A federal judge said today that he will wait until next week to rule on whether Borders can wrest back control of a list of half-a-million customers that the bankrupt bookseller says was effectively stolen by the company that managed its rewards program. Meanwhile, the case is throwing a cloud over an upcoming auction for Borders’ intellectual property.
Borders’ allegations, set out in a court filing this week, accuse the company Next Jump of sending unauthorized emails to inform customers that Borders is partnering with OO.com, a Next Jump coupon site. The bookseller is suing to stop Next Jump from using its customer list and to force it to surrender control of the Borders Rewards web site, which now tells reader that the perks program will be merged into OO.com.
In an email statement to paidContent, Next Jump denied it had done anything wrong. “Borders has been a long-time client. They went bankrupt. We had an agreement with Borders management to move accounts to OO.com to allow Borders members continued access to their earned points,” wrote Executive Vice President Meghan Messenger. “It is now in the courts and we feel we are in the right.”
There is a lot at stake here. The Borders trademark and customer list are the company’s most-valuable remaining assets, and are up for auction on Sept. 14. At least five potential bidders have asked about Next Jump’s activities and one bidder said it was lowering its value of the assets, according to the Borders claim.
Other bankrupt brands like Circuit City and Linens N Things began a second life on the Internet after investors bought their domain names, and Borders’ dispute with Next Jump could also threaten its future viability as an online brand. A new investor intending to revive Borders in the same fashion will no doubt want control over the bookseller’s popular rewards program.
As for Next Jump, the company will be in a world of trouble if the court sides with Borders. Along with a restraining order, lawyers for Borders are seeking an unspecified amount of damages for breach of contract, trademark infringement and theft of trade secrets. If Next Jump’s behavior was as egregious as Borders claims, a judge could also award punitive damages.
The parties will be back in New York bankruptcy court on Tuesday afternoon to argue over whether the judge should impose a temporary restraining for the time it takes to sort out ownership of the website and customer list.