When Mat Waddell resolved to leave Wild Mind Artisan Ales and sell his 35% stake in the southwest Minneapolis brewery, he says it came as a massive personal relief. The partners he left behind, though, were stuck without the only owner with brewing, or even hospitality, experience. When he shared news of his resignation, Waddell told his now-former associates that he was returning to his previous job in engineering, at 3M.
[Disclosure: The author was briefly employed at Wild Mind Artisan Ales in 2017, and left the role on agreeable terms.]
Waddell’s unhappiness in his final months at Wild Mind, then a three-year-old company, was well known to employees and partners, to the degree that it was impossible to let the curtain close on even a remotely positive note. In an effort to avoid his business partner Jason Sandquist, with whom his relationship had deteriorated, he shifted his brewing hours to begin as early as 4 a.m. According to colleagues, Waddell also rebalanced his work towards the barreling and blending aspects of the job, while letting others—including assistant Jeremy Miller—take the brewing reins, in the hope that his foremost passions would buoy his spirits.
But it didn’t work, and Waddell departed on December 31, 2018. Despite his return to engineering, Waddell was soon asked to share his expertise with another brewery across the Twin Cities. BlackStack Brewing in St. Paul had been eyeing up a mixed-fermentation program, and tapped Waddell for his expertise with foeder management, blending, and yeast collection and propagation. He came on board as a temporary consultant. For Waddell, the work was a welcome side gig and a distraction. BlackStack left much of the fine-tuning to him, so it could focus most of its attention on its well-received “clean” beer.
The degree of surprise Waddell felt when he received a cease and desist from Wild Mind’s attorneys in May 2019 was related primarily to the fact that he had never signed a noncompete agreement, or even an employment agreement, with his former partners. He had never been otherwise barred from beer making in any capacity anywhere or at any time. In September 2019, the accusations culminated in a verified Complaint (which was notarized but not served or filed) that contained several allegations against him, including breach of contract, fraudulent misrepresentation, and misappropriation of trade secrets and confidential information. If Waddell did not stop consulting and blending for BlackStack, he would be sued.
The lawsuit was filed two months later. But it was not clear to Waddell whether Sandquist and partner Tylor Johnson’s rationale was unsubstantiable, or if they had the means to true legal recourse.
For a long time, the craft beer industry seemed more defined by a spirit of collaboration than protectionism. That stance was evident not only in the normalization of collaboration beers, but on forums where brewers shared tips, through stories about breweries extending lab capabilities to and sharing materials with neighbors, and even via festivals based on co-brewed beers.
Occasional exceptions to this vibe did arise, but they were typically so rare that they remain memorable. Generally, intellectual property flare-ups most often stemmed not from employment matters, but from branding: names, logos, or taglines.
In 2015, for instance, Michigan’s Bell’s Brewery—the seventh-biggest craft brewery in the country—went after consummate “little guy,” Innovation Brewing of Sylva, North Carolina. The dispute arose from the fact that Bell’s had previously trademarked the slogan, “Bottling innovation since 1985.” Innovation Brewing argued that its name was unique from the Bell’s tagline, and would not be confusing to customers. Ultimately, Bell’s lost the dispute, with the Trademark Trial and Appeals Board leaning heavily on the fact that Bell’s hadn’t used the tagline on any packaging, only in promotional materials.
That case had broad industry reach within a surging market, at a time when brand recognition was climbing to the top of a brewery’s hierarchy of needs. Six years later, and breweries today flirt with flagrant IP violations. Beer names and labels imitate everything from cereals and sports franchises to big beer brands. (Even BlackStack makes a Great British Bake-Off Berliner Weisse.)
Closer to the Wild Mind matter, and arguably of more importance to brewery workers, are matters of employment. While unclaimed beer names may be hard to come by, the limiting factor in many regions of the country is talent. Whether that talent will take their skills elsewhere is the basis for noncompete agreements, and the knowledge they bring with them is the subject to nondisclosure agreements (NDAs). One much-discussed case occurred in 2018, when Iowa’s Toppling Goliath Brewing Co. sued its former head brewer, Chris Flenker, for joining his brother’s brewery, Thew Brewing Company, 100 miles away in Cedar Rapids. Flenker’s noncompete agreement had barred him from brewing anywhere within 150 miles of the popular Decorah taproom. The suit was dismissed after less than two months.
