LITIGATION: Editorials: Edition: June / August 2020

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Liberty

vindicated

Court clears it to use status of ‘Vitality’ members for its

own offers of cash-back bonuses.

Discovery is a sore loser. Its application for an interdict against Liberty Life having been dismissed by the Gauteng High Court, to prevent Liberty from using ‘Vitality’ information for computing its own ‘wellness bonus’ (TT Oct ’19-Jan ’20), Discovery has circularised consultants with a retort that contradicts both itself and the judgment.

Graciously, according to the circular, Discovery respects the court’s decision and won’t appeal against it. At the same time, however, it sticks to the belief that “what they (Liberty) are doing is morally questionable in that it is using our intellectual property without our consent or paying anything for its use and benefits”.

For good measure, the circular adds that the litigation “revolved around the complex legal framework of unlawful competition”. It turned on the judge’s view of Discovery Vitality and Discovery Life being separate legal entities, whereby Liberty competes only with the latter.

This summary is a disservice to the lucidity of Judge Raylene Keightley. In fact, she expressly held that Liberty’s use of the Discovery trademarks “is bona fide and in accordance with fair practice”. Liberty did not use the ‘Vitality’ trademark in a manner that would give the customer an impression of Liberty being the proprietor of the ‘Vitality’ programme or having a material trade association with Discovery.

There had to be a three-way consideration, said the judge: Discovery’s interests in protecting “what they say are their property rights”; Liberty’s interest “in what it says is its legitimate right to trade”, and the public interest in ensuring that in balancing the other two interests the benefit of competition in trade is not lost.

Members of the public paid for their ‘Vitality’ membership and status, so they should have the choice  in how they wanted to use that status (for example, to disclose their status to maximise cash-back under a Liberty policy offer). Were they prevented from doing so, it would limit competition in the insurance industry.

Discovery had contended that Liberty should require a licence from Discovery Vitality to use the ‘Vitality’ status. The “inevitable consequence” of accepting this “group wrong” approach, the judge held, would be that the non-legal entity of the Discovery group would be given wide powers to control even indirect competition.

Liberty has used an aspect of Discovery’s innovations – the ‘Vitality’ status of its members – to develop and market a cash-back bonus for members of the Liberty Life Plan. “There is nothing obviously unlawful in what it has done,” said Judge Keightley. “The insurance industry uses risk proxies as a matter of course.”

Liberty had not infringed Discovery trademarks. It has not misappropriated Discovery Vitality’s confidential information. It had neither acted dishonestly nor with an underhand motive, the judge continued: “It has been open in its advertising and has not falsely claimed any proprietorship of the Discovery programme.” Richard Jewell, head of retail solutions at Liberty, celebrates the judgment as a victory for the freedom of customers to use their own information as they want and as an affirmation of healthy competition.