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New Deal Lets B&N Get Borders Customer List

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A bankruptcy judge in New York approved Barnes & Noble’s $13.9 million purchase of Borders’ intellectual property, including its valuable customer list. The approval came after the parties offered a new proposal about how to protect the privacy interests of 48 million former Borders customers, and comes four days after the judge had temporarily halted the sale.

Under the new privacy protection measures, former Borders customers will receive an email informing them that their personal information is being transferred to Barnes & Noble (NYSE: BKS), and giving them fifteen days to disallow the transfer. The companies will also be required to place prominent notices atop and as well as take out a full-page ad about the name transfer in USA Today. The privacy arrangement, described in a Monday court filing, also permits Barnes & Noble to include promotional offers in the notification emails.

The judge’s approval, reported late Monday afternoon, comes two weeks after Barnes & Noble purchased a variety of Borders intellectual property at auction, including the bankrupt bookseller’s trademarks and website. The sale ran into trouble last week when the judge, citing the report of an independent privacy ombudsmen, said that longtime Borders customers were protected by an older privacy policy that forbid the transfer of their personal information without permission. Barnes & Noble said last week that it would walk away from the deal if it was forced to abide by the older policy.

Under the schedule proposed by the parties, the customer notification will be completed by the end of October. At this time, the personal information of former Borders customers who object to the transfer will be deleted and the rest will be transferred to Barnes & Noble.

The purchase of the Borders customer list appears to provide an opportunity for Barnes & Noble to widely expand its direct marketing efforts ahead of the Christmas season. The nature of the customer information is described as follows:

The Consumer Marketing Database contains information for approximately 48 million email addresses. For each of these email addresses,The Consumer Marketing Database contains a combination of some or all of the following data elements: first and last name (for approximately 20.4 million individuals), mailing address (for approximately 11.6 million individuals), seven digit phone number (for approximately 41 million individuals), and month and date of birth (but not year) (for approximately 7.9 million individuals).

The transfer will not include credit card or payment information.