Departing Employee Required to Transfer Social Media Accounts–Hyperheal Hyperbarics v. Shapiro
This is an ownership dispute over a departing employee’s right to use social media accounts and trademarks of an employer. The facts are somewhat atypical.
Shapiro founded a company called Hyperheal Hyperbarics to provide “hyperbaric oxygen therapy”. In 2014, the business was struggling and raised money from an investor, Samer Saiedy. Saiedy again put in money in 2015. Due to these cash infusions, Shapiro became a minority shareholder (owning 2.38%) and employee. In 2016, he was terminated. He was rehired in 2017 as an employee (he still retained his minority stake) but terminated again in 2018. Before being hired in 2017, he signed an employment agreement restricting his participation in social media on behalf of Hyperheal and agreeing to turn over unspecified social media accounts relating to Hyperheal. As part of the agreement, Shapiro also relinquished all rights in Hyperheal’s intellectual property.
After his 2016 termination, Shapiro filed a trademark application for “Hyperheal Hyperbarics, Inc.” In February 2017, prior to being rehired, the USPTO sent Shapiro an office action refusing his registration due to a previously filed mark (filed by Dr. Tommy Love).
After being hired in 2017, Shapiro ostensibly transferred over some social media accounts and domain names to the company. He did not mention the pending trademark application or office action. Because he never responded to the office action, the PTO deemed his application abandoned.
After his 2018 termination, Shapiro again applied to register a “Hyperheal Hyperbarics” trademark. This time, he bought Dr. Love’s interests in the trademarks. Shapiro also convinced GoDaddy to transfer the Hyperheal domain names back to him. He also told LinkedIn that Hyperheal infringed on Shapiro’s mark. Linkedin transferred control of the company account to Shapiro. Shapiro similarly contacted Twitter and Facebook. (The court does not describe the outcome of his efforts to pressure those companies into transferring accounts to Shapiro.)
Hyperheal sued, asserting various state law and trademark claims. It also moved for a preliminary injunction.
The court grants the injunction, focusing largely on the contract claims. Shapiro signed an agreement agreeing to relinquish rights to intellectual property and social media accounts. This he clearly did not do. The court finds particularly damning his failure to disclose the pending trademark application (that was facing an office action) at the time he purported to transfer ownership of the social media accounts to Hyperheal.
The court also finds Hyperheal likely to succeed on two other claims. It says that in wrestling away the domain name, not disclosing the trademark, and pursuing investors on his own, he “acted with the tortious intent to harm Hyperheal financially.” Similar conduct also supported Hyperheal’s claim that he tried to “misappropriate” Hyperheal’s products.
Finally, the court says that the injunction would not prevent Shapiro from earning his livelihood. He’s free to work in the industry, provided he doesn’t use any of Hyperheal’s marks and social media assets.
Previous employee social media cases have focused on different aspects of online accounts, such as followers (PhoneDog) underlying content (Ardis Health) or account credentials or right to access (Maremont). Litigants advance different theories and claims depending on what aspect of the account they are focused on. The plaintiff in this case appeared to focus on the branding for the accounts, and thus brought trademark and contract based claims. The court ultimately focuses on the latter.
This case emphasizes the importance of having a written agreement address a company’s social media assets that may be controlled by employees (or founders). Hyperheal dodged a bullet here in that it was able to get Shapiro to sign an agreement–after he parted ways with the company–that conveyed ownership of his trademarks and social media assets to the company. Most employees would not be so willing to sign such an agreement absent some consideration.
The language of the agreement itself was not terribly precise about the social media assets, but the court nevertheless found that Hyperheal was entitled to relief. Among other things, this was likely premised on Shapiro’s conduct that was not so above board.
Case citation: Hyperheal Hyperbarics v. Shapiro, 2018 WL 4257331 (D. Md. Sept 6, 2018).