When my friends and colleagues find out that I am a huge fan of the television show Seinfeld, many ask which is my favorite episode. While I don’t know if I can pinpoint just one (there are too many hilarious installments to choose from ), I can say that one of my favorites is the Soup Nazi episode.
For those of you not familiar with the show, the episode revolves around an irascible chef who runs a small, take-out restaurant in Manhattan that is renowned for its delicious soup. Nicknamed the "Soup Nazi", the chef is obsessed with forcing his customers to line up and follow his strict, no-nonsense ordering policy. A customer’s failure to strictly obey provokes the Soup Nazi to shout "no soup for you!" and refuse service. Nonetheless, the soup is so tasty that customers are lined up around the block.
Elaine Benes, a regular character on the show, unwisely flouts the Soup Nazi’s rules and he bans her from buying his soup for one year. Through another regular character, Cosmo Kramer, the Soup Nazi gives away an armoire, not knowing that Elaine is the intended recipient. Elaine later tries to thank the Soup Nazi, but he rebukes her, angrily declaring that if he knew the armoire was for her, he never would have given it away. A distraught Elaine returns home only to find a collection of the Soup Nazi’s recipes stashed away in the armoire. Elaine returns to the restaurant to flaunt her discovery and threaten to ruin his business by exposing the recipes. Feeling resigned to his fate, the Soup Nazi closes his restaurant for good.
As funny as the episode is, in real life Elaine could have subjected herself to a lot of grief in exchange for her plot for revenge. This is because those recipes would likely be deemed trade secrets, and Elaine could be accused of misappropriating or even stealing them.
Generally speaking, a trade secret is information, including a formula, process or methodology, that gives a business an economic edge over other competing businesses that do not have that information. An obvious example is the formula for Coca-Cola, which is famously locked in a vault. A common example many of my clients deal with is a list of a clients or customers for a particular business that they wish to protect. The key is how unique that information is compared to the way other businesses attempt to accomplish similar results. The more unique that beneficial information is, the more likely it is to give a business an edge over the competition, and the more likely it will be deemed a trade secret.
As far as recipes go, they may or may not be trade secrets depending on the circumstances. As much as my daughter likes the ham and cheese sandwiches I make her, there is not much that is unique about the "recipe" I use, thus I would be very hard pressed to claim that my "recipe" is a trade secret. On the other hand, McDonalds uses a "secret sauce" on their Big Mac sandwich. People have been enjoying Big Macs for years, in many cases because of the sauce. McDonalds even calls it the "special sauce" in its advertising (remember the song from the 1980s describing each component of the sandwich?). Because the sauce is unique to McDonalds, there are many customers who go there specifically for it. That recipe sounds like a trade secret to me.
A strong argument can be made that the Soup Nazi’s recipes were indeed trade secrets. In the service industry, the concept of "the customer is always right" is widely followed. The Soup Nazi’s soup was so good that he was willing to forgo that concept because he could – he still sold loads of soup despite his unpleasantness. Moreover, hoards of customers were willing to subject themselves to the Soup Nazi’s ire just so that they could eat delicious soup that they were not able to purchase elsewhere. In other words, the quality of the soup recipes was so good and unique to the Soup Nazi that it provided him with a distinct edge in the Manhattan soup market. Sounds like a trade secret to me.
If this had occurred in Pennsylvania, Elaine might have been busy calling an attorney after exposing the recipes. Instead of packing it in, the Soup Nazi could have sued Elaine for misappropriation of trade secrets, which would have subjected Elaine to numerous civil liabilities, including monetary damages and attorney fees. Elaine also would have subjected herself to criminal penalties. Not only does Pennsylvania’s Crimes Code punish the theft of property that has been lost, mislaid or delivered by mistake (18 Pa. C.S.A. §3924), but Elaine also could have faced felony charges for the theft of trade secrets (18 Pa. C.S.A. § 3930(b)(2)). Because Elaine specifically knew that the Soup Nazi derived a significant economic advantage because of the recipes remaining confidential, the fact that she did not intentionally steal the recipes would not have been much of a defense.
The lesson to learn is that if you are in a situation where you think you may be in a position to expose a trade secret, or if you think a trade secret of yours has been exposed or in danger of being exposed, you should consult with an attorney to discuss your options.
Matthew Grosh is an attorney at Russell, Krafft & Gruber, LLP in Lancaster, Pennsylvania. He received his law degree from Villanova University and practices in a variety of areas.