Two Chicago Hot Dog Companies Face-Off Over a Tasty Trade Secret
By: RDNE Stock project
Hot Dogs and the City of Chicago
Hot dogs have been an American tradition, specifically a Chicago one, since the late 1800s. [1]. At that time, a quarter of Chicago’s population, and over one third of Chicago’s butchers, were either fresh off the boat German immigrants or first-generation German Americans. [2]. Chicago was also the largest meatpacking center in the world, and one of the meat products coming out of Chicago district were hot dogs. [3]. Hot dogs were extraordinarily popular because they were cheaply made, and therefore an affordable product for the average family, and were a highly versatile meal because they could be eaten with a wide range of toppings. [4].
Jewish immigrants took the hot dog to the next level by creating all-beef hot dogs. [5]. These hot dogs were especially popular, even in non-Jewish communities, because kosher standards were believed to provide a cleaner and safer product, a significant concern given the horrific reputation for health standards in the Chicago Union Stockyard. [6].
Enter Samuel Ladany and Emil Reichl, two Jewish immigrants from Austria-Hungary, who crafted their own all-beef, spiced hot dogs. [7]. After successfully selling their hot dogs at the Chicago World’s Fair in 1893, Ladany and Reichl formed the Vienna Sausage Manufacturing Company shortly thereafter. [8]. The Vienna Sausage Manufacturing Company remained a Ladany family run business for two more generations. [9]. Samuel Ladany’s grandson Scott Ladany (the defendant in today’s case) joined the company in 1971 and earned a 10% stock interest. [10].
Eventually, in 1982, the Ladany family sold Vienna Sausage Manufacturing Company to Jim Bodman and Jim Eisenberg. [11]. Jim Bodman joined the company back in the 1960s as a warehouse worker slapping 39 cents stickers on hot dog packages. [12]. Bodman stayed at the company and worked his way up the corporate ladder until he purchased the company from the Ladany family, which became Vienna Beef (the plaintiff). [13].
Vienna Beef was, and is, a very successful business in the Chicago and the Chicagoland area. If you are eating a hot dog in the city of Chicago, it’s likely a Vienna beef product; the company has a whopping 71% market share in Chicago! [14].
"Mmm... Chicago style hot dogs" by jeffreyw is licensed under CC BY 2.0.
Scott Ladany, however, didn’t stick around long after the divestment. In 1983, he sold his stock, left the company, and set out on his own path. [15]. As part of his resignation, Scott signed a 2 ½ year non-compete contract and further agreed never to divulge or use Vienna Beef’s recipes, including its hot dog recipes, which are trade secrets. [16]. Scott knew he wanted to get back into the hot dog business, but had time to kill because of his non-compete, so he started a company that sold paper goods to fast food hot dog stands. [17]. Scott explained that this allowed him to build significant relationships with vendors and businesses that would eventually become his customers. [18].
In 1986, when his non-compete expired, Scott Ladany founded Red Hot Chicago, a hot dog company that also dabbled in sausages and other meat products. [19]. His son Bill joined the company in 2003 to create a new Ladany family hot dog business. [20]. Red Hot Chicago and Vienna Beef co-existed selling hot dogs in Chicago for over twenty years, but in May 2011, Red Hot Chicago ran an advertisement in Food Industry News for its twenty-fifth anniversary that deeply upset Vienna Beef. [21].
The advertisement read, in part: “The Ladany family has been making Chicago’s finest hot dogs for 188 years, and in 2011 we’re proudly celebrating our 25th Anniversary as Red Hot Chicago. For all these years we’ve been making our delicious hot dogs and polish sausage using our time-honored family recipe and only the finest ingredients” (emphasis added). [22]. The advertisement also featured photos from the 1893 World’s Fair and included the slogan “A Family Tradition since 1893.” [23].
A month after the advertisement ran, Vienna Beef filed suit against Red Hot Chicago and Scott Ladany and alleged that, among other things, Red Hot Chicago engaged in false advertising which would cause consumers to believe Red Hot Chicago’s hot dogs are made with Vienna Beef’s recipes. [24]. Vienna Beef also claimed that Red Hot Chicago’s hot dogs were actually made using the top-secret Vienna Beef recipes! [25].
Trade Secrets: The Lesser Known Intellectual Property
"Top Secret" by Malakhi Helel is licensed under CC BY-ND 2.0.
Trade secrets are a unique and frequently overlooked form of intellectual property. They are unique from other types of intellectual property because they are not defined by what they are, but by they are worth.
