Debtor Owns CEO’s Social Media Accounts The sole shareholder and former CEO of Vital Pharmaceuticals (and affiliates) refused to relinquish control
Debtor Owns CEO’s Social Media Accounts The sole shareholder and former CEO of Vital Pharmaceuticals (and affiliates) refused to relinquish control
of the social media accounts he used as Vital’s CEO after Vital filed for bankruptcy and dismissed
him as CEO. Vital then initiated an adversary proceeding seeking a determination that it owned the CEO’s social media accounts. As support, Vital argued that the CEO accounts bear the company's name; have content that is associated with its business, and were intended to generate revenues for the company.
On the other hand, John Owoc, the former CEO, and his wife and former SVP of Marketing, Megan Owoc, argued that Mr. Owoc used the CEO accounts to cultivate his public persona, which the Owocs contend is distinct from Vital and has personal value.
The U.S. Bankruptcy Court for the Southern District of Florida held that the CEO accounts belonged to the debtor. In reaching such conclusion the court first looked to Florida law (which the court assumed controlled since neither party disputed its applicability).
The court considered that “Florida law does not have a statutory scheme governing ownership of digital assets, such as social media accounts, like it does for (among other things) real property and motor vehicles.” However, it noted that, under Florida law, “property interests or rights can be documented in or evidenced by a contract.” As a result, it found that the terms of service of a social media platform could be instructive, as well as the debtor’s (as Mr. Owoc’s former employer) social media policy or employee handbook.
Specifically, the court held that the following factors must be considered in this context: (1) whether there was a documented property interest in the account rights (such as by contract); (2) evidence of control (as defined under proposed UCC Article 12) over access to the account, and (3) evidence of use of the account.
In this case, the first two factors were inconclusive to determine ownership (there was no documented property interest, it was unclear whether the Mr. Owoc was bound by the debtor’s employee handbook and both parties had control over the accounts), so the court relied on the nature of the use of the accounts.
The court found that this factor strongly favored the debtor’s ownership, based on the following:
- the debtor established that the CEO accounts were used mostly for marketing the debtor’s products;
- use of social media was the centerpiece of the debtor’s marketing strategy;
- the accounts were created by people who were working for the debtor, and
- the account names included the debtor’s brand name.