If the Coca-Cola Formula is Not a Secret Anymore, What Is?

Andrew Pearce

May 21, 2013

A Georgia man claims he found the original Coca-Cola formula in a box of old papers from an estate sale. Now, it can be yours for the Buy-It-Now price of $15,000,000, although the starting bid on Cliff Kluge’s eBay listing is only $5,000,000. Coke denies the claim, saying the only real formula remains heavily guarded in a vault in Atlanta.

I often say there are two undisputed trade secrets in America: the Coca-Cola formula and KFC’s secret herbs and spices recipe. I must also acknowledge, however, that internet sites claim to reveal KFC’s secret recipe, so maybe we are down to one.

For everyone else seeking to protect information as confidential or a trade secret, the ability to effectively establish such information as confidential can be critical to the operation of their business. Texas courts have defined a trade secret as any formula, pattern, device or compilation of information which is used in one’s business and presents an opportunity to obtain an advantage over competitors who do not know or use it. To determine whether a party has a trade secret, Texas juries have been asked to consider the following:

  1. the extent to which the information is known outside of Plaintiff’s business;
  2. the extent to which it is known by employees and others involved in Plaintiff’s business;
  3. the extent of the measures taken by Plaintiff to guard the secrecy of the information;
  4. the value of the information to Plaintiff and its competitors;
  5. the amount of effort or money expended by Plaintiff in developing the information; and
  6. the ease or difficulty with which the information could be properly acquired or duplicated by others.

Similarly, “confidential information” has been instructed to mean any process, information or compilation of information, formula, pattern or device which is used in one’s business and which gives an opportunity to obtain an advantage over competitors who do not know of or use it. Matters of public knowledge or of general knowledge in an industry cannot be appropriated as confidential. The personal efficiency, inventiveness, skills and experience which an employee develops through his work belong to him and not his former employer.

Simply stated, courts require that to be entitled to common-law protection, a trade secret must be secret. Although simple on its face, this issue becomes extremely complicated in the context of seeking to prevent the alleged misuse of a party’s trade secrets, such as through injunctive relief, as well as determining the enforceability of non-competition agreements premised on the existence of confidential information.