US group buying pioneer Groupon has hit local rival Scoopon with a trademark lawsuit in a United States District Court, alleging Scoopon’s name is too similar to its own and claiming that Scoopon’s owners even registered a company called Groupon Pty Ltd and the Groupon.com.au URL in Australia.
Groupon wants Scoopon to change its name immediately, pay as-yet unspecified damages, and turn over both the Groupon.com.au and Scoopon.com.au URLs to the company.
Scoopon began as a spin-off from daily deals site Catch of the Day. The two sites are amongs largest online retailers in the country and are set to turn over a combined $100 million this year.
Gabby Leibovich, who runs both Catch of the Day and Scoopon, declined to comment on the matter, as it is currently on-going.
Groupon said in a statement that, “we need to protect our brand and trademark in every country and plan to do so”.
The complaint was filed in the US District Court for the Northern District of Illinois, with Groupon claiming its Australian rival has sold products to customers in the Illinois area.
The complaint alleges Scoopon has committed a trademark violation, through “unauthorised use of the confusingly similar terms Groupon and Scoopon on defendants’ website, related advertisements, and as its domain name”.
It also accuses Scoopon of having committed violations, “in connection with the promotion of discounted goods and services of others, and marketing, advertising and offering the discounted goods and services of theirs under the mark of interstate commerce.”
Groupon also alleges it has even lost sales as a result of Scoopon operating in the Illinois area.
It claims customers have contacted the company in Illinois, believing it to be operated under Scoopon. It alleges the site is losing money as a result of these “illegal and unauthorised acts”.
“[The] Defendant has regularly and systematically engaged in business in this district by offering its services to the citizens of Illinois through its website at www.groupon.com.au,” the complaint states.
“Without any authorisation, license or authority from Groupon, defendants have registered or purchased the domain names, www.groupon.com.au and www.coopon.com.au and have marketed and advertised the confusingly similar Scoopon service mark on its website.”
“Actual confusion to as to source, sponsorship, affiliation, connection or identification has occurred between Groupon’s use of its registered mark and defendants’ unauthorised use of the Scoopon mark, and the websites located at groupon.com.au and Scoopon.com.au on a number of occasions, consumers contacted Groupon instead of defendants.”
The lawsuit is symptomatic of the problem facing Groupon. After only operating for a year and experiencing rapid success, several “copycat” companies have appeared and are using the same business model.
Several of these are operating in Australia, including Scoopon, Spreets, OurDeal and the Microsoft/PBL venture Cudo.
Groupon says in the claim it has noted these, but takes issue with the fact Scoopon’s name is too similar to its own.
It references a similar case the company made against copycat site Groupocity earlier this year, which was also hit with a trademark lawsuit.
“Groupocity has since changed its name,” the complaint states.
Groupon alleges a number of different violations against Scoopon, including deceptive trade practices, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, violation of the trade mark registration and violation of unfair competition laws, along with copyright infringement.
Groupon also claims Scoopon registered the Groupon Pty Ltd name in Australia earlier this year, on March 24.
The company claims it sent a letter to Scoopon requesting the company withdraw its Groupon Australia name, and cease and desist from using the Groupon mark “or any confusingly similar mark in connection with similar or identical services”.
However, it claims that Scoopon, through its lawyers, “refused to comply with Groupon’s demands”.
Groupon is also seeking compensation, although it claims that “due to defendants providing an inferior product”, it cannot calculate the precise amount of damages.
However, it is seeking orders to stop Scoopon from using the Groupon mark or any similar name or domain, including Scoopon. It also wants Scoopon to “deliver for destruction” all advertisements, brochures and current inventory of products and related materials that utilise the Groupon mark. This includes “all storage media”.
The company also seeks all profits received by Scoopon from sales and revenues of any kind “made as a result of their unlawful actions”.
Judging by Groupon’s previous success against Groupocity, Florida trademark attorney Mark Terry points out the company has a good chance of winning this case as well.
“At the heart of this matter is whether there’s a likelihood of confusion between the two marks – Groupon and Scoopon,” he says on his blog.
“It seems to me that since Groupon and Scoopon are so phonetically similar (I mean, they rhyme) and both web sites offer the same service, the likelihood of confusion factors clearly lean toward a finding of infringement. Scoopon would be wise to work out a settlement with Groupon before it gets hit with some large damages.”
Another business in Australia, Zoupon, operates a daily-deals site, but founder Adam Schwab is confident the company is safe.
“Trying to claim ownership of any name which sounds like ‘coupon’, especially when Groupon doesn’t operate in the jurisdiction appears without foundation. It would be like K-Mart bringing a legal claim against Wal-Mart. However, Groupon’s claim against Scoopon for registering the name ‘Groupon’ is a different matter entirely and Groupon appears well be within its rights to try to protect its own name.”
Groupon was founded last year by Andrew Mason, who pioneered the model of delivering group-buying deals. The model works by offering an offer for a local business, but the offer will only go ahead if a certain amount of people sign up.
The company has exploded, and according to a report from TechCrunch earlier this year, 2010 revenue is estimated to be $US300 million. Based on an investment from Digital Sky Technologies earlier this year, the site is also valued at over $US1 billion.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
