September 1, 2011, 2:58 PM

Borders sues a former loyalty club vendor for trademark infringement

Borders asks a bankruptcy judge for a cease and desist order against Next Jump.

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The saga of what will happen to Borders.com after Borders Group auctions off its e-commerce assets later in September has a new twist: trademark infringement.

In a new filing with the U.S. Bankruptcy Court for the Southern District of New York, Borders, No. 200 in the Internet Retailer Top 500 Guide, is suing one of its former loyalty club vendors, Next Jump Inc., alleging trademark infringement and misappropriation of trade secrets.

Borders, which is scheduled to auction off its trademarks, e-commerce assets and other intellectual property to the highest bidder in New York on Sept. 14., alleges that Next Jump is illegally using Borders’ e-mail customer lists and other proprietary loyalty program information to attract shoppers to OO.com, Next Jump’s shopping comparison engine that rewards members with perks and points for shopping online at other participating e-commerce sites.

In 2007, Borders, which at one point operated a successful customer loyalty program that reached more than 40 million members, hired Next Jump to build and operate BordersRewardPerks.com. The site was established to provide members of its Borders Reward Perks program with additional coupons and incentives from other retailers, travel and credit card companies.

But Borders is now suing Next Jump for using Borders’ customer list, including e-mail addresses, to drive business to OO.com and for the unauthorized use of its trademarks. “Despite the fact that Next Jump was expressly advised of the termination of the Next Jump agreement, Next Jump kept that portion of Borders’ customer list in its possession and continues to e-mail Borders’ customers stating that ‘Borders’ Rewards Perks is now OO.com,’” the complaint says. “Next Jump is infringing Borders’ trademark by improperly using Borders’ trademarks in e-mail communications, by continuing to operate the BordersRewardsPerks.com site and by using Borders’ trademarks on OO.com without authorization.”

In its complaint, Borders is asking the bankruptcy court for a cease and desist order against Next Jump and unspecified monetary damages. A judge has yet to rule on the complaint. Borders and Next Jump did not return calls for comment about the lawsuit.

Borders, which filed for bankruptcy in February, says an immediate injunction is needed to prevent an adverse impact on its upcoming trademark and e-commerce asset auction. “By its actions, Next Jump is causing irreparable harm at a crucial point in these Chapter 11 cases,” according to the complaint. “Next Jump’s actions are tantamount to theft of that portion of Borders’ customer list in Next Jump’s control and the goodwill embodied in Borders trademarks and brand, and have already caused and continue to cause significant harm.”

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