To demonstrate, let’s look at other forms of intellectual property. For a work of art to be entitled to copyright protection, it must fall within one of the enumerated categories established by the U.S. Copyright Act. [26]. Similarly, in order for an invention to be patented, it must fall under one of the four categories of patent-eligible subject matter. [27]. While not as restrictive as copyrights and patents, what can be trademarked under the Lanham Act is still limited to “word[s], name[s], symbol[s], or device[s], or any combination thereof.” [28].
However, trade secrets are not limited to specific categories or things. Instead, a trade secret is defined as information which provides its owner a competitive advantage over those who do not have such information. [29]. In other words, a trade secret is information which is valuable because it is . . . a secret!
Compared to other forms of intellectual property, trade secrets cover extraordinarily broad matter: “information.” What is information? Information is limitless. It is transmitted by everything in the universe. Trying to define the word information may unnecessarily limit what can be protected because of how the broad the word really is. Although, what can be considered a trade secret, in some ways, is more limited than what can be a copyright, trademark, or patent. Recall that in order to be a trade secret, the information must provide some advantage over someone who does not have that information. In other words, to be a trade secret, the information must have some sort of intrinsic value, which is not the case for copyrights, patents, or trademarks.
Trade secret misappropriation is a cause of action that a trade secret owner can sue someone for when they’ve wrongfully disclosed their trade secret. [30]. In many states, in addition to having the burden to prove the wrongful disclosure, the trade secret owner must also establish that they made “reasonable” efforts to keep the trade secret, well, a secret. [31].
So, in summation, a trade secret is a valuable piece of information that is kept secret (since its valuable derives from the fact that it is a secret), and the owner of a trade secret can sue someone who wrongfully discloses it, since disclosing the secret comprises its value.
Getting Back to Hot Dogs…
By Nadin Sh
In order for Vienna Beef to establish liability for trade secret misappropriation under Illinois law, Vienna Beef had to prove that (1) the recipe was a trade secret, (2) the trade secret was disclosed, and (3) the trade secret was used in defendant’s business. [32]. Vienna Beef claimed it has made extraordinary efforts to maintain the secrecy of its recipes, including using two contractors to make different components of the hot dog recipe so neither contractor would have access to the full recipe. [33]. Additionally, when Scott Ladany left the company, Vienna Beef had him sign a non-compete where he would agree to never use or disclose the recipes. [34].
In its Complaint, Vienna Beef alleged Scott Landay and Red Hot Chicago told numerous Chicago vendors that their hot dogs were made from Vienna Beef’s recipes. [35]. They also claimed that Red Hot Chicago’s brochures, available for download off their website, advertised that its hot dogs were made “using our century-old family recipe,” seemingly referencing Vienna Beef’s recipes (since Red Hot Chicago had only been in business for twenty-five years). [36].
After filing the lawsuit, Vienna Beef filed a motion for entry of a temporary restraining order seeking, to stop Red Hot Chicago from using Vienna Beef’s recipes, and from claiming that its recipes are over a century old, date back to 1893, and/or “that they are ‘Sam Ladany’s recipies’ or the Ladany family recipes.” [37].
At oral arguments for its motion, Vienna Beef claimed that Red Hot Chicago falsely advertised that its hot dogs were made using their trade secret hot dog recipe. [38]. However, the judge pointed out that because many of the claims in Red Hot Chicago’s advertisements were in fact literally true, in order to prevail on its claim of false advertising, Vienna Beef would have needed to provide evidence of consumer confusion, which it had not done. [39].
Vienna Beef also did not provide evidence that Red Hot Chicago used Vienna Beef’s hot dog recipe. [40]. Instead, Vienna Beef claimed that Red Hot Chicago’s own advertisements, which claimed Red Hot Chicago hot dogs were made using a “century old family recipe” were sufficient to establish that Scott Ladany had disclosed and used the trade secret recipes. [41]. However, Scott Ladany filed an affidavit stating unequivocally that Red Hot Chicago did not use Vienna Beef’s recipes, but instead developed their hot dog recipe in 1986 with another company Heller Seasonings & Ingredients. [42].
By Valeria Boltneva
Ultimately, the judge denied Vienna Beef’s motion for a temporary restraining order, and the case ended in a settlement later that year. [43]. As part of the settlement agreement, Red Hot Chicago merged with Vienna Beef and Scott Ladany became President of the Red Hot Chicago Division. [44].
