HALLOWEEN EDITION: Cookie Maker Gets Early Treat When Court Protects Halloween Cookie Recipe As A Trade Secret


http://blogs.orrick.com/trade-secrets-watch/files/2013/10/shutterstock_153779486-200x150.jpgIn September 1995, Philadelphia-area cookie manufacturer Sweetzel, Inc. got an early Halloween treat when the U.S. District Court for the Eastern District of Pennsylvania found that the company’s cookie recipes and customer lists constituted trade secrets, and granted an injunction against Sweetzel’s competitor.  The dispute centered on Sweetzel’s “Spiced Wafers,” which are sold on a limited basis during the Halloween season and have been celebrated as a local food tradition that traces its roots to colonial times.

Sweetzel accused its former plant manager George Kummer of taking Sweetzel cookie recipes and customer lists when he left his employment, and using them to start a competing company called Hawk Hill Cookies, Inc.  Sweetzel claimed that Hawk Hill’s “Aunt Ginny’s Famous Spiced Wafers” were based on Sweetzel’s secret spiced wafer recipes, and that even the black and orange product packaging was a rip-off.  Sweetzel also alleged that its secret customer lists were used to market the stolen snacks.

In determining that the recipes and customer lists were indeed trade secrets, the court found that Sweetzel had taken steps to limit their exposure, noting that “[a]lthough not kept under lock and key, the formulations were documented only once on paper and access was limited to a few people.”  The court also observed that “knowledge of the trial formulations was limited only to those who needed to know the formulations,” and that when Kummer first submitted samples for manufacturing after leaving Sweetzel, he required the manufacturer to sign a confidentiality agreement with respect to the recipes.  The court concluded that the customer lists were not available through non-confidential or independent sources.  Sweetzel established that the recipes were valuable by pointing to the significant costs and efforts it undertook to develop them.

The court enjoined Hawk Hill from using Sweetzel’s trade secrets and also called out Kummer on a Halloween trick: Kummer had previously asked a prospective customer to taste his brand and compare it with Sweetzel’s spiced wafers, but failed to tell the prospective customer that the Sweetzel sample was stale.  The court enjoined him from publicly badmouthing Sweetzel in the future.

The case is Sweetzel, Inc. v. Hawk Hill Cookies, Inc., 39 U.S.P.Q. 2d 1258 (E.D. Pa. 1995).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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