Protecting Your Restaurant’s Intellectual Property Is More Important Than You Think

In 2013, the inventive New York pastry chef Dominique Ansell created the Cronut, a cream-filled donut-croissant hybrid that quickly became a viral sensation across the globe.  After a food blogger wrote about the Cronut, people from all over the world started lining up outside Ansell’s bakery to buy one of the just several hundred he produced each day.  And while some of the Cronut craze has died down, as of 2016, from 60 to 100 people were still showing up every day at Ansell’s bakery to buy one.  

Ansell isn’t just famous for producing the Cronut, however—he’s also known for registering a federal trademark for the name of the unique baked good, preventing other bakeries from selling similar pastries under the same catchy name.  And while Ansell’s trademarking move caused some criticism, it turned out to be smart business on his part—he has parlayed his invention into a global food business, with two bakeries in New York, one in London, one in Japan, and a full-service restaurant in Los Angeles that launched just this year.

Restaurant sales have been recently growing at about two percent each year right along with the economy, with overall sales expected to hit $799 billion in 2017.  As the industry grows, and as customers pay more attention to local and artisan foods and celebrity chefs, there’s a growing interest in protecting recipes, signature dishes, and even restaurant brands as intellectual property.  After all, it’s a restaurant’s unique approach to food and customer experience that distinguishes it in a crowded marketplace—and that uniqueness can be a key factor in bringing in more customers and helping the restaurant grow.

Unfortunately, some restaurant owners do not take steps to protect their intellectual property and that often means heartache when copycat restaurants open down the street or key employees take recipes or food-preparation secrets with them.  The first step to knowing what should be protected in the restaurant business is to understand the four basic ways that intellectual property is protected:

Trademark

A restaurant’s name, its logo, the names of menu items and in some cases, food designs—all these things can be protected by trademark law.  The U.S. Patent and Trademark Office (the “USPTO”) defines a trademark as a “word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.”

Copyright

Menu designs, marketing materials, and a restaurant’s website fall under copyright law, which protects “original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture.”  Copyright protection lasts a long time—70 years after the death of the author for individuals and as long as 120 years after creation for copyrights owned by businesses.

Trade Secret

 Recipes, customer and vendor lists, and specific ways of doing things in the kitchen can be protected as trade secrets, which the USPTO defines as any information used in a business that gives the owner an economic advantage over competitors who do not know or use the information.  Trade-secret information can “include a formula, pattern, compilation, program, device, method, technique or process.” 

Patent

The USPTO explains that a patent is a “limited duration property right relating to an invention,” granted by the USPTO “in exchange for public disclosure of the invention.  Patentable materials include machines, manufactured articles, industrial processes, and chemical compositions.”  While often difficult and expensive to get, patents have been issued to some larger food companies for their products—for example, Kraft’s patent for the method of making a microwavable sponge cake.  

To adequately protect intellectual property, it’s important as restaurant owners, chefs, and managers to know what intellectual property you have and to understand its value in the same way you understand the value of tangible property such as furniture, equipment, and buildings.  In fact, in my view, a restaurant’s intellectual property—a compelling brand or popular original dishes—can be that restaurant’s most valuable asset.  You don’t have to protect everything, and doing so can certainly be costly and time-intensive.  But taking stock of what makes your restaurant valuable and what sets it apart from competitors can help you prioritize the intangible property that is worth protecting.

Just as important as protecting your own intellectual property is ensuring that you don’t infringe on the intellectual property of others and put your business (or yourself) in legal or financial peril.  The food and restaurant company Olympia Provisions (formerly Olympic Provisions) found this out the hard way.  With one small restaurant and an attached charcuterie facility, the company chose its name in 2009 from the “Olympic Cereal Building” where it was first housed.

After six years of steady growth and a national reputation, in 2014 the business received a cease-and-desist letter related to its name from the International Olympic Committee—and the company was forced into an expensive name change on everything that it had branded, from “packaging to restaurants to delivery trucks,” according to cofounder Elias Cairo.  While this particular dispute may have been hard to foresee when Olympia Provisions was just starting out, doing some research to see whether your desired name is already being used by someone else can help prevent costly disputes down the road.

Intellectual property disputes often result from disagreements between people—for example, between co-owners or partners in a restaurant business, or former employees.  Thinking through how intellectual property might be treated if a business partnership dissolves is important—a good partnership agreement will outline in advance how intellectual property might be fairly handled. It’s also critical to have agreements with anyone creating intangible property for the restaurant that ensure the restaurant owns the resulting intellectual property.  Confidentiality agreements for key employees who handle intellectual property such as recipes are also important, and those key employees should sign these agreements as a condition of employment.  Noncompete agreements can also be helpful, but they are not always binding, so check before you ask employees or partners to sign them.

While protection of your intellectual property may seem like just another overwhelming task in a busy operation, much of this protection can be obtained relatively easily with help from a lawyer who understands the issues inherent in the restaurant industry.  The first step is identifying what you should protect—once you’ve determined what’s unique and desired about your restaurant or business, creating a system to protect it can be fairly straightforward.  Protecting and maximizing the value of a business is on the top of every business owner’s list, and in the case of intellectual property, taking small steps now can pay off in a big way later.

 

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