Trade-Secret War Fractures Hot Dog Dynasty

CHICAGO (CN) - Vienna Beef, the Chicago-based hot dog dynasty, cannot get a temporary restraining order to prevent its founder's grandson from allegedly misusing trade secrets, a federal judge ruled.

First sold at the 1893 Columbian Exposition in Chicago, Vienna Beef hot dogs are today ubiquitous throughout the city. Descendants of Samuel Ladany, one of the Austro-Hungarian immigrants who founded the company, have remained intimately involved in the company's management.

Samuel's grandson, Scott Ladany, started out with a 10 percent interest in Vienna Beef back in 1971, but he left the company in 1983 and signed a noncompete agreement, complete with a confidentiality clause, regarding Vienna Beef's trade-secret recipes.

When that noncompete term expired in 1986, Ladany branched out with his own frankfurter venture, Red Hot Chicago.

Vienna Beef filed suit this month for a restraining order, arguing that Red Hot has released "promotional material ... [that] contains several of Vienna Beef's trademarked phrases," including "Make Me One With Everything" and "Drag It Through The Garden."

Red Hot also makes "numerous references to RHC using family recipes" that rightfully belong to Vienna Beef by saying it has used the same sausage recipe for the last 118 years.

Ladany's company also allegedly used "well-known photographic and illustrated images depicting Vienna Beef's 'Chicago-style hot dog,'" beloved for its eclectic and colorful mix of toppings and dogmatic avoidance of ketchup. The image makes countless appearances on the streets of Chicago, more so if one includes residents' tattoos.

On Tuesday, U.S. District Judge Sharon Johnson Coleman rejected Vienna Beef's application for a temporary restraining order against Red Hot, finding that the order was not necessary to prevent irreparable injury to Vienna Beef.

Although Vienna Beef argued that Red Hot's advertisements "convey a false impression," Coleman said "it is undisputed that ... members of the Ladany family have been in the hot dog business for 118 years."

"Thus, Vienna Beef is asserting false-in-context claims that require it to show evidence of consumer confusion, which it has not done," she added.

As for the allegedly trademarked phrases, the court found that at this point, Red Hot seems to have "used [them] in a descriptive manner as a customer ordering their hot dog with particular toppings and condiments." Because "[t]he phrases are part of full-page ads and do not convey an attempt by RHC to palm-off its hot dogs as Vienna Beef products," the claim is unlikely to succeed in court.

Even if Vienna Beef has a meritorious claim, "Vienna Beef fails to show how it will be irreparably harmed by waiting for an adjudication on the merits," Coleman continued.

Red Hot claims it has used the slogan, "A Family Tradition Since 1893" for 25 years and the above-mentioned catchphrases for eight.

Though Vienna Beef claimed to need the temporary restraining order "to prevent customer confusion," Coleman disagreed because the order would merely "curtail commercial competition when Vienna Beef has not ... show[n] that such an order is necessary to prevent harm."

"Thus this court fails to see the emergency necessitating a [temporary restraining order," Coleman wrote, leaving Chicagoans to contemplate the implications of civil war within the city's hot dog dynasty as the case proceeds on the merits.

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