Niche group buying site Bellabuy, formerly Beautyscoop, says it was forced to change its name after group buying giant Scoopon accused the start-up of trademark infringement based on the word “scoop” in its business name.
One of the Bellabuy co-founders, who wished to remain anonymous, says the business received a letter from Scoopon’s lawyers in May, seven weeks after it launched.
“Scoopon believed we were in breach of trademark for having ‘scoop’ in our business name, demanding it be changed immediately,” she says.
“Initially we thought we had done nothing wrong. We got some legal advice but being two mums working from home we couldn’t afford the legal costs.
“We were told by our lawyer to get rid of the name. Scoopon eventually agreed to a 30-day period in which we had to completely rebrand our website and redo all our promotional material.”
The exercise proved to be expensive and time-consuming for the Melbourne-based business, with the founders estimating they spent between $5000 and $10,000 on legal costs, IT and new advertising material.
Scoopon, which could not be reached for comment, was founded by Melbourne brothers Hezi and Gabby Leibovich, who also own daily deals site Catch of the Day.
Scoopon is embroiled in a legal battle with bitter rival Groupon, which filed a lawsuit against Scoopon last year, accusing the company of registering the Groupon.com.au URL and trademark.
The Chicago-based company wants both back, along with the Scoopon.com.au domain.
Scoopon has filed a cross-claim to have its competitor forbidden from operating in Australia using the Groupon name because it is too similar. The case is before the courts.
The Bellabuy co-founder says while it was difficult to comment on the battle between Scoopon and Groupon her own situation could have been a lot worse.
“We were lucky in a way that it happened so early. If it was six months down the track it would’ve been much worse but it’s still devastating to go through that,” she says.
She estimates she spent between 40 and 50 hours over a two to three-week period to organize the rebranding of the business.
“I worked a lot of nights and weekends … we had to redo all our graphics for advertising, which meant contacting all the people we advertised with,” she says.
“Luckily our clients have been quite supportive – we have a good relationship with most of the people we advertise with.”
The case follows a similar scenario between retail giant Woolworths and independent retailer Organic Marketing Australia over the phrase “honest to goodness”.
Late in March, Organic Marketing Australia – which trades as Honest to Goodness – alleged Woolworths’ latest marketing campaign infringed its intellectual property.
The campaign featured celebrity chef Margaret Fulton, who was quoted as saying Woolworths produce was “honest to goodness”.
The two companies eventually reached a settlement “on mutually acceptable, confidential terms” but Organic Marketing Australia co-founder Matt Ward said it came at a huge cost.
“If this can happen to us then it can happen to other well-meaning good businesses trying to do the right thing,” Ward told StartupSmart.
This article first appeared on StartupSmart, Australia’s top site for advice about starting a business
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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