A recent article published in D Magazine discusses a decision by the Dallas County District Court involving alleged secret family recipes at Gloria's, a local Dallas Mexican restaurant. According to the lawsuit, Gloria's sued a former employee for allegedly stealing Gloria's recipes and using the recipes at a new competing restaurant. The recipes, which Gloria's claims were passed down from family recipes, never were disseminated in writing to employees. The owner of Gloria's personally taught all the chefs the recipes from memory and kept the recipes in an undisclosed location. Despite these steps to keep the recipes secret, the Dallas County District Court found the recipes did not constitute a "trade secret" under Texas law.
Under Texas law, "a trade secret is any formula, pattern, device or compilation of information which is used in one's business and presents an opportunity to obtain an advantage over competitors who do not know or use it." From this language one would assume Gloria's recipes clearly give the restaurant an advantage over competitors, but Texas courts require more than a showing of competitive advantage. Texas courts examine several factors when determining a trade secret's existence, including the measures a business takes to prevent the trade secret's disclosure. While Gloria's took some protective measures, the Court's ruling indicates Gloria's failed to take enough measures.
Gloria's exemplifies a problem many employers face: failure to document. An important measure for protecting trade secrets is a requirement that employees sign non-disclosure and confidentiality agreements. Gloria's failed to take this important measure and unfortunately, Gloria's is left to compete against its own recipe.
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