07 August 2005

Intellectual Property Abuse

Al Lewis at the Denver Post has a classic example of a
corporation, in this case Chipolte, abusing a confidentiality agreement.

They key points: Douglas Bolle worked a Chipotle for two years from February 1999-2001, then moved to Las Vegas and opened Zabas Mexican Grill which expanded to three stores with sixty employees. Chipotle didn't open a restaurant there until August 2003. In 2004, they sued him for violating a confidentiality agreement he signed while he was a manager there.

"The 'look and feel' of a Zabas Mexican Grill is confusingly similar to the 'look and feel' of a Chipotle Mexican Grill," the big burrito-maker claims in a lawsuit filed in Jefferson County.

Chipotle accuses Bolle of copying everything from restaurant design to menus, pricing and service. When it comes to Bolle, clearly the company still has a big chipotle on its shoulder.

Bolle denies all of his former employer's claims. He was a store manager but says he never learned the recipes because a lot of the food was prepared in a commissary and came in bags.

"I don't know how you could figure out a recipe if something comes in a bag," he said. "I knew what it smelled like, and that's about it."

Like most of these suits, Chipotle's claims are dubious. Colorado law is very restrictive of what sort of non-competition agreements can be validly entered into with employees. Basically, only "trade secrets" can be protected in a case like this one. What is a trade secret? It is a secret kept from the public which relates to the business. If a customer can observe it, it isn't a trade secret.

Guess what? Restaurant designs, menus, the prices charged to the public, and "look and feel" are, by definition, not trade secrets. For that matter, neither are the rough quantities of fixings which they put into the burritos in public view. As the few facts we have make clear, no secret recipes (spice proportions, for example) were ever disclosed and so no secret recipes could be stolen. And, Chipotle was barred by Colorado law from doing what it really wanted to do, which was enter into a non-competition agreement with its employees. It didn't patent that look and feel, and you can't copyright a look and feel either. Chipotle is simply going to have to compete in the competitive marketplace, if it can't bully Bolle into submission with a bogus lawsuit.

We can only hope that Mr. Bolle won't settle the case and that Chipotle will be hit with punitive damages and attorneys' fees on the counterclaim. It probably won't play out that way, but we can hope.

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