James Packer’s $80 million investment in local group buying site Scoopon could affect its legal battle with international rival Groupon, according to the US-based site’s legal counsel.
Groupon 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 of these back, along with the Scoopon.com.au domain.
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Earlier this year, Scoopon – founded by Melbourne brothers Hezi and Gabby Leibovich – secured an $80 million investment from a high-profile consortium including Packer.
Packer invested in the company via his Consolidated Press Holdings vehicle, taking a minority stake in the business.
Groupon now believes the investment will complicate the court case, and says questions need to be answered over whether consortium members will be introduced as witnesses.
“What’s happened recently is that our ‘friends’ have sold the Scoopon business to a new entity, which has become the fifth respondent, and so that involves a new round of pleading,” Groupon counsel Adrian Ryan said.
The Leibovich brothers, who also own Catch of the Day, appeared in the Federal Court in Melbourne yesterday for the first hearing in the dispute.
While introducing Packer into the fight may make the situation more complex, it may also give Scoopon the necessary funds to defeat Groupon if the case continues for some time.
Groupon has argued that Scoopon’s use of the Groupon.com.au trademark had confused some customers, and that its rival is attempting to gain sales as a result.
In its claim, Groupon said the Leibovich brothers “have conspired together for the purpose of appropriating to themselves… the reputation of [Groupon] in Australia or for the purpose of preventing [Groupon] from exploiting its reputation in Australia”.
The Leibovich brothers have also engaged in “passing off”, according to the claim.
“Passing off” occurs when a company adopts a similar name or packaging to a competitor, which could confuse consumers about the product’s origin. It is considered misleading and deceptive conduct under the Trade Practices Act.
If Scoopon is found guilty of passing off or misleading conduct, the Leibovich brothers could be stripped of their entitlement to the Scoopon and Groupon names, and be forced to pay damages.
Scoopon has filed a cross-claim to have its rival forbidden from operating in Australia using the Groupon name as it is too similar. The case will be back in court next month.