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Trading Secrets A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

What’s for Lunch? Trade Secrets!

Posted in Trade Secrets

With the end of summer fast approaching, a new trade secret case filing caught our attention regarding one of the staples of the summer barbecue…the hot dog.

Who doesn’t love a good, old fashioned hot dog?  It just so happens that a pair of litigants agree with this sentiment!  In a case filed in Los Angeles this summer, Dog Haus LLC sued W.S.H Enterprise and its business, King Hot Dog, alleging that confidential information, including the recipes for hamburgers and secret sauces, had been misappropriated. Dog Haus alleges that King Hot Dog convinced two former Dog Haus employees to leave the company and begin working for King Hot Dog.  In doing so, the former employees allegedly utilized Dog Haus’ proprietary information in violation of their written employment agreements, resulting in economic injury and harm to Dog Haus’ reputation and goodwill.

Dog Haus is a California based company with three restaurants in the Los Angeles area specializing in hot dogs and hamburgers.  The phrase “Dog Haus” is a registered trademark and trade name.  In November 2010, the company hired defendant Asuncion Cruz (“Cruz”) as a line cook.  Through the course of his employment, Cruz allegedly had access to significant proprietary information, including recipes for the company’s sauces and burgers, as well as vender information.    At the time of his hire, Cruz signed an employment agreement prohibiting the dissemination of proprietary information.   Similarly, Luis Miguel Cruz Martinez (“Martinez”), a prep cook, also allegedly had access to proprietary information, including the sauces used by the company.  Under the terms of their employment agreement, both men were restricted from taking confidential information and sharing it with a third party.  However, according to the complaint, Cruz and Martinez allegedly agreed to implement a scheme to secretly misappropriate Dog Haus’ proprietary information, as well as its business opportunities, and to sell this information to King Hot Dog.  Allegedly, King Hot Dog then began making unauthorized use of Dog Haus’ trade dress and trade secrets, including the restaurant décor, the floor plan, the menu, and the serving style.  Based on defendants’ actions, Dog Haus alleged claims of breach of contract, intentional interference with Dog Haus’ business relationships and prospective economic advantage, as well as unfair competition, misappropriation of trade secrets, and trade dress infringement. 

From a legal standpoint, it remains to be seen whether and to what extent Dog Haus’s recipes, sauces, and décor are a protectable interest or sufficiently distinctive and famous in its look to entitle Dog Haus to injunctive relief against any misappropriation, trade dress infringement or dilution claims arising from a competitor’s alleged use of the same or similar products. This is not the first wiener war that we have seen. The case serves as a reminder that those in the restaurant industry must closely guard their cooking secrets and employ effective non-disclosure and confidentiality agreements. The case is scheduled for a status conference on October 7, 2013.  No other hearings have been scheduled as of yet, but we will continue to keep you updated with any material developments in this juicy case.