IP Law Daily Denial of trade secret misappropriation, co-inventorship claims against PepsiCo over scent technology affirmed
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Friday, May 17, 2019

Denial of trade secret misappropriation, co-inventorship claims against PepsiCo over scent technology affirmed

By John W. Scanlan, J.D.

Testimony by the plaintiff company’s principal provided evidence of the existence of a trade secret but insufficient to establish co-inventorship of the defendant’s patent.

PepsiCo was not liable for misappropriation of trade secrets for a process for adding aromas to beverage containers, the U.S. Court of Appeals for the Federal Circuit ruled in an unpublished opinion affirming a decision by a federal district court in New York City. The Federal Circuit also upheld the lower court’s determination that the plaintiff was not entitled to a correction of inventorship of the patent (ScentSational Technologies LLC v. PepsiCo, Inc., May 16, 2019, per curiam).

ScentSational Technologies (ST) brought suit against PepsiCo, Inc., Pepsi-Cola Technical Operations, Inc., The Quaker Oats Co., Stokely-Van Camp, Inc., and Tropicana Products, Inc., (together, “PepsiCo”), alleging claims for misappropriation of ST trade secrets and breach of contract, and also asking the court to grant it correction of inventorship on a patent that had been issued to PepsiCo. According to ST, ST possessed trade secrets for a process for adding aromas to beverage bottles in order to enhance the beverages’ perceived taste. ST alleged that PepsiCo violated non-disclosure agreements between it and ST to obtain patent rights to ST technologies. ST asked for damages for lost profits based on separate negotiations with Coca-Cola involving the use of the same trade secrets that ended when Coca-Cola discovered that PepsiCo had filed a patent based upon similar technologies. After striking much of ST’s expert testimony, the district court dismissed the misappropriation of trade secret and breach of contract claims and granted summary judgment to PepsiCo on the claim for right of correction of inventorship. ST appealed.

Trade secret misappropriation/damages. After the Federal Circuit upheld the district court’s grant of summary judgment to PepsiCo on causation and damages, it similarly affirmed the lower court’s finding that the evidence was insufficient to support a claim for lost profits for trade secret misappropriation and breach of contract based upon the possibility that Coca-Cola would have adopted ST’s technology for use with its products. The record also did not justify ST’s claim that it was entitled to damages based on developmental money spent on ST’s Coca-Cola project. ST submitted a draft statement of work ST provided for this phase, but there was no evidence that Coca-Cola agreed to the statement or the proposed fee, and no indication what ST’s costs or profits would have been for the next phase of the project. A statement in an email by a Coca-Cola official did not show that there was an agreement by Coca-Cola to proceed to the next phase. ST was not entitled to nominal damages either because it had not previously raised this issue before the district court in its brief against summary judgment.

Correction of inventorship. The Federal Circuit agreed that the evidence was insufficient to support ST’s claim that its principal was at least a joint inventor of the patent issued to PepsiCo in 2013. A party making this claim must establish co-inventorship by clear and convincing evidence, which means presenting more than testimony by the alleged co-inventor. The testimony of the ST principal described ST’s trade secrets, and ST then compared this description to the one of the claims in the PepsiCo patent. While the testimony provided evidence of the existence of ST’s trade secrets, it was not enough to corroborate ST’s assertion of co-inventorship. ST’s argument that correction of inventorship could be awarded as an equitable remedy for misappropriation of trade secrets even if damages for lost profits was not awarded was deemed waived because ST had not raised it prior to its appeal. The appellate court noted that even if it had not been waived, it did not provide the corroboration necessary to establish the ST principal’s claim for co-inventorship.

This case is No. 18-2091.

Attorneys: Melvin C. Garner (Leason Ellis LLP) for ScentSational Technologies LLC. Richard B. Harper (Baker Botts, LLP) for PepsiCo, Inc., Pepsi-Cola Technical Operations, Inc., The Quaker Oats Co., Stokely-Van Camp, Inc. and Tropicana Products, Inc.

Companies: ScentSational Technologies LLC; PepsiCo, Inc.; Pepsi-Cola Technical Operations, Inc.; The Quaker Oats Co.; Stokely-Van Camp, Inc.; Tropicana Products, Inc.

MainStory: TopStory Patent TradeSecrets FedCirNews

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