THE PROOF IS IN THE PUDDING

WHY CONFIDENTIALITY AGREEMENTS ARE NECESSARY

Hypothetically speaking, you learn that your former chef has borrowed your well-recognized restaurant concept and opened his own eatery within proximity to yours. Suddenly, you find that your unique concept of a “pudding-only” menu is now being duplicated in northern California. A bit far-fetched, yes, but stranger things have happened.

As recent news of the travails of a well-known computer firm losing one of its lead executives to its competitor has pronounced, the likelihood of transference of company secrets, financials, and full-scale corporate proprietary information is quite high, especially in this age of quick transmission of computer files, other digitally mastered data and miscellaneous information.  The company supervisor must heed to a vigilant-style of management to ensure safety and compliance records are up to date, yet your most valuable asset (e.g., your employees) may be in need of a more tenable oath of loyalty when it comes to the possible occurrence of proprietary information being shared with your competitors.

For instance, the “Bloomin’ Onion” – a signature trademark recipe owned by Outback Steakhouse has legally identified this as part of their company Trademark, along with other slogans. This and, of course, any other trademarked items, cannot be used in your establishment (at least not by using the same name/identifier). Competitors try to get around this by creating their own nomenclature for the same “type” of recipe, and this has been an acceptable mode for “copycat” routines.

Excerpt from SEC: The Company regards its Outback Steakhouse service mark, its Carrabba’s Italian Grill service mark and its “Bloomin’ Onion” trademark as having significant value and as being important factors in the marketing of its restaurants. The Company has also obtained a trademark for several other of its Outback menu items, and the “No Rules. Just Right.” and “Aussie Mood. Awesome Food.” advertising slogans. The Company is aware of names and marks similar to the service mark of the Company used by other persons in certain geographic areas in which the Company has restaurants. However, the Company believes such uses will not adversely affect the Company. The Company’s policy is to pursue registration of its marks whenever possible and to oppose vigorously any infringement of its marks.

There is such a compendium of experiences and blogs on the ownership of recipes and rightful compensation for their uses, I thought that some general discussion of these issues would be appropriate.

Handling legal issues within restaurants will differ to some extent on how corporate businesses are overseeing their employees. In best-practices operations, for instance, it is expected that you would have your chef sign an Employment Contract which includes a complete job description and a confidentiality agreement. Within this contract there should also be specific statements directed at the handling of intellectual property: such as, recipes which are created by the chef while on the job belong to the restaurant while he/she is employed.

For the sake of brevity in this blog, I will offer a list of must-haves in any chef employment contract.

Statement of Duties – Job Description.  This is fairly self-explanatory.

Intellectual Property – Any work done by the chef, or other employee, recipes, procedures, etc. are the property of the restaurant and remain the property of the restaurant upon termination of employment.

Conflict of Interest Statement – Again, self-explanatory, however, might not be practical for part-time employees.

Confidentiality Agreement – Forbids the employee from divulging any of your proprietary information to anyone else. This would include recipes, financial information, vendor agreements, training practices, etc.

Chefs should be required to maintain an up-to-date written journal of their recipes/menus/procedures as part of their best practices methods for your restaurant, including any changes to the job descriptions and, more specifically, any contributory enhancements the chef has introduced to your facility. Should any occasion develop wherein a potential lawsuit develops as a result of employment issues, the written documentation becomes evidence supportive of your business. “This is because it is rarely the truth that wins lawsuits; it is usually the evidence that prevails”.

Make sure the employee signs the Employment Contract (including all the above-noted sections) and initials each page in front of a witness (supervisor, manager) to ensure he/she has read the stipulations and acknowledges such conditions.

Upon termination of employment, the employee must surrender any and all documents and property (including recipes belonging to the restaurant).

This matter is such a widely contested and discussed issue on the Internet, and blogs are overwhelmingly abundant with pros and cons. What have you experienced in your restaurant (as a chef, or as a restaurant owner). I would be interested in hearing your comments.

Read more from an article I came across by Dina Berta (2008) on this issue: http://www.nrn.com/article/protecting-ideas-recipes-proves-problematic-restaurateurs#ixzz11Fk5CNK3