After 20 years of operating a Little Caesars franchise, Sioux Falls Pizza Company, Inc. (“SFPC”) established its own pizza company at the same location. The franchise agreement had terminated, but the franchise alleged the former franchisee was using its proprietary trade secrets in its new business. Little Caesars claimed SFPC  was stealing the company’s “Hot-N-Ready” pizza system and the specifications for how to let the dough rise, how to apply sauce and toppings, and how to cook and store the pizza.

Trade secrets must be protected as such to retain protected status under the law. Formulaic confidentiality agreements are not enough. A business must implement a trade secret protection plan that is reasonably likely to maintain the secrecy of the proprietary information. Companies should also ensure they are creating a culture of confidentiality in the workplace.

The franchise’s trade secret misappropriation clams were unsuccessful, largely in part to a finding by the court that Little Caesars did not do enough to protect whatever secrets it might have.  Little Caesars did require its franchisees (the owners) to sign confidentiality agreements protecting proprietary business information, but required nothing from the franchisee’s employees.  These employees, who made the dough, applied the toppings, cooked the product, and sold it to customers, had “the most detailed knowledge of Little Caesars’ system” but “had no duty or promise to keep that information confidential because they were not required to sign confidentiality agreements.”

Without such precautions, a company’s trade secrets will be available for anyone. Take the time to review your own trade secret protection program to ensure your confidential information is adequately protected and you have the best chance of success if you must use the court to enforce your rights.