From the press release:

A team of Haynes and Boone, LLP intellectual property litigators earned a precedent-setting victory regarding ownership of social media accounts in the United States Court of Appeals for the Second Circuit on Wednesday, Jan. 17. This decision is the first on the issue of social media account ownership by a federal appellate court.

…

While a district court issued a preliminary injunction awarding JLM control of the accounts based on a subjective six-factor social media account ownership test, the Second Circuit rejected that test and vacated the order. The court sided with Haynes Boone’s argument that ownership should be determined “like any other form of property,” by first determining who owned the account at the moment of its creation and then evaluating whether that owner sold or transferred the account.

“When Gutman created the disputed accounts, any associated property rights belonged to someone. And if she created them using her personal information and for her personal use, then those rights belonged to her, no matter how the disputed accounts may have been used later,” the court ruled. “… The fact that Gutman transferred some or all of her rights in particular content posted on the disputed accounts does not by itself support an inference that she transferred ownership of the disputed accounts themselves. Nor should it ordinarily matter to the question of ownership whether an account owner permits others to assist in managing the account, or whether one or the other party holds itself out as owning it.”

Lawlor sees this as a vital decision and victory for the future of similar cases, which are certain to be prevalent in an age of increasing use of influencer and digital marketing.

From the landmark decision:

To resolve the issue, the district court identified six factors “at the core of a proper social media account ownership inquiry.” Gutman, 2023 WL 2503432, at *10.3 Based on these factors, the district court ruled that “JLM has established [a] clear likelihood of success in demonstrating that it owns the Instagram Account and Pinterest Account or (to the extent Ms. Gutman or the relevant platforms may hold title to the Accounts) has a right to use and control the Accounts vastly superior to any such right of Ms. Gutman.” Id. at *15.

The district court expressly declined to consider whether Gutman owned the Disputed Accounts when they were created. See id. at *11. It stated that such an approach would be “overly simplistic, and the dynamics of social media warrant a much fuller examination of how the accounts were held out to the public, the purposes for which the accounts were used, and the methods by which the accounts were managed.” Id. 

We conclude that this approach was error. The law has long accommodated new technologies within existing legal frameworks. See, e.g., Kyllo v. United States, 533 U.S. 27, 33-40 (2001) (holding that the use of thermal imaging technology can constitute a search under the Fourth Amendment); Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283, 292-93 (2007) (treating electronic records as property equivalent to physical records for the purposes of conversion). We see no reason to depart from this traditional approach here. Determining the ownership of social-media accounts is indeed a relatively novel exercise, but that novelty does not warrant a new six-factor test.4

The Disputed Accounts should be treated in the first instance like any other form of property. This includes determining the original owner. See Pierson v. Post, 3 Cai. 175 (N.Y. 1805) (determining original owner of a fox); Lightfoot v. Davis, 198 N.Y. 261, 265 (1910) (discussing the principle of title by first possession); see also Carol M. Rose, Possession as the Origin of Property, 52 U. Chi. L. Rev. 73, 73 (1985). When Gutman created the Disputed Accounts, any associated property rights belonged to someone. And if she created them using her personal information and for her personal use, then those rights belonged to her, no matter how the Disputed Accounts may have been used later.5 See 2 William Blackstone, Commentaries *389.

If the district court concludes that Gutman owned the Disputed Accounts at creation, it will then need to consider whether JLM subsequently took ownership by operation of the Contract. 6 Traditional principles of property law guide this analysis. Thus, the fact that Gutman transferred some or all of her rights in particular content posted on the Disputed Accounts does not by itself support an inference that she transferred ownership of the Disputed Accounts themselves. 7 Nor should it ordinarily matter to the question of ownership whether an account owner permits others to assist in managing the account, or whether one or the other party holds itself out as owning it. See, e.g., Meisels v. Meisels, 630 F. Supp. 3d 400, 411 (E.D.N.Y. 2022) (management of rental property not probative of ownership); Porter v. Wertz, 53 N.Y.2d 696, 698 (1981) (permitting suit for recovery of a painting purchased from a middleman who lacked authority to sell the painting). Determining ownership by reference to such principles would promote transfer by surprise and complicate contractual arrangements under which an account owner might agree to advertise another’s goods on his or her platform.8

Moreover, the district court erred by concluding that JLM is likely to succeed in demonstrating ownership of the Disputed Accounts under Paragraph 11 of the Contract.9 See Gutman, 2023 WL 2503432, at *15. That paragraph provides that all “designs, drawings, notes, patterns, sketches, prototypes, samples, improvements to existing works, and any other works conceived of or developed by [Gutman] in connection with her employment with the Company involving bridal clothing, bridal accessories and related bridal or wedding items,” are works for hire and the exclusive property of JLM. Contract ¶ 11

The district court ruled that the Disputed Accounts themselves qualify as “any other works” conceived of or developed by Gutman in connection with her  employment. It thus concluded that Gutman likely assigned them to JLM in the Contract. But the ordinary meaning of general terms at the end of a list must be interpreted to “embrace only objects similar in nature to those objects enumerated by the preceding specific words.” Yates v. United States, 574 U.S. 528, 545 (2015) (quoting Wash. State Dep’t of Soc. & Health Servs. v. Guardianship Est. of Keffeler, 537 U.S. 371, 384 (2003)) (applying ejusdem generis). Otherwise, giving general terms an “all-encompassing” meaning would render specifically enumerated terms surplusage. See id. at 545-46 (quoting Begay v. United States, 553 U.S. 137, 142 (2008)). 

