October 24, 2006
Guilty Pleas Entered in Coke Case
Two men who stole trade secrets from Coca-Cola and sought to sell them to Pepsi have pleaded guilty in the case.
Ibrahim Dimson and Edmund Duhaney were charged along with another former Coke employee, Joya Williams, on counts covering wire fraud and stealing and selling trade secrets.
With their guilty pleas, Messrs. Dimson and Duhaney could each get up to 10 years in prison and be required to pay a fine up to $250,000.
The case came to light when Pepsi-Cola provided Coke with a copy of a letter offering to turn over confidential information. Coca-Cola then took the case to the Federal Bureau of Investigation (FBI).
Discussion Questions: Where is the distinction drawn between legal competitive business intelligence activities and illegal corporate espionage? What
role does getting information on competitors’ businesses play in the operation of retail and consumer goods industries today?
BrainTrust
Recent Discussions
Discussion Questions
Poll
(Just an aside, but am I the only one who wonders what happened to the word, “pled,” instead of “pleaded”?)
In the 80s and early 90s, Safeway had a food laboratory in the Bay Area that was skilled in reverse engineering national brand products. Sometimes they came too close and had to back off in order to avoid problems. Two examples with which I am familiar are Heinz Ketchup and original Doritos. Key here is that they backed off when they intruded too deeply into a supplier’s branded product. Their integrity knew where the line was, and they honored it. To me, that’s the distinction between legal competitive business intelligence activities and illegal corporate espionage. Integrity.
Assessing competitive business strategies, products and marketing activities has always been a key part of consumer products marketing (e.g. SWOT analyses, competitive spending, reports from field sales, monitoring new product launches). And keeping abreast of what your competitors are up to will always play a key role in business.
There is a grey area between what’s legal in terms of competitive intel and what’s illegal — and this is usually determined by the courts. Many of us have been involved in the “legal,” tracking competitive activities in the market, talking to former employees, doing consumer research to assess relative product appeals — all fair game because this information is more or less available to the public.
Where it gets somewhat foggy is when successful new products get “reverse engineered” and me-too brands appear on the shelf. Then we have numerous examples of copyright infringements when competitors attempt to duplicate the label or trade dress of leading brands
Lastly we have situations (like Coca-Cola), when patents, or formulae are stolen, which is clearly on the illegal side of the ledger. It seems all is fair in love, war and marketing.
Very few business secrets are kept secret. A determined competitor, supplier, or customer can usually find out anything, legally, if they’re willing to make the effort. In retailing, there’s almost no effort needed, since anyone can walk into any retail store and see for themselves. Furthermore, retail staff turnover is so high that it’s usually easy to hire the actual people doing the “secret” work. The real secret to Coke’s success isn’t in the bottle anyway, it’s in the marketing, brand management, and organization.
This is outright thievery by people stupid enough to think they could get away with it. The justice system will take care of them.
Good business intelligence is keeping your eyes and ears open in the trade, seeing things that others may not see and analyzing your competitor’s business to find their weaknesses.
I think the answer to the first question has already been settled — it’s in the courts. Trade secrets at retail are somewhat different than they are for the manufacturer. Since it’s public, everyone gets to walk through a store (just look at all the competition trolling Wal-Mart for ideas). CPG companies on the other hand work very hard at concealment so “theft” is a little easier to prove.
More Discussions
Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?Should IKEA Be Flattening Management?
Should IKEA be trimming down its management headcount?Is Legislation the Answer on Visa, Mastercard Swipe Fees as ~$200 Billion Record Is Set?
Is lawmaking the way forward on swipe fees?
(Just an aside, but am I the only one who wonders what happened to the word, “pled,” instead of “pleaded”?)
In the 80s and early 90s, Safeway had a food laboratory in the Bay Area that was skilled in reverse engineering national brand products. Sometimes they came too close and had to back off in order to avoid problems. Two examples with which I am familiar are Heinz Ketchup and original Doritos. Key here is that they backed off when they intruded too deeply into a supplier’s branded product. Their integrity knew where the line was, and they honored it. To me, that’s the distinction between legal competitive business intelligence activities and illegal corporate espionage. Integrity.
Assessing competitive business strategies, products and marketing activities has always been a key part of consumer products marketing (e.g. SWOT analyses, competitive spending, reports from field sales, monitoring new product launches). And keeping abreast of what your competitors are up to will always play a key role in business.
There is a grey area between what’s legal in terms of competitive intel and what’s illegal — and this is usually determined by the courts. Many of us have been involved in the “legal,” tracking competitive activities in the market, talking to former employees, doing consumer research to assess relative product appeals — all fair game because this information is more or less available to the public.
Where it gets somewhat foggy is when successful new products get “reverse engineered” and me-too brands appear on the shelf. Then we have numerous examples of copyright infringements when competitors attempt to duplicate the label or trade dress of leading brands
Lastly we have situations (like Coca-Cola), when patents, or formulae are stolen, which is clearly on the illegal side of the ledger. It seems all is fair in love, war and marketing.
Very few business secrets are kept secret. A determined competitor, supplier, or customer can usually find out anything, legally, if they’re willing to make the effort. In retailing, there’s almost no effort needed, since anyone can walk into any retail store and see for themselves. Furthermore, retail staff turnover is so high that it’s usually easy to hire the actual people doing the “secret” work. The real secret to Coke’s success isn’t in the bottle anyway, it’s in the marketing, brand management, and organization.
This is outright thievery by people stupid enough to think they could get away with it. The justice system will take care of them.
Good business intelligence is keeping your eyes and ears open in the trade, seeing things that others may not see and analyzing your competitor’s business to find their weaknesses.
I think the answer to the first question has already been settled — it’s in the courts. Trade secrets at retail are somewhat different than they are for the manufacturer. Since it’s public, everyone gets to walk through a store (just look at all the competition trolling Wal-Mart for ideas). CPG companies on the other hand work very hard at concealment so “theft” is a little easier to prove.