Can A Twitter Account Be A Company Trade Secret?

There has been an ongoing tug-of-war between journalists and publishers over who gets to keep digital possessions after a break-up. The debate took a new twist this week after a court issued a ruling in the case of a tech reporter who walked out the door with 17,000 Twitter followers that his former employer says are worth $2.50 each.

In a Tuesday ruling, a federal judge in San Francisco refused to dismiss news site PhoneDog’s complaint which argued that a Twitter password and the identity of followers was a trade secret. PhoneDog claims that its former journalist, Noah Kravitz, failed to surrender the password to a Twitter account that was originally tied to the handle @phonedog_noah. Instead, says PhoneDog, he simply changed the name of the account to @noahkravitz and kept sending messages to the thousands of followers he had acquired while employed at the site.

Chief Magistrate Judge Maria-Elena James ruled that more evidence was needed to decide the question of whether the password was a secret under state law. She also allowed the company to go forward with its allegations of conversion — a tort that involves taking and using the property of someone else.

Kravitz also failed to persuade the judge that the case should be thrown out because it was worth less than $75,000 (the minimum amount for federal court). PhoneDog argues that its claim is worth $340,000 based on the “industry standard” of $2.50 per month for every Twitter follower. The judge found she could not decide as a matter of law that the claim was worth less than $75,000 or that PhoneDog was claiming the amount in bad faith. The company’s “industry standard” metric may, however, be a touch optimistic — reports have suggested that Twitter followers are worth less than a penny a piece.

These type of disputes are becoming more frequent in an era where journalists are encouraged to brand themselves. A BBC correspondent created a stir this summer when she took 60,000 Twitter followers to a competitor while this week the New York Times (NYSE: NYT) filed a lawsuit after its former “Mommylode” blogger started the “Parentlode” blog at the Huffington Post. Ownership of a social media or online brand typically turns on whether the journalist was an employee and the terms of any relevant contract.

The judge’s ruling in the PhoneDog case means the matter is unlikely to be resolved until next year. In the meantime, Kravitz appears to be thriving on Twitter where he now has over 21,000 followers. In recent days, he has posted messages about the Penn St. scandal and his trip to the dentist but not about the court decision.

The ruling was first reported by Venkat Balasubramani on the Technology & Marketing Law Blog.