By Monica Mizzi firstname.lastname@example.org
KFC. Coca Cola. Krispy Kreme. Hershey’s. These kingpins of the food industry all boast a common money spinner— tightly guarded “trade secret” recipes. From the Colonel’s 11 secret herbs and spices to Coke’s distinct taste, only a select handful are privy to what exactly lies behind the thick veil of secrecy companies go to great lengths to maintain.
Why all the hush hush?
Companies trumpet that if their trade secrets were exposed, their life bread— their branding and subsequently, their profit – would be irrevocably destroyed. However, perhaps it’s all just a lucrative marketing scheme, as pervasive conspiracy theories claim. We’re all so caught up on reading stories about the big wigs, that it’s easy to overlook more modest establishments who also staunchly protect their signature recipes. It’s especially insightful for small business owners interested in protecting their brand name and trademarked property to learn from cases of ex-employees opening up eerily similar restaurants with carbon copy dishes. Here are three stories of small-scale recipe espionage that had us popcorn-in-hand captivated.
Dumpling Daughter v. Dumpling Girl
It seems the key to a perfectly crafted dumpling isn’t just in the stuffing, it’s also in the name. In a case that rumbled the Boston food scene last year, Nadia Spellman, owner of popular casual Chinese restaurant, Dumpling Daughter, brought charges against two of her ex-employees, former assistant Jie Lin and chef Ying Yao Xiong. Spellman claimed the two ex-employees pilfered her original recipes to establish their own dumpling venture, Dumpling Girl.
According to Spellman, as Dumpling Daughter serves dishes based on recipes which have been passed down through her family for generations, the fundamental concept and uniqueness of Dumpling Daughter is inextricably tied to preserving the integrity, and thus, secrecy of her family’s recipes. Upon discovering that Lin and Xiong had opened up Dumpling Girl, a restaurant she claims has a “virtually identical” name, branding, trade operations, recipes and menu, she filed a federal case of trademark infringement against Dumpling Daughter.
The case set out that Xiong and Lin deceivingly used the in-depth knowledge the pair acquired of Dumpling Daughter’s operations in order to create Dumpling Girl. At the crux of the claim were the 41 out of 52 Dumpling Girl menu items that arguably shared an alarming similarity to Dumpling Daughter’s. Indeed, it is striking to compare the two establishments’ menus. Take the restaurants’ ramen offerings; perhaps un-coincidentally, Dumpling Girl’s menu description of its “Pork Ramen” is exactly the same as Dumpling Daughter’s “Three Day Pork Ramen”, save for one less exclamation mark.
|Dumpling Daughter||Dumpling Girl|
|Three Day Pork Ramen||Pork Ramen|
|NOT the instant kind!!!!!! Classic pork broth, fresh ramen noodles, pork belly, soft egg, bamboo, red pickled ginger, kombu seaweed, scallions.||NOT the instant kind!!!!! Classic pork broth, fresh ramen noodles, pork belly, soft egg, bamboo, red pickled ginger, kombu seaweed, scallions.|
Fortunately, the case of double dumplings has now been settled. Dumpling Girl has since undergone a rebranding with a new name, Star Dumplings, and an altered menu which excludes most of the “copycat” menu descriptions in the firing line during the lawsuit. Had Spellman required her employees to sign a Non-Disclosure Agreement (NDA) which clearly stated that her secret recipes must remain as such, perhaps the whole dispute could have been prevented, or, at least, more swiftly handled.
Torchy’s Tacos v. Texas Taco Co.
Torchy’s Tacos is an Austin institution that has no trouble attracting customers from all over the US. After all, even Obama swung by in March this year to grab a bite of their distinctly flavored tacos. However back in 2007, Torchy’s found itself in a bit of hot sauce when it noticed some of their customers tagging images from Texas Taco Co. on Instagram. Taken aback by what it alleges is a shameless rip off of its propriety recipes, menu designs and presentation style, Torchy’s is seeking damages from former cook Mario DeJesus, who they allege stole and supplied Texas Taco Co. their…wait for it…“Taco Bible”.
While piecing together a tasty taco may seem rather intuitive, Torchy’s affirms that their Taco Bible is particularly sacred because it outlines detailed information on exactly how to combine ingredients, cook, and assemble each dish. Therefore, in the case it was to fall into the wrong hands, carbon copies of the recipes would be able to be produced— precisely what Torchy’s asserts is evident with Texas Taco Co.’s menu. The similarity between the restaurants has at least been enough to cause a number of Torchy’s customers to confuse Texas Taco Co. as its affiliate.
A comparison shows stark similarities between Torchy’s and Texas Taco’s menu offerings
One cause of significant confusion has been the restaurants’ similar menu descriptions. As is evident in the comparison of the two menus above, the descriptions are essentially the same. The only point of differentiation between the selected menu descriptions is punctuation and minimally altered wording. This example is reflective of the overarching strong similarities noted between the two menus.
