Utah Cookie Wars underscores the need to protect trade secrets

THere’s a war in Utah, but instead of bullets, the fighters use lawyers and freshly baked cookies. The first shots were fired from Utah’s gourmet cookie shop, Crumbl Cookies, in early summer 2022. In May, Crumbl sued two of its competitors in the cookie industry, Dirty Dough Cookies and Crave Cookies, alleging primarily that Dirty Dough and Crave infringe Crumbl’s trade dress and trademarks. These lawsuits drew significant attention from local news outlets, including The Deseret News and The Salt Lake Grandstand as well as on several social media pages, which hashtagged the disputes “#UtahCookieWars.”

Crumbl followed the fight during the hot Utah summer, and although the lawsuits began as ordinary trademark lawsuits, the dirty dough lawsuit has recently become more complex. In early August, Crumbl filed new lawsuits against Dirty Dough for misappropriation of trade secrets. In support of its trade secret claims, Crumbl alleges that a former Crumbl employee was given access to Crumbl’s confidential business information, possibly including “confidential cookie recipes,” and that the former employee disclosed that confidential business information to Dirty Dough for its own use.

The lawsuit against Dirty Dough is still in its early stages, and it will likely be some time before Crumbl’s claims are decided by a court or evaluated by a jury. Nevertheless, Crumbl’s allegations show how important it is to protect trade secrets from misuse by internal personnel, such as departing employees, or external sources, such as competitors.

What is a trade secret?

The first step in protecting trade secrets is to find out what a trade secret is. In most states and federal law, statutes govern the definition of a trade secret. Most of these laws define “trade secret” quite broadly. For example, the Utah Trade Secret Act defines “trade secret” to include “a formula, pattern, composition, program, device, method, technique, or process.” However, to be protected under most trade secret laws, information must meet two requirements. First, because the information is kept secret, it must have commercial value and not be readily identifiable by others who might benefit from its use. In many situations, this simply means that the information must be valuable because it is not publicly available. Second, an employer must make reasonable efforts to keep the information confidential.

Information that companies classify as “confidential” often becomes trade secrets. Some common examples of confidential information that may constitute trade secrets are customer lists, manufacturing processes, proprietary formulas or recipes, financial information, and business analysis.

How can companies protect their trade secrets?

There are some practical steps companies can take to ensure their confidential information is protected under trade secrets law. First, companies should constantly review the steps they are taking to protect the confidentiality of their trade secrets. As mentioned above, unless a company makes reasonable efforts to keep its information confidential, the information is not protected as a trade secret. Determining what efforts are sufficient to maintain trade secret protections is not an exact science, but some measures companies commonly employ to protect the privacy of their confidential information include restricting access to information on a “need-to -Know” basis and the use of user authentication software to limit access to information. In addition, companies should include thorough policies in their employee handbooks and training that cover acceptable uses of confidential information. Organizations should also ensure that copies of confidential information are recovered from departing employees so that the information is not intentionally or accidentally disclosed to third parties.

In addition, restrictive covenants are powerful tools that companies can use to protect their trade secrets and confidential information. Restrictive covenants are contractual provisions that are often included in employment contracts and other contracts as a reminder of business relationships. Many companies use non-disclosure clauses in their contracts to prevent disclosure of their confidential information outside of the intended recipients. Non-competition and non-solicitation clauses can also help to prevent the dissemination of trade secrets and confidential information.

Finally, companies should consider hiring legal professionals to conduct a trade secrets review. During these audits, attorneys meet with key custodians of confidential business information to both identify likely trade secrets and provide advice on how to obtain and maintain trade secret protections for confidential information.

What should companies do if they suspect their trade secrets have been stolen?

If a company suspects that its trade secrets have been stolen, it should contact an attorney as soon as possible to create a response plan. A response plan often includes conducting digital forensic analysis to determine what information was extracted and seeking an injunction through the court system to recover the company’s trade secrets and confidential information and stop its disclosure immediately.

Parsons Behle & Latimer’s litigation team has extensive experience in identifying and protecting trade secrets. If your business has been affected by a trade secret theft or you would like to speak to an attorney about identifying and protecting your business trade secrets, please contact us.

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