Episode Transcript

Episode 1: The Coca-Cola Caper

This episode covers trade secrets and how they are commonly lost.

This podcast is on trade secrets.

Her name is Joya Williams. She was a secretary at the Coca Cola company. A jury of her peers recently found her guilty of conspiring to steal the 100-year old but still super secret formula for Coke and to sell it to Pepsi. How was the would-be theft of the century averted? None other than a lawyer for Pepsi got wind of the deal and did the right thing - he told Coke.

CNN ’s headline covering the story reads "Ex-secretary found guilty of stealing Coke secrets."

The Coca Cola secret formula is every intellectual property attorney's favorite example of a trade secret. The formula for Coke is even rumored to be worth more than a billion dollars. That's billion with a "B." It illustrates how trade secrets can last a century while patents only last 20 years.

The secretary's story is useful to us to know because it shows us not what a trade secret is as much as how a trade secret can be lost.

There are many ways a company can lose its trade secrets.

The first most likely way to lose your trade secrets is at the hands of your own employees. Loss of trade secrets through employees can come through inadvertent, as well as intentional, disclosures.

Employees may talk carelessly about their business and new developments, allowing information to be obtained by competitors. It's like the old World War II poster: "Loose Lips Sink Ships. "

Intentional disclosures are even more disturbing to the company. These arise most often when an employee leaves to begin work with a competitor or to begin a competing business. A large percentage of trade secret litigation arises in this situation. And of course there's criminal conduct too, though less common. And that's what the Coke case was all about.

A second way to lose your trade secrets is through your distributors, customers, vendors and suppliers. Unless a company is totally vertically integrated, possessing the ability to produce internally all raw material, supplies, and ingredients, and can package, produce, and distribute the product or service through its own employees, it may be forced to reveal all or part of its trade secrets to its suppliers, vendors, and distributors. Now if proper precautions, like the use of a non-disclosure agreement, everything may turn out o.k., but if not, the proverbial cat has left the bag.

Third, surprisingly, trade secrets are often lost because of approved company presentations during trade shows, and in brochures, speeches, and in marketing materials, and in publication and trade journals.

Also, it happens when a proposed sales of a company is under discussion, in connection with proposed joint ventures, and in countless other situations.

Fourth, trade secrets can be lost in the course of litigation. For instance, information regarding research and development expenses, pricing practices, and other procedures may be sought in discover in antitrust cases. The plaintiff in a product liability case may attempt to obtain defendant ’s studies, records, and testing information.

Fifth, information that has been filed with the government, pursuant to regulatory requirements, is potentially subject to being obtained by a competitor under the Freedom of Information Act. Further, information revealed in reports required under government contracts may be revealed to the public.

The single most important thing to realize is that once a trade secret is lost, it is lost forever. If there is a disclosure to a third party and it is no longer a secret, not only that party that got the information can use it, but the whole rest of the world can too. There are only two labels that will fit: secret and not secret.

In our next Podcast we'll discuss how we know what our trade secrets are and are not.

The legal information in this podcast is not intended to be a substitute for seeking personalized legal advice from an attorney licensed to practice in your jurisdiction. The Licensing Lawyer and its underwriters do not intend to create an attorney-client relationship with any listener.

You can send questions and comments to randy@thelicensinglawyer.com. Please note that doing so will not create an attorney-client relationship and will be used for the purposes of this podcast only.