It’s yet to be decided by the courts whether or not Texas Taco Co. committed the cardinal sin of stealing the Taco Bible and unlawfully appropriating Torchy’s recipes. Interestingly, unlike the previously mentioned dumpling dispute, there may be an NDA between the parties, although proof of this or video evidence of DeJesus stealing the Taco Bible have yet to be presented.
Wild Ginger v. Jujube Tree
For a federal lawsuit about two warring vegan restaurants, the details are as juicy as a thick slab of steak. Popular Manhattan vegan haunt, Wild Ginger, was left steaming after a rival vegan joint, Jujube Tree, popped up with markedly similar dishes and design elements. Wild Ginger’s case points the finger at two former employees, kitchen supervisor Zhong Gui Ren and chef Wu Qu Song for conspiring with a number of co-workers to nab everything from the menu and signage fonts, to its décor and plating.
But the act of apparent betrayal that has Wild Ginger fuming most is the offending duo’s replication of the two dozen or so “secret sauces” created by its co-owner known as Tim. As seems standard with any tale of a restaurant’s secret recipes, Tim employed unique measures to ensure the lid wouldn’t be lifted on how to create his signature dishes. Tim was so determined in his resolution to ensure only he knew the secrets to his sauces that he went to his restaurant every single day to personally prepare them.
According to the suit, the “copy cat” dishes at Jujube Tree reflect the workings of a conniving ex-employee who had witnessed Tim put together Wild Ginger’s dishes. The restaurant is seeking damages for trademark and copyright infringement and unfair competition. What’s on these near mirror-image menus? Over at Wild Ginger you can order yourself a “Yam & Taro Tempura” which is described as “Deep-fried root vegetables w/ tempura sauce”, whereas at Jujube Tree you can order their “Yam & Taro Tempura” which has “deep-fried root vegetables w/ tempura sauce”. Sound familiar? Indeed, the only difference between most of the menu descriptions is mere punctuation.
Comparing side by side images of each restaurant’s dishes highlights the difficulty in distinguishing between the two vegan venues. Have a look for yourself:
Side by side photographs of Wild Ginger and Jujube Tree’s plating
Wild Ginger is still seeking damages for trade dress and copy infringement, unfair competition and -you guessed it- misappropriation of trade secrets amongst other claims. Notably, despite Wild Ginger’s adamant protests to protect its secrets, the restaurant quite strongly relied on the good faith of their staff to maintain the confidentiality of its operations and proprietary recipes.
What then, can small businesses take from these case studies? Essentially, as important as it is to trust your employees, if you are serious about protecting your small business or brand’s name, trademarks or confidential operations, it is in your best interests to safeguard your company against the worst case scenario. The unlawful use of trademarked property can have a devastating cost to a business.
On top of the considerable negative impact it can have on a business’ image, customer numbers and revenue, trying to receive just reparations for the damage already done to a brand is a process littered with financial and emotional challenges. After sending a cease and desist letter to halt the offending party from committing any further legal breaches, you need to consider how you will best achieve the justice you believe your case is deserving of.
For the large majority of cases, settling out of court is often the most appealing course of action for both parties, given the high fees and drawn out process of settling in court. On the other hand, if you and your lawyer are confident that you have a formidable case backed by strong evidence, settling in court may result in a more advantageous outcome for your business. However, as a court battle is usually a considerably more complex avenue to undertake, proceeding this way is likely to come at a higher financial cost and stress to you and your business.
In any case, needing to prove that an individual or company breached your legal rights is not a good position for your business to find itself in. It is therefore vital that you implement mechanisms to counteract against this possibility. One of the most formidable resources at your disposal is a Non-Disclosure Agreement. Mitch Baker, managing partner at Fisher & Phillips law firm in Portland, recommends to be selective in what you include in an NDA, “Don’t say every bit of information you possess is confidential,” Baker urges, “it will be impossible to show that you’ve treated all that information as confidential”.
An NDA, used in appropriate circumstances, can be a powerful preventative measure which clarifies to employees what constitutes as confidential information and property protected by the law. Furthermore, it communicates that there will be legal consequences should this information or property be compromised. Whilst an NDA is not a magical solution to keep rogue employees in line, nor for winning a potential battle, it can play a vital role in both. If the cases above can teach us anything, it’s that it pays to think seriously about employing safeguards to help ensure your trade secrets remain, well, secret.
Monica Mizzi is the editor and legal writer for LegalTemplates.net, a website which equips people with the right tools to be their own legal advocates. She writes in a distinctly approachable way with the purpose of helping readers to demystify the legal resources at their disposal so that they can confidently assert their rights and safeguard their property and finances. In her spare time she enjoys wasting away the hours by attending art or cultural events, seeking out new places to sink her teeth into, and tap, tap, tapping away on her laptop.