Electronic Products & Technology

Recipes for Secrecy or Lessons for Engineers in the story of Coca-Cola

What is the secret of Coca-Cola's great taste? The recipe for this iconic soft drink has been carefully guarded for over a century. Recently, there have been unconfirmed reports that the formula has been revealed publicly.

March 23, 2011  Staff

But given the ubiquity of this drink, how is it that the formula could have remained hidden for so long?

The formula may have stayed secret, at least in part, due to the zealous measures Coca-Cola executives allegedly put into place to protect their secret recipe. There are tales, possibly apocryphal, of labels removed from containers, requiring ingredients to be identified by sight and smell; invoices from ingredient suppliers destroyed to prevent rivals from reverse-engineering the formula; prohibitions against writing down the recipe; written copies stored only in bank vaults; and, perhaps most intriguingly, a policy that only two individuals at any time were privy to the entire recipe (and were therefore forbidden from traveling together by airplane).

Casual observers may — incorrectly — assume that the makers of Coca-Cola also hold a patent for the recipe. Patents can be powerful tools, after all. But patents, by virtue of the time-limited monopoly they confer, require their subject matter to be publicly known. In contrast, secret recipes such as that for Coca-Cola belong to an entirely different class of intellectual property: trade secrets.

Although there are differing definitions, depending on jurisdiction, a trade secret can be characterized as information that is not generally known and that is valuable because it is not generally known. Moreover, owners of trade secrets must make reasonable efforts to protect the information.

There is no registration system for trade secrets. In general, any information that meets the above criteria can form the basis of a trade secret. Some common examples include formulas and recipes, schematics, and compilations of information (such as customer lists). Much of the information encountered in daily practice by an electrical or electronic engineer can also be a trade secret.

The principle factor is the secrecy of the information. Unlike the protection available to patent holders, there is no accompanying right of a trade secret owner to prevent others from fairly discovering or learning the information. Indeed, defendants in a trade secrets case can escape liability by establishing that they discovered the information independently.

However, the law may offer protection to parties whose trade secrets have been unfairly revealed or stolen. In particular, courts can provide various forms of relief if the secret information has been disclosed improperly to a third party, and the third party is aware that the information should not have been disclosed. In particular, owners of trade secrets can seek relief if their secret information was revealed through theft, bribery, misrepresentation, breach of a duty to maintain secrecy (e.g., under a confidentiality agreement), espionage or other such means.

Somewhat ironically, the lack of formal requirements concerning the establishment of a trade secret can make it difficult to make a claim at a later date. Accordingly, companies should be pro-active both in identifying appropriate parts of their current technologies, and in establishing policies and procedures to safeguard them. A documented paper trail can be critical if a trade secrets case is ever launched.

Not surprisingly, the story of Coca-Cola, whether completely accurate or not, illustrates some ways to protect a trade secret. The information to be protected was clearly identified (i.e., the recipe and the specific ingredients). Moreover, concrete steps were taken to limit distribution of the information, whether in written or verbal form.

Knowing who has access to a trade secret, and how, can greatly simplify tracking down the source of a leak. Likewise, identifying the source of a leak can be important not only to confirm that a leak has occurred and to prevent future leaks, but also to serve as valuable evidence in a court case.

The specific policies and procedures that should be implemented will, of course, vary according to industry and resources. But trade secrets are no exception to the mantra: forewarned is forearmed.

Paul Horbal (phorbal@bereskinparr.com) is an associate lawyer with Bereskin & Parr LLP and a registered Canadian patent agent. He can be reached at (416) 957-1664. This article is intended to provide general information and should not be considered legal advice.

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