Traditional methods of intellectual property protection have their limitations, particularly for protecting ideas. Patents only protect new, useful and nonobvious ideas, the details are public, and protection last only for a fixed term of 17 or 20 years years, depending upon the filing date; and trademark and copyright law do not protect ideas at all. It’s no wonder that some companies resort to the time-tested method of secrecy for protecting valuable ideas. But secrecy may not be the best option for protecting ideas whose value derives from communicating them to the public. On the other hand, commercial recipes, formulae, and algorithms not only derive their value from confidentiality but their value may actually be enhanced by a cloak of secrecy. The “Coca-Cola” recipe is one of the best known and oldest trade secrets whose value is probably worth billions.
In a recent article in the Daily Finance website, Bruce Watson listed the 10 most valuable trade secrets today. It’s a familiar list:
1. Thomas English Muffins;
2. Coca-Cola’s secret recipe;
3. Google’s search algorithm;
4. KFC’s Fried Chicken recipe;
5. The WD-40 formulation;
6. The mechanics of how the New York Times Best Seller List is created;
7. Auto-Tune algorithms;
8. The recipe for Chartreuse;
9. The recipe for Mrs. Fields’ Chocolate Chip Cookies; and
10. Starwood Hotels’ formula for luxury service.
It’s interesting that Thomas’ English Muffins holds the number one position. A recent New York Times article described litigation between Chris Botticella — former vice president in charge of bakery at Bimbo Bakeries — and Bimbo Bakeries, the owner of the Thomas’ English muffins brand. Apparently, Bimbo accused Botticella of stealing company secrets when he left the company in January 2010 to accept a job with rival baker, Hostess Brands. Legal documents showcased the company’s methods of maintaining the secrecy of the Thomas English muffins recipe. Recipe manuals were referred to as “code books” and valuable information was shared on a need-to-know basis to protect it from disclosure. To quote the New York Times,
The secret of the nooks and crannies was split into several pieces to make it more secure, and to protect the approximately $500 million in yearly muffin sales. They included the basic recipe, the moisture level of the muffin mixture, the equipment used and the way the product was baked. While many Bimbo employees may have known one or more pieces of the puzzle, only seven knew every step.
Disclosing a secret to employees as component parts of a larger secret may seem like overkill — like multiple launch keys to a nuclear warhead — but to make a product, lots of people must understand the process, or at least the part for which they are responsible. Thus, it makes sense and certainly achieved the desired trade secret protection. Ask Mr. Botticella; he was ultimately barred from starting his new job by the U.S. Court of Appeals for the Third Circuit.
— Adam G. Garson, Esq.