A federal court in Minnesota rejected a company’s misappropriation of trade secret claim, finding that the publication of a patent related to the “secret” process rendered it no longer secret.
The case of Unitherm Food System Inc. v. Hormel Goods Corp. involved a process developed by Unitherm for pre-cooking sliced bacon using super-heated steam, as shown here.
The Secret Process
Unitherm claimed that its process was a “closely held, confidential trade secret.” In 2007, Unitherm met with Hormel Foods Corporation to discuss a joint venture to develop and commercialize the process. Hormel sent Unitherm a mutual confidential non-disclosure agreement (aka an NDA). Later, the parties signed a joint development agreement.
At the same time that Unitherm was talking to Hormel, Hormel was also talking with one of Unitherm’s competitors. According to Unitherm, Hormel disclosed some of its confidential information to that competitor. At the end of 2007, the competitor issued a press release claiming to have developed a process substantially similar to the one used by Unitherm.
The Patent Application
In early 2008, Unitherm filed a patent application for its process. The patent was published in July 2009.
In 2010, Hormel “suddenly and without prior written notice” terminated the joint development agreement, saying that it had not produced a viable result.
Five months later, Hormel applied for its own patent for pre-cooking bacon. Hormel now sells a product called “Bacon 1,” that Unitherm claims uses its process.
Unitherm sued Hormel in 2014, raising various claims including misappropriation of trade secrets. Hormel moved to dismiss.
The court granted Hormel’s motion, finding that Unitherm’s patent application contained its alleged trade secrets and thus that they were no longer secret. The court noted that “it is axiomatic that a thing patented cannot also remain a secret.”
Additionally, even if the process had been a trade secret before the patent was published in 2009, the court held that Unitherm failed to state a claim before the three-year Minnesota statute of limitations had run.
The case illustrates the risks associated with the choices companies have to make when protecting their intellectual property.
On the one hand, intellectual property protected as a trade secret can, in theory, be kept confidential “forever.” The recipe for Coca-Cola is the best-known example of IP that has been protected as a trade secret for more than 100 years.
On the other hand, once a trade “secret” is revealed, the cat is out of the bag and the IP is no longer proprietary.
A patent provides its owner with certain rights, but only for limited term – currently 20 years from the filing date.