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

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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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Pop Culture
How Jimmy Buffett Turned 'Margaritaville' Into a Way of Life
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Few songs have proven as lucrative as “Margaritaville,” a modest 1977 hit by singer and songwriter Jimmy Buffett that became an anthem for an entire life philosophy. The track was the springboard for Buffett’s business empire—restaurants, apparel, kitchen appliances, and more—marketing the taking-it-easy message of its tropical print lyrics.

After just a few years of expanding that notion into other ventures, the “Parrot Heads” of Buffett’s fandom began to account for $40 million in annual revenue—and that was before the vacation resorts began popping up.

Jimmy Buffett performs for a crowd
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“Margaritaville,” which turned 40 this year, was never intended to inspire this kind of devotion. It was written after Buffett, as an aspiring musician toiling in Nashville, found himself in Key West, Florida, following a cancelled booking in Miami and marveling at the sea of tourists clogging the beaches.

Like the other songs on his album, Changes in Latitudes, Changes in Attitudes, it didn’t receive a lot of radio play. Instead, Buffett began to develop his following by opening up for The Eagles. Even at 30, Buffett was something less than hip—a flip-flopped performer with a genial stage presence that seemed to invite an easygoing vibe among crowds. “Margaritaville,” an anthem to that kind of breezy attitude, peaked at number eight on the Billboard charts in 1977. While that’s impressive for any single, its legacy would quickly evolve beyond the music industry's method for gauging success.

What Buffett realized as he continued to perform and tour throughout the early 1980s is that “Margaritaville” had the ability to sedate audiences. Like a hypnotist, the singer could immediately conjure a specific time and place that listeners wanted to revisit. The lyrics painted a scene of serenity that became a kind of existential vacation for Buffett's fans:

Nibblin' on sponge cake,
Watchin' the sun bake;
All of those tourists covered with oil.
Strummin' my six string on my front porch swing.
Smell those shrimp —
They're beginnin' to boil.

By 1985, Buffett was ready to capitalize on that goodwill. In Key West, he opened a Margaritaville store, which sold hats, shirts, and other ephemera to residents and tourists looking to broadcast their allegiance to his sand-in-toes fantasy. (A portion of the proceeds went to Save the Manatees, a nonprofit organization devoted to animal conservation.) The store also sold the Coconut Telegraph, a kind of propaganda newsletter about all things Buffett and his chill perspective.

When Buffett realized patrons were coming in expecting a bar or food—the song was named after a mixed drink, after all—he opened a cafe adjacent to the store in late 1987. The configuration was ideal, and through the 1990s, Buffett and business partner John Cohlan began erecting Margaritaville locations in Florida, New Orleans, and eventually Las Vegas and New York. All told, more than 21 million people visit a Buffett-inspired hospitality destination every year.

A parrot at Margaritaville welcomes guests
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Margaritaville-branded tequila followed. So, too, did a line of retail foods like hummus, a book of short stories, massive resorts, a Sirius radio channel, and drink blenders. Buffett even wrote a 242-page script for a Margaritaville movie that he had hoped to film in the 1980s. It’s one of the very few Margaritaville projects that has yet to have come to fruition, but it might be hard for Buffett to complain much. In 2015, his entire empire took in $1.5 billion in sales.

As of late, Buffett has signed off on an Orlando resort due to open in 2018, offering “casual luxury” near the boundaries of Walt Disney World. (One in Hollywood, Florida, is already a hit, boasting a 93 percent occupancy rate.) Even for guests that aren’t particularly familiar with his music, “Jimmy Buffett” has become synonymous with comfort and relaxation just as surely as Walt Disney has with family entertainment. The association bodes well for a business that will eventually have to move beyond Buffett’s concert-going loyalists.

Not that he's looking to leave them behind. The 70-year-old Buffett is planning on a series of Margaritaville-themed retirement communities, with the first due to open in Daytona Beach in 2018. More than 10,000 Parrot Heads have already registered, eager to watch the sun set while idling in a frame of mind that Buffett has slowly but surely turned into a reality.

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Design
The Secret to the World's Most Comfortable Bed Might Be Yak Hair
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Savoir Beds laughs at your unspooling mail-order mattresses and their promises of ultimate comfort. The UK-based company has teamed with London's Savoy Hotel to offer what they’ve declared is one of the most luxurious nights of sleep you’ll ever experience. 

What do they have that everyone else lacks? About eight pounds of Mongolian yak hair.

The elegantly-named Savoir No. 1 Khangai Limited Edition is part of the hotel’s elite Royal Suite accommodations. For $1845 a night, guests can sink into the mattress with a topper stuffed full of yak hair from Khangai, Mongolia. Hand-combed and with heat-dispensing properties, it takes 40 yaks to make one topper. In a press release, collaborator and yarn specialist Tengri claims it “transcends all levels of comfort currently available.”

Visitors opting for such deluxe amenities also have access to a hair stylist, butler, chef, and a Rolls-Royce with a driver.

Savoir Beds has entered into a fair-share partnership with the farmers, who receive an equitable wage in exchange for the fibers, which are said to be softer than cashmere. If you’d prefer to luxuriate like that every night, the purchase price for the bed is $93,000. Purchased separately, the topper is $17,400. Act soon, as only 50 of the beds will be made available each year. 

[h/t Travel + Leisure]

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