What's a Trade Secret? (And What Would Happen if You Stole The Colonel's?)

Earlier this week, KFC removed Colonel Harland Sanders' original handwritten recipe of 11 herbs and spices that go into the company's signature fried chicken from its safe storage place. The 68-year-old recipe had been resting in a locked filing cabinet inside a vault at the company's Louisville headquarters, and it was only removed under the watchful eyes of many guards so the company could upgrade the security around the piece of paper. Why all the fuss? Are these measures just publicity-seeking theatrics for KFC? Why does KFC need to keep the recipe under lock and key anyway?

The KFC recipe is part of a larger class of corporate knowledge known as trade secrets. Broadly defined, a trade secret is a process (think of things like Web search algorithms), formula, practice, design, or other secret information to which the public doesn't have access that allows a company to gain a competitive advantage over the rest of its industry. In this case, KFC feels that its spice blend enables the company to make particularly delicious chicken that's differentiated from the rest of the fried-chicken market. The public seems to agree; KFC raked in over $5 billion in domestic sales last year. If another chicken company got their hands on this spice blend, they could conceivably replicate the delicious fried poultry and effectively eat away at KFC's market share. As such, KFC maintains its recipe as a trade secret to keep competitors at bay.

If KFC wants to protect its recipe, why doesn't it just get a patent?

Because then the cat would be out of the bag on what the 11 spices are. In order to acquire a patent, a company has to give pretty exhaustive information on what it's patenting to the United States Patent and Trademark Office. If the office granted a patent, the information would then become public. Although KFC would have a temporary monopoly (usually for 20 years) on that particular recipe, every chicken shack owner in the country could start toying with the recipe, making little tweaks to it, and potentially coming up with something even better. None of that would be good for the Colonel. But by keeping the recipe a closely guarded secret, the company can theoretically keep its advantage forever. Since apparently no one has the first clue what the 11 spices are, much less the proportions in which they're mixed, the company can feel safe as long as it guards the recipe.

Companies with these sorts of trade secrets generally make employees sign non-disclosure and confidentiality agreements, so the select few who get to see the recipe don't run off and start their own chicken businesses. Anyone who tries to swipe a trade secret through espionage should be ready for a lot of legal liability and potential jail time. Just ask Kate Hudson, who came under fire last month for allegedly pilfering a trade secret in the formulation of her new hair-care products.

Does that mean there's no way we'll ever see another company selling KFC's chicken?
Not quite. One downside of a trade secret is that it's perfectly legal for competitors to try to reverse engineer someone else's product. You want to make KFC chicken legally? Get in the kitchen and tinker with spice blends until you figure out the one that tastes just like it. Alternatively, if a chef serendipitously came up with the spice blend independently without sneaking a peak at KFC's recipe, she could start legally trafficking in the bird.

The KFC spice blend is just one example of a jealously guarded trade secret, though. Here are a few other notable ones:

The Coca-Cola Formula
Coke_Bottle.jpgThe Coca-Cola formula, which is known by the code name "Merchandise 7X," is possibly the best-known trade secret in the world. The formula, which dates back to the drink's 1886 invention by Joseph S. Pemberton, is written on a piece of paper that resides in an Atlanta bank. Despite decades of attempts to figure out the formula, no one has succeeded yet; these failures are why the knock-off store brand sodas you buy never taste quite like the real thing. Coke is not afraid to go to great lengths to maintain the secrecy of the formula. In 1977 the Indian government demanded that the company reveal the recipe to keep its ability to sell the beverage in India. Coke decided it would rather leave the market altogether rather than give up its secret; you couldn't buy a Coca-Cola in India until the government relented in 1993.

McDonald's "Special Sauce"
We all know the Big Mac jingle. What we don't know is exactly how to make the sauce. The burger itself was originally conceived in Pittsburgh to compete with Big Boy's signature burger, but it was so popular it had to get a national audience. The sauce is pretty analogous to Thousand Island dressing, but the actual formulation remains a secret sought by beef aficionados everywhere.

The Krispy Kreme Recipe
krispy_kreme.jpgKrispy Kreme opened in Winston-Salem, NC, in 1937 after founder Vernon Rudolph bought a secret recipe for yeast donuts from a New Orleans chef. Despite the company's meteoric rise over the last seven decades, the recipe remains locked in a vault in Winston-Salem and is known by only a select few. (As someone who went to college in Winston-Salem and ate way too many Krispy Kremes, my educated guess is that the secret ingredient is either awesomeness or love. Possibly both.)

Google AdWords
AdWords is Google's advertising product that places pay-per-click banner and text ads throughout the Web and provides site-targeted ads. The system is certainly successful; it pulled in over $16 billion last year. How do the ads get placed on individual pages, though? Good question, but it's one that will remain a mystery since the algorithm is a trade secret.