Over ten years after the lawsuit and merger, Red Hot Chicago hot dogs are still available for sale, Vienna Beef’s recipes are still top secret, and the company is still a family business, although it is the Bodman family, not the Ladany family running the show. [45]. Jim Bodman is still the Chairman and CEO, and two of his seven children, son Jack Bodman and daughter Taylor Bodman, work for Vienna Beef, ensuring at least one more generation of this family-run Chicago hot dog company. [46].
Sources
[1] Rebecca Holland. Everything You Need To Know About Chicago-Style Hot Dogs, Forbes. July 21, 2021 <https://www.forbes.com/sites/rebeccaholland/2021/07/21/everything-you-need-to-know-about-chicago-style-hot-dogs/>.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Vienna Beef, Ltd. v. Red Hot Chi., Inc., 833 F. Supp. 2d 870, 873 (N.D. Ill. 2011), see “About Us” Vienna Beef. Accessed April 4, 2025. <https://www.viennabeef.com/about-us>.
[9] Holland, supra note 1.
[10] Vienna Beef, supra note 8 at 873.
[11] Trotter, supra note 11; Vienna Beef, supra note 8 at 873.
[12] Jim Proppe. Vienna Beef CEO Jim Bodman on the cost of compromise, Plante Moran. February 12, 2019 <https://www.plantemoran.com/explore-our-thinking/insight/2019/02/learn-from-leaders-vienna-beef>; see Greg Trotter. The real sausage king of Chicago, Chicago Tribune. August 25, 2016 <https://digitaledition.chicagotribune.com/tribune/article_popover.aspx?guid=44aa19d7-93f2-4a9f-93a2-fd33993ed82b>.
[13] Trotter, supra note 11.
[14] Holland, supra note 1.
[15] Vienna Beef, supra note 8 at 873.
[16] Id.; Meet Scott Ladany of Red Hot Chicago, Voyage Chicago. October 17, 2017 <https://voyagechicago.com/interview/meet-scott-ladany-red-hot-chicago-division-vienna-beef-near-northside/>.
[17] Voyage Chicago, supra note 16.
[18] Voyage Chicago, supra note 16.
[19] Vienna Beef, supra note 8 at 873.
[20] Vienna Beef, supra note 8 at 873.
[21] Compl. ¶ 54 June 6, 2011; Vienna Beef, Ltd v. Red Hot Chicago, Inc., et al. 1:11-cv-03825 (N.D. Ill.).
[22] Id. at ¶ 56.
[23] Id. at ¶¶ 57-58.
[24] Id. at ¶¶ 87-88.
[25] Id. at ¶¶ 123-129.
[26] 17 U.S.C. § 102(a).
[27] 35 U.S.C. § 101; see United States Patent and Trademark Office, Manual of Patent Examining Procedure § 2106.03.
[28] 15 U.S.C. § 1127.
[29] 1 Milgrim on Trade Secrets § 1.01 (2025).
[30] Id.
[31] Id.
[32] Learning Curve Toys, Inc. v. Playwood Toys, Inc., 342 F. 3d 714, 721 (7th Cir. 2003); see 765 Ill. Comp. Stat. Ann. 1065/1.
[33] Vienna Beef, supra note 8 at 876.
[34] Vienna Beef, supra note 8 at 876.
[35] Compl. supra note 21 at ¶¶ 51-52.
[36] Id. at ¶ 73.
[37] Vienna Beef, supra note 8 at 873
[38] Vienna Beef, supra note 8 at 876.
[39] Vienna Beef, supra note 8 at 875.
[40] Vienna Beef, supra note 8 at 876.
[41] Vienna Beef, supra note 8 at 875-76.
[42] Vienna Beef, supra note 8 at 876.
[43] Vienna Beef, supra note 8 at 877.
[44] Voyage Chicago, supra note 16.
[45] See “Red Hot Chicago Beef Franks 10 lbs. 8:1 (approximately 80 count)” available on Amazon.com. Accessed April 3, 2025 <https://www.amazon.com/Chicago-Beef-Franks-lbs-approximately/dp/B08HNKL4P2?ref_=ast_sto_dp&th=1>.
[46] Sylvia Perez. Inside Vienna Beef: The Chicago icon that defined tWindy City's hot dog tradition, FOX 32 Chicago. May 23, 2024. <https://www.fox32chicago.com/news/inside-vienna-beef-chicago-icon-windy-city-hot-dog-tradition>.
