How Groupon Bought The Domain Groupon.com | Hacker News Reader

How Groupon Bought The Domain Groupon.com

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50 pointsAndrewWarner38 comments

Um. They should speak to lawyers right now, the UK has something called "Groundless Threats" protection for trademarks. The guy in question could quite possibly sue Groupon for a substantial amount and get the domain name back.

Groupon knew the guy had the name and the intention to use it for a coupon service, and they then went ahead and registered the guys (unregistered) trademark with full knowledge that the guy was planning on using it (+ with the intention of forcing him to give up the domain). They then used the trademark to make him give up the domain. How could Groupon's lawyers not have warned them that this was a bad idea ?

Did the guy really have rights to the name? In the U.S., for instance, you have to actually use the mark in trade in order to establish a right to it - simply having thought of a use isn't enough. Is there no similar requirement in the UK?

It's an interesting question, and I think one that would have to be decided before a court. Certainly trademarks for prelaunch products have been granted protection before if there's a clear intent for usage (for example the iPad). Given this guy had a specific plan and turned down a substantial amount of money for the domain, that's likely to play in his favour proving that he both had intent and that the brand had value.

However in this case he doesn't even need to prove his usage was trademark worthy, the Groundless Threats doctrine just requires you to be threatened unfairly, which given it seems pretty clear from the interview that the trademark was registered in bad faith (knowing a competitor was going to use it) it seems likely to be covered. If a court finds he was made to sell his domain under duress from a groundless trademark threat then they could invalidate the sale and award substantial compensation.

(ianal)

I'm guessing the high price they paid included some agreements to relinquish any potential IP claims. If it literally happened as described in the interview and the seller took the legal claim at face value they'd have surely settled for a lot less for the domain.

It doesn't matter. If a court finds the contract was made under duress it could invalidate the whole thing including any litigation waivers.

True, but again, I don't think the conversation took place exactly as outlined in the summary. If they were making veiled legal threats they'd have lowballed on price.

An approach along the lines of "we really, really want the name and will pay big bucks for you to relinquish your rights to it; however much you like the name our trademarks are going to make it difficult for you to succeed with it and we're offering you way more than you'll conceivably make off parking income" doesn't seem unduly threatening

It depends on the context really, 250k may have been a low-ball offer, without knowing what they offered pre-trademark I guess it's hard to say.

But yeah it depends exactly what was exchanged between the two parties, but even saying "our trademarks are going to make it difficult for you" could be considered as crossing the line, the UK has fairly stringent rules to prevent frivolous IP threats.

But where do you see the threat here? They haven't tried to interfere with business operations or asserted the English guy would face a loss if he did not comply with their requests. All they did was advise him of their success in getting the mark and warn him off using the domain to infringe upon it in the future. His investment in the domain seems limited to the registration costs for a year or two, and there's no evidence he ever put time or money into building up any kind of business identity for it.

If he had elected to just sit there and keep renewing, and www.groupon.com just took you to a blank page saying 'not affiliated with the Groupon company', nothing bad would have happened. I personally think that having made $250k for doing very little other than have a good idea, he's feeling extremely pleased right now and the last thing on his mind is spending his windfall on bringing a court case of dubious merit.

Well, it worked, so it doesn't seem to have been a bad idea so far... I assume whatever agreement they worked out to transfer the domain also precluded future lawsuits over it or the trademark, but IANAL

They didn't 'force' or 'threaten' him to do anything. Groupon got the trademark first -- by active use even before trademark registration. The other guy got the domain name first. Then the two parties struck a mutually beneficial deal based on their distinct rights.

The domain-owner's 'intent' doesn't count for much; everyone with a domain name has a plausible 'intent' to use it for a related web project.

And the suggestion they 'speak to lawyers right now' is goofy -- they certainly consulted much better legal counsel than is available in this discussion thread before spending $250K for an international domain purchase.

I doubt they would have given a public interview on the topic if they had a UK trademark attorney to warn them they may be in grey territory. Even if there's a low probability of facing a lawsuit, as we've seen in the case of facebook, where there's money there's lawyers.

Also it looks like they didn't mention groupon.com when they filed their trademark. I've made a more detailed analysis at http://news.ycombinator.com/item?id=1549608

Two thoughts come to mind:

1) I wonder if they would have got the domain via the first contact if they had offered $250k, or even $125k there and then (ie no trademark route). When people email me about domains "asking if I'm interested in selling" it's usually because they are looking to pay $500 range. If it's worth $250k to you, use a lawyer and then the other person knows you're serious. I would have thought almost all unused domains are for sale at $250k.

2) No one seems to be thinking about the risk here, which is that they invested a lot of time, effort and money into the Groupon brand (inc trademarking it) but they didn't own the domain.

That seems like quite a risk because, despite common assumption, you are not entitled to a domain just because you own the trademark (the other party could have other circumstances). Mr A R Mani legitimately owned and held armani.com until they had to privately buy him out and this dude could say he was building a community for roof-top gardeners (Gro Upon.com). Put up a dummy site for that and their case is tough.

