Trade secrets and injunctions

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Gannons used an injunction to protect the trade secrets of a large food manufacturer.

A national food supplier chain misused our client’s confidential information. Our client, a large food manufacturer, had disclosed their recipe formulation only for health and safety regulatory compliance purposes. They wanted to stop the food supplier exploiting its confidential information.

Resolving the dispute

Our client instructed us, and moved into action to resolve the dispute. Firstly, we prepared the documents needed for an injunction to restrict the activities of the supplier. We were successful in gaining the injunction order, and after using it to secure our client’s short term position, we proceeded with litigation. This secured our client’s costs, which were reasonable and proportionate to the dispute.

Case background

Our client, manufactures a special sauce blended from oils, herbs and spices, which enhances the flavour of many dishes. The food supplier was our client’s most important customer. To comply with health and safety regulations, our client provided the supplier with the ingredients and production techniques of their special sauce.

The special sauce was the supplier’s key ingredient in many products. Many years ago, to reduce costs, they tried to create their own version, however, they failed. Their sauce lacked the unique flavour of our client’s sauce.

After our client disclosed the ingredients and production techniques of the sauce, the supplier tried once again to create the special sauce and succeeded, clearly infringing upon our client’s trade secrets.

Our client’s case

Our client discovered the food supplier’s intentions from an equipment supplier. The food supplier had purchased the supplier’s equipment for manufacturing and testing. The equipment supplier suggested that our client might also use their equipment to create new products.

Our client met with the food supplier’s directors and they discussed how the food supplier’s product development used our client’s confidential product information. The food supplier admitted they intended to use the confidential information to create a new product, but not to replicate our client’s products.

We applied for an interim injunction, which would stop the food supplier importing, exporting, marketing or offering for sale any sauce manufactured using our client’s confidential information.

Issue before the court

To determine if there was a breach of confidence from the unauthorised use of confidential information, the court considered the following issues: First the court considered whether the information our client provided to the food supplier for health and safety regulatory purposes had the necessary quality of confidence. Then the court considered if the food supplier would have known that the information relayed to them was confidential. Finally, the court considered whether the food supplier used that information to the detriment of our client.

The court’s decision

The court found in our client’s favour on all three issues. It granted an injunction to our client against the food supplier. This injunction prevented the food supplier from manufacturing a product using the confidential information. The court also found that the food supplier used our client’s confidential information, despite the food supplier’s claims to the contrary. Lastly, the court found that the information saved the food supplier’s time. Although the techniques and ingredients used were common in the industry, the judge found that the food supplier would have taken a longer amount of time to develop the technique without our client’s information.

Conclusion

Trade secrets are valuable. When imparting confidential information, ensure that the other party knows you own the information. You should also make the other party aware that the information is confidential and that it is marked as confidential. Finally, the other party should know that the information should not be used without prior consent. This means that you should mark the information as confidential and have the other party sign a confidentiality agreement.

Note also that a patent requires you to reveal a formulation’s details. Therefore, the formulation is no longer a secret. Whether or not a patent protects your formulation requires consideration.

John Deane is a partner in the intellectual property team and works with a range of businesses to solve the issues relating to trade secrets. Please do contact John if you think he can help you.

  • The value Gannons provided for us was enormous.