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The formula for Coca-Cola has long been considered the ultimate trade secret. While Coca-Cola could have chosen to patent the formula they use for their product, that protection would only have lasted twenty years and generic coke would currently be undercutting their product. Instead of using the patent process, Coca-Cola took the more difficult, but potentially longer lasting route in protecting their intellectual property by protecting the formula as a proprietary trade secret.
A trade secret is defined in North Carolina, as business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:
a. Derives independent actual or potential commercial value from not being known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and
b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
G.S. § 66-152(3)(2001)
Factors in determining whether or not information is a trade secret include:
(1) the extent to which information is known outside the business; (2) the extent to which it is known to employees and others involved in the business; (3) the extent of measures taken to guard secrecy of the information; (4) the value of information to business and its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could properly be acquired or duplicated by others.
The trade secret act allows owners of trade secrets to receive injunctions against disclosure or use of their trade secrets and potentially to receive treble damages for infringement.
According to legend, Coca-Cola's formula is only known to a handful of top executives who are all bound by various confidentiality and non-compete agreements. The recipe has been kept under lock and key. Any information that would be helpful to someone trying to reverse engineer the formula has also been subject to protection.
Despite the best efforts of Coca-Cola, This American Life claims to have revealed the ultimate trade secret, the recipe for Coca-Cola by looking closely at a 1979 photo they claim is of the recipe. The formula has been one of the most closely guarded corporate secrets. Coca-Cola's protection of the formula has been the gold standard by which all attorneys wish their clients would follow regarding their trade secrets. Even if this formula is correct, Coca-Cola has been able to protect their trade secret for many decades by protecting their information the right way.

A person is faced with many decisions when they decide to start their own business. One of the first and most important decisions that must be made is what type of business structure to go with. There are many variables that go into deciding which structure would be more beneficial. Today we are going to look at the difference between a C-Corporation versus an S-Corporation.

The C-Corp is considered the standard corporation, while the S-Corp has elected special tax status by the IRS. However, the special status under the S-Corp is not automatic. One must elect to become an S-Corp, and must do so by filing Form 2554 with the IRS.

One of the major differences between these two structures is the way that they are taxed. A C-Corp is considered a separate entity, therefore requiring that they file a separate corporate tax return as well as pay taxes at the corporate level. In addition, a C-Corp also faces double taxation as the corporation is taxed on its income, and then the shareholders are taxed on any dividends they receive. S-Corps however are considered "pass through entities'." This means that the profit and losses pass through the business and instead are reported on the individual's personal tax return. Therefore taxes are paid at the individual level by the owners, and no income is taxed at the corporate level.

Another difference between these two entities is ownership. While a C-Corp has no restrictions as to ownership, an S-Corp is limited to 100 shareholders, and shareholders must be U.S. citizens. Another restriction placed on an S-Corp is that they may only have one class of stock, unlike the C-Corp which may have multiple classes.

Determining what business structure is best for your business is an important decision, and it is imperative to have an attorney who is knowledgeable in this area of law and up to date with all of the IRS tax codes. If you are interested in forming a corporation, or just have further questions, please do not hesitate to contact me.