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Davis Brown Intellectual Property Law Blog 


Should Breweries be Worried about Trade Secret Misappropriation? - July 8, 2015

The craft brewing industry is exploding and there is no sign of it slowing down in the upcoming years. In 2010, the Brewers Association reported 1,813 breweries in the United States. As of 2013, there were over 2,800 breweries. There was a 15.3% increase in craft breweries in just one year from 2012 to 2013!

 

With industry growth comes more jobs and more competition. As we know, the rise in trademark disputes among brewers is a hot topic in the news and on social media lately. Due to the rise in trademark disputes, brewers need to be extra careful in selecting, adopting, and using their trademarks. But the concern shouldn’t just stop at trademarks: brewers should also be concerned about protecting and maintaining their trade secrets.

What is a trade secret?

A trade secret is a formula, practice, process, design, instrument, pattern, commercial method, or compilation of information that is not generally known or reasonably ascertainable by others. It is something that provides a business an economic advantage over competitors or customers and is the subject of reasonable efforts to maintain its secrecy. And while the definition of trade secrets can vary from state to state—unlike patent and copyright law which is governed by federal law—the list above is generally considered the type of information that is subject to trade secret protection.

 

How long do trade secrets last?

Trade secrets can last perpetually, as long as the information claimed as “trade secreted” remains not general public knowledge and meets the other definition of the state statute—i.e., provides an economic advantage.

 

What types of trade secrets could a brewery have?

A brewery can own several types of trade secrets, including brew recipes, financial and technical information, special processes for brewing beer, bottling and/or canning processes, etc. In fact, most of a brewery’s intellectual property portfolio is made up of trademarks and trade secrets. A question you may be asking right now is who owns the trade secret? The brewmaster or the brewery owner? This will be the subject of next week’s blog post.

 

Vats at brewery from MorgueFile user KConnorsWhy should breweries be concerned with trade secrets?

While a brewery’s trademark helps to harness and maintain its reputation, its product—and the way in which the product is created and maintained—is what helps to build up the reputation among its customers. And while it’s probably true that a tap room helps to build a reputation, its most likely true that when it’s all said and done, a brewery’s reputation hangs on the beer it makes.

 

As the industry expands, the brewmasters charged with the task of making its delicious beer will become highly sought after for their experience and knowledge, and thus prime targets for competitors to poach. The craft beer industry is collegial and more like a community or extended family, rather than an industry of competitors looking to steal trade secrets. However, this type of situation has actually occurred in the brewing industry before.

 

So while it may seem silly to think loyal employees would do anything to compromise a business, it is imperative to protect your trade secrets none-the-less.

 

How to protect your trade secrets

Protecting your brewery’s trade secrets doesn’t require you to put out a signup sheet, pass out visitor badges, or install security cameras to watch your employee’s every move! Rather, a brewery is only required to take commercially reasonable steps to keep trade secrets confidential. This can include:

 

  1. limiting knowledge and access to information only to individuals who require knowledge of it for your brewery’s purpose;
  2. have some procedures and documents in place that restrict your employees or contractors from disclosing certain information to others—i.e., brew recipes, processes, etc.—including confidentiality agreements and non-disclosure agreements;
  3. password-protect computers systems or programs with competitively sensitive information; and
  4. mark documents that contain confidential and trade secreted information as such.

 

Although these things may seem extreme and unnecessary, it’s these small steps that can help maintain your brewery’s trade secrets. These steps will also help ensure adequate remedies in the event you find yourself in a situation where potential information may have been stolen or made public. 

 

 


 

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