NEW YORK Pearl Oyster Bar in lower Manhattan, but nothing rankled her more than when her former sous chef opened Ed’s Oyster Bar less than a mile away. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Finding Ed’s to be too similar to her 10-year-old establishment—from the paint colors and furniture design to the white marble bar and Caesar salad dressing—Charles sued her former employee, Ed McFarland, in federal court last month for alleged theft of intellectual property. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
McFarland, who opened the restaurant three months after leaving Pearl’s, declined to comment on the pending lawsuit. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Charles, who has grown her restaurant into a $2 million-a-year business, said she reluctantly is considering her lawyers’ advice to require employees to sign confidentiality and noncompete agreements. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
“In a restaurant like mine, a small one with 54 seats, you don’t have people sign contracts,” Charles said. “I never signed one in 30 years as a chef. But maybe they’re right. Times have changed.” —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Despite the highly competitive nature of the restaurant industry, operators often do not do enough to protect their proprietary information from misuse by former employees, be that with regard to recipes, sources of supplies, site plans or marketing strategies, industry experts say. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
“It’s an interesting area of law, and it comes into play in the restaurant industry more frequently than anyone would like it to,” said Rich Emmett, chief legal officer for Denver-based Quiznos Sub. “Everyone likes to think their employees will be forthright, but it’s a very competitive industry. People who put time, money and effort to create something unique need to take whatever steps they need to appropriately protect themselves.” —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Quiznos recently sued a former senior vice president of operations for allegedly taking trade secrets with him to another sandwich chain and enticing other Quiznos employees to join him there. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Michael Grodi left Quiznos in 2006 and in January became president and chief executive of Orlando, Fla.-based Earl of Sandwich, a three-year-old, six-unit chain. Grodi would not comment on the lawsuit, but last month he filed a response in federal court in Denver denying its allegations. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Emmett, a former Papa John’s Pizza franchisee and executive who joined Quiznos in April, also declined to discuss specifics of the chain’s suit against Grodi and co-defendant Earl of Sandwich. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Emmett and other industry lawyers said some of the ways restaurant operators can protect their trade secrets and intellectual property include having employees sign agreements to keep information confidential and not use it to compete with their former employer after they leave the job. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Some say that even hourly workers who are involved with proprietary information should be required to sign confidentiality and noncompete agreements, as should managers and executives with greater influence and capabilities to leave a company and start a similar concept. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
“If you have certain approaches and techniques and you want your cooks or waitstaff to keep them confidential, have them sign an agreement saying, ‘Anything I’ve learned here with the way we do business at XYZ restaurant, I agree to keep confidential’—those are enforceable,” said labor lawyer Mike Mitchell in the New Orleans branch of the Fisher & Phillips law firm. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
However, operators need to keep a balanced, fair-minded approach with their employees, said Charles Valauskas of the Valauskas and Pine law firm in Chicago. He has been involved in intellectual-property issues in the industry for 20 years. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Heavy-handed contracts can stifle creativity, and drain energy from an operation, Valauskas said. While anything a chef comes up with becomes the intellectual property of the restaurant, operators can give chefs financial incentives and rewards to encourage them to be creative, he said. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
“Chefs do not come with an empty head,” he said. “They come in with a lot of creative thoughts. The reason why they are hired is they are creative.” —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Even without restrictive employment contracts, restaurateurs may be able to enforce trade-secrets claims. The courts have allowed a certain amount of protection to businesses whose former employees did not sign any agreements, noted Mitchell, who also is executive editor of Hospitality Workforce Trends. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
“There is a common law regarding trade secrets,” he said. “If any company, any restaurant has something that is a trade secret, an employee is not entitled to take it or sell it. But the question becomes, are you treating it like a trade secret?” —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
If chefs are publishing their recipes in cookbooks or in newspapers, they may have less of a defense against former employees using that information, Mitchell said. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Valauskas added that operators need to be clear with employees on what is considered to be proprietary information. “It has to be at least implicit among the staff that it is a secret,” he said. “Stuff that is created here stays here. That has to be articulated.” —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
Although McFarland, who worked for Charles at Pearl Oyster Bar for six years, would not discuss the lawsuit his former boss had filed against him, he noted that cooking is an apprentice-oriented art form that involves the sharing of information. —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
“When I started out in culinary school and in other restaurants, they’d tell you to bring a notebook with you,” McFarland said. “They wanted you to write the recipes down and make them your own. I don’t believe you need to have a trade-secret issue. If there is something you don’t want known, don’t tell. I expect [my employees] to use what I teach in their future.” —Chef-owner Rebecca Charles had become accustomed over the years to other operators trying to imitate her successful
