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Marketing Week: High Court papers unveil ‘secret’ Shell writ losses

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Marketing Week

High Court papers unveil ‘secret’ Shell writ losses

By Tom O’Sullivan

High Court papers have revealed that Shell has already lost three copyright battles with the promotional agency that issued a High Court writ against it two weeks ago.

The details of the out-of-court settlements have, until now, remained secret as part of the agreement reached by the two sides.

In its latest legal action, Don Marketing is suing Shell for allegedly breaching its copyright on the concept idea used to create Shell’s Smart card loyalty scheme, which is being tested in Scotland.

All three previous cases hinged on the same claim of infringement.

Additional papers, lodged with the High Court writ, show that in 1996, Shell settled two cases brought by Don Marketing “on terms favourable to the plaintiff’. In both cases, one a Nintendo-themed promotion, the other a Hollywood-themed promotion, the agency claimed that Shell had used its ideas, given in confidence in 1992, without either crediting the agency or paying for such use.

In a third case, Shell paid “a substantial sum” to settle a legal action in April 1994. It resulted from the re-use of the “Make Money” promotion, which Don Marketing first ran for Shell in 1981.

Don Marketing is demanding a multimillion pound settlement in the Smart case. But Shell, which has 14 days after the writ’s issue to respond, says: “We are filing a defence and possibly a counter claim.”

News Analysis, page21

Photograph Caption: ‘Make Money’: Shell had to pay a ‘substantial sum’ in settlement


Pages 21 & 22: NEWS ANALYSIS

Shell action fuels copyright conflict

Don Marketing’s latest High Court writ against Shell is its fourth since 1992.

All have been settled out of court but for the first time we reveal the details of cases which place the spotlight on intellectual copyright.

By Tom O’Sullivan

Shell has already lost three copyright battles in the past four years with the promotional agency which issued a High Court writ against the company two weeks ago (MW April 16).

In its latest legal action Don Marketing claims Shell’s Smart card scheme, which is on trial in Scotland, is based on a “multibrand loyalty programme” which it first developed and proposed to Shell in October 1989.

But now the details of three similar cases of ownership of intellectual copyright have emerged as “similar fact evidence” in its latest claim. Don Marketing clearly hopes that the details will support its claim but it is also hoping to embarrass the oil company.

The details of the three cases, all of which were settled out of court and stretch back six years, have always been kept secret. But additional information contained in the High Court writ issued on April 9, but only publicly available at the end of last week, includes the result of the three actions which also revolved around ownership of promotional ideas.

The first case dates from June 4 1992. Don Marketing claims that in a meeting with Shell’s then promotional manager Andrew Lazenby it proposed a Nintendo-themed forecourt promotion. In 1993 Shell launched its own Nintendo-themed promotion and Don Marketing responded with a legal claim that the scheme was based on its confidential proposal.

According to the information contained in the latest writ the case was settled “on terms favourable to the plaintiff’, Don Marketing, in 1996. A second case, also brought in 1994, was settled at the same time and on the same terms according to the writ.

This second case involved a Hollywood-themed promotion. Again the writ claims details of the promotion idea were first revealed to Andrew Lazenby in a meeting on November 24 1992 for a scheme under the proposed title of “The Hollywood Collection”. In 1994 Shell launched a promotion called “Now Showing the collector card” and again Don Marketing started legal action claiming its confidential information had been used without its permission.

The third case involves the “Make Money” promotion which ran in 1994. An earlier incarnation of Don Marketing, called DMML, devised a forerunner to the Make Money scheme in 1981. It was agreed that the scheme would be jointly owned by Shell and DMML and the oil company gave an undertaking that if the scheme was re-run, Don Marketing would be automatically involved. The scheme was re-run in 1994.

But Don Marketing was neither involved nor paid for its previous involvement.

Again it resorted to a legal action, issuing a writ on April 6 1994. Shell settled the case on April 18 1994 and paid what is described in the latest action as a “substantial amount of money”.

