Little Caesars has trade secrets. At least that is what they would like the courts to believe. When a former South Dakota franchisee, Sioux Falls Pizza Company, Inc., ended their 20 year relationship with Little Caesars and started a competing pizzeria in the same location, Little Caesars knew that their propriety trade secrets had been stolen and used by the new competitor.
Specifically, Little Caesars claimed that Sioux Falls Pizza Company, Inc. stole the company’s “Hot-N-Ready” pizza system.
Little Caesars also claimed that the competitor had stolen trade secrets on how long to let the dough rise, how to apply sauce and toppings, and how to cook and store the pizza. Little Caesars asked the Court to shut SFPC down until the case was decided at trial.
Courts have identified a number of factors relevant to determining whether business information satisfies the secrecy requirement. These factors include:
(1) The extent to which the information is known outside the business.
(2) The extent to which the information is known by employees and others involved in the business.
(3) The extent of the measures undertaken by an employer to protect the secrecy of the information.
(4) The value of the information to the employer
(5) The amount of effort or money expended by the employer in developing the information.
(6) The ease or difficulty with which the information could be properly acquired or duplicated by others.
The federal court in South Dakota refused to find that Little Caesars’ had any trade secrets because “Little Caesars did not make a clear showing of, and the court could not discern, specifically which information within Little Caesars’ system is not generally known.” References to “preparation, timing, and amounts of food per hour to minimize waste is not specific enough to constitute a trade secret.” Little Caesars could not identify any specific software or computer program, nor any complex manufacturing process, nor any secret that was unique to it. Ultimately, “Little Caesars’ description of what makes up its system is too generic or general to amount to a trade secret under the evidence presented at this stage of the litigation.”
The court also found that Little Caesars did not do enough to protect whatever secrets it might have. Remember, the first rule of trade secrets is to keep the information SECRET. Hence the name.
Even though Little Caesars did require its franchisees to sign confidentiality agreements protecting proprietary business information, they did not require anything from the employees. The employees, who made the dough, applied the toppings, cooked the product, and sold it to customers, had “the most detailed knowledge of Little Caesars’ system” but “had no duty or promise to keep that information confidential because they were not required to sign confidentiality agreements.” According to the court.
How Can I Help?
If you need help to identify your trade secrets and how to protect them so you don’t end up with Pizza on your face, or know someone that can use my help, please contact me for a free 30 minute consultation by sending me an email or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.
– Ex astris, scientia –
I am and avid amateur astronomer and intellectual property attorney. As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +