How to Keep Your Recipes and Processes Protected in Your Brewery or Distillery?
As a brewer or distiller, you have probably spent hours perfecting your beer or liquor recipe and processes for making your beers and liquors. As such, you may want to consider steps to protect these recipes and processes. Generally, there are two avenues for protecting your recipes and processes: (1) trade secret and confidentiality agreements or (2) non-competition agreements.
Trade secret agreements allow a former employee to work for a competitor but the employee cannot disclose the trade secret or confidential information. This could last forever —so long as the information remains a trade secret or otherwise confidential. A trade secret is, generally, considered information that has actual or potential economic value; that is not generally known or not readily ascertainable by other people; and that is the subject of reasonable efforts by its owner to maintain its secrecy. See S.C. Code Ann. § 39-8-20(5) (2014). Information, under South Carolina’s Trade Secret Act includes, but is not limited to, “a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code[.]” Id. As you can see from the definition above, a brewery or distillery recipe, most likely, can be considered a trade secret. However, brewers and distillers must be cautious and take the appropriate steps to keep these trade secrets protected.
In contrast to trade secret agreements, a non-competition agreement prohibits an employee from working with a competitor for a reasonable period of time after leaving employment. States have different approaches to enforcing non-competition agreements. In South Carolina, generally, to be enforceable a non-compete must be no greater than is reasonable to protect the legitimate interests of the employer. Stringer v. Herron, 309 S.C. 529 (Ct. App. 1992). Further, a non-competition agreement must: be reasonable as to area and length of time; not unduly burden the employee’s ability to earn a livelihood; be supported by valuable consideration; and be reasonable from the standpoint of sound public policy. Id.
With the vast expansion of craft breweries and distilleries, competition is increasing. Brewers and distillers should consider trade secret agreements and/or non-competition agreements with their employees to protect their recipes and processes.