Gillette Razor Designs
Here's an example of why you don't want to steal a trade secret. In 1997, Wright Industries was helping Gillette design a new razor that was extremely confidential and potentially valuable. Wright Industries employee Steven L. Davis worried that his job was in jeopardy and had a grudge against his supervisor, so he swiped a bunch of trade secrets, including drawings of razor designs and data and sent them to Bic, Warner-Lambert, and other competitors. Bad move. The 1996 Congressional passing of the Economic Espionage Act made stealing trade secrets a federal crime. Davis pled guilty to five counts of theft of trade secrets and received a sentence of 27 months in jail and over a million dollars in fines.

Ethan Trex co-writes Straight Cash, Homey, the Internet's undisputed top source for pictures of people in Ryan Leaf jerseys.
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Big Questions
What Is Fair Trade?

What is fair trade?

Shannon Fisher:

Fair trade is a system of manufacturing and purchasing intended to:

1) level the economic playing field for underdeveloped nations; and

2) protect against human rights abuses in the Global South.

Fair trade farmers are guaranteed fair market prices for their crops, and farm workers are guaranteed a living wage, which means workers who farm fair trade products and ingredients are guaranteed to earn enough to support their families and comfortably live in their communities. There are rules against inhumane work practices. Fair trade farming organizations are monitored for a safe work environment, lack of discrimination, the freedom to organize, and strict adherence to child labor laws. Agrochemicals and GMOs are also forbidden. If these rules are not followed, a product will not receive fair trade certification.

The quality of life in many communities producing fair trade-certified goods is greatly improved. Sometimes, farming communities are given profit sharing from the companies that source their ingredients, and those profits go to improving the community as a whole—be it with a library, medical facilities, town infrastructure, or opening small businesses to support the residents. A major goal of fair trade is to help foster sustainable development around the globe. By helping farming communities in third-world countries, the economy of the entire region gets a boost.

This post originally appeared on Quora. Click here to view.

The Top 10 Pizza Chains in America

Pizza is a $45.1 billion industry in the United States. Here are the top pizza chains across this great nation, based on gross sales in 2016.


Pizza Hut is truly enormous. Raking in more than $5.75 billion in 2016, the chain is best known for its red roof architecture. The style is so distinctive that the blog Used to Be a Pizza Hut collects photos of former Pizza Hut restaurants now turned into other businesses.


With more than $5.47 billion in revenue, Domino's is nipping at Pizza Hut's heels. For decades, Domino's offered a guarantee that your pizza would arrive in 30 minutes or less, or it would be free. The policy was terminated in 1993 in the U.S., and Domino's has since focused on expanding its menu with pasta, sandwiches, and other goodies.


Photo of the exterior of a Little Caesars restaurant

Founded in 1959 by Mike and Marian Ilitch, Little Caesars focuses on carry-out pizza at ultra-competitive prices. Using slogans like "Pizza! Pizza!," "Pan! Pan!," and "Deep Deep Dish," the chain offers hot cheese pizzas for just $5.


Headquartered in Jeffersontown, Kentucky, Papa John's was the first national pizza chain to offer online ordering in the U.S., way back in 2002.


Papa Murphy's offers exclusively "take and bake" pizza, where the ingredients are put together in front of you, then you bake the pizza at home. It's the only large chain to offer this kind of pizza, and it's a smart business model—stores don't need pizza ovens!


California Pizza Kitchen

The first California Pizza Kitchen launched in 1985 in Beverly Hills, California. The focus is on gourmet pizza, including a line of relatively fancy frozen pizzas. In many locations, CPK also offers gluten-free crust as an option, making it a favorite for gluten-intolerant pizza lovers.


Pasquale “Pat” Giammarco founded Marco's Pizza in 1978. The Toledo, Ohio-based chain is now the country's fastest-growing pizza chain, with more than 800 franchised locations across the U.S. as well as in Puerto Rico, the Bahamas, and India. They specialize in what they've dubbed "Ah!thentic Italian."


In 1958, Bill Larson concluded four years of US Navy service and got a job at a pizza parlor in San Mateo, California. A year later, he founded his own: Round Table Pizza. Using a King Arthur theme, Round Table has often featured knights and shields in its logo. The knight theme originated when Larson saw drawings of King Arthur's court eating pizza.


The brainchild of two Georgia Tech students, Mellow Mushroom opened in Atlanta, Georgia as a one-off pizzeria. Today, it boasts more than 150 locations, and is regularly inching further westward.


Macaroni and cheese pizza from Cicis

Cicis is the world's largest pizza buffet chain. It features all sorts of wild stuff including a macaroni-and-cheese pizza.

Source: PMQ Pizza Magazine


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