Theft of Trade Secrets: The Newest Chapter in the War of the Beer Companies
Beer Battle Over Trade Secret Theft, The Second Chapter
A war between beer companies continues to brew. Recently it was a deceptive advertising lawsuit between Anheuser-Busch (“AB”) and Molson Coors Brewing Company (“Coors”) regarding use of corn syrup in beer. Now, it’s a beer battle over trade secret theft with AB suing Coors.
Beer Battle About Corn Syrup: Coors Sues AB
AB and Coors have been battling each other in court since AB aired a Super Bowl advertisement that took aim at Coors by singling out Coors’s use of corn syrup in connection with its beer. Coors sued AB over the advertising campaign, claiming AB was guilty of illegal use of their trademarks as well as deceptive advertising, eventually winning a court ruling that AB's advertising campaign was misleading. The court also went on to issue a preliminary injunction that prohibited AB from using such language in the future and held that AB may only sell off the rest of its products that have been labeled with its “no corn syrup” packaging that it has manufactured as of June 6, 2019, or until March 2, 2020, whichever comes first.
Beer Battle Over Trade Secret Theft: AB Sues Coors
Coming off the heels of Coors’s most recent legal victory, AB has now filed a counterclaim against Coors with allegations that Coors has gained illegal possession of photographs of AB recipes that specifically detail how AB batches are brewed, including but not limited to, information about the specific blend, volume, and weight of its ingredients. Specifically, AB alleges that Coors illegally obtained the recipes for its Michelob Ultra and Bud Light beers from an ex-AB employee that now works for Coors. This new beer giant battle over trade secret theft opens a new chapter between the beer rivals.
While Coors has already denied AB’s claims, it did comment that AB’s counterclaim seemed hypocritical as AB had just launched an expensive campaign to educate the public on what goes into AB beer in a bid for more transparency in beer ingredients, implying that AB’s counterclaim was simply an attempt to draw attention away from its recent legal losses. In trade secret protection, the secret often must be kept just that, a secret, to endure intellectual property protection.
Protecting a Trade Secret in Beer Recipes
As in any trade secret suit, AB had to lay out for the court how its beer recipe qualifies as a trade secret. As such, AB described its protocol for handling its recipes, noting that it requires confidentiality agreements with manufacturers, user IDs for its employees, electronic monitoring of certain actions, and requirements that access to recipes and manuals were only on a need-to-know basis. In its lawsuit, AB is asking the court to prohibit Coors from accessing, using, or disclosing any of the information it obtained from the ex-employee; speaking to any current or former AB employees; and to return any of AB’s confidential and trade secret information.
Lessons from Beer Rivals Over Trade Secret Theft
If Coors has indeed received copies of AB’s Bud light and Michelob Ultra recipes, this spells big trouble for AB as it has already experienced a 9.2% drop in sales and relies on Bud Light and Michelob Ultra as the two brands are among its top performers.
As the court cases battle on, it would behoove intellectual property counsel to follow the proceedings as they tackle a multitude of intellectual property issues. As more information comes out in court, it will be interesting to see what other types of safeguards are in place and whether or not the companies have any specific non-compete agreements that will play a part in the proceedings.
Key Takeaways Regarding Theft of Trade Secrets
Overall, companies should ensure that they have the proper protocols and safeguards in place to protect valuable intellectual property such as trade secrets. Consulting with experienced intellectual property counsel before embarking on new advertising campaigns and business ventures can be invaluable measure toward safeguarding company business and IP:
IP counsel should be consulted when new advertising campaigns are to be rolled out to analyze whether there are potential intellectual property claims such as infringement or false advertising to be considered;
Companies that heavily rely on trade secrets should consult intellectual property counsel about how to properly protect them and implement protocols to help ensure trade secrets remain secret; and
Companies should use non-competes and other employee agreements/contracts in protecting the company IP and business.
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