Here, the specific terms—“designs, drawings, notes, patterns, sketches, prototypes, samples, [and] improvements to existing works”—are all closely related.  Contract ¶ 11. They describe steps in the process of fashion design and capture much (if not all) of the creative output that Gutman might produce in her role as a designer. Moreover, the enumerated terms are all items that JLM might conceivably sell to the public and appear to be presumptively copyrightable. See 17 U.S.C. § 102(a) et seq. The Disputed Accounts by contrast share none of these core attributes, despite featuring content that does, such as sketches and drawings of wedding dresses.10 It would thus be inconsistent with ordinary principles of contract interpretation to conclude that Paragraph 11 of the Contract assigned the Disputed Accounts to JLM. 

To summarize: the analysis of social-media-account ownership begins where other property-ownership analyses usually begin—by determining the account’s original owner. The next step is to determine whether ownership ever transferred to another party. If a claimant is not the original owner and cannot locate their claim in a chain of valid transfers, they do not own the account.

Read the precedent-setting decision here.

Why is this important in this situation? Throughout this case, BCS insists that it owns Mrs. McNamara’s domain. This is despite admissions of the following from BCS throughout discovery:

• Mrs. McNamara purchased the domain in her own name and with her own funds a year before the incorporation of the organization
• Mrs. McNamara has renewed and paid for the domain every year with her own funds and the domain has remained in her name since the creation
• Mrs. McNamara never transferred or assigned the domain to Breaking Code Silence (See Response to Interrogatory No 4)
• Mrs. McNamara received no consideration from BCS for her domain or their use of it (See Response to Request For Admission No 34 and highlighted sections of Page 33-35 of Magill Depo)
• Mrs. McNamara refused to execute an Intellectual Property Assignment after her resignation (See Highlighted section of Page 43 of Magill Depo)
• Breaking Code Silence never demanded the domain from Mrs. McNamara after her resignation and before the filing of this action (See Page 43 of Magill Depo)

Yet Breaking Code Silence seems to believe that Mrs. McNamara’s ownership of her domain is a violation of a criminal federal hacking statute. 

We believe that such dangerous thinking and application of the law would not only promote a “transfer by surprise” of intellectual property absent contract, consideration, assignment, clear terms, or even without informing the other party there is an ownership dispute (before litigation or criminal charges) but also hold the potential to criminalize future ownership disputes if the law was allowed to be applied in such a way.

We will end this post by quoting McNamara’s Motion for Summary Judgment:

Here, McNamara purchased the .Org Domain over a year prior to the founding of BCS. (UMFs 13, 16.) She paid for the domain with her own money, placed the domain in her own Hover domain registrar account, and paid for the renewal each year. (UMFs 14-15.) McNamara never transferred or assigned the ownership of domain to BCS, and refused to execute an intellectual property assignment. (UMFs 15, 34.) Analogously, the Second Circuit recently held, in a case involving disputed ownership of social media accounts, that the relevant accounts “should be treated . . . like any other form of property. This includes determining the original owner.” (JLM Couture, Inc. v. Gutman, Case Nos. 21-2535, 22-1694, p.17 (2nd Cir. January 17, 2024) (opinion provided at Exhibit 116).) “When [appellant] created the [relevant accounts], any associated property rights belonged to someone. And if she created them using her personal information and for her personal use, then those rights belonged to her, no matter how the Disputed Accounts may have been used later.” (Id. (citing 2 William Blackstone, Commentaries *389).) 

Further, “the fact that [appellant] transferred some or all of her rights in particular content posted on the [relevant accounts] does not by itself support an inference that she transferred ownership of the Disputed Accounts themselves. Nor should it ordinarily matter to the question of ownership whether an account owner permits others to assist in managing the account, or whether one or the other party holds itself out as owning it.” (Id., 18.)

Moreover, BCS’s pre-lawsuit demands never included a demand for the .Org Domain. (UMF 35.) Whether or not McNamara legally owns the domain (and Defendants believe that she does), McNamara at all times believed that she was the domain owner and had the authority to legitimately delegate permissions to Whiteley and take any other actions she could legally take via the Google Tools for the .Org Domain. (UMF 39.)