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Partners turn into foes over coke formula
By Zhang Xuanchen |
December 8, 2010, Wednesday
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Online Edition
Online Edition
A SUBDIDIARY of PepsiCo has lost a lawsuit filed by a domestic coke maker in Chongqing, southwest China, who accused the global soft-drink giant of illegally using its formula for 16 years.
The Chongqing No. 5 Intermediate People's Court ruled on Sunday that the Chongqing Pepsi-Tianfu Beverage Co, a US-Chinese joint venture, had committed "trade secret infringement" by using classified coke formula and other know-hows owned by China Tianfu Cola Group, Chongqing Evening News reported today.
The court ordered the Chongqing Pepsi-Tianfu to immediately return the formula and terminate its illegitimate use. But it rejected the plaintiff's request for 1 million yuan (US$150,500) in compensation, the newspaper said.
In its filing, China Tianfu said it signed an agreement with PepsiCo to form a joint venture in 1994. Under the agreement, the company offered its factory, equipment and land-use rights in exchange for 40 percent of shares, but still owned its trade secret and Tianfu Cola brand.
However, China Tianfu voluntarily handed in its formula and core production documents to PepsiCo, hoping its US partner could help spread the Tianfu brand globally.
Contrary to its expectation, PepsiCo didn't develop Tianfu Coke but took advantage of the Chinese partner's skills and formula to boost the production of Pepsi Cola, said China Tianfu's chairman Qian Huang.
In response, Chongqing Pepsi-Tianfu said the plaintiff had already agreed to transfer the data ownership to the joint venture. It also said the evidence was not sufficient enough to convict it of any wrongdoing.
Both Chongqing Pepsi-Tianfu Beverage Co and PepsiCo didn't make comments after the court's ruling.
The Chongqing No. 5 Intermediate People's Court ruled on Sunday that the Chongqing Pepsi-Tianfu Beverage Co, a US-Chinese joint venture, had committed "trade secret infringement" by using classified coke formula and other know-hows owned by China Tianfu Cola Group, Chongqing Evening News reported today.
The court ordered the Chongqing Pepsi-Tianfu to immediately return the formula and terminate its illegitimate use. But it rejected the plaintiff's request for 1 million yuan (US$150,500) in compensation, the newspaper said.
In its filing, China Tianfu said it signed an agreement with PepsiCo to form a joint venture in 1994. Under the agreement, the company offered its factory, equipment and land-use rights in exchange for 40 percent of shares, but still owned its trade secret and Tianfu Cola brand.
However, China Tianfu voluntarily handed in its formula and core production documents to PepsiCo, hoping its US partner could help spread the Tianfu brand globally.
Contrary to its expectation, PepsiCo didn't develop Tianfu Coke but took advantage of the Chinese partner's skills and formula to boost the production of Pepsi Cola, said China Tianfu's chairman Qian Huang.
In response, Chongqing Pepsi-Tianfu said the plaintiff had already agreed to transfer the data ownership to the joint venture. It also said the evidence was not sufficient enough to convict it of any wrongdoing.
Both Chongqing Pepsi-Tianfu Beverage Co and PepsiCo didn't make comments after the court's ruling.
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