Social media can compromise database assets

How many business owners realise that uncontrolled use of social media by their staff could put their client database at risk? If the business’s client database is considered a valuable asset, the owners must take the appropriate steps to protect it.

Many businesses encourage higher level staff to use social media such as LinkedIn, Twitter, or Facebook to communicate with clients. Staff need to access the business’s client relationship management database to do this.

This database could contain proprietary, confidential or commercially sensitive information. Even if each piece of information is not of great consequence on its own, taken as a whole the database may represent significant investment in client development and analysis. In some industries this intangible asset could comprise a large part of the business’s value.

Businesses need to address the risk of a disenchanted staff member deciding to leave with all or part of the database. Furthermore, they should understand that any information uploaded to networking sites will become unprotectable as the business’s trade secret or confidential information.

This issue has been highlighted by a September ruling from the New York District Court involving Sasqua Group Inc, which specialises in headhunting professionals for the financial services industry. Sasqua maintained a central database of client information which contained clients’ individual profiles, needs, preferences and hiring practices, and strategies for business expansion.

Earlier this year managing director Lori Courtney resigned and set up in competition with Sasqua, taking 3 recruiters with her, and (apparently) much of Sasqua’s database information. Sasqua sought an injunction against Courtney and the other ex-employees to stop them from using this information, on the basis that it was “the lifeblood” of the business.

Unfortunately for Sasqua, the Court held that the database could not be protected as proprietary, trade secret or confidential information. One reason for this was that much of the base information was readily available on Bloomberg, LinkedIn, and Facebook.