Broadly, a noncompete agreement places restrictions on an employee that prevents that individual from participating in the same work elsewhere. Such agreements typically define a set period of time and a geographical boundary for that limitation.
Designed to reduce competition within physical proximity to the business in question, noncompetes undoubtedly put owners at an advantage while employees are restricted. However, by law, the employer must give the employee something tangible in return for such restrictions in order for them to remain enforceable. At first it can be the job itself. Those with standing noncompetes must be given a raise or other advantages while bound by the contract. “Continued employment is not enough,” explains Elliot Ginsburg, an attorney at Hop Law in Minneapolis with a background in food, beverage, and franchise law.
Nondisclosure or confidentiality agreements, meanwhile, are clauses that are often contained within other employment agreements, such as those that outline wages and responsibilities. They prevent the employee from passing along private information, and do not impact future employment.
Noncompetes and nondisclosures are unique from one another, and complement the four tenets of intellectual property law: patents, copyright, trademarks, and trade secrets. Patents, awarded to new and useful inventions, are governed by the U.S. Patent and Trademark Office, and the inventor must apply. Trademarks, also overseen by the USPTO, were designed for consumer protection and market regulation and help distinguish brands from one another. On the other hand, works subject to copyright are generally creative pieces that are displayed, reproducible, and published; the work itself holds the copyright and the creator need not apply. By and large, the legal consensus is that recipes that merely list ingredients and are not a literary work—including beer recipes—are not subject to copyright.
Finally, trade secrets, the lesser-known facet of IP, are defined by their secretive nature. They do not depend on the presence of a noncompete agreement.
No doubt patents have a role in brewing technology and trademarks are ubiquitous among all brands, but the majority of shift brewers typically interface with trade secrets on a regular basis, whether or not they formally understand them as such. That is partly because trade secrets are seldom explicit in an employment agreement.
By law, they do not need to be. Trade secrets are simply pieces of valuable and confidential information; the information becomes a trade secret when it is kept reasonably, well, secret.
Not all confidential information is a trade secret. “Something like general skills and knowledge can’t be protectable as a trade secret. It needs to derive value from the fact that it is not readily ascertainable by proper means,” explains Aaron Thom, Waddell’s attorney.
The Uniform Trade Secrets Act has been adopted nearly nationwide to govern trade secret claims (only New York, North Carolina, and Alabama don’t employ it in its entirety). It dictates two critical criteria: Trade secrets derive their value from not being generally known or discoverable, and that reasonable means are taken to keep them secret.
Ryan Mihm, head brewer at Finnegan’s Brew Co. in downtown Minneapolis, recalls an illustration of the secrecy element from his time working at Allagash Brewing Company in Portland, Maine. When a group of Master Brewers Association members visited the brewhouse and filed through for a closer look, the recipe card for its flagship Witbier, Allagash White, was accidentally left sitting out in the open. By the time the tour was completed, the error had been corrected, and the card had been put away. Allagash had taken other reasonable means to protect its secrets by indicating only “secret spices” on the recipe card, without noting them by name. That secrecy, plus the financial advantage the brewery derives from that secrecy, would almost certainly weigh in favor of this particular recipe meeting the legal criteria for a trade secret.
At the same time, Mihm personally questions whether Witbier spices are secrets to begin with. “Our label says ‘coriander and Curaçao orange peel,’” he points out. “It’s not secret.” Still, when asked about the Allagash recipe by others in the industry, Mihm says he always brushes the questions off.
That doubt, about what is public domain and what is proprietary, is not unique to Mihm. Averie Swanson, Master Cicerone and founder of Chicago’s Keeping Together, recognizes the role of secrets, but doesn’t buy into a broad definition. Her experience at Austin, Texas’ oft-imitated Jester King Brewery, and her departure as head brewer with ownership shares, make her well-suited to opine on the topic. “Yes, every once in a while, there is a style of beer or something innovative, really experimental,” she says, using the example of a New England IPA. “Virtually everything else is iterating on classic styles or older, traditional practices.”
