Hunton Retail Law Resource

In granting a summary judgment motion on June 16, 2023, the Southern District of Florida Bankruptcy Court developed a new framework to determine the ownership rights to a corporate social media account. The court found that Vital Pharmaceuticals, the manufacturer and seller of “Bang” energy drinks, is the rightful owner of three social media accounts used to market Vital’s products, rather than the company’s former CEO who often posted to the accounts.

The accounts at issue include:

• an Instagram account with the handle @bangenergy.ceo;
• a TikTok account with the handle @bangenergy.ceo; and
• a Twitter account with the handle @BangEnergyCEO.

Ownership was contested by John H. “Jack” Owoc, Vital’s now former CEO, who argued he was the rightful owner. Six months ago, Vital and its affiliates filed for chapter 11 bankruptcy. Three months later, Vital’s board of directors fired Owoc. Vital has since been attempting to sell their business, which includes over 50 social media accounts. But Owoc refused to turn over the passwords to the three CEO-named accounts, arguing they were his personal accounts.

Suit

Vital sued Owoc and moved for summary judgment seeking (1) a declaration that the rights to the CEO accounts are property of the estate and (2) turnover of the CEO accounts.

Vital argued the accounts belong to Vital because they are clearly meant to generate revenue for the company, pointing to the fact that the names for each of the accounts include Vital’s brand name, “bangenergy.”

Owoc argued that the CEO accounts were used to cultivate his persona and serve as his own personal account. For example, several posts included celebratory posts of birthdays, anniversaries, holidays and photos of his newborn child.

Holding

The court determined that Vital is the rightful owner. In doing so, the court established a new framework for social media account ownership, consisting of three factors:

• Documented Property Interest. An agreement documenting or evidencing a property interest in the account creates a presumption of ownership.
• Control Over Access. Evidence of exclusive access and the power to prevent others from accessing the account can overcome the presumption established by a documented property interest.
• Use. If a party has both a documented property interest and control over access, they own the account rights. Otherwise, the use of the account, including its name, promotion of products and alignment with marketing strategies, plays a primary role in determining ownership.

This framework contrasts with an earlier framework from In re CTLI, LLC, 528 B.R. 359, 367 – 74 (Bankr. S.D. Tex. 2015), which created a presumption that an account bearing the name of a company belongs to the company. The court here concluded that the presumption no longer makes sense because many social media influencers like Owoc use a persona to market products, thus blurring the line between a personal account and a business account.

Under its new framework, particularly the “Use” factor, the court concluded that Vital is the account owner because an overwhelming portion of the social media posts associated with the CEO accounts, approximately 75% (206 out of 284 posts), explicitly or implicitly promote Bang products. And an additional 15% of posts subtly market Bang products by highlighting aspects of Mr. Owoc's persona that align closely with Vital's marketing strategy. Only 10% of the posts were purely personal in nature. Thus, there was no genuine dispute of material fact that Vital owns the rights.

Lessons Learned

This decision is a reminder to social media directors, brand owners and content creators to keep at least three things in mind.

• First, it is important to memorialize the ownership of social media accounts. It would be prudent to review any documents related to the property interests in any accounts and finalize agreements over any accounts in which ownership is not explicitly clear.
• Second, understand who has control over your social media accounts. Even if a party has drafted agreements pursuant to account ownership, those agreements might be overcome by evidence of a party having complete, exclusive control over an account. Manage control of passwords, usernames and other access-related data to make sure that accounts are controlled appropriately.
• Third, monitor the content and usage of your social media accounts. Are the accounts used primarily for promotional content, personal content or both? The ratio of promotional to personal content may be important in determining the nature of an account.