Groupon claims Australian rival Scoopon reneged on deal to sell domain name, confirms legal action

Group buying giant Groupon has slammed local rival, Scoopon, accusing the site in a explosive blog post of cyber squatting on the Groupon.com.au domain name and then rejecting an offer from Groupon to buy it for $286,000, thereby delaying Groupon’s entry into the Australian market.

Groupon has also confirmed the company is suing Scoopon, created by Gabi and Hezi Leibovich, in the United States for trademark infringement. It wants Scoopon to turn over the Groupon and Scoopon domain names, along with the Groupon Pty Ltd trademark in Australia, and any of the site’s profits.

The lawsuit has been running in the state of Illinois since last year, after Groupon said it was actually losing sales because the Groupon.com.au name was diverting traffic to Scoopon.com.au. It said customers were confused by the alleged similarities between the two names.

Scoopon chief executive Gabby Leibovich says he is confident of his company’s position before the court. 

“Groupon’s attempt to try and have this matter ‘determined’ in the court of public opinion is unfortunate and possibly amounts to sub-judice. As the matters in dispute are presently before the court, it is inappropriate to publicly comment on matters before the court,” he says.

“Scoopon is confident of its position which it will continue to defend, whilst at the same time continuing to provide the leading online group buying service in Australia, despite attempts by Groupon to bully it out of the market.”

“Scoopon is the ‘sister’ website of CatchoftheDay.com.au, which has been offering daily deals (including the provision of entertainment services) to Australian consumers since 2006, well before Groupon came into existence. The development of Scoopon  was a natural extension of the existing consumer offering provided by the founders of Catch of the Day. Consequently, Scoopon  refuses to bow to the US  giant’s  attempt at trying to  bully it out of the  Australian  market.”

Groupon has declined to comment further on the situation.

The matter will head to court in the US on February 5.

In the blog post, titled “Why Groupon Isn’t In Australia”, chief executive Andrew Mason notes Groupon’s absence from Australia despite worldwide expansion, and he says this is because Scoopon has “been making life difficult for us”.

“Scoopon went a little further than just starting their Groupon clone – they actually purchased the Groupon.com.au domain name, took the company name Groupon Pty Limited, and tried to register the Groupon trademark (filing for the trademark just seven days before us) in Australia.”

The dilemma means Groupon has now been forced to enter the crowded Australian market through another brand – Stardeals.

Mason then claims that Groupon has offered $US286,000 to Scoopon in order to buy the domain and trademark back, and even claims that the company accepted.

“But now they’ve changed their minds, and we believe that they’ll only sell us the domain and trademark if we’re willing to buy the entire Scoopon business from them. Left with no other options, we’ve filed a lawsuit against Scoopon, claiming that their Groupon trademark was filed in bad faith (among other things).”

Groupon is the largest group buying site in the world with revenue reported to be over $US300 million. Last year the company reportedly rejected a takeover offer from Google worth $US2.5 billion.

Scoopon was started by Leibovich last year as a spin-off from his other website, Catch of the Day. The company claims to be turning over $100 million a year across both sites combined, with an email database of over 100,000.

But Groupon wants more than just the trademark. In the company’s lawsuit, it says it wants to collect all profits received by Scoopon from sales and revenues of any kind “made as a result of their unlawful action”.

“[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.”

With so many copycats flooding the market, Groupon is fiercely protective of its branding. Last year president Rob Solomon told SmartCompany that “the Groupon brand is the meaningful part of the business, and we want to bring that with us whatever we do”.

But established players in the group buying industry have previously pointed out that by taking so long to enter the Australian market, Groupon may have a hard time competing against the existing market leaders which include Scoopon, Spreets, Jump On It and Cudo.