Yahoo.com is reporting that KFC, owner of one of the most famous corporate trade secrets out there–the secret handwritten recipe of 11 herbs and spices which exists on a yellowing sheet of paper signed by Colonel Sanders himself–is moving the recipe in order to revamp security. You can find the article here.
It’s always interesting to note the extremes that famous trade secret owners sometimes need to take to ensure that their trade secret remains secret. Similar to the secret recipe for Coca-Cola, only two company executives at a time know the 11 herbs and spices and their precise measurements.
“So important is the 68-year-old concoction that coats the chain’s Original Recipe chicken that only two company executives at any time have access to it. The company refuses to release their name or title, and it uses multiple suppliers who produce and blend the ingredients but know only a part of the entire contents. . . .”
“For more than 20 years, the recipe has been tucked away in a filing cabinet equipped with two combination locks in company headquarters. To reach the cabinet, the keepers of the recipe would first open up a vault and unlock three locks on a door that stood in front of the cabinet.
Vials of the herbs and spices are also stored in the secret filing cabinet.
“The smell is overwhelming when you open it,” said one of two keepers of the recipe in an interview at company headquarters.
The biggest prize, though, is a single sheet of notebook paper, yellowed by age, that lays out the entire formula — including exact amounts for each ingredient — written in pencil and signed by Sanders.”
While the majority of the readers of this blog do not have to worry about such high security, it is always interesting to note when the protection of these major trade secrets arises in the news.
This news may be a little old but it is worth posting as I am going to be following the progress of this case closely. You can find a link to the information here.
Actress Kate Hudson and ceebrity stylist David Babaii have been sued by 220 Laboratories Inc. in Los Angeles Superior Court over allegations that Hudson and Babaii misappropriated trade secret information relating to the ingredients of hair-care products (specifically Volcano Ash).
“220 Laboratories says it was the only supplier of volcanic ash in the USA and that it entered an “oral contract” with the Tinseltown twosome in August 2006 to develop and manufacture hair products. The company says it revealed their “confidential” ingredient list to Hudson and Babaii in November, and that the duo then took the ash samples and shopped around to find a cheaper deal.”
If the allegations are true and 220’s ingredients list can be categorized as trade secrets (i.e., not generally known to the public, and the subject of efforts to maintain the secrecy of the ingredient list) then 220 may have a pretty good case depending on how it is that Hudson and Babaii came into contact with the ingredient list. In other words, if they signed a confidentiality agreement that specifically stated ingredient lists as the subject of the confidential communication, then 220 stands a very good chance of prevailing. However, the use of the “oral contract” language makes me believe that there is no confidentiality agreement, just an agreement to do business together (which may be a separate claim, but not a trade secret misappropriation claim). If so, it will be interesting to see how 220 will claim that information for which they did not even go to the simple step of having a confidentiality agreement signed before disclosing can be classified as a trade secret.
In any event, if 220 is merely relying on an oral contract to do business together as a basis for their trade secret misappropriation lawsuit, then we can learn a few lessons here: (1) get any contract in writing before you place any reliance on the agreement; (2) before disclosing any sensitive information, get a confidentiality agreement. Had these two steps been followed by 220, their case would, most likely, be much stronger. I cannot stress this enough–use Confidentiality Agreements when disclosing sensitive information.
In a follow-up to a previous post which can be found here, “PETA has filed a request for a rehearing with the Mississippi Supreme Court after the justices ruled that the information PETA was seeking about animal experiments at Mississippi State University (MSU) for cat- and dog-food company Iams is exempt from public disclosure.” You can read about it here.
Key graph: “The Supreme Court ruled that details of the experiments’ protocols–such as the number of animals used, what surgeries were performed, and if any of the animals were killed–would reveal confidential business information and were, therefore, exempt from disclosure under the Mississippi Public Records Act. PETA asserts that the court failed to acknowledge that state law requires government entities to separate exempt material and release non-exempt material. And even though Iams presented no specific evidence that the requested material contained proprietary information, the court has denied PETA all the requested documents.”
This is an interesting case which pits trade secrets against the public’s right to know. Right now, the trade secrets are winning–which I think is a good thing. But who knows, maybe PETA is right and the documents should be made public. I can see arguments on both sides. We’ll continue to follow this intriguing matter.
According to FlexNews.com, which provides “business news for the food industry”, Cargill has lost its claim for misappropriation of trade secrets by three former employers named Matt Budine, Brian Sundberg, and Luciana Jonkman. The former employers formed a dairy nutrition and management consultancy firm called Progressive Dairy Solutions. According to Cargill spokesman David Feider, “The litigation with Cargill’s former employees was about whether they could use – acting as competitors – the fruits of Cargill’s research and development efforts for their own purposes after they left Cargill. ”
The Federal Court in Fresno, California found the claims “objectively specious.” Ouch. Cargill is apparently exploring appeal options.
We will update if we learn more.