In the Wild Mind case, the significance of whether Waddell “stole” recipes from the brewery—and whether those recipes constitute trade secrets—is up for debate. “We put recipes into nondisclosures. But it’s not really what people think. Recipes are worthy of protection but it doesn’t mean you’ll get the same beer,” says Ginsburg. Thom agrees. “It’s not going to be protectable as a trade secret,” he says, stating that the majority of beers can be replicated.
Put another way, the recipe doesn’t make the beer. If it did, variety in beer would be slim. “Hill Farmstead makes a Pilsner. I make a Pilsner. Unless I straight-up ripped off the recipe, which I would never in a million years do, certain styles are only made one way,” says Matt Tarpey, co-founder and head brewer of The Veil Brewing Co. in Richmond, Virginia, and former assistant brewer at Hill Farmstead Brewery in Greensboro Bend, Vermont. “It’s Pilsner malt, European hops, Lager yeast, and water.”
Even an attempt to be identical will very rarely land. There are elements that are mostly out of a brewer’s control, and which lead to distinct products—the water source, the batch size, ingredient nuances, and even altitude. Breweries rely in part on these unavoidable variations, along with irreplicable expertise, when they post their beer recipes to blogs and encourage patrons to propagate yeast from the dregs of bottles, as Jester King does.
These issues are not unique to beer, of course. St. Paul-based food writer Joe Rosenthal has seen IP disputes play out in the competitive arena of New York pizza. When high-level employee Frank Badali, who was responsible for Prince Street Pizza’s famous Sicilian-syle pepperoni pizza, left for Made in New York Pizza, he brought his idea with him, and it became a hit for the second business.
“There is an unwritten rule that if a cook comes up with a dish and they leave, they can take that dish with them,” says Rosenthal. Badali later moved on to Village Square Pizza, and soon, Instagram revealed it had a nearly identical item: a Sicilian-style pizza with a massive pile of pepperoni in the middle.
“Did he come up with those ideas while under the employment of Prince Street Pizza? And if so, do they own those ideas?” Rosenthal asks. It’s complicated. “If that is their signature thing and he goes out and does that elsewhere, that’s a problem for them. I can understand why they are upset about that.”
This is a central question for the allegations against Waddell. Was mixed-fermentation beer Wild Mind’s signature thing? Yes and no. According to other Wild Mind employees, as well as its current beer menu, the brewery has historically sold, and continues to sell, a large proportion of garden-variety “clean” beers. Wild Mind’s attorney Jeff O’Brien declined to comment.
“If you are a restaurant and the chef that came up with your ideas brought those ideas elsewhere, maybe you shouldn’t be threatened?” says Rosenthal. “Maybe it is time you came up with different ideas. If your restaurant’s only claim to fame is the work of somebody else, maybe it is not unreasonable for that person to also make fame from that idea.”
Wild Mind does not have a single beverage equivalent of the Sicilian-style pepperoni pizza. Instead, its supposed signature is barreled and blended mixed-fermentation beer. Still, the question of who is allowed to benefit remains. The company reaps the reward of that employee’s recipe or technique and typically continues to do so after the worker is gone. When that individual brews elsewhere, should they be required to leave their ideas behind? Wild Mind’s mixed-fermentation beer arose from Waddell’s own skill and prior knowledge, and was brewed on the company’s equipment on company time. Is it wrong that they both continue to benefit, each without the other?
The fact that the case against Waddell is based on Wild Ale adds a nuance that stretches beyond recipe theft. Swanson believes intellectual property is even less of a consideration when it comes to mixed-fermentation beers.
“Recipes play less of a role,” she says. “I might be more out there when it comes to my thoughts and ideas behind beer making, but intention has a lot to do with it. The relationship I have with the yeast that I use, if I could call it that, it is unique to me. I could share the knowledge that I have—and I have—with apprentices or mentees, but they are not me. They would never be able to make the beer the way I do. And that is not to say that they couldn’t make better beer, but the beer is singular to who I am.”
