IP Ingredients, Part 15: How and when to use trade secrets to protect your food or drink innovations

Some of the food and drink industry’s most successful products are protected as trade secrets: the recipes for Coca Cola, Heinz ketchup and Krispy Kreme donuts to name just a few.

The manufacturers of these products have reaped enormous benefits by keeping their proprietary assets as trade secrets instead of protecting them using patents. Trade secrets can therefore be a powerful tool in your IP arsenal, and should not be underestimated as an integral part of a successful IP strategy

There are several advantages to protecting a new food or drink product as a trade secret, rather than filing a patent application.  Firstly, trade secret protection potentially lasts indefinitely, unlike patents which expire 20 years from the filing date. Secondly, there are no specific legal requirements in order for information to qualify as a trade secret; unlike patents there is no novelty or inventive step hurdle to overcome.  On the other hand, proving a breach of a trade secret and assessing loss can be more challenging than proving patent infringement.  Furthermore, if trade secret protection is breached, subsequent patent protection cannot be obtained because the proprietary information will have been disclosed.  For these reasons, patents are normally the first consideration for novel and inventive food and drink technologies.

When deciding whether to protect your innovations via a patent or a trade secret, a first consideration is the type of information that you want to protect.  Some types of innovations, like databases, do not lend themselves to patent protection and are best protected via trade secrets.  New food or drink products may be suitable for patent protection, but if the composition of the product cannot be reverse-engineered a greater benefit may be gained by retaining the information as a trade secret, like the Coca Cola recipe.  Manufacturing processes that are carried out behind closed doors could be protected by a patent and/or a trade secret.  In such cases, the form of protection chosen may depend on commercial factors, for example whether a greater advantage over competitors could be obtained by keeping the process a secret, or alternatively whether a patent would be useful for securing funding or licensing income.

In some cases a combination of patents and trade secrets is best way forward. For example, a patent may be used to protect a core part of the product or a manufacturing step, while keeping the more detailed aspects of the technology (e.g. specific recipes, or detailed manufacturing steps) as trade secrets.  This stops competitors using the core part of the technology but also prevents them from having an understanding of the whole product or process.

Although there is no formal process to register trade secrets as there is for patents and registered trade marks, it is not sufficient to merely decide that something is a trade secret.  In order to benefit from protection, a trade secret must be information that:

·         Is secret and not generally known;

·         Has commercial value because it is secret; and

·         Has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

In particular, the last point means that you need to have a process in place for protecting confidential information. The importance of adequate procedures for handling trade secrets has been highlighted in recent years by two high-profile lawsuits in the US.  In the first, a Coca Cola employee was convicted of trade secret theft.  The trial focused not only on the actions of the former employee, but also on the security measures put in place by her employers to protect their proprietary information.  In the second case, this time in the alt protein field, Meati Foods alleged that a patent awarded to the Better Meat Co. (US Patent No. 11,058,137) describes Meati’s trade secrets and confidential information. Meati has proceeded with eight claims against the Better Meat Co., including trade secret misappropriation and breach of contract.  This case is ongoing.

Reasonable steps must therefore be taken to prove that your innovation was kept as a trade secret so that, in the event of a leak, you can enforce your rights in the courts.  These reasonable steps are also important for preventing leaks in the first place, thus reducing the need for enforcement.  These steps may include some or all of the following:

·         Implementing a policy for handling trade secrets

·         Maintaining a register of your trade secrets

·         Restricting access to confidential documents

·         Educating your employees on how to identify and protect trade secrets

·         Putting in place a plan for unauthorized disclosures of trade secrets

·         Reviewing your employment contracts and ensuring that joiners or leavers of the company are aware of their obligations regarding trade secrets.

In summary, trade secrets can be a key part of a successful IP strategy for protecting proprietary assets in the food & drink sector.   For any new invention, we recommend carefully weighing up the risks and benefits of relying on trade secrets versus applying for a patent.  Putting in place suitable procedures, controlling access to key documents and providing training to your staff will give you, and your investors, reassurance that your secrets will remain just that.

For any questions relating to the above, please contact the author, Jennifer Bailey jbailey@hgf.com. With special thanks to Lauris Kemp for editorial input and to Sheena Wang for an update on the Meati v Better Meat Co. proceedings.