Not really a very cool way to get the domain.

tl;dr

Company doesn't offer enough for a domain that's their own company name .com.

Domain name is probably worth less then $25k.

Company launchs and grows really big.

Company trademarks the domain and manage to buy it for $250k.

They manage to call it a success.

Question: what if you have a launched business + the trademark to the name and someone still owns and won't sell the .com URL? We own the .co and all other extentions but the .com is preferred, would you go about thr same way groupon did it in this case?

You can't force them to relinquish it. They should know that because you have the trademark, they can't launch anything with that name. They're probably just hoping that the longer they wait, the more invested you'll get in the name and the more you'll be willing to pay.

Are you sure they can't just call themselves "name.com"?

I believe dropbox did exactly the same thing. The lesson here is that you should get a trademark in addition to the domain. Essentially, this makes squatting pretty useless without the trademark.

Well, $250,000 for a non-executed idea isn't a bad payout.

Absolutely. However, it's an edge case.

only because groupon said they were going to launch a business with that name, so the owner couldn't launch a similar business with the same name. he could have still squatted on the domain with an ad-filled landing page.

if they tried to claim the domain (via an arbitration panel through the UDRP) by asserting ownership of the trademark, they would lose because the domain name was registered before the trademark was applied for.

>The lesson here is that you should get a trademark in addition to the domain.

Trademarks (in the UK) are both a registered and an unregistered right.

You get a trademark by using a mark that is suitable to identify the source of goods or services. A website, for example, is a service and so their is an automatically established IP right for the original owners.

Marks are registered in a particular ["Nice"] classification and only protect against other following uses in that same classification.

Strictly (at least in Europe, AFAICT) someone else can use your mark in your field of commerce too provided there is no cause for confusion as to the origin - eg disparate geographical locations. But cost of lawyers and the assumption of confusion tend to rule against this.

I love how ridiculous this statement is. Someone owns a domain name and then another person creates a company and files for a trademark and the original person is the squatter. Violating their intellectual property. I call bullshit.

To get that domain through UDRP they shouldn't stand a chance if registration date of the domain is before trademark or use. It couldn't be registered in bad faith no matter what they were using it for. Of course, there are all sorts of terrible judges on UDRP panels and it's like russian roulette.

Wow, is .25MM cheap for a domain name.. ever? I can't think of a scenario in which it would be. Could anyone enlighten me as to the economics of this?

It's cheap when your business is valued at $1 billion.

Yeh, but it wasn't valued at that when they bought it.

Which the article directly addresses:

"I think we bought it in May 2009 or something like that for maybe $250,000, which seemed like a lot at the time and now it seems cheap."

I think he meant that it's cheap in comparison to what they built.

They built a business with huge revenues. When I asked him if he could at least say that Groupon generates over $100 million, I think he laughed and said that $100 million is small.

Hmm. I did some math here-> http://news.ycombinator.com/item?id=1338758 a while ago. I figured 175M revenue. If 100M is small, I must have been way off.

I mean I get that Groupon is a huge business. I guess the question is are domain name prices relative? If, for instance, this was a public company, and this was disclosed, I would be a pissed off shareholder. Is it better than taking the corporate jet on a family vacation? Yes. Does that make it a good business investment? Don't know. Obviously Groupon is not a public company, but it seems like you could get a much higher ROI on a quarter of million dollars invested in the primary product as opposed to domain name. Maybe not, just my 2 cents.

For trendy consumer startups like Twitter and Groupon, I can imagine that the name does affect word-of-mouth. But in general, I think most products could be called anything and succeed. Meebo is an idiotic name but they have millions of users because their product is solid.

I upvoted you but I disagree completely.

Names are of vital importance.

Meebo may sound idiotic to you but it's rhythm and sound fit the web-2.0 ethos, it's short, easy to spell, easy to share, lends itself to verb-ising, including "me" suggests personal communication and "-bo" links with other site name (I've never heard of it, but I'm guessing it's a myspace/bebo mix based on the name) ...

I think most opinions of names are post-hoc rationalizations. I think that if Meebo was a failure we would all think it was a stupid name.

When Snickers started in Britain everyone expressed the idea that it sounded stupid and Mars Co used this as part of the advertising angle ("[corny French accent]'av' you got the snickers?"). Was/Is it a better name than Marathon? Don't know.

Also are you really claiming that you're the only person able to avoid post hoc analysis? Or indeed that you're immune to it. Perhaps you only think it sounds stupid because you think the product is stupid or because of the style they use to market it.

I was surprised by this. Sure, 250k is tiny compared to the current value of Groupon, but they were also in a superior bargaining position and had crafted a situation where the domain was practically worthless to the original owner. I would have thought they could have talked him down to <100k

Well, for sex.com or x.com it is :)

groupon.com Created on: 29-May-02

As domainers would say - ding-ding-ding we have a winner!

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