#bankruptcy: Reconsidering 'property' to Determine the Role of Social Media in the Bankruptcy Estate
| Publication year | 2014 |
#Bankruptcy: Reconsidering 'Property' To Determine The Role of Social Media in the Bankruptcy Estate
Smita Gautam
Social media has become increasingly necessary for staying connected in our globalized and tech-savvy society. Although social media has become a staple of modern life and a regular part of business, the legal definition of social media remains undefined.
State legislatures have remained silent on the topic, but as business and individual account holders find themselves seeking bankruptcy relief, it becomes clear that treatment under the Bankruptcy Code depends on definitions that do not yet exist. The question of how social media should be characterized leaves bankruptcy courts uncertain as to whether social media accounts should be included in the bankruptcy estate.
While social media encompasses aspects of property, intellectual property, and other rights, this Comment argues that social media does not fit solely into any of these categories. Instead, this Comment argues for the classification of a social media account as more similar to a personal privilege than a traditional property right. This Comment concludes that state legislatures should legally define social media to foster predictability of its role in bankruptcy proceedings.
The explosion of social media has become undeniably evident in recent years. Sixty-four percent of social media users use social media services, such as Facebook and Twitter, at least once a day.1 As of 2014, Facebook had 132 million unique visitors each month, Twitter had 32 million, and Pinterest had 27 million.2 Each of these services also received millions of visitors each month to their respective mobile applications.3
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The impact of social media extends beyond how many people "like,"4 "favorite,"5 or "retweet."6 For example, a new law in California, nicknamed the "Eraser Bill," requires that by January 1, 2015, all websites on which a California minor is registered, including social media services, must include a function to delete content minors previously posted.7 From a business perspective, social users have generated lucrative returns. For example, retailers have seen their marketing efforts on social media services result in higher sales.8 Facebook and Twitter both filed for initial public offerings within a year of one another, revealing revenues over $3 billion9 and $300 million,10 respectively.
Celebrities, in particular, are highly visible on social media by using accounts across multiple services. Even individuals with no prior fame have gained hundreds of thousands of followers and subscribers through their unique online personalities.11 Besides popularity, these online celebrities have capitalized on their social-media followings to create new income streams.12
It is uncertain whether this social media presence would be a property interest included in the bankruptcy estate if an online celebrity were to file for bankruptcy. This Comment argues that because a social media presence includes inherent liberty interests beyond the scope of property, an individual's
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social media account cannot be assigned a value. Therefore, the social media presence should be excluded from the bankruptcy estate.
Part I of this Comment provides the framework for understanding social media and the treatment of property under the Bankruptcy Code (the "Code"). Part II is divided into three subparts. Part II.A conceptualizes social media as an extension of the user's identity and explains how social media accounts contain some of the characteristics of a traditional property interest. Part II.B analyzes the social media service's terms of service to determine who owns the content posted by the user. Lastly, Part II.C considers existing law and how it can be analogized and applied to social media. This Comment concludes that social media accounts should not be included in the bankruptcy estate. Further, legislatures should define what elements of a social media account qualify as property under the Code.
A. What Is Social Media?
Social media has been defined as "websites and applications which enable users to create and share content or to participate in social networking."13 Social media has been divided into six categories:14 collaborative projects,15 blogs and microblogs,16 content communities,17 social networking websites,18 virtual game-worlds,19 and virtual social worlds.20 This Comment will focus primarily on blogs and microblogs, content communities, and social networking websites, although much of the argument applies to other forms of social media as well.
A social media post may contain words, pictures, videos, or any combination thereof, created by the user or someone else and shared by the
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user.21 These types of content are all subject to applicable copyright law.22 The value of a social media user's posts is not only related to the content itself, but also to who is posting the content.
B. What Is Property Under the Bankruptcy Code?
Famed legal scholar Dean William Prosser once wrote, "It seems quite pointless to dispute over whether such a right is to be classified as property."23 The statement is an understanding of the difficulty in accurately defining what is "property," and an acceptance that property is perhaps more of an elusive concept than a concrete category. Nonetheless, the need to determine what exactly constitutes property remains important in the bankruptcy context.
Upon filing of a bankruptcy petition, the bankruptcy estate is created pursuant to § 541 of the Code.24 The bankruptcy estate is a new legal entity, separate and distinct from the debtor.25 Thus, when property is included in the estate, the trustee has control over the property, including the authority to use and sell it for the benefit of creditors.26 In essence, the ownership rights of the property transfer from the debtor to the bankruptcy estate.
Section 541 defines property of the bankruptcy estate as "all legal or equitable interests of the debtor in property as of the commencement of the case."27 While § 541 defines which of the debtor's interests are included in the estate, it does not address the threshold question of what constitutes the debtor's legal or equitable interests in a particular type of property. The Supreme Court of the United States clarified this omission by stating, "Property interests are created and defined by state law," and these state law definitions apply in bankruptcy proceedings.28
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Section 541 has been interpreted to include both tangible and intangible property interests.29 Intellectual property is "a category of intangible rights protecting commercially valuable products of the human intellect and comprising primarily trademark, copyright and patent rights."30 Case law has recognized goodwill as an intellectual property interest eligible for inclusion in the bankruptcy estate.31
Section 554 permits the trustee to abandon property of the estate that is either a burden or of inconsequential value or benefit.32 It also permits the court to order the trustee to abandon property on request of a party of interest.33 This abandoned property then vests in the debtor.34
A major dispute in bankruptcy cases involving property of the estate is the inclusion of future profits or proceeds, sometimes referred to as "expectancies."35 One consideration of these expectancies is that they hold "a very valuable legal right that is of no value to anyone but the debtor."36 This characterization is analogous to the reason that social media accounts should not be treated as property because, while they may be valuable, that value is created by and inherent to the user.
A. Social Media as a Pseudo-Property Interest
The personal nature of social media supports this Comment's argument that one's social media account should not be treated as property within a bankruptcy proceeding. The first question to consider is who actually owns the content: the user or the social media service7 One example raises questions about the ownership and alienability of a user's social media account. In 2008,
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B.J. Mendelson created an account on Twitter for a cross-country breast cancer awareness tour he was planning with the 1 in 8 Foundation.37 He became the first non-celebrity, non-brand, non-media outlet to be placed on Twitter's Suggested User List, which appears on users' profile pages to suggest popular accounts to follow.38 An entrepreneur was offering to purchase from Twitter a two-year placement on the Suggested User List.39 Mendelson heard about this offer and offered to sell his spot on the Suggested User List for $250,000, which would be donated to the 1 in 8 Foundation.40 Twitter prevented the sale.41
While users are not able to sell their accounts, in some cases they may share control over their social media accounts. Since 2012, the Twitter account @MichelleObama has been managed by staff members of the President Obama 2012 presidential campaign with First Lady Michelle Obama's own tweets signed "-mo."42 In 2013, the Twitter account @FLOTUS was started by the Office of the First Lady, once again with First Lady Michelle Obama's own tweets signed "-mo."43 Each account features Michelle Obama's likeness in the profile picture and both have tweets written by her.44 The similarity of the accounts and the shared control makes ownership of the accounts unclear.
1. The Nature of Fame and the Right of Publicity
The nature of social media accounts makes it difficult to determine the delineation between the individual and the individual's expression. Other types of personal property are physically distinct from their creator. But because social media involves the continued posting by the account holder, the user has a continued connection with the account. There is a source of...
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