BCX loses major court battle over Dis-Chem pharmacy software

The High Court has dismissed an application brought by BCX against Vexall which argued that Vexall illegally poached its employees and customers and unlawfully appropriated its intellectual property.

MyBroadband reported earlier this year on a High Court dispute between BCX and Vexall over computer software used by hundreds of pharmacies in South Africa, including Dis-Chem.

Dis-Chem is a shareholder in Vexall, which is a software company that began trading in September 2019.

The intellectual property which BCX has accused Vexall of appropriating is Unisolv, the industry-standard software used by hundreds of local pharmacies to dispense medicine.

In addition to this court victory, the Competition Tribunal also recently found in favour of Vexall, ordering that BCX be prohibited from selling or offering a Unisolv licence on condition that customers purchase value-added services for six months.

“On Thursday 21 May 2020, the High Court of South Africa dismissed an application with costs on the scale as between attorney and client that was brought by BCX against Vexall and 47 other respondents most of which are Vexall employees,” Vexall said.

“In its application, stripped of its emotive and strong language, BCX sought interdictory relief on allegations of collusion, solicitation, springboarding and the use of confidential information against Vexall and most of its employees in addition to the enforcement of restraint of trade provisions against some of the Vexall employees.”

Due to regulations implemented to curb the spread of the COVID-19 pandemic, the case was argued virtually and the High Court found no evidence of any unlawful conduct on the part of Vexall.

As a result, the application was dismissed with costs.

“[The ruling] is welcomed and celebrated by Vexall, its clients and alliance partners and central to the promotion of the rights of software users to elect their value-added service provider of choice,” the company said.

BCX responds

BCX said that it has noted the judgement by the High Court and is disappointed by the ruling.

“BCX has noted the judgement passed down by the High Court on Thursday, 21 May 2020 regarding the matter between Vexall and BCX,” the company said.

“As would be expected, we are disappointed by this ruling.”

“We are currently studying the judgement and taking advice on the implications and effect of this judgement,” BCX added.

“We will decide on further actions, if any, once we have received the advice requested.”

Poaching accusations

The case above was brought about after a number of BCX employees involved in the development of Unisolv resigned and joined Vexall last year.

BCX argued that these resignations were orchestrated, while Vexall said the workers were either retrenched as part of a substantial cost-cutting exercise or resigned seeking job security.

After these employees joined Vexall, Dis-Chem and many other pharmacies told BCX that they would no longer procure “value-added services” from the company.

These include services such as hardware and software installation, central patient profile hosting, and inventory management services.

BCX required customers to purchase value-added services in addition to the Unisolv licence, stating that it was not possible to unbundle these from its software offering.

Following the legal action initiated by BCX, Vexall asked the Competition Tribunal to prevent BCX from inducing its customers not to deal with it by making the licensing of the Unisolv software conditional upon the purchase of value-added services.

The Tribunal subsequently ordered BCX to halt this practice.

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BCX loses major court battle over Dis-Chem pharmacy software