Cupcakery alleges former worker stole business secrets

Monday, May 11, 2009 | 5:43 p.m.

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The Las Vegas area's trendy and fast-growing Cupcakery business is suing a California cupcake entrepreneur, charging she stole trade secrets and infringed on trademarks when she opened two gourmet cupcake shops there.

The Cupcakery was launched by Pamela Jenkins in 2005 and now has shops in the Silverado area on Eastern Avenue, in northwest Las Vegas on Lake Mead Boulevard and in Frisco, Texas; with a fourth planned for Dallas.

The popularity of the concept has expanded with numerous upscale cupcake shops, including two called Sift: A Cupcakery in Napa and Cotati, Calif., owned by Andrea Ballus.

In an April 2008 press release, Ballus said she's a master cupcake baker and related why she, her husband Jeff and her mother started the business in California.

"The idea for Sift occurred to me when we were planning our Sonoma County wedding in Sonoma last year," she said in the release. "We wanted to serve cupcakes, but all we could find were ones that tasted like plastic cupcakes, or were too dry, or really boring. Let's face it, Sonoma County has tons of great wine, but it is severely lacking in the cupcake department."

The release says: "Andrea Ballus left a promising career as a fine dining consultant in Las Vegas, where she worked with that city’s growing cadre of nationally renowned chefs, sommeliers and restaurateurs."

The Cupcakery, in a May 5 lawsuit filed in U.S. District Court in Las Vegas, says Ballus is now profiting from the Cupcakery's intellectual property assets.

Ballus could not immediately be reached for comment on the allegations Monday.

The suit says Ballus applied for and was hired for a part-time position at the Cupcakery in January 2008 and that while working there, she registered the trade name Sift: A Cupcakery with the California Secretary of State.

"Upon information and belief, Defendant Ballus used Plaintiff’s trade secrets and confidential information obtained during the course and scope of her employment at The Cupcakery to develop a competing cupcake business," the suit charged. "Upon information and belief, Defendant Ballus procured her employment with The Cupcakery under false pretenses and in order to obtain such confidential information and other trade secrets regarding Plaintiff’s business model to aid in the development of her own gourmet cupcake business."

The suit goes on to level allegations of trademark infringement, unfair competition, deceptive trade practices, breach of contract, fraud and misapplying trade secrets.

The suit was filed by attorneys Mark Tratos, Lauri Thompson and F. Christopher Austin of the Las Vegas law firm Greenberg Traurig.

Discussion: 16 comments so far…

By bbrummel

5/11/09 at 11:44 p.m.

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Greedy nincompoops. They don't stand a chance of winning, except for perhaps the name issue, as cupcake "boutiques" of every shape and size can be found all over the country. This is a new fad that has caught on and unless the Cupcakery can prove that she stole, and is using, patented recipes there really isn't a damn thing they can do about it. They couldn't possibly have trademarked cupcakes or the way they're sold! What sort of "trade secrets" could there be in the cupcake business? Considering the business is in Napa, hundreds of miles away, you would think they would simply shrug it off and use better judgement in the future in their hiring practices. However, what sort of a dolt uses the exact wording of their present employer's trade name when filing for their own? Typical Las Vegas.
By markp

5/12/09 at 3:33 a.m.

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battle of fairycakes..lol
By starrynite7

5/12/09 at 5:25 a.m.

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This lawsuit is a sham! You can't put a patent on Cupcakes, people all over the world make cupcakes all the time. The recipes are handed down from generations or swapped at parties. That would be like STarbucks suing The Daily Grind for selling ...coffee that they have a patent on..gimme a break. Sounds like someone is money hungry. The cupcakes are so over-priced at The Cupcakery anyway, I can't really imagine in this economy that people are running out to spend almost 3.00 a piece on cupcakes that they can make at home for pennies.
By Ladydiodes

5/12/09 at 9:40 a.m.

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What a waste of judical time. Do these people think they can sue anyone who has a start up cupcake business? I for one am in the cake and candy business and have been for years in California, and now that I live in Nevada and re-establishing my business which is mostly cupcakes they will probably go after me. Actual the cupcakery place here in Las Vegas doesn't have the best cupcakes anyway, plus they are way over priced.
By payrolldept

5/12/09 at 10:28 a.m.

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So Pam Jenkins is under the impression she owns the rights to the word "cupcakery"? In all 50 states?
I think Betty Crocker and Duncan Heines should sue her.
By fromthesouth

5/12/09 at 11:02 a.m.

