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Secret Recipes and Formulae – to Patent or not to Patent
It is well known that Coca Cola has never patented its recipe and that it has reaped the rewards of keeping its recipe secret (it claims in a guarded vault in Atlanta Georgia) for over a hundred years - since 1886. That was until in February 2011 when someone claimed to have discovered the ingredients and quantities needed to make Coca Cola in a photograph which had been published in a US newspaper.
But, I asked myself, why has no one adopted the simple expedient of carrying out a chemical analysis of Coca Cola. Although it may not have been possible to find out what was in Coca Cola in 1886, it is surely possible to do that nowadays.
The recipe for Coca Cola is protected as a trade secret. There isn’t a precise definition of what constitutes a trade secret, but it’s generally taken to mean information which derives economic value from the fact that it is not generally known to others who could obtain some economic value from using it and whose owner has taken reasonable efforts to maintain its secrecy.
When deciding whether or not information is a trade secret the courts look at a number of factors, including:
- the extent to which the information is known (both outside and inside the owner's business);
- the measures taken to protect its secrecy;
- its value (both to the owner and competitors);
- the investment made in developing the information; and
- whether the information can easily and legitimately be acquired by other people.
Once information becomes generally known or it ceases to be secret, it ceases to be protected as a trade secret. Something like a chemical formula may be protected as a trade secret or it may be patented. It may be tempting to choose to protect a secret formula as a trade secret rather than by obtaining a patent because:
- (apart from the costs of maintaining the secrecy of the information and the not inconsiderable costs of enforcing rights) the protection of a trade secret is free, whereas obtaining and maintaining a patent may cost many thousands of pounds;
- patent protection lasts for 20 years, whereas protection as a trade secret can last indefinitely – for as long as the information remains secret; and
- when patenting, the formula has to be made public and can be used freely by competitors at the end of the 20 year patent protection period.
The downside is that if the recipe or formula can easily be reconstructed or obtained by proper means, then it may not be protected as a trade secret for very long.
Although a competitor cannot lawfully use a trade secret which has been obtained by theft, industrial espionage, bribery or other unlawful means, and cannot use a trade secret where to do so would be in breach of contract, a competitor (or anyone else) can examine, test, analyse or reverse engineer a product which has been lawfully obtained. That is the case even where the intention is to imitate or reproduce the product.
Trade secret law does not prevent anyone from buying (but not stealing) a product, submitting it to chemical analysis to determine what the ingredients are and then putting a product with the same ingredients on the market. (This does not mean that you are free to infringe anyone’s trade marks or to pass off your cola drink as made by someone else or breach any contract or non-disclosure agreement.)
It is therefore unwise to rely on trade secret law if your product can be reverse engineered by a competitor using proper means.
Protection as a trade secret should be considered where you have a process or formula which is separate from the product which is manufactured using the trade secret. If there isn’t that separation of product and process or formula, obtaining a patent (where you have an invention which can be patented) will usually a much better means of protection.
What if you decide to protect your recipe or formula as a trade secret and then change your mind and decide that it would be better to patent it. Unfortunately it may be too late if you have already put the product on the market. (In the US there is a period of grace of 1 year from the launch of the product, but there is no grace period in the UK.) Conversely if you have applied for a patent and your invention has been published, it will be too late to protect your recipe or formula as a trade secret.
For more information about patents, please see: http://www.ipo.gov.uk/types/patent.htm
Contact Details
If you would like further advice about any of the issues considered above please contact
Christine Reid on 01865 864195 or email her at christine.reid@northwoodreid.com.
Terms of Use
This article is not intended to be, and should not be taken as being, legal advice. The law often changes and it varies from jurisdiction to jurisdiction; the information in this article is generic in nature and specific legal advice should be taken before acting on any of it.
© Northwood Reid 2011. The use, copying and dissemination of this article are subject to our