URL the Pearl
Just last week St. Paul's venerable Hungry Mind bookstore wrapped up its 29th-anniversary sale. But when it comes time to mark 30 years of independent bookselling, the store will do so under a new name. In August founder and owner David Unowsky agreed to sell rights to the name "Hungry Mind" to a fledgling San Francisco-based Internet education portal called HungryMinds.com, which was launched in late September.
By next April 1, Unowsky will have to remove the name Hungry Mind from his Grand Avenue shop, the Hungry Mind Press publishing company, and the literary journal Hungry Mind Review. He will also cede ownership of the domain name hungrymind.com. Though Unowsky hasn't been trumpeting the deal, his Web site does contain a clue to the pending change in the form of a banner ad pointing to the continuing education Web site: "Looking for HungryMinds.com? Click here for online learning."
The proprietor says he wasn't shopping the name, and that Hungry Minds approached him. "I didn't put a want ad out anywhere," says Unowsky. "They called me. They said they were starting this cyber-university and they liked the name." (Hungry Minds founder and CEO Stuart Skorman was unavailable for comment; a spokeswoman for the company refused to be interviewed for this story.)
"When I got up the next morning after having come to an agreement, my first thought was as if I had sold my child," Unowsky goes on. "But I realized that for us to be able to go forward and be who we want to be, this is a great opportunity."
More and more these days, opportunity seems to be a synonym for cash. Local scuttlebutt puts the dollar figure for the Hungry Mind name sale in the neighborhood of $1 million. Aside from characterizing the sum as "a lot of money," Unowsky won't discuss particulars: "I'm not going to talk to you about the money, period." Whatever the amount, it's bound to come in handy in the coming year, as Unowsky expands his store into Minneapolis.
Online business identities are an increasingly valuable commodity. Back in 1994 local Internet consultant Bonnie Neubeck, president and CEO of the Minneapolis-based NETprofit.com, a firm that helps companies increase online traffic and visibility, had the foresight to register the domain name drugs.com. Earlier this year she optioned it to an Arizona entrepreneur, who in turn put it up for auction. In August a San Francisco Internet developer purchased the name for a whopping $823,456.
"I got a very nice chunk, but I didn't get that much," says Neubeck. She declines to be more specific but adds that she also recently sold advertise.com for a combination of cash and stock. What determines the value of a name? "The market," says Neubeck, who recalls receiving e-mails from people who were incensed that she was unwilling to sell them drugs.com for $70, the typical cost of registering a domain name.
Drugs.com was auctioned on Universal City, California-based GreatDomains.com, the nation's largest broker of Web addresses. As of last week the site was taking bids on more than 115,000 names; leading the pack was loans.com, with a current bid of $1.25 million. According to statistics kept by the broker, the average domain name sells for $14,500. "Generally we sell more names out of what's called the bargain showcase," where names are listed for $500 to $1,000, says customer-service manager Daryl Antoine.
All of which would seem to put the rumored $1 million paid for Hungry Mind in the realm of the barely possible. According to the GreatDomains.com Web site, a domain name's value is determined by several factors, including the number of characters in the address (the fewer the better) and the ability to generate commerce. "Names with potential trademark issues," the site's online literature notes, "are generally worthless."
Hungry Minds.com did its homework. When company honchos hit on a name they wanted and found it was taken, they approached the owner and negotiated. They found a willing seller in Unowsky, and a deal was cut that presumably satisfies both sides. It doesn't always work that way.
In a now well-publicized case, the Minneapolis-based Amazon Bookstore sued online-bookselling behemoth Amazon.com, alleging trademark infringement. Owners of the feminist bookstore, in business for three decades, complain that they're fielding daily calls from people who wonder if they're Amazon.com and ask what has become of their order. Amazon.com began selling books online in July 1995; their local namesake came online in August of the following year.
While the tiff is ostensibly a battle over the pristine legal turf of online real estate, Amazon Bookstore attorney Mathias Samuel says he thinks the case will be governed by existing trademark law. "The legal requirement is a 'likelihood of confusion,'" says Samuel, who works in the Minneapolis office of Fish & Richardson. "The best evidence you can show is actual confusion. Amazon Bookstore has extensive evidence of actual confusion: People call them every day and want to know if they're Amazon.com." Samuel answers the frequently invoked criticism that his clients waited three years to file suit by pointing out that it wasn't until last holiday season that online commerce really took off--and really generated confusion for Amazon Bookstore. Attorneys for Amazon.com are asserting that there's not much chance of mistaking its Internet operations for those of a local specialty bookstore. But, Samuel argues, "Amazon is the oldest feminist bookstore in the country. They do a considerable mail-order business around the country."
Counters Amazon.com spokesman Bill Curry: "Our principal argument is that we filed for the name and got federal registration of it and that's something that Amazon Bookstore does not have." Curry points to an August ruling by Judge Richard Kyle denying a preliminary injunction that would have prohibited the e-tailer from using the word Amazon in local advertising, calling it a good sign for his company.
The most common intellectual-property suits involving the Internet deal with so-called cybersquatting, in which someone stakes a claim to the domain name of an existing business or individual. So far there have been few cases like Amazon Bookstore vs. Amazon.com. Earlier this year the California-based Sparc International Inc. got Spark Systems Inc. to stop using the domain name sparksys.com after bringing suit. In September the toymaker Hasbro Inc. lost a bid to snatch clue.com from a small Colorado computer consulting firm called Clue Computing, Inc., when a federal court in Massachusetts found that since the computer firm wasn't selling a game called Clue, there was no infringement. Samuel predicts that many more cases are to come. "[Amazon] is sort of on the cutting edge," the attorney says.
Richard Berman, co-chair of the intellectual-property group and chair of the trademark group at the Faegre & Benson law firm, guesses the online retailer won't risk a trial. "I would think that this is the kind of case that Amazon.com would want to settle," says Berman. "Under traditional trademark law, the first user is the superior party, whether you're big or small." But he notes of the Internet giant, "If in fact they can prove that there is no likelihood of confusion, then Amazon.com should prevail."
The trajectory of the Amazon case could set a precedent for such lawsuits, including one brought by local retailer Joe Reiners, who sells vitamins, herbs, and sports supplements at four Mother Natures stores in the Twin Cities. Reiners has been in business since 1987 and online at mothernatures.com for four years. In a suit filed earlier this month in federal court, he alleges that online herbal retailer MotherNature.com of Acton, Massachusetts, is causing confusion for his customers.
Michael Bayer, chief financial officer for MotherNature.com, won't comment on the litigation. His company, founded in 1995, has raised more than $61 million in venture capital and has registered with the U.S. Securities and Exchange Commission to sell stock to the public. The firm is in the midst of a $17 million national "offline" television, print, and radio ad campaign.
Reiners says he gets a lot of calls and visits from people looking for special offers advertised by mothernature.com. "They're doing all this advertising locally in the papers and on the radio and it's causing a lot of confusion for us," he argues. "On the Internet there's confusion because the domain names are so similar." Though he admits that he's up against a well-funded adversary, Reiners felt he had to take a stand. "We were getting bombarded with people," he says. "We had to seek relief."
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