The Sixth Circuit Court of Appeals recently issued an important, informative opinion about “combination trade secrets.” The appellate court agreed with the jury in a federal trial court in Kentucky that Jarrow Formulas, Inc., a customer of dietary supplement company Caudill Seed & Warehouse Co., had misappropriated combination trade secrets involving Caudill’s processes for producing broccoli-seed extract to use in supplements.
At our law firm, we represent Kentucky companies of all sizes in a wide range of legal matters, including the protection of intellectual property key to business success. Specifically, we help clients identify and protect their trade secrets from misappropriation by competitors. When necessary, we advocate vigorously in settlement negotiations or in court to assert claims of wrongful use of a client’s trade secret or to defend against accusations of misappropriation.
Trade secrets defined
A trade secret is commercial information that a company keeps secret from the public and competitors because it has (or has the potential for) economic value to the business. Examples may include formulas, processes, prototypes, customer lists and other compilations of data, designs and more.
The trade secret dispute of Caudill Seed & Warehouse Co., Inc., v. Jarrow Formulas, Inc., involved combination trade secrets, a kind of protectable secret that may arise in manufacturing processes. This litigation continued for more than eight years, finally resulting in a $7 million damage award under the Kentucky Uniform Trade Secrets Act (KUTSA).
A combination trade secret is a unique combination of processes or steps – any or all of which may be publicly known – so long as the combined use of the elements produces a unique trade secret in the normal sense. In response to the question of whether Caudill had specifically identified a protectable trade secret, the jury found the “entire process of research and development” of the broccoli-seed extract production constituted a novel trade secret that combined the company’s past study and invention with later creative uses.
In part 2 of this post, we will discuss how to describe a combination trade secret in a lawsuit with sufficient detail and explanation.