Monday, 26 July 2010

Is Groupon Sitting on a Legal Timebomb ?

(disclaimer: I'm not a lawyer and this is my personal opinion. I may well be wrong)

Recently Andrew Mason gave an interview on Mixergy where he described how they went about obtaining the domain name groupon.com from it's previous owner who planned to launch a similar service. Essentially it boiled down to Groupon getting a trademark and using it to stop the owner of the domain from launching his service under that name (at which point he sold the domain to Groupon).

This raised a discussion on Hacker News about the legality of registering a trademark to pressure a domain owner to sell up. While there doesn't seem to be a clear answer on the topic, perhaps more worryingly is Groupon's trademark filing which includes the following declaration:

The undersigned, being hereby warned that willful false statements and the like so made are punishable by fine or imprisonment, or both, under 18 U.S.C. Section 1001, and that such willful false statements, and the like, may jeopardize the validity of the application or any resulting registration, declares that he/she is properly authorized to execute this application on behalf of the applicant; he/she believes the applicant to be the owner of the trademark/service mark sought to be registered, or, if the application is being filed under 15 U.S.C. Section 1051(b), he/she believes applicant to be entitled to use such mark in commerce; to the best of his/her knowledge and belief no other person, firm, corporation, or association has the right to use the mark in commerce, either in the identical form thereof or in such near resemblance thereto as to be likely, when used on or in connection with the goods/services of such other person, to cause confusion, or to cause mistake, or to deceive; and that all statements made of his/her own knowledge are true; and that all statements made on information and belief are believed to be true.

Note this trademark was filed in March 2009, a few months before they bought the domain from the original owner but after they were aware (going by the dates in the interview which may be inaccurate) of the original groupon.com. So it's surprising they could make such a declaration at that point.

While this might not be an immediate problem, it likely adds to the potential for legal issues in the future, especially given groupon.com's trademark lawsuit against groupocity.com.

5 comments:

  1. This is a non-issue; that language asserts that they are not aware of any official registration of groupon.com elsewhere -- just buying up a domain name does not constitute a legal right to it.

    The legal right is gotten by official registration, which includes an official mark search in the jurisdictions you want.

    It costs money, and once you've gotten back a 'yay/nay' from the search, you file.

    Even if the guy had said "I OWN GROUPON Trademark in ENGLAND!!!" If he hadn't registered it, he wouldn't have any rights to it.

    Finally, since they bought it from him for six figures, unless their lawyers really screwed the pooch, that dude gave up all rights to the mark, just to be double sure.

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  2. Peter, as a follow-up. I've just bought a domain name. Where do I have to register that trademark (in every territory around the world)?

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  3. I do not seem to understand how groupon works at all. I would have understood if the country had a sort of a goods deficit, but it surely does not. So tell me one simple thing, how can they provide so big discounts? What is in it for them? I am not a businesswoman and this looks like a total secret to me. So I think this company is sitting on a time bomb. You know it is like as if no fax payday loan lenders would charge no interest rate at all which we know is unfortunately impossible. I guess we will wait and see!

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  4. You can register your trade mark to protect your brand, eg the name of your product or service. When you register your trade mark, you’ll be able to take legal action against anyone who uses your brand without your permission, including counterfeiters. Register your Company with Specimark and at the same time, set up your company domain name and get your registered trademark symbol.

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