Though not unheard of in the 1990s or 2000s—for example, Portland’s Widmer Brewing sued former brewer Alan Sprints in 1993 when he started Hair of the Dog Brewing Company—intellectual property issues of that era generally evoke chummy images of Avery Brewing Company and Russian River Brewing Company’s Collaboration Not Litigation Ale rather than the interior of a courtroom. And for good reason. They were rare in the beer industry, and they still are. “It’s uncommon for noncompetes to lead to lawsuits,” says Ginsburg.
Still, as craft beer has progressed from infancy, the lawsuits that have arisen from noncompetes and nondisclosures can feel like a loss of innocence for the industry. Swanson sees this current era as a natural evolution. “Noncompetes and NDAs are important. I think that this industry has definitely reached an adolescent or more mature phase over the last five-to-10 years,” she says. She adds that an increasing number of people started breweries, beginning in the mid-2010s, not because of a passion for homebrewing, but because of the perceived business opportunity.
“With more and more people entering the industry, it’s inevitable that you will get some folks who are not in it for the reasons that the people in the beginning were […] but because it appears to be a fairly lucrative business endeavor if you’re doing it well,” Swanson says. The industry itself has had to mature from a business perspective, she adds, as a result of growth and competition.
Anecdotally, Mihm doesn’t think noncompetes are widespread in the industry. He was never asked to sign one at Allagash. “Pretty much it was kind of like, ‘Don’t give away our stuff.’ It was based on trade secrets.”
New Belgium Brewing, where Mihm worked in 2015 and 2016, took it one step further. “They were a complete open book to their employees, because they were employee-owned,” he says. “They wanted to empower their employees. If you had a pursuit to open your own brewery someday, they were gung-ho about it.” Mihm cannot recall an instance of trade secret violation discussion at either brewery.
Tarpey believes that nondisclosures in the form of employment agreements are common, and The Veil requires noncompetes for its production team—all brewing staff, but not bartenders or salespeople. “It’s almost standard practice. Almost any larger, interesting brewery you go to, there is some type of employment contract that is going to include some type of language about that,” Tarpey claims. “It is primarily out of protection.”
He says he tries to balance the interests of his company while being cognizant of the restrictions that noncompetes place on staff. “I never try to stifle people or hold people back. But, yes, we have to protect ourselves, too. There is a fine line,” he says. The Veil’s noncompetes have a geographic range of 50-100 miles and a term of two-to-four years. Disputes thus far have not arisen, in part because the brewery has had very little staff turnover, according to Tarpey.
An undisputed fact in Waddell’s case is that he did not sign a noncompete agreement. Instead, he participated in writing an employee handbook, along with former partners Sandquist and Johnson, which included a provision that “employees protect and preserve confidential and proprietary information that employees received during the course of their employment.” This clause is a form of nondisclosure agreement and allows for the application of trade secret law.
The Complaint spells out the proprietary information, and Waddell’s misuse of that information. But first, Wild Mind sets the stage for the economic advantage that it would not have but for that information, as required by trade secret principles: “Wild Mind is engaged in the business of brewing craft beer for sale in Minnesota, specializing in mixed culture fermentation and the production of wild, farmhouse, saison, and rustic ales. At the time of its founding in 2016, Wild Mind was one of the few breweries in the country marketed as a ‘wild’ brewery, reflecting the wild yeasts and ales it created. At the time of its founding Wild Mind was also one of a handful of breweries developing sour beers in Minnesota.”
Notwithstanding the fact that the terms “wild” and “rustic” are ill-defined in the document (or, frankly, in general), it’s a questionable assertion. If “mixed culture fermentation” beers were indeed rare, that could make marketing a business as a “wild” brewery an economic advantage in terms of fueling a trade secret argument. But if that was the case in 2016, then these styles would not be measurable to the tune of Great American Beer Festival categorization, as Swanson points out.
2016 was a record year for GABF entries in many ways. There were 9% more total entries than the previous year and a record 464 new entrants. Bart Watson, chief economist for the Brewers Association, described 2016 as the year of sours. “American-Style Sour Ale saw the largest percentage jump of any category, from 1.28 percent of entries in 2015 to 1.93 percent of entries in 2016—a total jump of 56 entries,” he writes. He goes on to note that the styles gaining the most market share included Saisons and “Brett beers.”
