Liberty Group wins against Discovery Vitality and opens the door for Comparative Advertising

Adams & Adams Partner and Chairman, Gérard du Plessis, represented the Liberty Group in the judgment they won in the Johannesburg High Court earlier this month against Discovery Vitality. Not only was the judgment ground-breaking when it comes to trade mark law, but it has interesting implications when it comes to comparative advertising.

In plain summary, Liberty launched a product where they offered benefits to their customers, benefits that could be earned by producing proof of membership of an external wellness programme – like the customer’s Vitality status, in this case. Discovery took Liberty to court on two claims:

• Trademark infringement: Liberty is using Discovery’s VITALITY trade mark without their permission.
• Unlawful competition: Liberty is piggybacking off the investment that Discovery made in creating its Vitality programme.

The court ruled in Liberty’s favour and dismissed all aspects of Discovery’s case, with costs. The court found that Liberty makes it absolutely clear that VITALITY is an external programme and a trade mark of Discovery. Thus, there can be no trademark infringement if there is no consumer confusion. Liberty’s conduct also cannot be deemed unlawful competition, because the data they used was disclosed to them by customers to whom that status belonged i.e. Liberty did not have access to any of Discovery’s proprietary algorithms.

This was the first time where a company used the wellness status created and calculated by a competitor, to calculate additional benefits for their own customers. This is a landmark ruling because now, under certain circumstances, you are now allowed to make use of your competitor’s trade mark without their authority, provided you are not creating the impression that the trade mark is your own. The test is whether consumers are likely to be confused. This might well open the door to comparative advertising, which up to now has generally been regarded as unlawful.

All in all, we could see this have interesting implications as far as marketing communications and business strategy is concerned. Hopefully, consumers will benefit from any such ingenuous strategy adding value to products and services on offer.

Gérard du Plessis

Partner

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