Pickle Packer Trade Secret Lawsuit Illustrates Importance of Trade Secret Protections

A recent case filed by Grillo's Pickles provides an excellent example of the importance of manufacturers taking concrete steps to protect their valuable trade secrets.  Grillo's has sued Patriot Pickle, alleging that the company copied Grillo's secret process and recipe after having access to this information during the time that Patriot Pickle worked as a co-packer for Grillo's.  

Grillo's alleges that the two companies signed mutual nondisclosure agreements, which are an important first step in protecting one's trade secrets when working with business partners outside your company.  Such agreements can provide a vital deterrent and backstop to prevent such trade secret theft or, as in this case, allow for a company to seek damages to compensate for the loss.

However, NDAs are not the only tool to protect trade secrets when dealing with outside companies. Plans should be put in place whenever third parties are given access to potential trade secret information to control and limit access whenever possible.  For example, trade secret recipes should be kept in password-protected folders and files and access should only be granted to those that truly need the information, and companies should keep strict lists of any person that accesses or is provided access to that information. Companies should also consider whether it is possible to mix ingredients in-house and provide those mixes to third parties for manufacturing purposes rather than permitting third parties to mix the ingredients in the recipes, which allows for easier third-party access to the recipes.  Further, companies should review and update their employment agreements regularly to ensure that employees understand that they are not permitted to leave the company and share such trade secrets with competitors.  

The more protections that companies put in place around their valuable trade secrets, the lower the chance that those trade secrets could be stolen, lost, or otherwise publicized outside the company, which can lead to significant lost revenue, profits, and business opportunities!