10 June 1999
Shell faces court battle on its Smart scheme
Donovan: has taken legal action over Shell’s Smart Card loyalty scheme
By Nelli Denny
Shell will this week defend a multi-million-pound law suit from sales promotion agency Don Marketing, which claims Shell stole its idea for the Smart loyalty scheme.
The oil giant is facing charges of breach of contract and misuse of confidential information in the case which begins this Thursday in the High Court.
John Donovan, managing director of Don Marketing, maintains that between 1989 and 1992 he had a series of meetings with Shell’s promotional marketers at which, in response to a verbal brief, he outlined plans for a card-based, multi-brand loyalty scheme.
Shell liked the idea and in 1990 paid Don Marketing for an option, giving the oil giant first refusal on the idea.
During this period Donovan obtained outline agreement from Sainsbury’s that it would participate in the scheme.
At his final meeting on November 24 1992, Donovan claims he was assured that if Shell decided to pursue a multi-brand loyalty scheme he would be involved.
Two years later Shell Smart was triailed in Scotland, and by July the following year it became a multi-brand scheme after John Menzies joined as the first of many partners.
“This is a landmark case for ad and promotional agencies,” says Donovan. “Does the law of confidentiality protect ideas if they are presented in confidence?”
A Shell spokesman said “it is not appropriate to discuss the issue” before the case but added it would “vigorously defend the action”. It is counter-suing Donovan for breach of confidentiality.
Donovan, who will have to sell his house in order to cover the legal costs if he loses, has on three occasions since 1994 initiated action against Shell over forecourt promotions. Each case has been settled out of court, with Shell paying Donovan.