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AUTHOR
Douglas Panzer
(610)797-9000
dpanzer@flblaw.com
January 29, 2015

Trade Secrets: It’s All About the Bacon…’Bout the Bacon

Posted By Douglas Panzer @ 3:49 pm
Filed under: Litigation,Patents,Risk Management,Trade Secrets

The court set the stage on the technology:

Unitherm developed what it called the “Unitherm Process” for preparing pre-cooked sliced bacon. This process involved the use of a spiral ovens [sic] and super-heated steam. According to Unitherm, before it developed this process, there was no acceptable process for pre-cooking sliced bacon because all attempts had resulted in bacon that did not resemble a pan-fried product.

The relationship between the parties appears to have been a bit of a soap opera from the start. Unitherm, which claimed that its process was a trade secret, met with Hormel in June 2007, to discuss a potential business deal between the two companies regarding the process. No signed NDA was provided in court as evidence, but Hormel did not dispute the claim that one was signed around July 20, 2007. Of course, Unitherm also claimed that Hormel disclosed some Unitherm confidential information to a Unitherm competitor (FMC Technologies) at some point between the June meeting and the July 20 NDA. Hormel claimed to have remedied that situation and the parties entered into a joint development agreement in September 2012, despite the early hiccup.

Despite Unitherm’s position that its process was a confidential trade secret, the company filed a patent application on the process in January 2008, which published in due course in July of 2009. In April 2010, Hormel terminated the joint development agreement with Unitherm and less than 5 months later filed its own patent application on the process. After the Hormel patent application published, Unitherm sued Hormel alleging, among other counts, that Hormel misappropriated Unitherm’s trade secrets (under Minnesota law).

On Hormel’s motion to dismiss, the court dealt Unitherm the harsh reality of Trade Secret 101:

“[I]t is axiomatic that a thing patented cannot also remain a secret.”

In order for information to constitute a trade secret, it must be kept secret. As a quid pro quo for patent protection, one must publish a specification detailing the process to be patented. Unitherm published the information it claimed constituted its trade secret. The court, therefore, held that any activity regarding the supposed trade secret information after the July 2009 date of publication could not constitute misappropriation of a trade secret since no trade secret remained. In the court’s words: “The publication of the patent means that Unitherm no longer had a trade secret in the Process, and its misappropriation claim fails.”

While the full details of this particular story contain significant additional complexities, the lesson is pretty simple – trade secrets must be kept strictly confidential or they will be lost, period.

Plaintiff: Unitherm Food Systems, Inc.
Defendants: Hormel Foods Corporation; Hormel Foods Corporate Services, LLC
Court: U.S. DISTRICT COURT FOR THE DISTRICT OF MINNESOTA
Decision Date: January 27, 2015
Case Number: Civ. No. 14-4034 (D.Minn.)

Unitherm-v-Hormel-Trade-Secret-14-4034 (Opinion on Motion to Dismiss)


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