In return Don Marketing relinquished its rights to the Make Money concept.

No compensation figures are given for any of the out-of-court settlements but in the Hollywood case Don Marketing is believed to have received more than £200,000 in settlement.

The three cases were all for short-term promotions. The Smart programme is seen as a long-term investment by Shell. More importantly, the legal row could further delay the national roll-out of the scheme which was scheduled for the end of last year.

Officially it was delayed because the ten partners in the scheme, including Dixons, the RAC and Commercial Union, could not agree a launch date. Advertising for the scheme in Scotland was devised by M&C Saatchi. Its chairman Lord Saatchi has often been credited with bringing the partners in the Smart consortium together.

But Don Marketing claims the idea for a “multi brand” loyalty scheme was first offered to the oil company at a confidential meeting between the agency and Shell on October 23 1989. The High Court claim also reveals that Don Marketing had approached both Sainsbury’s and Tesco, among other potential partners, to join a multibrand scheme with Shell in early 1990.

Sainsbury’s was an initial member of the Shell Smart consortium in 1996 but is not part of the Scottish trial.

The oil company has 14 days after the writ was issued to respond to the High Court action and is acutely aware that its Annual General Meeting on May 8 will be used by Don Marketing managing director John Donovan as an opportunity to increase pressure on the oil company.

A Shell spokesman says: “We will be filing a defence and may possibly look at a counter claim.”

Don Marketing’s solicitor Richard Woodman denies that the latest High Court writ is an attempt to embarrass Shell into an out-of-court settlement. But it raises the issue of ownership of ideas and concepts. If the case makes it to court it could provide a useful precedent for all those who believe companies have used their ideas without permission. •

Photograph caption: Smart: National roll-out delayed


Don Marketing’s account of alleged events outlined in High Court writ Arthur John Donovan v Shell UK Ltd (April 9 1998)

October 23 1989 – Meeting between Don Marketing’s representative Roger Sotherton and the then Shell promotional manager Paul King at Shell-Mex House. Don Marketing’s multibrand loyalty scheme detailed in a document, “A presentation of promotional ideas to Shell UK Oil”, presented at this meeting. A copy of the document, marked “strictly confidential”, left with Paul King. Between October 1989 and July 1990 further conversations between Sotherton, King and two other Shell employees Tim Hannigan and its then national promotions co-ordinator Stuart Carson about the concept.

July 24 1990 – Letter sent by Sotherton to Brian Horton at J Sainsbury including the details of the multibrand concept and an invitation for the supermarket chain to join any future scheme. At the same time Don Marketing granted Shell an exclusive first option on the multi brand loyalty scheme. But Shell decided nor to pursue the concept “at this time”.

May 12 1992 – Don Marketing managing director John Donovan and Sotherton met with Shell promotional manager Andrew Lazenby and proposed a multi-brand promotional game known as “Mega-match”. At the meeting Don Marketing again revealed its multi-brand loyalty programme idea.

May 14 1992 – Don Marketing gave a copy of the 1989 document, “A presentation of promotional ideas to Shell UK Oil”, to Lazenby.

November 24 1992 – Don Marketing revealed further details of the proposed scheme and how it could use plastic swipe cards, and that a “smart card” could capture data and handle financial transactions as well as processing the promotional “currency”, or redemption.

April 18 1994 Don Marketing wins damages from Shell in an out of court settlement brought over the oil company’s “Make Money” promotion.

July 1996 – Don Marketing alerted to Shell’s plans for a smart card consortium by articles in The Sunday Times and Marketing Week.

October 1996 – Two further actions brought by Don Marketing against Shell settled out of court” on terms favourable to the plaintiff’.

April 1997 – Shell launches a Scottish trial of its smart card with advertising through M&C Saatchi.

April 9 1998 – High Court writ issued against Shell UK alleging copyright infringement.

Graphics caption: Shell Smart: Don alleges copyright infringement

Original Article with photographs

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