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i tried the cupcakery and while they were delicious, i thought they were overpriced. I havent thought about them since. In my opinion, once the fad has run it's course, so will these businesses.
By goingbust

5/12/09 at 11:51 a.m.

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Good luck getting that heard in Las Vegas. The defendant will move it to California and their costs will skyrocket.
By James_P_Reza

5/13/09 at 8:31 a.m.

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"So Pam Jenkins is under the impression she owns the rights to the word "cupcakery"? In all 50 states?"

Yes, she (or her company) does own it. That's what a trademark is, after all, and trademark law requires the trademark holder to seek out violations and to actively defend the trademark. If the trademark holder does not do this with regularity, the trademark can be considered abandoned.

Whether trade secrets of design, operation or ingredients were stolen is another question, but I applaud Pamela Jenkins for defending the business she has built and for defending her trademark. At the very least, the other bakery will likely be forced to change their name.
By JayeTT

5/13/09 at 9:17 a.m.

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Why the heck would anyone want to steal the recipes for those cupcakes? The Cupcakery is only successful because they were the first in town and have name recognition...the cupcakes suck.

Wait until the likes of a Magnolia or Sprinkles opens here, no one will go there anymore. AND, Sprinkles is notorious for filing lawsuits just like this, so the Cupcakery better watch out because they might find themselves on the receiving end of a suit if Sprinkles comes to town.
By Sassyfrolet

5/13/09 at 9:21 a.m.

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The Cupcrappery is a cheap imitation of Sprinkles! The greatest cupcakes are at Crumbs in So Cal and New York City. They're as big as your face and cost the same as a cupcakery cupcake.
By ThreeDogMom

5/13/09 at 11:55 a.m.

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I don't see how she has a case. Pamela's business model is obviously working but her recipes need improvement. There are cupcake places all over and I enjoyed this place when it first opened but once they expanded their quality seemed to suffer and now results in an inconsistent product. They do decorate beautifully though.

Crumbs is one of my favorites. But as far as cupcakes in town I'll stick with Retro or Whole Foods.
By bbrummel

5/13/09 at 12:12 p.m.

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I'd like to comment on Mr. Reza's comments. Although I'm not intimately acquainted with the specific details of this case I would say that it is unlikely that the Cupcakery purchased trademark rights to the word "cupcakery" in all fifty states. The cost would be astronomical. Furthermore, a simple search for the word on the U.S. Patent and Trademark site shows that there are, in fact, two companies operating in California using the word "cupcakery", which means she'll have to sue that party as well if she wishes to make a trademark infringement case against Sift. You can't cherrypick who you'd like to sue in these cases. In the end both parties in this case will end up spending a lot of unecessary dollars and choke up the court system with nonsense. I would agree, that after all is said and done, the final result may simply be the defendant being ordered to drop the word "cupcakery" but most likely there would be no monetary damages awarded and Ms. Jenkins will end up more bitter and aggravated than when she began. She will also have to spend a great deal more money to protect her trademark if she intends to purchase the exclusive rights to the word "cupcakery" nationwide. I'm always surprised at lawyers who willingly take on cases such as this.
By James_P_Reza

5/13/09 at 1:41 p.m.

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The costs assciated with trademarking a trade name are not "astronomical." I speak from personal business experience. They may qualify as "a heck of a lot" but "The Cupcakery" is indeed trademarked nationally. The application must be under review (hence the "TM" and not the "R" next to the name) and awaiting final registration, which is why it's not found in trademark searches.

Mark Tratos is one of the nation's foremost intellectual property attorneys, and based again on personal experience, he doesn't move forward with cases that have no merit.

And no, I'm not involved with The Cupcakery, except as a customer.
By sheckyvegas

5/13/09 at 1:54 p.m.

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thems cumpcakes ain't radiated like them termaters, are they? ooo-wee!
By boftx

5/13/09 at 3:30 p.m.

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I'm surprised they could get a trademark for "Cupcakery" in the first place, it's far too logical of an extension to describe any place cupcakes are sold. Just look at the battles that have been fought over "Xerox" and "Kleenex", both of which are made-up words.
By StanG

5/13/09 at 5:05 p.m.

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Would it surprise you would be lawyers to know that if you use "Let's get ready to rumble" in a commercial enterprise, you'll be sued?
Are any of you business people? No? Well, it might also surprise you to learn that even the names of the suppliers to her business is company confidential. Yes, where she buys the sugar is as secret as is the nature of, the amount of, the method and timing of adding flavoring.
Do you think her business plans might include future expansion into Tonapah ... or perhaps even to ever so far away California?
Of course she would sue.