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Twitter vs. Meta: Trade Secrets Theft Allegations Amidst Threads Launch

Posted by Ryan M. Newburn | Oct 24, 2023 | 0 Comments

What is Twitter/X?

Twitter is an American social media website founded in 2006 by Noah Glass, Biz Stone, Evan Williams, and Jack Dorsey. The website allows users to send short posts, limited to 280 characters, known as “tweets," to their follower's feeds.

Twitter has gained significant popularity among journalists for its ability to communicate breaking news stories as they unfold. A study by the Pew Research Center found that 69% of U.S. adults on Twitter use the platform as a news source. Of those 69% of U.S. Twitter users, 70% followed live news events on the platform.

In October 2022, South African-born American entrepreneur Elon Musk purchased Twitter for $44 billion, becoming the company's sole owner. The transition resulted in many changes to the platform, including implementing a premium subscription that gives subscribers a blue checkmark, previously used to symbolize verified accounts, the ability to post up to 25,000 characters, and post prioritization in the algorithm, among other features.

What is Threads?

Threads is a competing social media platform launched by Meta Platforms, formerly Facebook Inc., on July 5th, 2023. According to Meta, “Threads offers a new, separate space for real-time updates and public conversations.” The app reached 30 million downloads within the first 16 hours of its launch.

Part of the initial success of Threads can be attributed to the ability to create a Threads account through an existing Instagram profile and the ability to import followers of your Instagram without needing to search for them on your own.

Threads allows posts up to 500 characters and employs features similar to Twitter, such as the ability to like, repost, or reply to a post by “quoting” it.

What is Twitter/X accusing Meta of?

Hours after the launch of Threads, Alex Spiro, an attorney for Twitter, sent a letter to Meta CEO Mark Zuckerberg accusing Meta of engaging in “systematic, willful, and unlawful misappropriation of Twitter's trade secrets and other intellectual property.”

The letter asserts that Meta has hired dozens of ex-Twitter employees with access to Twitter's trade secrets and “ongoing obligations” to Twitter. It goes on to accuse Meta of “deliberately assign[ing] these employees to develop, in a matter of months, Meta's copycat ‘Threads' app with the specific intent that they use Twitter's trade secrets and other intellectual property[.]”

The letter demands that “Meta take immediate steps to stop using any Twitter trade secrets or other highly confidential information.”

What are trade secrets?

According to the Uniform Trade Secrets Act (UTSA), a trade secret is any information that "derives independent economic value, actual or potential form not being generally known to . . .  other persons who can obtain economic value from its disclosure or use[.]”

In simpler terms, the value of a trade secret is in its secrecy, and the holder of such a trade secret needs to make reasonable efforts to maintain its secrecy.

For something to be a trade secret, it must have four aspects:

  1. It must be a specific piece of information and not a piece of general knowledge or skill;
  2. It must be secret, in the sense that it is not obvious or easy to compile;
  3. The owner must make a reasonable effort to maintain secrecy; and
  4. It must give the secret owner a competitive advantage.

How can you protect trade secrets?

Trade secrets provide protections that cannot be achieved with other intellectual property regimes. For instance, copyright and patent provide the intellectual property holder with a temporary monopoly over the copyrighted or patented material, after which anyone can use the protected material.

Trade secrets have no limit on the length of protection. A company may protect its proprietary soda recipe as a trade secret rather than patenting it to avoid its disclosure and the eventual termination of patent protection after 20 years.

A trade secret must be kept in "relative secrecy," meaning that it may be shared with some while remaining protectable, so long as the information has not escaped into mainstream public knowledge. Reasonable efforts to maintain secrecy can include implementing security systems or requiring employees with access to the data to sign non-disclosure agreements.

How can trade secrets be misappropriated in general?

Misappropriation is violating trade secret rights and can take multiple forms.

First, it could be acquiring a trade secret from another person, knowing it was acquired by improper means.

It could also be disclosing or using a trade secret without the consent, whether express or implied, by someone who acquired the knowledge improperly.

