In an earlier posting entitled “Minding Your Own Business Or Keeping Your Trade Secrets Secret” I discussed various measures that an entity can take to maintain the confidentiality and the value of its trade secrets. The Illinois Trade Secrets Act defines a “Trade Secret” as information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that (1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. The latter is important; in order to claim trade secret protection for your proprietary information, you have to take reasonable steps to maintain its secrecy or confidentiality.
In the case of the Thomas’ English muffin, with its array of nooks and crannies, the company, Bimbo Bakeries USA, that owns the formula for it, according to the New York Times on August 6th, took numerous steps to maintain that formula. These included provide access to that formula to only seven people, placing recipes in confidential documents called “code books,” compartmentalizing information so that only particular individuals know particular pieces of information, and sharing that information among others only on a need-to-know basis. For example, while certain individuals knew the basic recipe and others the special equipment used to bake the muffins and others how the muffins were baked, only seven individuals knew the details of the whole process.
A problem arose when one of those individuals, a Vice President,
left Bimbo on two weeks notice to take a job with Hostess, a major competitor of Bimbo in the bakery business. He signed a confidentiality agreement but no non-compete agreement so he was free to leave, and before he left he copied numerous confidential company files onto a flash
drive. Last February, a federal judge enjoined the VP from going to Hostess and Hostess said he no longer had a job with it.
The lessons here; (1) you should limit the number of individuals who know the entire process
involved in making your key products, (2) make key employees, at least, sign not only
agreements barring them from leaving your employ and competing with you afterwards [These must be for reasonable period of time and cover a reasonable geographic area.], but also barring them from disclosing your trade secrets and using those trade secrets in their next job, (3) require
that they return or destroy any company information that they have in their possession upon their leaving your company and make them certify that they have done so, (4) put the employee on notice of these requirements when they start their job, during the period of their employment and upon their leaving in an “exit interview” and (5) include language in those agreements that if they violate them, you sue them and they lose, that they have to pay everyone’s legal fees involved.
The moral here, the best offense is a good defense and trust, but verify
