318 F.3d 1284 (11th Cir. 2003), 01-12012, Penalty Kick Management Ltd. v. Coca Cola Co.

Docket Nº:01-12012.
Citation:318 F.3d 1284
Party Name:PENALTY KICK MANAGEMENT LTD., Plaintiff-Appellant, v. COCA COLA COMPANY, Defendant-Appellee.
Case Date:January 24, 2003
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit

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318 F.3d 1284 (11th Cir. 2003)



COCA COLA COMPANY, Defendant-Appellee.

No. 01-12012.

United States Court of Appeals, Eleventh Circuit

January 24, 2003

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[Copyrighted Material Omitted]

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Douglas V. Rigler, Thomas R. Kline, Charles M. Crout, Andrews & Kurth, L.L.P., Washington, DC, for Plaintiff-Appellant.

Joel Martin Neuman, The Coca Cola Co., Atlanta, GA, Joel W. Benson, Jerold A. Jacover, Richard E. Stanley, Jr., Brinks, Hofer, Gilson & Lione, Chicago, IL, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before TJOFLAT and BIRCH, Circuit Judges, and GOLDBERG[*] , Judge.

TJOFLAT, Circuit Judge

Penalty Kick Management Ltd. ("PKM") brought this lawsuit against the Coca-Cola Company ("Coca-Cola"), seeking legal and equitable relief under theories of conversion, misappropriation of a trade secret, breach of contract, breach of a confidential relationship and duty of good faith, unjust enrichment, and quantum meruit. The district court granted summary judgment in favor of Coca-Cola as to all claims, and PKM appeals. We affirm.



In early 1995, PKM's Chief Executive Officer, Peter Glancy, conceived of a beverage label marketing and production process known as "Magic Windows." Magic Windows consisted of the following: a scrambled message on the inside of a beverage container label which could be decoded and read only after the beverage container was emptied. The message would be read through a colored filter

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printed on a label on the opposite side of the container, directly across from the coded message.

On November 2, 1995, Glancy and Charles Carter of PKM met with representatives of Coca-Cola to demonstrate Magic Windows. Glancy orally advised the Coca-Cola representatives that the information concerning Magic Windows was confidential, and the representatives regarded it as such. Glancy also advised the representatives that PKM was pursuing global patent protection on Magic Windows,1 and thus would be in a position to provide Coca-Cola the exclusive rights to the Magic Windows marketing tool.

A few months after the meeting, in February of 1996, the parties executed a Non-Disclosure Agreement in which each agreed not to disclose to any third party any confidential information shared during discussions regarding Magic Windows. However, the agreement went on to provide:

[T]here is no obligation to maintain in confidence any information that:

(i) at the time of disclosure is available to the public;

(ii) after disclosure, becomes available to the public by publication or otherwise;

(iii) is in [Coca-Cola's or its subsidiaries' or affiliates' possession], at the time of disclosure [ ];

(iv) is rightfully received from a third party; [or]

. . .

(vi) [Coca-Cola] can establish was subsequently developed independently by [Coca-Cola or its subsidiaries or affiliates] independently of any disclosure hereunder.

After the execution of the agreement, PKM and Coca-Cola representatives met again to discuss the possibility of Coca-Cola licensing Magic Windows for its exclusive use. Following several months of discussions, on July 16, 1996, Coca-Cola drafted a Development and License Agreement in which, among other things, Coca-Cola proposed to pay PKM $1 million and a per label royalty for a global license giving Coca-Cola the exclusive right to use Magic Windows.2

Concomitant with sending its proposed license agreement, however, Coca-Cola undertook an intellectual property review of PKM's patent applications to determine, inter alia, whether PKM could actually provide Coca-Cola with exclusivity over the concept embodied in Magic Windows. In the course of that review, Coca-Cola unearthed a copy of the Virtual Image patent application published in May of 1993, and sent a copy of the application to Glancy on October 7, 1996. The Virtual Image patent application revealed that the two main concepts of Magic Windows— using a colored filter to decode a disguised message and placing the filter on the side of a bottle label opposite the coded message, already existed in prior art.3 In view

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of the Virtual Image patent application, Coca-Cola concluded that the Magic Windows concept was in the public domain, and that PKM could not provide the patent exclusivity Coca-Cola was seeking. Accordingly, a month later, on November, 19, 1996, Coca-Cola informed PKM that it would " 'not pursue [an] exclusivity agreement' w[ith] them," and terminated all negotiations.