Some courts find that the wrongful acquisition of a trade secret is sufficient to constitute misappropriation. In contrast, other courts require the disclosure or use of the trade secret for a finding of misappropriation. A trade secret holder can also file a lawsuit for a threatened misappropriation of their trade secret, even if the threatening party has yet to use the information. The court could issue an injunction to prevent the theft, disclosure, or use of the trade secret.

How did Meta allegedly misappropriate Twitter's trade secrets?

Twitter asserts that the “dozens” of former Twitter employees that Meta hired had access to, and continuously had access to, Twitter's trade secrets and other confidential information.

They also accuse Meta of assigning such employees to develop the Threads app knowingly and encouraging the employees to use trade secrets and other IPs to build the app.

If Twitter can prove that Meta executed a plan to hire former Twitter employees to gain unauthorized access to Twitter's trade secrets, such conduct is likely to constitute misappropriation. An inference of misappropriation may be made where especially “key” employees are hired away by a competitor.

Twitter will likely have a separate breach of contract claim against their ex-employees if there is proof that such employees shared confidential information with Meta, violating their non-disclosure agreements. 

What are the consequences of trade secrets violations?

Misappropriation of trade secrets can create both civil and criminal liability.

Where misappropriation has been threatened but has yet to occur, the trade secret holder may seek a court injunction to prevent the use and distribution of the trade secret. Damages may be available where the defendant has made substantial use of the trade secret. It is up to the plaintiff to prove with reasonable certainty the damage caused by the defendant's misappropriation of the trade secret.

In this case, Twitter must show that Meta's use of its trade secrets resulted in financial damage to Twitter's business. Damages may be for losses incurred by the plaintiff, unjust enrichment of the defendant, or punitive damages to discourage future misappropriation.

Theft of a trade secret under the Federal Economic Espionage Act can result in a fine of up to $5,000,000 or 10 years imprisonment. Both individuals and organizations can be held liable for trade secret theft.

What will the result be?

It is unlikely that Twitter will be able to win a misappropriation of trade secrets claim based on the information provided in the letter to Meta alone.

For a misappropriation claim, a protectable trade secret must be made. While the letter alleges that ex-employees now with Meta have access to Twitter's trade secrets and other confidential information, Twitter will need to argue that more specific pieces of information, such as their algorithm, were misappropriated. Bland allegations that ex-Twitter employees gained some amount of general knowledge or skill during their time with the company will not be sufficient to prove misappropriation.

If Twitter can show that there were specific trade secrets stolen by ex-employees and shared with Meta, there will likely be a finding of misappropriation. Disclosure or use of a trade secret by someone who knew or should have known that the information was obtained from or through one subject to an obligation of confidentiality constitutes misappropriation. NDAs are very common in the technology industry, and Meta is likely to know that any ex-Twitter employee would be bound by some terms of confidentiality related to their work at Twitter.

Twitter may attempt to accuse Meta of “raiding” their employees. Raiding is the practice of hiring a competitor's employees for a nefarious purpose, such as acquiring confidential information.

However, Meta may have a reasonable defense against such a claim. Twitter had allegedly laid off 50% of its staff in November of 2022 following Musk's acquisition of the company. It may be that Meta's employment of these ex-Twitter employees was partly a consequence of Twitter's layoffs, as opposed to a deliberate solicitation of talent by Meta. In addition, Andy Stone, communications director for Meta, posted to Threads that “No one on the Threads engineering team is a former Twitter employee — that's just not a thing.”

While Twitter's accusation of trade secret misappropriation against Meta may not be completely unfounded, the company will need to come forward with much more concrete information to prove its allegations. In the meantime, Meta should screen their ex-Twitter employees from involvement with their Threads app.

About the Author

Ryan M. Newburn

Ryan Newburn is a business and legal expert trusted by Executive Teams and Boards of Directors to apply sound business principals to solve legal and financial problems. Ryan's practice focuses on mergers and acquisitions, financings, corporate formations and corporate governance in a broad range of industries including energy, distribution services, healthcare, medical devices, and technology. Leveraging his formal business training and years of practical experience, including as an executive at public and private companies, Ryan has advised hundreds of companies in dozens of industries of unique legal and financial issues.


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