PepsiCo retains sparkle in Aquafina defence

Last month, reports from as far as the Himalayan Times to Caribbean Business reported on a default judgment entered against PepsiCo for US $1.28 billion for apparently ‘stealing’ an idea to sell purified water from two men.  On Friday, 7 November, that decision was set aside, and PepsiCo is now free to defend the case on its merits.

The story so far is a telling reminder to check your mail.  The lawsuit was served on PepsiCo (although apparently not on its head office), and the secretary who received it failed to act until she received the default judgment.

Whilst available details of the legal allegations are sketchy, it is alleged that in 1981 Charles Joyce and James Voigt entered written confidentiality agreements about a new beverage they were calling “U.P.” with Wis-Pak, Inc. and Carolina Canners, Inc., companies that make and distribute PepsiCo products.  It is further alleged that, in violation of those agreements, confidential information contained in them was given to PepsiCo, which eventually rolled out a bottled water brand – Aquafina – about a dozen years later.

It’s interesting to consider how these facts, if they are true, might be applied in the Australian context.  That is, under Australian law, the plaintiffs would have to rely on the equitable action of breach of confidence as there would be no direct contractual claim against PepsiCo.  Here, if a third party has received confidential information innocently, and only finds out later it was originally given in confidence, that party might still be restrained from using the information.  The situation is analogous to being the unwitting purchaser of a stolen motor vehicle.  Whilst an innocent recipient, one still has to return it to the rightful owner even if out of pocket for the purchase price. �

It is hard to see though, why any damages would be payable by the third party, unless there was a flagrant use of such information after notification.  Also unclear is the information said to be confidential.  Usually, there is a detailed inquiry into the character of the information to determine whether it has the necessary quality of confidence, is not already in the public domain, and has actually been used by the third party.

And, of course, in the present case, the plaintiffs have apparently failed to explain why they have waited so long after the 1994 launch of Aquafina to bring an action!  One envisages some serious hurdles here.

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