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When business partners in the restaurant industry part ways—sometimes as co-owners of a restaurant, sometimes as franchisor and franchisee—the issue frequently arises whether recipes used in the business belong to one of the parties and whether that party can prohibit the other, or anyone else, from using them.
The answer depends on a number of factors and a number of laws—mostly, the law of trade secrets and copyrights. The bottom line is that it's hard, but not impossible, to protect recipes.
Can a recipe be copyrighted?
In most circumstances, recipes are not protectable under copyright law. To be protectable, a recipe must be a trade secret. In fact, the outcome of recipe-related cases often hinges on whether the recipe is a trade secret.
What is a trade secret?
Generally speaking, a trade secret is any confidential information that gives a business a competitive edge. In franchise law, a trade secret is information that, if it were disclosed, would be economically valuable to the business's competition. Businesses must also take reasonable steps to maintain the secrecy of a trade secret.
Trade secret recipes must be unique and confidential.
If a licensor sues a former licensee for continuing to use a recipe that the licensor originally provided, the licensor must show evidence of uniqueness or confidentiality. Otherwise, the court may find that the recipe is not a trade secret, and the former licensee can continue to use the recipe in a new restaurant.
Similarly, if the end product is not unique, the recipe is probably not subject to trade secret protection. For example, there would be far fewer dining options if one restaurant could prohibit another from using a béarnaise sauce or a vinaigrette salad dressing merely because the recipes are the same across restaurants.
Plaintiffs must take steps to protect trade secret recipes.
Courts have held that a recipe constitutes a trade secret only if the plaintiff sufficiently protects the secrecy of the recipe. Consider a case where a plaintiff who shared a recipe with a select number of employees shows that he instructed employees to never disclose the recipe to anyone. The court may hold that the recipe constitutes a trade secret.
On the other hand, if a plaintiff shared a cooking process with several employees who are not subject to confidentiality agreements—and if the cooking process could be derived with relative ease—it is unlikely that the process would be protectable as a trade secret.
Generic recipes may not qualify as trade secrets.
Not all recipes qualify as trade secrets, even if subject to a degree of secrecy. Courts may decline to extend trade secret protection to recipes that are generic, easily duplicated, or discernible. In addition, courts may refuse to grant trade secret protection when a recipe is generic and so obvious that very little effort would be required to discover the recipe. For example, a basic dish served in buffets across the United States is undeniably obvious.
It's difficult to show the misappropriation of a trade secret recipe.
While plaintiffs may successfully sue defendants for the misappropriation of a trade secret recipe, it's difficult to show misappropriation.
In the case Vraiment Hospitality, LLC v. Binkowski, the plaintiff alleged that the defendants had misappropriated a salted caramel brownie recipe. The plaintiff offered evidence that both the plaintiff's and defendant's brownies had the same unique texture, look, and taste. The plaintiff argued that although its recipe had been made public, it withheld from the public a secret ingredient that it alleged the defendant was using. The defendants argued that the defendants did not use the plaintiff's recipe, but rather, their chef developed his own salted caramel brownie recipe.
The court found that because the defendant provided evidence that it was not using the plaintiff's recipe, and because the alleged secret ingredient was unimpressive, the defendant had the better argument. Having the same texture, look, and taste does not mean the brownies are made from the same recipe. A plaintiff must show more than superficial similarities to win a misappropriation claim.
What this means for former franchisees.
Many former restaurant franchisees operate new restaurants without violating non-compete clauses. In these situations, franchisors may find it difficult to prevent the former franchisee from serving similar food items. While recipes that are truly trade secrets may be protected, a franchisor will have to show both the existence of a trade secret and the former franchisee's actual use of the franchisor's recipes.