Running a business that thrives on innovation?

Whether it’s crafting the perfect recipe, developing chemical compounds, or creating proprietary processes—You’d want to make sure to protect your secret sauce that gives you your competitive edge.

Without the right safeguards, your hard work could end up in the hands of competitors or customers looking to undercut you. But don’t worry—there are effective ways to secure what’s yours and keep your advantage intact!

In the spotlight today, is a food producing company and its recipe, but really this applies to any company that makes food, chemicals, or has other valuable information that it wants to keep a secret.

So if you’re more interested in protecting your..let’s say..manufacturing process, just swap “recipe” with “manufacturing process,” and you’ll understand the message, and you’ll surely forgive me for not pointing out all nuances (i.e. certain processes can be patentend, offering patent protection which a recipe cannot get)

Guard your secret sauce!

So imagine you spend months perfecting your own recipe only to find your contract manufacturer, a competitor, or a customer using your hard work to undercut you. Right through the heart! 

Fortunately, there are ways to protect your recipes without too much work. 

Keep it a secret, of course! Ha!

So that’s the easy way. But reality, of course, is different. You can’t always keep everything a secret. Your employees may know. Your contract manufacturer may need to know. Even your customer may want to know. 

So what then?

Trade Secret Laws offers protection

Well, if your recipe meets the criteria for it to be a trade secret according to  applicable law you get some protection- Meaning, you get to take legal action against the party that used your trade secret without permission.

Now trade secret protection can last indefinitely, as long as the information continues to meet the requirements of a trade secret. We’ll get to these requirements in a few, don’t worry.

But before we dive into this a bit more, let’s discuss the basics of intellectual property protection, shall we?

There are 4 types of intellectual property and each different type protects something else.

1. Patents.
2. Trademarks.
3. Copyright. And
4. Trade secrets. 

Types of IP	What does it protect?	Examples	How to become protected?
Patents	Inventions or innovative solutions	Wheel, printing press, smartphone, etc.	Register your patent with relevant authorities
Trademarks	Brand identity	Logos, slogans, brand names, and sometimes distinctive colors or sounds	Register your trademark. This allows you to use ® or otherwise be stuck with (™)
Copyright	Original creative works	Books, music, art, software, and film.	Copyright is automatic upon creation, but if you can register it, it offers additional protection.
Trade secrets	Information owned and controlled by your business that gives you a competitive edge	Formulas, manufacturing processes, recipes, etc.	Keep on reading!

You may have noticed that recipes are not listed under patents, trademarks or copyrights.

That’s because recipes don’t fall into these three buckets.

• Sidestep: While processes may also qualify as a trade secret, you may want to file for a patent instead, provided it meets the necessary criteria for patentability. But that’s for another day.

So back to the recipe.

You would want to make sure that your recipe qualifies as a trade secret.

So what exactly is a trade secret I hear you ask? 

Great question! 

Well, it’s information that meets the following criteria:

1. is not generally known or easily accessible to others
2. with commercial value because you get a competitive edge by keeping it secret, and 
3. you have taken reasonable efforts to keep it a secret

But to meet these criteria, you’ve got to put in the legwork.

More specifically:

• Limit access to sensitive information to those who need to know

• Use NDAs with employees, contractors, customers, and business partners.

• Implement security measures, such as encryption, locked storage, and password protection

• Conduct regular audits of the above

• Train employees on the importance of confidentiality 

• Have your factory visitors sign appropriate NDAs before entering. Yes this is important!

If you do all of this, and the information has commercial value, you’ve got a fair chance that your information will be considered a trade secret, giving you the benefit of protection by virtue of the law. 

By virtue of the law….

Sounds smart right? 

But speaking for myself here, I don’t solely want to rely on any protection the law may offer…

Now, why is that? 

A non-compete clause offers protection

What if your customer decides they like your product so much that they want to make it themselves and become your competitor? The customer can decide to do this even without having access to the (complete) recipe.

A way to tackle this is to include a non-compete clause in the agreement with your customer. This can prevent the customer from operating in the same business space or targeting the same customers.

A no-reverse engineering clause strengthens your position

Of course, the above two restrictions need to be reasonable in scope— I can imagine that a restriction unlimited in time, may not be valid according to relevant EU and national law.

But overall these additions, together with the actions you should take to benefit from trade secret protection under the law, should give you a lot of protection right there! 

That’s all then? 

Well, not quite. 

Another way to protect yourself is to specifically state that you own the IP

It’s also smart to include in an agreement with your customer that you own the intellectual property related to your recipe- specifically if you don’t have a non-compete or no-reverse engineering clause.

After all, the customer may still claim that it’s not you who owns the recipe, but them!

For example, it may happen that a customer argues that by providing funding or input (let’s say the customer gives you a specification) they have some claim to ownership of the recipe, even if they didn’t explicitly request ownership. 

It may not happen very often, but it doesn’t hurt to be clear, right?

So that’s essentially it. 

The 5 ways to protect your recipe

Then finally- what if you actually want to allow your customer to use the recipe? 

That’s possible!

If you’re feeling generous and want to share IP rights for a custom recipe, make sure to include specific terms on how it can (and cannot) be used. 

For example, you may want to limit its use to a specific country that you are not active in yourself, plus you may want your customer to pay you a royalty for using the recipe. 

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In conclusion

If you are a food company, safeguarding your recipes is crucial for maintaining a competitive advantage in the food industry. 

This post has outlined essential strategies for protecting your “secret sauce” as a trade secret, and I’ve emphasized the importance of legal frameworks such as Non-Disclosure Agreements (NDAs), non-compete, no reverse engineering, and ownership clauses, and reasonable measures to maintain confidentiality.

By implementing these strategies businesses can effectively prevent unauthorized use and ensure that their recipe remains protected. 

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Want us to check your documents for the hidden and often not so hidden IP traps? Need help drafting IP documents? Why don’t you reach out?

Need free templates including a comprehensive Non-Disclosure Agreement with explanations? Look here.

Want to receive my secret spicy stew recipe? No way!

All the best,

Rob