The Complaint goes on to say, “Wild Mind has a unique method of using yeast, allowing it to create ‘wild ales’ with unconventional and distinctly local flavors. Creating ‘wild ales’ requires the careful and intentional selection of bacteria and yeast, as it is the interplay of these ingredients that allows for the production of unique brews […] Wild Mind uses a unique ‘coolship’ method to brew wild ales.”
These background statements illustrate an impossible dichotomy about ownership in wild beer—that a brewery can have “careful and intentional selection” of yeast while relying on the surrounding environment to provide it. Can a beer be both wild and proprietary?
In Mihm’s work at Allagash, which had the first coolship in the United States, the methods were anything but proprietary. In fact, the objective was to mimic Brussels’ Brasserie Cantillon. “Open fermentation, along the lines of having a coolship, that definitely brings out the terroir,” Mihm asserts. “So with coolships, no matter where [the beers] are made, they are all pretty much the same method as Cantillon has been doing for hundreds of years.”
The Veil’s Tarpey, meanwhile, learned the Cantillon ways directly from the source. He took what he saw there and applied it stateside, with the explicit blessing of Cantillon owner Jean Van Roy. “Jean told me, ‘Take this knowledge and go home and try to do it yourself,’” Tarpey chuckles. It was part challenge, part Van Roy’s way of saying that a true copy wouldn’t be possible. The influence of local ingredients, generations of expertise, and serendipitous conditions can’t be packed in a suitcase.
Wild Mind alleges that Waddell’s work with other breweries “necessarily requires disclosure” of confidential information and trade secrets—in other words, managing foeders, blending, and otherwise crafting mixed-fermentation beers is impossible without using proprietary information.
There is a problem, too, with this argument. Waddell had mixed-fermentation experience prior to being recruited by Sandquist and Johnson, and had planned to open his own business based on that knowledge. “Sour programs at breweries are very complicated and require experience. If someone has knowledge beforehand of the process, like the microorganisms involved, that is not the company’s secret,” explains Ginsburg.
Not only was Waddell the only founding partner with any brewing experience, but Sandquist, whose background is in real estate, leveraged that experience and indicated that Waddell would have total autonomy over brewing operations. Wild Mind’s suit has not yet concluded. The brewery claims that it cannot afford to continue, and the judge has not yet ruled on whether that means the suit will be dismissed or if Wild Mind will be found in contempt.
Does the public care about issues like aggressive noncompetes? Swanson argues that consumers are becoming more and more aware of where their dollars go, and research shows that members of Gen Z are doing their homework about ethics, social impact, and labor practices. “At the end of the day, people have to make choices as to how they are spending their money. If companies are treating their employees poorly, that is a huge issue, especially right now. Social equity is a major topic.”
The Wall Street Journal reported that general litigation over noncompetes was on the rise in 2013, while craft beer lawsuits were expected to increase in 2018, the year Waddell left Wild Mind, amid an unprecedented year of growth. Rosenthal believes that both noncompetes and nondisclosures are common and increasing in restaurant employment contexts as well, especially in young restaurants.
“I tell clients that they might want to think about not including a noncompete. I’ll put it in if the client absolutely wants, but not as a matter of policy,” says Ginsburg. “Brewers understand that their staff will want to move on, whether to go to another brewery or start their own. I represent brewers, so I understand. I’ve seen what noncompetes do.” As the industry workforce becomes more experienced and aware of employment matters, strict noncompete agreements could drive away talent. A nondisclosure, on the other hand, does not prevent employee mobility.
Swanson did not have explicit plans to start a beer company when she left Jester King, and she had never been asked to sign a noncompete. She doesn’t believe she would have signed one if asked to do so. “It hamstrings the industry as a whole because it does prevent that pollination,” she says. “You can’t move somewhere else and bring your experience with you and bring your knowledge with you and allow that to evolve and transform.”
Whether noncompetes should be a general expectation in the brewing world is one question. Who should be signing them is another. A noncompete signed by a strategic, high-level individual does not feel as exploitative as one signed by a professional on the canning line, who may wish to apply to jobs elsewhere in order to advance in salary or position. Should that person be forced to travel 150 miles in order to package beer or clean kegs for a few more dollars an hour?
