There are many legal tools that are potentially useful for food businesses. This article focuses on three issues of particular relevance: (1) intellectual property; (2) contracts; and (3) business planning to minimize upcoming regulatory burdens associated with the Food Safety Modernization Act.
Every business should have a strategy for identifying, protecting, and leveraging its intellectual property (IP). Food businesses are no different; trade secrets, copyrights, and trademarks are valuable assets. But, if these assets are not carefully protected, they will be lost. The first step in protecting IP is to identify assets, such as patents or patentable inventions, copyrighted works, trade secrets or other confidential business information, and trademarks. Once a company has an inventory of its intellectual property, it should ensure that these assets are adequately protected with government registration (if applicable), internal policies, and contractual agreements.
A patent is a property right conferred by the U.S. Patent and Trademark Office (USPTO) allowing the owner to exclude other people from making, using, selling, or importing an invention. Although some aspects of food products and processes may be novel enough to obtain patent protection, most food recipes are not patentable. In general, recipes may be protected only as trade secrets.
A trade secret is a property right in some piece of information or know-how—such as a proprietary recipe, formula, customer list, or pricing information—that gives the owner a competitive advantage precisely because it is not generally known. A trade secret is protected under the law only if it is kept secret. Thus, if a company with trade secrets does not take steps to maintain confidentiality, it loses the ability to protect those secrets legally, and competitors will be free to use the information.
Companies with valuable trade secrets should have internal policies in place to maintain confidentiality, and nondisclosure agreements with employees and outsiders to whom trade secret information is disclosed.
A copyright prevents others from copying, displaying, distributing, or creating a derivative work from an “original work of authorship.” The focus of copyright protection is on originality in expression, not the substance of what is being expressed. Food businesses may own copyrights in written materials (such as their website content) or graphic designs, and they exist as soon as the words or design are created in a tangible form.
Copyrighted works may be registered with the Library of Congress Copyright Office, but registration is not required to obtain copyrights. Because the “author” (creator) of a work generally owns the copyrights in that work, it is important for a food business that contracts for copywriting or design services to ensure that the company will own the copyrights in the deliverables. When a company hires a designer as an independent contractor to create a website or marketing materials, the company and the designer should enter into a work-for-hire agreement and assignment of copyright to the company.
A trademark is a symbol, logo, words, or anything that distinguishes goods or services as coming from a particular source (i.e., the manufacturer or service provider). The owner of a trademark has rights to prevent other people from using the same or a similar trademark in a way that likely would confuse consumers about the source of the goods or services. Trademarks are especially important to food businesses because they distinguish products in an often crowded marketplace.
Trademark rights are derived from the use of a mark in connection with the sale of goods or services in commerce; no registration is required to have trademark rights. A trademark owner who does not continue to use its mark, or freely allows other people to use the mark or similar marks, will be deemed to have abandoned its rights. Therefore, whenever a company allows someone else to use its trademark, it should have a written licensing agreement controlling the use of the mark. Without such control, the trademark owner risks abandoning its rights.