Page 6 - Grapevine July-August 2015
P. 6
In The Winery
Know And Protect Your Assets:
Trade Secrets Have Value By David Hoffman
S ome people are surprised to learn that there itor, Brooklyn Bagel Boys (the “Bagel Boys”)
is a winery in every state, even Alaska. near Chicago. Uncle B’s was deathly afraid that
Possibly more surprising is that a bagel bak- O’Rourke would divulge their trade secrets. They
ery in Ellsworth, Iowa became a twenty million dol- filed suit in federal district court in Iowa against the
lar a year business. The company created a process Bagel Boys and O’Rourke alleging several things,
for extending the shelf life of bagels from about including misappropriation of Uncle B’s trade
three days up to well over three months if refrigerat- secrets. In addition, Uncle B’s asked the Court for
ed. The process involved putting the bagels in an air an injunction against O’Rourke working for the
tight plastic bag, removing oxygen from the bag and Bagel Boys.
putting carbon dioxide and nitrogen in its place. The
company filed for a patent for this special preserva- In the case, it was clear that Uncle B’s bagels
tion method. were unique in that they were the only never-frozen
bagels sold in refrigerated cases at supermarkets.
The company founder, William Rose, Jr., had But, there was no evidence that the Bagel Boys ever
spent some of his childhood in Chicago, where he used any of Uncle B’s trade secrets. There was only
grew to love bagels. When he went to University of some evidence that the Bagel Boys did start using
Iowa to study business, he longed for a good bagel. a similar bag as Uncle B’s. O’Rourke said the bag
So, in 1985, not long after he graduated, he started was common in the industry. The Court found that
Uncle B’s Bagels in Ames, Iowa. He built a sizable even if the bag was a “stock” material of packag-
business. The company even built a bagel plant in ing suppliers, there were still some trade secrets
Ellsworth. After developing the special preservation involved. For example, the specifications that the
method, Uncle B’s had a substantial competitive material must meet, and the names of the actual
advantage by selling to grocery stores and guar- suppliers were “secret” and protectable.
anteeing a ninety day shelf life in the refrigeration
section. The Court also found that Uncle B’s trade secrets
were protectable even if used by Bagel Boys on
Uncle B’s was careful to protect its trade secrets. products other than never-frozen refrigerated bagels,
All plant visitors had to sign a nondisclosure agree- e.g., fresh bagels or frozen bagels. Moreover, the
ment (NDA). About the beginning of 1994, when Court found that Uncle B’s unique recipes having
Uncle B’s needed a plant manager, they interviewed special ingredients to prevent molding or staling,
Kevin O’Rourke. During the interview, he signed and its bagel-making processes, were trade secrets.
Uncle B’s NDA so he could see the plant. It was For example, Uncle B’s Bakery’s bagel-making pro-
also Uncle B’s practice to have all employees sign cess employed special cold treatments to the bagels.
an NDA and a noncompete agreement. Uncle B’s
hired him. When both William Rose, Jr. and his Was the special preservation process on which a
father welcomed O’Rourke aboard, they said they patent application had been filed protectable as a
had him sign the more comprehensive employee trade secret? Since unpublished patent applications
NDA and the noncompete. The signed agreements are processed in confidence by the U.S. Patent &
were kept in HR. Trademark Office (PTO), trade secret status may be
retained unless it becomes patented. The PTO had
O’Rourke was a trusted employee. He even went rejected the application because it considered the
to Europe with William Rose, Jr. to help develop process obvious in view of prior patents and pub-
the bagel preservation process. However, within lications. So, the process never was patented. The
about a year, O’Rourke was hired by a compet- Court was persuaded that it was in view of Uncle
Page 4 The Grapevine • July - August 2015 877-892-5332