In the pizzerias he has studied, Rosenthal says he has not heard of examples of delivery drivers signing noncompetes, but there are reports of line cooks signing them, which he finds harmful to low-level workers. “They’re scared and don’t realize it’s probably not enforceable,” he says.
A lawsuit is not a lawsuit without damages. Wild Mind claims that it was forced to dump two batches of beer due to Waddell neglecting them during the end of his tenure there. The plaintiffs allege that Waddell intentionally did a poor job (a statement that other Wild Mind employees describe as ridiculous). At the same time, Wild Mind continued to serve beer that Waddell had made after he left. Notably, the brewery sold bottles of a beer by Waddell called Schrödinger's Cat, a sour with blackberry and pomegranate. This beer was served as late as August 3, 2019, after Wild Mind had contacted Waddell with cease-and-desist language and just one month prior to sending him the verified Complaint. Brewers subsequent to Waddell reported that beer Waddell had created remained in barrels even after they themselves had left. Wild Mind continued to benefit from Waddell’s expertise long after his departure, yet wanted to legally prevent him from deriving value from it anywhere else.
With respect to the misappropriation of trade secrets argument, Wild Mind claims “as a result of Defendant's actions [...] Wild Mind has and will continue to incur damages.” Proof of ongoing damages or a loss of market share due to Waddell’s outside consulting was not outlined in the suit. Proving that any loss of market edge was due to forces other than an increasingly competitive pool would be difficult, due to the growth in the sour and mixed-fermentation sector.
Careers of apprenticeship by nature dictate that the novice becomes the journeyman, who then becomes the expert. When one learns by doing, that person must learn from someone who is taking a risk in sharing their own expertise. Though Waddell brought his own skill and experience to the table, and continues to share it with others, the case against him illustrates the slippery slope of intellectual property and employment.
Protecting one’s business interests by relying on noncompetes is, according to employment law experts, not an inevitability. Using employment agreements and trade secret principles is less likely to alienate a workforce that has more and more choice at hand. Conversely, not signing such a document is not a guarantee for protection against employment litigation, as illustrated by this suit.
If we extend Swanson’s notion that this moment amounts to the awkward teenage years of the brewing industry, then maturity is on the horizon. That could look like a return to relationship-based practices that are backed up by plain-language trade secret discussions. Tarpey argues that they go hand in hand, saying that an attitude of respect should coexist with a noncompete.
Otherwise, if the technology sector, the breeding ground of IP law, is any indication, we could be in for a grim future. From 1996 to 2018, trademark, copyright, and patent suits were broadly on the rise nationally, with California leading that growth at 21% of the caseload, vastly attributable to Silicon Valley. Noncompetes are not enforceable in California, and therefore would not contribute to this figure. Less studied is trade secret litigation, but research has shown that trade secrets pertaining to processes, which would include brewing, made up about one-third of all trade secret-related suits in the last three decades.
Trade secret litigation is expected to continue growing due to the 2016 passing of the Defend Trade Secrets Act, which pertains to misappropriation of trade secrets across state lines, a potentially important tool for breweries with a national footprint. While the Act doesn’t overrule state guidelines, it gives companies an option to file in federal court, making state-by-state variations in trade secret enforcement essentially moot.
Swanson believes that businesses should take another approach, by incentivizing workers and rewarding longevity. “Maybe the question is more like, ‘Why is the situation such that you are having people sign these things that are, If you do this, this bad thing will happen to you?’ It comes from a place of mistrust,” she says. “I feel like incentivizing people to do good by each other, as opposed to threatening to punish them when they don’t, might be a better way of going about this whole entire thing. Such as, ‘We would like to honor the intellectual property that you have put in, that you have given to us.’”
There’s some variation of the golden rule in her words. Or, put more simply, “If you want to keep employees, be a good employer,” remarks Ginsburg.
Wild Mind, meanwhile, told the court that Waddell’s actions have damaged its reputation and perception in the community. If prior lawsuits are any indication, it’s more likely that their own actions will do just that.
Words by Paige Latham DidoraIllustrations by Tim Green
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