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Spat between beer giants widens with claim of trade-secret theft

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MADISON, Wis. (CN) – A dispute between two beer giants took an unexpected turn after Anheuser-Busch filed a counterclaim accusing a MillerCoors employee of stealing its recipes, brewing processes and other trade secrets using contacts and inside information gathered when he worked for Anheuser-Busch.

Newly filled and sealed cans of Miller Lite beer move along on a conveyor belt at the MillerCoors Brewery in Golden, Colo., in March 2015.  (AP Photo/Brennan Linsley, File)

The brawl between the two industry leaders began in March when MillerCoors filed a false advertising lawsuit in federal court, claiming an ad campaign concocted by rival Anheuser-Busch misled consumers into believing that Miller Lite and Coors Light, two of MillerCoors’ flagship products, contain high-fructose corn syrup in an attempt to irreparably harm those products in the crowded beer marketplace and boost the sales of Bud Light.

The multimillion-dollar ad campaign debuted during this year’s Super Bowl and also aired during the Academy Awards.

U.S. District Court Judge William Conley, appointed to the bench by former President Barack Obama, issued a preliminary injunction in May stating the ads went a step too far in promoting a common misunderstanding that if consumers drink Miller Lite or Coors Light, they are consuming high-fructose corn syrup, a sweetener found in hundreds of products that is increasingly being linked to obesity, cardiovascular disease and colorectal cancer.

The injunction barred Anheuser-Busch from using a range of misleading statements in its ads, including the claim that Bud Light contains “100% less corn syrup” than its competitor’s products.

Conley then expanded the injunction in September to prevent Anheuser-Busch from making similar claims on its packaging, too.

However, Anheuser-Busch changed the playing field Thursday by bringing a counterclaim in which it charges that one of its former employees played spy games on behalf of MillerCoors, utilizing text message communications with another Anheuser-Busch employee to steal recipes and other trade secrets, allegedly at the behest of MillerCoors’ top brass.

The redacted document claims that Josh Edgar, a brewer at MillerCoors’ Golden, Colorado facility who previously worked for years as a brewer at Anheuser-Busch’s Cartersville, Georgia facility, used relationships he maintained in Cartersville as an inroad to commit corporate espionage on behalf of MillerCoors.

Anheuser-Busch says its internal investigation found that Edgar exchanged texts with one of its employees inquiring about various ingredients, including enzymes, hop blends and dextrose, used to brew products like Bud Light and Michelob Ultra, as well as technical information about brewing processes and alcohol content. Some texts included direct screenshots of printed recipes that appeared to have been folded up and taken out of Anheuser-Busch’s brewery.

The counterclaim states that “the method of transmittal of the recipes demonstrates that they were sent outside of normal business practices,” and asserts that “the recipes are extraordinarily valuable- Bud Light is the best-selling beer in the U.S. and Michelob Ultra is the fastest growing.”

The filings alleges that senior management at MillerCoors specifically asked Edgar to take these steps, “which was very unusual and demonstrates how important the flow of information was to the CEO Gavin Hattersley.”

Edgar also got his hands on information regarding the layout of Anheuser-Busch’s control room and marketing plans, according to the counterclaim.

Anheuser-Busch states that Edgar even went as far as trying to poach the employee for MillerCoors. One text from the source inside Anheuser-Busch assured Edgar “there is a lot more coming too,” the filing states.

This flurry of secretive texting incidentally occurred just before and after this year’s Super Bowl, when Anheuser-Busch began running its high-fructose corn syrup ads slamming MillerCoors’ products. Both Edgar and the Anheuser-Busch employee were subject to non-disclosure agreements at the time of the exchanges.

The counterclaim alleges violations of the Defend Trade Secrets Act and Wisconsin and Colorado’s uniform trade secrets laws as well as conversion and tortuous interference.

In a statement released Thursday, Anheuser-Busch said it “will enforce our right to uncover how high up this may reach in the MillerCoors organization. We take our trade secrets seriously and will protect them to the fullest extent of the law.”

Representatives with MillerCoors could not be reached for comment Friday.

Thursday’s filing brings a different tone to the drama between the two companies, widening the scope and upping the intrigue in the closely watched case.

The case got kicked up to the Seventh Circuit in June when MillerCoors appealed Conley’s original preliminary injunction.

A three-judge panel in that court consisting of U.S. Circuit Judges Frank Easterbrook, David Hamilton and Amy St. Eve issued a partial remand Friday stating that the district court did not follow federal rules when it issued its injunction and modification of that injunction. Hamilton dissented, finding the remand to be unnecessary.

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