How do I protect a product formula when joining a joint venture?

[TheFarmacy]

I am an owner of a company that sells CBD, a natural substance derived from hemp plants and totally legal. This an e-commerce business recently launched may 1st of this year. It is a DBA and I am sole proprietor owner of the company with no employees. Currently started by selling other companies products bought wholesale, at retail prices on my website. My current campaign is to create a CBD Vape Juice line and then produce more products from my company and phase out all products other than ours. It is known locally that my formula for the CBD Vape Juice line is 2nd to known locally and nationwide. There is another owner of a company that sells CBD locally, and from word of mouth he has approached me several times wanting me to work with him. He has basically told me he does not know how to create the formulas on paper for the patents of the product. However anyone with knowledge to create this type of product, should easily know how to create the formula for it. So now after me blowing him off he finally proposed that we create a new company as an LLC and ill use my formula to create the CBD juice lines, and then sell them at each of our stores and the new one online. However my main fear is agreeing to this, him learning my formula and then deciding to part ways with the company and use the formula for his own personal business. How can I protect myself? Is doing this company a bad idea? I have a gut bad feeling about it.

I know he has a lot of funds, and could help my business however I am also worried this can be a nice setup.

Any advice would be greatly apprecaited?

 

[FlyingRon]

What state are you in?

By your own description, the formula isn't patentable (actually the formula itself isn't patentable, period. The process might have been but you say it's obvious, so that's an outright bar to patentability). This means the only way to protect your formula is to keep it secret. You're going to need to bring an attorney in to find out if there is an instrument that you can use to keep him from "stealing" your recipe. Note however, that if it is so obvious, then others could indendently produce the product and you'd have no claim against them.

 

[TheFarmacy]

Texas

It is actually not that easy to create the product if it was, I wouldn't be in this situation. However he claims that he can create it, and as someone with Chemistry experience. If you know how to create a vape juice using different ratios of chemicals and flavorings, then you should have no problem writing the formula down on paper.

This is sounding more and more like he just wants to find out how I make my product.

 

[quincy]

Texas

It is actually not that easy to create the product if it was, I wouldn't be in this situation. However he claims that he can create it, and as someone with Chemistry experience. If you know how to create a vape juice using different ratios of chemicals and flavorings, then you should have no problem writing the formula down on paper.

This is sounding more and more like he just wants to find out how I make my product.

It is not a good idea to go into business with someone you don't trust.

 

[FlyingRon]

Easy vs. hard isn't the issue. Lots of things are hard but they are not patentable. The issue is whether the process you're developing is novel and non-obvious. Just sitting there mixing up vape juice doped with your flavoring and canabanoid additives isn't likely going to meet the requirement.

My answer still stands. You need to protect it as a trade secret, which means you have to be very careful about who you share it with and a lawyer can tell you what aggrements you need in place to argue an infringement if it comes to that. But understand since it sounds like you are cheaping out on a lot of things, it COSTS money to sue people in court on these actions and there's no guarantee you'll prevail. Furhter, giving a secret to someone you don't trust to keep it isn't going to work (as Quincy alludes) no matter how many agreements are in place.

If you want a joint venture, perhaps the better move is to keep the production of the juice in your own control and allow him to handle other parts (sales, marketing, storefronts, accounting, HR) of the business.

 

[quincy]

I agree with all that FlyingRon has said.

It might also be mentioned that your formula cannot be protected as a trade secret if someone learns the formula through reverse engineering.

After the legal acquisition of a product, any information about the product learned through an examination of it that reduces the product to its basic elements, is considered to be in the public domain.

If your invention/technology/process cannot be protected under patent laws (and it does not appear it can be), then your competitor potentially can create his own like-product for sale through the reverse engineering of your product - and there is nothing legally you can do about it.

You would be smart to sit down with an attorney in your area to discuss your available options.