There is wiener controversy brewing, but this one does not involve Twitter™ or a Representative from New York. Rather, this dust up concerns a Chicago hot dog dynasty and allegations of misappropriated trade secrets, false advertising, unfair competition, and trademark infringement.
On June 21, 2011, District Court Judge Sharon Coleman denied Vienna Beef LTD’s motion for a temporary restraining order which sought to enjoin competitor hot dog maker Red Hot Chicago , Inc. ("RHC") and its founder, Scott Ladany (collectively, "Defendants"), from engaging in various alleged conduct, including using Vienna Beef recipes or claiming that their recipes are century old, date back to 1893, or that they are Sam Ladany or Ladany family recipes. Vienna Beef claims, among other things, that its hot dog recipes are trade secrets and that RHC is using them without permission.
Scott Ladany is the grandson of company founder Samuel Ladany, who in 1893 began selling sausages using a family recipe. Scott Ladany began working for Vienna Beef in 1971 and obtained a 10% stock interest. The Ladany family sold Vienna in the early 1980s to plaintiff Vienna Beef ("Vienna"). Scott Ladany remained employed by Vienna until 1983, when he sold his 10 percent stake in Vienna. At the time Ladany left Vienna, he signed agreements which prohibited him from using or disclosing Vienna’s trade secrets and competing with Vienna for a specified term.
In 1986, at the end of the non-compete term, Ladany started RHC.
As to its trade secrets claim, Vienna offered the following evidence of misappropriation (1) that Defendants included language in their advertising stating that Defendants have been making hot dogs "using" a century-old "time honored family recipe" which "is the foundation for a true Chicago-style hot dog…"; and (2) sworn statements by vendors attesting that Defendants claim their products are made with Vienna’s recipes.
In her Memorandum Opinion, Judge Coleman held that Vienna had predicated its trade secrets claim on RHC’s advertising materials and that RHC effectively rebutted Vienna’s allegations. The Court cited to an affidavit filed by Ladany unequivocally stating that RHC does not use the Vienna recipe developed by Ladany’s grandfather, but instead developed its own recipe as early as 1986 through work with Heller Seasonings & Ingredients, which recipe has been used by RHC in substantially similar form for 25 years.
The Judge concluded that, in any event, Vienna "has shown no evidence that [its] recipes were used in RHC’s business and therefore cannot show that it is likely to succeed on the merits of [its claim for misappropriation of trade secrets]." Likewise, the Court found that Vienna had not shown irreparable harm as, but for one new advertisement, the complained of advertising had been used by RHC "for years", thus negating the need for emergency relief. Accordingly, the Court found that Vienna Beef’s application did not pass muster and was denied. Based upon the Court’s ruling, it will be interesting to see if there is a round two of the wiener wars in the form a preliminary injunction motion.