A clash among lawyers from Elon Musk’s X Corp., Alex Jones’ Infowars, and The Onion would normally be enough to pack a courtroom.

But the question each will debate before a Texas bankruptcy judge Monday rises to another level: Who really owns the rights to a social media handle?

Asking to intervene in the liquidation of Infowars, X wants Judge Christopher M. Lopez to block the transfer of any Jones- or Infowars-associated accounts on its platform to The Onion’s corporate parent, Global Tetrahedron LLC, which last month won the auction for the right-wing conspiracy news platform’s assets.

“Notwithstanding all the commentary about free speech, the terms of use provide pretty broad discretion and latitude to the social media companies to control what goes on their platforms,” said Greg Pesce, a partner at White & Case LLP’s restructuring practice.

Lopez will assess the structure of The Onion’s winning bid—which includes support from families of Sandy Hook Elementary School shooting victims who hold $1.5 billion in judgments against Jones—while also considering X’s concerns in one of the first times a social media platform has elbowed itself into a bankruptcy court sale of a user account.

The few bankruptcy courts that have overseen social media account ownership disputes haven’t addressed whether the social media company had a superior ownership right over either the individual or the corporation that controlled the accounts, X’s lawyers said in court papers.

“The law in this space is developing rapidly,” they said. “But under any of the tests articulated, X Corp. owns the X Accounts.”

Terms of service

Social media services normally stay out of battles between rival claimants to a social media handle, said Eric Goldman, a professor at Santa Clara University School of Law and co-director of its High Tech Law Institute.

While X’s position that it owns all handles instead of its users isn’t novel, enforcement of restrictions to transfer accounts are usually done quietly and rarely involve court proceedings, Goldman said.

“Social media services approach this topic gingerly because they want to encourage their users to invest heavily in their accounts,” Goldman said.

While X has given account holders like Jones and Infowars a license to use its services, that license can’t be assigned to others under its terms of service or as a personal services contract, X’s lawyers said in court papers.

The trustee overseeing the liquidation of Jones’ estate in bankruptcy therefore can’t sell, assign, or transfer that license without X’s consent, it said.

“It all comes down to the the bible for these companies, which is their terms of use,” Pesce said. “Does the terms of use let you transfer it and, with respect to the other stuff that the families and The Onion are buying, can you put that stuff that they’re buying — the content, the logos, etc. — can you put that on X in a new configuration after the sales approval?”

The trustee has said the account itself isn’t being sold, but rather the estate’s rights and interests in the account. X argues its terms of service are clear that users don’t have a property interest in their accounts, and the trustee’s motion draws a distinction without a real or legal difference, said Seth H. Lieberman, a Pryor Cashman LLP restructuring partner.

The bankruptcy system largely relies on nonbankruptcy law to determine property rights, but that doesn’t mean the estate can sell that interest, said Alexander Gouzoules, a professor at University of Missouri School of Law focused on law and bankruptcy.

“Restrictions on the transfer of property don’t necessarily vanish just because an interest in that property became part of the bankruptcy estate,” Gouzoules said.

X’s involvement also raises questions about the trustee’s sale of interests in handles on other social media platforms, including Gab, Telegram, and President-elect Donald Trump’s social media company Truth Social, and whether they have similar terms of service as X, Lieberman said.

Eyal Berger, a bankruptcy and reorganization partner at Akerman LLP, said the only time in his career that the issue ever came up was in the 2022 bankruptcy of Vital Pharmaceuticals Inc., popularly known as Bang Energy. Berger represented Bang’s purchaser, Monster Energy, in the case.

The judge in that case ruled the company, not the former CEO, owned the accounts. The ruling is being appealed.

Musk control

The dispute over the Infowars account shows Musk and X want to control how handles are transferred and used in the future, Pesce said.

“It is a novel issue because of Elon Musk’s involvement,” Pesce said.

Even if the judge approves the sale to The Onion, it will still be bound by X’s terms of service.

Unlike other social media services, X has shown it doesn’t care much about users’ concerns about control over their handles, Goldman said. He cited X’s recent reassignment of the "@America” handle for partisan purposes.

That “extremely unusual” raw exercise of the platform’s power can rattle other users’ confidence in the safety of their handles, Goldman said.

“X’s intervention with Alex Jones’ handles is consistent with another partisan move, though that may not be their ultimate goal,” Goldman said.

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