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A Broken Marriage: Bridal Designer Cannot Compete but Regains Control of Social Media Accounts

By Michael Foley & PJ Kee on February 10, 2022
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In the case JLM Couture Inc. v. Gutman, in the U.S. Court of Appeals for the Second Circuit, a bridal designer signed an employment agreement that barred her from competing with her employer – JLM Couture Inc. (JLM) – following her employment. The designer also agreed to give certain rights to JLM related to a bridal line created in the designer’s own name in exchange for compensation and JLM’s investment in the brand. The agreement also prevented the designer from using variations of her name to market bridal wear.

Things went south, however, when JLM tried to renegotiate the parties’ deal by expanding the designer’s social media job duties. When negotiations fell apart, the designer locked JLM out of social media pages, and she started one or more new social media accounts under a slightly different trade name. JLM then sued for breach of contract, unfair competition, and conversion of social media accounts, among other things.

A federal district court judge enforced the non-compete even though it went so far as to prevent the bridal designer from using variations of her own name to earn a living. But the trial court went too far, according to the appellate court, when it ordered the bridal designer to transfer sole control of business-related social media accounts to JLM, ownership over which the parties fiercely disputed. Though the bridal designer’s right to compete was limited by her JLM employment agreement, she “never forfeited her right to keep property that is legally hers,” according to U.S. Circuit Judge Michael H. Park. Notably, a dissenting appellate judge found that the injunction against the bridal designer went too far because not only did it prohibit her from using her name for marketing bridal wear, i.e. the business in which she was engaged by JLM, but it also restricted her from using her name to market any product.

This case reminds employers that non-competes should be tightly drafted because they often must withstand a high degree of scrutiny. This case is also a cautionary tale against resting exclusive access to social media accounts in the hands of one employee.

Photo of Michael Foley Michael Foley

Michael Foley is an author for the Trade Secret Insider. He is a partner in the firm’s Labor & Employment Practice Group and practices from the New Orleans office. Mr. Foley focuses on employment-related litigation, including non-compete and trade secret disputes. He…

Michael Foley is an author for the Trade Secret Insider. He is a partner in the firm’s Labor & Employment Practice Group and practices from the New Orleans office. Mr. Foley focuses on employment-related litigation, including non-compete and trade secret disputes. He can be reached at mfoley@joneswalker.com or 504.582.8853.

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Photo of PJ Kee PJ Kee

PJ Kee is an Editor and Founder of the Trade Secret Insider and a member of Jones Walker’s Trade Secret and Non-Compete Team. He regularly litigates cases involving trade secret theft, non-competes, computer fraud, conspiracies, and unfair competition, and counsels clients on strategies…

PJ Kee is an Editor and Founder of the Trade Secret Insider and a member of Jones Walker’s Trade Secret and Non-Compete Team. He regularly litigates cases involving trade secret theft, non-competes, computer fraud, conspiracies, and unfair competition, and counsels clients on strategies to protect their trade secrets. Mr. Kee also represents clients in criminal proceedings and litigates complex commercial and employment matters involving various breach-of-contract claims, business torts, invasion of privacy claims, defamation, and wage and hour disputes. He can be reached at pkee@joneswalker.com or 504.582.8230.

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  • Posted in:
    Intellectual Property
  • Blog:
    Trade Secret Insider
  • Organization:
    Jones Walker LLP
  • Article: View Original Source

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