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The Secrets Your Whiskey Holds: Trade Secrets in the Alcoholic Beverages Industry

With so many whiskey options currently on the shelf to choose from and new whiskeys continually being released, how do distilleries keep their edge and distinguish themselves from competitors? Sometimes, it’s not so clear because the answer lies in trade secrets. Trade secrets include information that is not generally known or readily ascertainable and is valuable to a company; the company holds and maintains such information as proprietary or confidential.

Trade secret protection is considered an alternative to patent protection and offers some notable benefits over patent protection. For example, trade secret protection does not expire as long as the owner uses reasonable means to maintain the secrecy of the information. Additionally, there is no official registration process for trade secrets, so trade secrets do not have to go through a rigorous and costly application process like a patent.

Trade secrets are not without their fault though. Trade secret protection can be lost if the information is purposefully or inadvertently disclosed, a third party independently discovers it, or a third party reverse-engineers it. Therefore, it is important to choose the right kind of information for trade secret protection and make sure reasonable measures are in place to maintain its secrecy.

As long as the owner derives economic value from the information, many kinds of business information can be held as trade secrets – including customer lists, formulas, scientific or technical information, market information, recipes, designs, processes, and more.

Looking at the whiskey industry, many distilleries hold their recipes and processes as trade secrets. For instance, a mash bill is the recipe of grains (corn, rye, wheat, barley, etc.) that is boiled and cooked in the whiskey-making process to ultimately craft your favorite bourbon, rye, or whiskey. Mash bills are commonly shown as a percentage of each grain like 70% corn, 20% wheat, and 10% malted barley. Some distilleries choose to publish their mash bill right on the bottle, while others simply say the whiskey was made with their mash bill #1, #2, #3, or #4 without disclosing further details. Other stages of the whiskey-making process can also be held as a trade secret, such as the yeast strain used to ferment distiller’s beer to create the alcohol in whiskey, the temperature and duration of cooking the grains, and the temperature and duration of fermentation. These and other variables of the whiskey-making process are great candidates for trade secret protection, because competitors cannot easily reverse-engineer them, and perhaps more importantly, they provide unique characteristics to the distillery’s final whiskey that their customers can enjoy.

Reasonable efforts to maintain secrecy of the trade secret information can vary based on the kind of information and industry. Generally, efforts to maintain secrecy can include restricting access to the information, storing the information in secured locations or on secured computers, and confidentiality and NDA agreements, among others. As an example, distilleries may limit knowledge of the details of their mash bills to need-to-know employees who have signed confidentiality agreements. Furthermore, control panels showing the distilling process parameters, like temperature, can be kept in restricted areas that are not accessible to members of the public who may be touring the distillery facility.

If you have any questions about whether your information can be protected as a trade secret, please reach out to us to discuss.

For more information on the differences between trade secrets and patents, see our previous IP Tip of the Month here.

Category: Intellectual Property, Trade Secrets