Two soft drinks giants recently hit the headlines in an intriguing turn of events that involved two of the world’s most recognised brands and an investigation by the FBI. In a commendable show of camaraderie, Pepsi’s referral has led to three individuals being charged by the US prosecutors for the theft of Coca-Cola’s most valuable trade secret.
Who: Coco-cola and Pepsi
Where: New York
When: July 2006
It is not every day that a story involving the theft of trade secrets belonging to the one of the world's most recognised brands, an undercover FBI operation and a box stuffed with $US 30,000 hits the headlines, but this month a rather unusual turn of events was revealed at a bail hearing in Atlanta, Georgia.
When Pepsi received a letter from a person claiming to be a high-level Coca-Cola executive called "Dirk" willing to sell trade secrets, it went straight to its rivals. The FBI were soon on the case, launching an investigation that ended six weeks later with the arrest of three suspects, who now face federal charges of fraud and stealing trade secrets.
The two companies, who built their rival brands by creating iconic ad campaigns designed to keep their products at top of the cola market, have co-operated following the arrests. After the release of a statement by Coca-Cola thanking Pepsi, Dave DeCecco, spokesman for Pepsi-Cola North America, said: "We only did what any responsible company would do. Competition can sometimes be fierce, but it also must be fair and legal."
Coca-Cola has been left with concerns over its security procedures and Neville Isdell, chief executive, said in a memo to employees: "While this breach of trust is difficult for all of us to accept, it underscores the responsibility we each have to be vigilant in protecting our trade secrets. Information is the lifeblood of the company." He also said Coca-Cola would review its information protection practices.
Why this matters:
This case serves as a useful warning to any organisation holding trade secrets, or any other confidential information, that even a highly successful company whose business relies heavily on its trade secrets can be caught out if its procedures are not watertight. It is almost too obvious to say, but it also highlights that a trade secret is only a valuable piece of intellectual property if it stays exactly that – a secret.