Bankrupt bookseller Borders Group Inc
Next Jump, which operates a Borders website and has access to its customer lists, used the site to steer customers toward its own website, Borders said in a lawsuit Wednesday in U.S. Bankruptcy Court in Manhattan.
The case comes at a critical moment for Borders, which is trying to sell its trademarks, customer lists and other intellectual property. Infringement could cause those assets to lose value if customers are steered away from the site, the company said in court papers.
At least one potential buyer has already told Borders it may lower its valuation of the assets due to Next Jump's tampering, court papers showed.
A loss of value would mean less recovery for creditors of the insolvent bookstore chain, which is winding down its operations and going out of business.
Next Jump is causing irreparable harm to
The retailer hired Next Jump to operate Bordersrewardsperks.com, a site established to provide rewards from third-party vendors to Borders' most loyal customers.
Next Jump allegedly emailed customers in hopes of directing traffic to its own site, OO.com, telling customers Borders' Rewards Perks is now OO.com, the lawsuit said.
Borders accuses Next Jump of continuing its actions even after Borders terminated the agreement. The nine-count complaint includes allegations of breach of contract, trademark infringement and misappropriation of trade secrets.
Judge Martin Glenn, presiding over Borders' bankruptcy, scheduled a hearing Friday to consider Borders' request to temporarily restrain Next Jump from using Borders' customer information. Borders' bid for an injunction will be considered at a follow-up hearing on September 15, according to court papers.
The company said in a statement the lawsuit is geared toward protecting its customers.
We take the privacy of our customers very seriously and will act to ensure that measures are taken to protect their information, Borders said.
Representatives for Next Jump did not immediately respond to calls and emails.
Borders has been actively offloading assets since announcing in July that it would liquidate after a takeover deal with buyout firm Najafi Cos fell through. It is conducting going-out-of-business sales at its nearly 400 remaining stores, attempting to sell its real estate leases and preparing to auction its brand and intellectual property.
The company filed for bankruptcy in February, unable to withstand rising competition from online booksellers and from sellers of e-readers such as Amazon.com Inc's
The bankruptcy case is In re Borders Group Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-10614.
The lawsuit is Borders Inc et al v. Next Jump Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-ap-2567.
(Reporting by Nick Brown; Editing by Tim Dobbyn)