PKM's presentation was not the first or only time that Coca-Cola had discussed window labels and decoder filters. Two other instances are particularly important in this case.4 First, in November of 1995 (the same month PKM first met with Coca-Cola), Coca-Cola asked Bright-House, an Atlanta-based ideation company, to create a promotion for the upcoming 1996 NFL season. One of the ideas presented by BrightHouse in December of 1995 was the creation of a bottle label with a scrambled message on the back inside of the label and a red decoder filter printed on the front side of the label. Bright-House believed the concept would work, and proved its point with a graphic illustration and a bottle mock-up. Coca-Cola subsequently tested the BrightHouse concept with focus groups in order to gauge consumer reaction to a decoder bottle.

Second, in September of 1996 (while Coca-Cola was still negotiating with PKM), Coca-Cola met with Steve Everett, a salesman with ITW-Autosleeve ("ITW"), the regular printer for labels used on Coca-Cola's products in Argentina, to discuss a windows label promotion in Argentina. At this meeting, Coca-Cola representatives discussed the concept of the window label in general terms, showed Everett a mock-up of a bottle with a label, and asked if ITW was capable of manufacturing such a label. The label included a message that was printed off an ink-jet or bubble-jet printer and was taped to the back side of the bottle; red litho paper was on the front side of the bottle. ITW informed Coca-Cola it could produce the label and set out to do so.

ITW's Graphic Arts Manager, Jeffrey Albaugh, was assigned the task. He was not given any instruction on how to create the sample label. Albaugh independently determined the type of printing press, inks, color sequences, and production processes needed. He alone did the following: constructed the scrambled text on the label; planned the print formula; selected the film to use as a substrate for the label; chose the color to use on the filter; figured how to block the scrambled message from being read from the outside; picked the weight and tone of the ink; established the printing setup; and decided whether to print on the surface or reverse print the label. Albaugh made these decisions based on his experience as a printer. He viewed the task as "simple, everyday printing" that did not require "anything new in technology." After approximately three weeks, Albaugh completed the bottle label. Coca-Cola subsequently used the label in an Argentinian marketing promotion.

In February of 1997, PKM learned of the Argentinian promotion. After viewing one of the Coca-Cola bottles, PKM was

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alarmed by (what it perceived to be) the striking similarity between its Magic Windows label and the bottle label developed by ITW. Glancy called Coca-Cola to determine whether Coca-Cola had used the information PKM had shared to help create the ITW label. When Coca-Cola denied any wrongdoing, PKM filed this suit.


The complaint in this case is framed in six counts. Count I alleged that Coca-Cola converted PKM's Magic Label technology for its own use; Count II alleged that Coca-Cola misappropriated trade secrets when it divulged the disclosed information to ITW, who in turn, used that information to develop its label; Count III alleged that Coca-Cola breached the Non-Disclosure Agreement when it disclosed confidential information to ITW; Count IV alleged that Coca-Cola breached its confidential relationship and duty of good faith imposed by O.C.G.A. § 23-2-58; Count V alleged that Coca-Cola was unjustly enriched by utilizing PKM's design of, and production process for, the Magic Windows technology; finally, Count VI alleged that Coca-Cola failed to compensate PKM for the services and property provided to Coca-Cola.

Coca-Cola answered the complaint, denying liability on all counts. In short, Coca-Cola stated that the information revealed by PKM regarding Magic Windows was not a trade secret, was not disclosed to ITW or any other third party, and was not used by Coca-Cola. Additionally, Coca-Cola had complied with the Non-Disclosure Agreement, and did not owe any money to PKM because it did not provide Coca-Cola with any valuable services or property. Rather, the Magic Windows concept was rightfully received by Coca-Cola during the BrightHouse presentation, and any other allegedly misappropriated elements of Magic Windows were independently developed by ITW using well-known printing techniques.

As part of its defense, Coca-Cola served an interrogatory on PKM asking PKM to identify every element of the Magic Windows technology that PKM contended was misappropriated by Coca-Cola. Plaintiff responded, in pertinent part,

PKM contends that Coke misappropriated a promotional concept referred to as "Magic Windows," "Clear View Windows," and "Rear View Windows" that requires purchasers of containers (in the case of Coke, a beverage container) to empty the contents of the container to receive a message or to determine whether they have won a prize which was incorporated in a commercially feasible beverage label printed on a gravure or comparable press with...

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