No matter how many ways you slice it, the flour is flying between two Central Oregon pizza joints.
The owner of Cibelli’s New York Pizza in Bend is suing the owners of Prineville’s new pizza place, Pizanno’s New York Pizza, saying in a lawsuit that Pizanno’s owners improperly acquired and re-created key aspects of Cibelli’s business, including “virtually identical” recipes and decor, although the lawsuit does not list specific aspects of the business that were copied.
Pizanno’s owners say the lawsuit is baseless.
Cibelli’s has four restaurants in Central Oregon and recently announced plans to build another about one block east of Pizanno’s on Third Street in downtown Prineville. Pizanno’s opened in April.
In a suit filed May 30 in Deschutes County Circuit Court, Cibelli’s says Pizanno’s two owners, one of whom formerly worked at Cibelli’s, have used Cibelli’s recipes, decor, products, processes, systems, suppliers and every other facet of the business.
According to the suit, Cibelli’s seeks damages for misappropriation, unfair competition and breach of a noncompetition agreement. The suit demands monetary damages in the form of various shares of Pizanno’s gross sales from its opening date in April until the judgment date, which Pizanno’s owners say would put them out of business.
“We can prove we developed those recipes,” said Edward Barbeau, partner in Pizanno’s with former Cibelli’s employee Brandon Banner.
“Besides the fact that we both sell New York-style pizza, our restaurant doesn’t look anything like Frank’s,” said Barbeau, who was a frequent patron of Cibelli’s, according to the suit. “We have one poster of Marlon Brando (which Cibelli’s on U.S. Highway 20 also has), but it’s not the same poster.”
Barbeau said his restaurant has a different food distributor than Cibelli’s and developed the restaurant’s recipes in Portland with the food representative.
Barbeau also said his partner, Banner, never agreed to a noncompete contract with Cibelli’s owner, Frank Cibelli, nor did Banner agree to a contract ensuring the confidentiality of Cibelli’s recipes and other business processes and development.
Banner worked at Cibelli’s in Bend from October 2001 to February 2007, according to the suit. Cibelli said Banner was his first hire.
Cibelli said in the suit that Banner “had a duty” to keep Cibelli’s business information secret and did not have Cibelli’s consent to disclose it, which he did in a willful and malicious way to compete against Cibelli’s and profit from his tried and true business processes.
“It’s a verbal understanding — you don’t go open another pizza place,” Cibelli said Friday from Satellite Beach, Fla. “I felt we had a verbal agreement, a clear and verbal understanding, of the value of the secrets — and (Banner) blatantly stole them.”
Banner referred all comments to Barbeau, who denied the allegations.
Cibelli, who was born in New York City and grew up in Florida, has five pizza restaurants: two in Bend, one in Tumalo, one in Redmond and one in Florida. His Prineville restaurant is slated to open this fall.
Pizanno’s owners say their attorneys are responding to the suit and plan on submitting their recipes to attorneys and judges to prove their innocence. Barbeau feels his small business is being pushed around by a larger business.
“We’re just the little guy, trying to do something different,” Barbeau.
At Pizanno’s on Tuesday afternoon, Powell Butte resident Onda Hall munched on a piece of “white pie.” She’s had Cibelli’s pizza in Bend and had heard of the lawsuit.
“They’re similar, but not alike,” Hall said of the two restaurants. “But pizza is kind of similar anywhere you go — you can’t change pizza too much.”
Trademarking trade secrets
Business owners have multiple legal options in trying to protect their products and recipes, says Joe Miller, associate professor for Lewis & Clark Law School in Portland.
One way involves protecting a trade secret, which is protected under intellectual property law, Miller said.
A trade secret would be a product made with specific ingredients measured a specific amount and prepared a specific way. If a pizza owner has made a successful business from a special pizza recipe, that could qualify, Miller said.
“If I get business value out of knowing all the details of my pizza that customers really love, that is a benefit to me as a business,” Miller said, and that pizza product qualifies as a trade secret, which he added is principally a matter of state law rather than federal law.
If someone creates an unprecedented new recipe for an industrial process, they may be able to get a patent, Miller said.
“But most food recipes simply don’t come close to qualifying for that,” Miller said. “Most recipes are quite conventional — even if they are atypical, they have conventional ingredients and you can’t really copyright it.”
Trademarking can protect the fact that a restaurant owner is offering a certain food at a certain quality and a certain price, Miller said, which is protecting the brand. But that doesn’t protect the recipe for pizza, for example, just the kind of pizza or the name of that type of pizza.
If anyone can walk in, taste the pizza, figure out what’s in it and re-create it, then the original producer has no ownership of the recipe, Miller said.
That’s called reverse engineering — re-creating a recipe with publicly available information, and the way a dish tastes is publicly available information.
“This is for the consumers’ benefit,” Miller said. “If (businesses) go head-to-head, you get a better product at a better price.”
As long as no one had to sneak in and essentially steal the written recipe, it’s OK, Miller noted.
However, if the person re-creating a pizza product is a former employee at a competing pizza business, the legality becomes less clear, Miller said.
“This has been a tough problem in (intellectual property) law — dealing with former employees,” Miller said. “When you have a departed employee, part of what they take with them is just general experience.”
That general experience is a good thing and can help the employee find more work, Miller said, but “they also walk out the door with really specialized knowledge that they really shouldn’t be able to use.”
Employers can protect against this with noncompetition agreements, which can be written, verbal or implied contracts that an employee won’t reveal any information that could hurt the employer.
“It means I won’t go into the same kind of business and compete against you after I leave my current job with you after a certain amount of time, for example,” Miller said.
In his suit, Cibelli said Banner violated this understanding, which Barbeau denied.