The recipe for Coca-Cola is (arguably) one of the world's most famous trade secrets. Although it is now apparently housed in the Vault of the Secret Formula at the World of Coca-Cola in Atlanta, its history is the subject of many outlandish urban myths (see, for example, here). The recipe itself is, of course, not on public display and its content remains a closely guarded secret.
This raises the question: would Coca-Cola be one of the most valuable brands in the world (worth an estimated $81.6 billion in 2014) if the recipe had been released to the general public?
In England, trade secrets are not the subject of legislation, but are instead protected by a combination of the common law relating to confidential information and contract. Whenever confidential information is exchanged between two entities (for example, between an employer and an employee or between two businesses), the information disclosed should be protected by appropriate contractual provisions governing how the confidential information can be treated during the contract and after its expiry/termination.
This point was emphasised in a recent High Court decision (Eurasian Natural Resources Corporation Ltd v Judge [2014] EWHC 3556 (QB)). In that case, after ENRC terminated the appointment of one of its directors (Mr Judge), ENRC demanded that Mr Judge deliver up all documents incorporating ENRC's confidential information, along with undertakings from Mr Judge that he would not disclose or use ENRC's confidential information in the future.
Mr Judge's employment contract, comprising a Letter of Appointment, contained the following provision dealing with confidential information:
"All information acquired during your appointment is confidential to the Company and should not be disclosed to third parties or used for any reason other than in the interests of the Company, either during your appointment or following termination (by whatever means), without prior clearance from the Chairman."
Following termination of his appointment, Mr Judge accepted that he was under a continuing duty of confidence in respect of ENRC's confidential information, but did not accept that he was under any duty (whether under the Letter of Appointment or according to the common law) to return to ENRC any documents incorporating their confidential information.
At a recent hearing of the matter, the Court found no reason to imply that Mr Judge was under a duty to deliver up any confidential information. The Court pointed out it would be an extremely onerous task for a company director to have to comply with such an obligation and, given the continuing duty to keep ENRC's information confidential, delivery up would serve an extremely limited purpose. The Court ruled that, if ENRC wanted delivery up of its confidential information when Mr Judge ceased to be a director, it should have included a clause to that effect in the Letter of Appointment.
Two simple lessons arise from this case:
1. Make sure that you have appropriate contractual provisions in place (e.g. in an employment contract or via a non-disclosure agreement) to protect your confidential information whenever you let third parties have access to it.
2. Don't underestimate the value of confidential information to your brand.
