Under Many Locks and Keys: The Law of Protecting Trade Secrets

Chrissie Scelsi is the principal of Scelsi Entertainment and New Media Law with offices in Orlando and Port Charlotte, Florida, where she focuses her practice on entertainment, intellectual property, internet, technology, and business law.

On September 9, 2008, a company took extraordinary measures to protect a valuable corporate asset while moving it to an undisclosed location for safekeeping while security measures at the corporate headquarters was being upgraded. The asset was locked in a lockbox, which was handcuffed to a security specialist, and transported to the undisclosed location in an armored car. What was this valuable corporate asset—a nuclear weapon, a gold bar, a priceless historical relic? It was none of these things. It was the recipe for the 11 herbs and spices that make up Kentucky Fried Chicken’s Original Recipe Chicken. Why did KFC owner Yum! Brands such extraordinary measures to protect this recipe? The company went to these great lengths to protect the recipe because it is a type of intellectual property known as a trade secret.

Under the Uniform Trade Secrets Act, which has been adopted in most states, the definition of a trade secret is “information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Uniform Trade Secrets Act.)

Unlike other types of intellectual property, which are typically protected through a registration process that calls for the disclosure of a specimen or illustration of that type of intellectual property, trade secrets are protected by keeping them secret. As such, companies whose business depends on the protection of such secret recipes will go to great lengths to protect these assets from disclosure.

For example, even given all of the security measures that were used to protect the KFC Original Recipe, Yum! Brands also limits the access to the recipe to only two employees. After the security upgrades to its headquarters, the recipe is now kept in a vault surrounded by concrete blocks that is monitored by motion detectors and cameras and is connected to a backup generator to keep the security system operational in the event of a power outage. Similar measures are reportedly used by Coca-Cola for the recipe for Coke, and by Hostess to protect the recipe for Twinkies.

The reason for these security measures is simple: if the recipe is disclosed, then it could potentially lose its economic value, causing harm to the company. In addition to physical security measures, companies also use contractual measures to protect trade secrets from being disclosed by employees.

There can often be overlap between the other areas of intellectual property law and trade secrets. One such instance where this occurs is when registering a computer program for copyright protection. This process involves depositing portions of the program’s source code with the Copyright Office, source code which can often contain trade secrets. While registrants are instructed to redact such trade secrets from the deposited source code, attorneys working with clients on registering such items for copyright must still take great care to ensure that they do not disclose trade secrets in making the deposit, or in the case of video games opt to register the work as an audiovisual work rather than as a computer program to avoid this potential risk.

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