3 minute read | February.11.2015
From Minnesota comes a delicious reminder that the protection of trade secrets requires consideration of a company’s entire intellectual property strategy. Without such a comprehensive strategy, in the most prosaic of terms, a company’s bacon is cooked.
Unitherm Food Systems, Inc. designs and manufactures equipment used to process and cook meat. It claims to have invented a revolutionary process to prepare pre-cooked sliced bacon that closely resembles the bacon you’d get from traditional pan frying. You can watch this mouth-watering process in action here. Unitherm treated this process as a trade secret.
In June 2007, Unitherm met with meat heavyweight Hormel Foods Corp., a company it had worked with in the past, to discuss this new bacon process. Over the next few months, Hormel signed both non-disclosure and joint development agreements with Unitherm.
Unbeknownst to Unitherm, Hormel was simultaneously in talks with FMC Technologies, a Unitherm competitor. In December 2007, FMC issued a press release announcing its own bacon cooking process. Unitherm suspected Hormel disclosed information about its bacon cooking process to FMC.
However, rather than sue, Unitherm rushed to file a patent application in early 2008 claiming its bacon-cooking process and its invention, which patent issued in mid-2009.
Fast forward to September 2014: Unitherm sued Hormel in federal court in Minnesota, claiming breach of contract, misappropriation of trade secrets, unjust enrichment, and accounting. Hormel successfully moved to dismiss the trade secret claim.
The Court rejected Unitherm’s trade secret claim for two reasons. First, Unitherm failed to identify any trade secrets that were at issue after July 2009, when the USPTO published the patent covering the bacon cooking process. With the patent public, the secret bacon cooking process was no longer secret. Second, even if the process was a trade secret before July 2009, Unitherm failed to state a claim before Minnesota’s three-year statute of limitations had run.
While Unitherm’s breach of contract and unjust enrichment claims survived and the case continues, this ruling is a reminder that having an intellectual property strategy is paramount. Without such a strategy, one can unwittingly or unknowingly forego the protections provided by trade secret laws. Of course, any strategy will have its benefits and its downsides. To name a few: Pursuing patents will provide a monopoly for a period of time; however, it is just that, for a period of time. Deciding to protect something as a trade secret provides an unlimited period of protection, but provides no monopoly or protection from independent development. Of course, as we have written previously, it is possible under certain circumstances to get both patent and trade secret protection. We also published a chart on factors to consider when deciding whether to seek protection of IP through patent, trade secret, or both.
Whatever strategy is arrived at, it is far better to develop it before the need arises to actually enforce those rights.