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Court upholds PepsiCo trade secrets ruling (UPDATE)

By TODD RICHMOND
Associated Press

MADISON, Wis. (AP) – A judge properly vacated a $1.26 billion judgment against PepsiCo Inc. in a lawsuit alleging the soft drink giant stole two Wisconsin men’s idea for bottled water, a state appeals court ruled Thursday.

The 4th District Court of Appeals ruled the men made their claims too late to satisfy Wisconsin’s statute of limitations and should have paid more attention to developments in the beverage industry.

Charles Joyce, of Juneau, and James Voigt, of Cleveland, Wis., filed a lawsuit against PepsiCo and two Wisconsin distributors in 2009. They alleged they met with the distributors’ representatives in 1981, and shared their idea for a bottled water product they called Ultra-Pure.

The men claimed they executed confidentiality agreements with the representatives, but nothing ultimately came from the discussions. More than 20 years later, in 2007, Joyce bought a bottle of Aquafina water for the first time, tasted it and decided it was a copy of Ultra-Pure. They accused the three entities of breach of contract and misappropriation of trade secrets.

Their attorney, listed in court records as Robert E. Barnes, didn’t immediately return a message Thursday.

Jefferson County Circuit Judge Jacqueline Erwin initially entered a $1.26 billion default judgment against PepsiCo in September 2009, but granted a request from PepsiCo attorneys to vacate the decision just weeks later and ultimately dismissed the case. The judge found that the statute of limitations to bring the case had expired long ago.

The men filed another lawsuit in 2010, again alleging PepsiCo had stolen their trade secrets, but Erwin threw that one out, too, saying it also was time-barred. The 4th District Court of Appeals agreed.

PepsiCo began distributing Aquafina in 1994. If the companies breached their contract with Joyce and Voigt, they did it before then, which would have started the clock ticking on the six-year statute of limitations, the court ruled. But the men didn’t file their lawsuit until 2009, well after the window had closed.

As for misappropriating trade secrets, the men had three years from the point they discovered the problem or should have discovered it through “reasonable diligence” to file a lawsuit, the court said.

They ultimately filed their claims in 2009, two years after they claimed they had discovered their secrets had been compromised when Joyce took his first drink of Aquafina in 2007, and within the time limits.

But the appeals court ruled the men ignored developments in the industry for years that might have signaled their secrets were out, failing to exercise reasonable diligence.

“It is undisputed that they … did nothing and would have continued on that path if Joyce hadn’t been particularly thirsty on that day in 2007 when he purchased a bottle of Aquafina by chance,” the ruling said.

The court went on to say Erwin properly exercised her discretion when she erased the $1.26 billion judgment, noting the men didn’t specify the amount of damages they were seeking in their complaint.

When PepsiCo failed to file a timely response, the men sought the $1.26 billion judgment but never notified PepsiCo of the amount as required.

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