Case study on trade secrets

The other day as I was sitting at breakfast eating my English Muffin, I came across a fascinating story on trade secrets featuring -- my English Muffin. The NY Times article -- A Man With Muffin Secrets, but No Way to Cash Them In -- outlines the case of an executive accused of taking the secrets of the nooks and crannies of Thomas' English Muffins to a competitor. The executive signed a confidentiality agreement, but not a non-compete agreement. (As noted in yesterday's posting, noncompete agreements do not offer as much protect as many may think.) The case, therefore, is a classic trade secrets action. As trade secrets lawyers will tell you, one of the key to proving a violation is to show that the owner took steps to keep the secret a secret. Looks like that is the case here:

According to Bimbo's filings [Bimbo Bakeries USA, the parent company], 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.
"Most employees possess information only directly relevant to their assigned task," Daniel P. Babin, a Bimbo senior vice president, said in a written court declaration, "and very few employees, such as Botticella, possess all of the knowledge necessary to produce a finished product."

So for an example of how trade secrets work in practice, this is a good read. And you might want to learn more about trade secrets. As Mark Halligan argues in his recent paper Trade Secrets v. Patents: The New Calculus, trade secrets may be the best way to protect valuable information:

Contrast patent-eligible subject matter to trade secrets. There are no subject matter constraints imposed on trade secret protection so long as the information provides a competitive advantage derived from the secrecy of the information.

The trick -- as the English Muffin case illustrates -- is keeping the secrets secret. That is not always an easy thing to do.