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Judge Halts Sale Of Borders Name To B&N

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Barnes & Noble’s $13.9 million purchase of Borders’ intellectual property assets is on hold after a federal judge said he needed more time to consider privacy issues related to the bankrupt bookseller’s customer list.

The delay clouds the transfer of Borders’ customer list which contains information about some 48 million names according to court filings. Barnes & Noble (NYSE: BKS) acquired the list and other intellectual assets such as trademarks in an auction last week.

The sale was awaiting bankruptcy court approval but ran into a snag when lawyers for both parties asked the judge to cross out privacy restrictions tied to the deal. Those restrictions were set out in a report by a third-party ombudsmen, and stated that Barnes & Noble should be bound by an earlier Borders privacy policy restricting the transfer of customer names. The report said that Barnes & Noble should be able to use the data only if customers covered by the old policy granted it explicit permission to do so. In a court filing on Tuesday, the company claimed that Borders concealed the ombudsmen’s recommendations and said that it is entitled to back out of the sale if the court does not lift the privacy rules.

According to Reuters, a lawyer for Barnes & Noble told Judge Martin Glenn that the company very much wants to purchase the assets but fears the deal could fall apart. The judge reportedly told the parties that, if he allows the sale to take place on terms agreeable to Barnes & Noble, state and federal regulators might step in with their own privacy enforcement actions.