Wednesday, September 8, 2010

GroupOn Sues Australian Companies for Trademark Infringement

Groupon, Inc. (“Groupon-US”), the Illinois-based company which specializes in offering daily group discounts and coupons for various goods and services to subscribing members of its website, filed suit in the U.S. District Court for the Northern District of Illinois against two Australian companies, Groupon Pty. Ltd. (“Groupon-Australia”) and Scoopon Pty., Ltd. (“Scoopon”), that are also in the business of offering “group coupon” services in Australia. See Groupon, Inc. v. Groupon Pty. Ltd. et al, Case No. 10-cv-05634 (N.D. Ill. Filed September 3, 2010). A copy of the complaint (without exhibits) can be downloaded here.

Groupon-US has a registration for the mark GROUPON (registered September 22, 2009) in connection with “promoting the goods and services of others by providing a website featuring coupons, rebates, price-comparison information, product reviews, links to the retail websites of others, and discount information.” Groupon-US also obtained a Community Trade Mark registration for the GROUPON mark (claiming priority to its March 13, 2009 U.S. application filing date). See CTM Reg. No. 008226508. Unfortunately for Groupon-US, the company did not have the foresight to also file an application to register the mark in Australia within the six month window of opportunity to claim priority to its U.S. trademark application. Groupon-US claims to operate in over 200 cities nationwide and in 29 countries throughout the world (although the complaint does not state whether or not Australia is one of those 29 countries where it offers its services).

The main crux of the current complaint is the fact that Scoopon, through the website, offers the same type of daily discount/coupon services as Groupon-US using the similar mark SCOOPON (the complaint neglects to mention that Scoopon’s services appear to be currently limited to offerings in eight different Australian cities). Of course, what Groupon-US is probably more upset about is the fact that Groupon-Australia also registered the domain name, which currently displays a “Coming Soon” page “from the people behind Scoopon.” Causing Groupon-US further grief is the fact that on March 18, 2010, Scoopon filed an application with IP Australia (Australia’s version of the U.S. Patent and Trademark Office) to register the mark GROUPON (No. 1351539). Five days later, Groupon-US filed its own application with IP Australia to register the GROUPON mark (No. 1352123) and in July, Groupon filed an opposition against Scoopon’s application.

Groupon-US’s causes of action are for federal trademark infringement, unfair competition, and dilution, deceptive trade practices under Illinois law, and common law trademark infringement. Groupon-US also obtained two copyright registrations for its website -- VAu1-012-452 (registered February 18, 2010) and VAu1-015-272 (registered March 11, 2010). These copyright registrations also form the basis of a copyright infringement cause of action by Groupon-US which alleges that Scoopon’s website infringes Groupon-US’s copyrighted website.

The first thing that comes to mind when seeing Groupon-US’s attempt to have the scope of its trademark rights spread beyond the borders of the United States (and Europe) is the “terrioritality” principle articulated eloquently by the Second Circuit Court of Appeals in ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 155 (2nd Cir. 2007):

The principle of territoriality is basic to American trademark law. See American Circuit Breaker Corp. v. Or. Breakers, Inc., 406 F.3d 577, 581 (9th Cir. 2005); Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 714 (3d Cir. 2004); Buti v. Impressa Perosa, S.R.L., 139 F.3d 98, 103 (2d Cir. 1998); Person's Co. v. Christman, 900 F.2d 1565, 1568-69 (Fed. Cir. 1990). As our colleague, Judge Leval, has explained, this principle recognizes that

a trademark has a separate legal existence under each country's laws, and that its proper lawful function is not necessarily to specify the origin or manufacture of a good (although it may incidentally do that), but rather to symbolize the domestic goodwill of the domestic markholder so that the consuming public may rely with an expectation of consistency on the domestic reputation earned for the mark by its owner, and the owner of the mark may be confident that his goodwill and reputation (the value of the mark) will not be injured through use of the mark by others in domestic commerce.

Osawa & Co. v. B & H Photo, 589 F. Supp. 1163, 1171-72 (S.D.N.Y. 1984).

Precisely because a trademark has a separate legal existence under each country's laws, ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. Rather, a mark owner must take the proper steps to ensure that its rights to that mark are recognized in any country in which it seeks to assert them.

(footnote omitted); see also my prior blog post discussing the exceptions to the “terrioritality” principle.

Of course, in the instant lawsuit, however, Groupon-US is not claiming trademark rights in Australia (although that is probably the subject of the pending opposition). Rather, Groupon-US argues that the Defendants use of SCOOPON in Australia (and the registration of the domain name) infringes Groupon-US’s U.S. trademark rights. The basis for such claims are reflected in the allegations set forth by Groupon-US to claim jurisdiction over these foreign defendants within the State of Illinois:
  • [Scoopon] is doing business in this district, and defendant has promoted discounted goods and services of others on their website, and provided services allowing consumers to purchase coupons, in connection with marks confusingly similar to Groupon's mark, in this district. Further, defendants are foreign corporations, being incorporated in Australia, and provide an Internet website with a substantial effect on United States commerce, and a substantial effect on commerce in this district. [Comment—how exactly does the use of SCOOPON by an Australian company in connection with offering group coupons for goods and services in Australia have a substantial effect on United States commerce and specifically on commerce in Illinois?]

  • Defendant Groupon Pty. Ltd. has regularly and systematically engaged in business in this district by offering its services to the citizens of Illinois through its website at which states that the website is "from the people behind Scoopon". [Comment—since when did a “Coming Soon” sign equate to regular and systematic engagement in business?]

  • Defendant Scoopon Pty. Ltd. has regularly and systematically engaged in business in this district by offering its services to the citizens of Illinois through its website at [Comment—how many citizens of Illinois are going to be interested in coupons for goods and services offered by businesses which are located thousands of miles away?]
While Scoopon may have an interactive website accessible by Illinois residents, there is no indication that Scoopon directed its services at Illinois residents (none of the cities served by Scoopon are in Illinois, or even in the United States) or knew that its services would cause any harm to Groupon-US (assuming that Groupon-US had no presence in Australia – other than its own internet presence – before Scoopon began using the SCOOPON Mark or registered the domain name).

So would an Illinois court’s exercise of personal jurisdiction over these Australian companies comport with the principles of “fair play and substantial justice” (especially given that Groupon-US is already engaged in a battle over the GROUPON name in Australia and could just as easily pursue a civil action against the Defendants in Australia)? We shall see.

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