How to protect your restaurant's proprietary recipes

Offering customers something they cannot find anywhere else is one of the best ways to entice consumers, but some restaurateurs and chefs may not realize that their "one-of-a-kind" recipes may not stay that way unless they have legal protection. That's where phrases like "trade secrets" or "our proprietary formula" come into play, said Michael James Duff of Duffy Law in Philadelphia. His firm often fields calls from restaurant owners asking how to protect their recipes after a head chef has departed, but by then, it's usually too late.

"It is commonly along the lines of 'My chef left my restaurant after gaining experience, stole all of my recipes and is now working for my competitor/starting their own restaurant. What can I do?'

The simple answer, without taking proper precautions, is usually 'Nothing,'" he said.

Restaurant owners, however, can be proactive when it comes to protecting their recipes and products by following the law. Although many restaurants may use the word "proprietary" when describing recipes and products, unless they have legally secured the rights, their recipes are not actually protected, Duffy said.

Specifically, some legal options may include:

· Claiming the use of of Trade Secrets.

· Having employees sign contracts.

· Applying for copyrights.

· Or trademarking a name.

Relying on trade secrets

Under U.S. law, a trade secret has to meet three criterion. 1. The "recipe" cannot be generally known to the public. 2. It must confer some sort of economic benefit by keeping it a secret, and 3. It is the subject of reasonable efforts to maintain its secrecy.

"Trade secrets are a powerful tool," Duffy said. "That is how Coca-Cola has kept its recipe secret for more than 100 years. However, it is risky, and the recipes must be kept a secret or they lose that protection. It is a complicated issue that would need guidance from an attorney if trade secrets were to be relied upon."

Contracts

Having employees sign contracts can be useful for keeping recipes confidential or preventing employees from competing within a certain time and geographic limits, but they only give recourse against the parties to the contract, Duffy said.

"If a competitor did not agree to the contract there generally is no recourse under the contract absent extenuating circumstances," he said.

Copyrighted recipes

Recipes can usually be copyrighted, but that generally only provides protection from copies of the exact written recipe. A competitor substantially changing a written recipe or just using it without writing down an exact copy may not be in violation of the copyright, Duffy said.

Trademarks

Duffy said the best course of action may be establishing trademark rights to the name of any popular dishes, which can protect restaurants from competitors using confusingly similar names for competing products.

"Even if they do steal your recipe or copy your dish, you still have the titled dish that you made famous and customers will recognize the original," he said. "The potential benefits of establishing trademark rights also apply to the name of the restaurant, the menu, even the décor and other items may be eligible for the protection trademark rights provide. Consultation with an attorney is essential to establishing and protecting any trademark rights to which you may be entitled."

Pancheros Mexican Grill has trademarked "Bob the Tool," which it designed to allow customers to "taste every ingredient in every bite", said Rodney Anderson, the president of the chain, who believes trademarking Bob was important since it's part of the Pancheros logo and instrumental in how the chain delivers food.

"The only thing we were trying to protect was the integrity of the burrito," Anderson said. "All of our burritos are customized and mixed with Bob, and he has really evolved into a personality all his own that reflects our brand's humor and simplicity."

Smoothie King is another chain that protects its products. In fact, it has 58 proprietary formulas, said Rocky Gettys, VP of Product Development and Purchasing, who believes that having legal protection makes it more difficult for rivals to compete regarding flavor profile, nutritional content, functionality and consistency.

"Proprietary items also ensure consistency between our many franchisee operators as well as a competitive advantage since an exact match of our flavor, quality, functionality, and consistency is nearly impossible," Gettys said.

Although the process can be expensive, Gettys said it is worth it.

"We've invested in facilities, equipment, man power and expert assistance, but every dollar was worth the investment," he said. "The benefits far outweigh the costs and as we continue on an aggressive growth path you will see more innovations from the Smoothie King brand."

Amit Kleinberger, CEO of Menchie's, agreed, saying that 51 of its custom yogurt and sorbet flavors are exclusive to the brand. He has invested heavily in a Research & Development team and partnered with a large California Dairy company to produce all flavors to the chain's specifications.

"Once the dairy partnership was established, we built a flavor laboratory at our headquarters specifically designed for frozen yogurt innovation and formulation. Today, we have a team of in-house food scientists and a culinary chef on staff who are focused full-time on product development. The recipes that our Research and Development team create are unique," he said.

Building a full scale R & D department was costly, and the venture took a lot of time and effort to complete, said Kleinberger, who also admitted it requires constant investment in innovation and production but that it's necessary in order to be a category leader,

"We must take the needed steps and make a large investment in creating our own abilities to formulate food," he said. "The investment was substantial, yet has given us our return and much more. Our products today are at a level that sets the tone for our industry and we could not have done this without this specific investment."

Although Pancheros doesn't have 50 some proprietary recipes like Smoothie King and Menchie's, it does have proprietary rights to two of its salsas: Greenade and Flavolcano. Protecting those recipes was just as important as protecting "Bob the Tool" but for different reasons, Anderson said. The chain wanted to guarantee customers that its sauces were unique to competitors.

"When looking at the hot sauce market in general, demand has increased steadily over the last 10 years, although tastes have changed," Anderson said. "The consumers' palates have become more refined and they are more apt to try new and different things. This gave us the opportunity to offer some unique, gourmet flavors in this segment that turn up the heat. The objective with our new sauces was to provide some additional, delicious flavors to our food that can only be found at Pancheros."