If Spree.com loses its domain name, the online storefront says it'll go out of business.
So the fledgling company is suing the telecommunications giant Sprint over the Web address "www.spree.com."
Last December, Sprint received "Spree" as a trademark for its prepaid phone cards. The company sent a letter to Spree.com in late July, asking it to turn over the domain name on grounds that the site was infringing on its trademark. But also in December, Spree.com applied for the trademark for its electronic gift marketplace.
Sprint and Spree.com aren't the only companies who own rights to the name; it's used to sell soda and cameras, too. That's because in the physical world, a name or term can be registered by numerous parties as long as the products don't compete or cause consumer confusion among the different entities. But on the Internet, only one company can use the domain "spree.com."
This dilemma has led to an international debate, with some groups calling for an overhaul to the current domain name registration system. (See related story)
"We clearly offer distinct and different services. But Sprint can operate without 'spree.com' as a domain name--we cannot," said Spree.com founder Mike Dever, who said he's invested $2.5 million in the service.
"I feel the domain name should be granted on a first-come, first-served basis," he added.
Spree.com partners with book, flower, and other gift vendors to operate its retail business exclusively on the Net. Spree.com launched last August, but a beta site was online in May. Legal threats from Sprint soon followed.
Legal experts say this isn't the first fight over domain ownership, and it won't be the last. "This is the No. 1 trademark issue on the Net," said Eric Schlachter, an attorney at Cooley Godward who represents Internet companies.
The conflict between Spree.com and Sprint also illustrates problems e-commerce brings up for brick-and-mortar businesses, even those that have ventured online.
"I think we have a big tension between businesses that have invested billions of dollars building brands in physical space and a new breed of entrepreneurial ventures that are building brands solely on the Net," added Schlachter.
Even though Spree.com was granted rights to the name by the U.S. Patent and Trademark Office that doesn't stop Sprint from getting the site yanked, even temporarily, because the Internet's current domain registrar has its own procedure for trademark squabbles.
When Sprint asked Spree.com to give up the domain name, it also filed a complaint with Network Solutions (NSI), which registers most Net names under the most popular domains, including ".com," .org," and ".net." Under NSI's trademark dispute policy, Spree.com had 30 days to respond. If the companies could not settle the disagreement within the time period, then Spree.com's domain would have been suspended.
At the time, Spree.com hadn't received its trademark. So on August 20, in a last-ditch effort to keep its site from going black, Spree.com filed a lawsuit in a Philadelphia district court seeking a judgment that would grant it use of the domain name.
Yesterday, representatives of both companies meet for the first time, but it's not certain that a legal battle will be avoided. Sprint said today that it doesn't comment on pending litigation; however, the long distance and Net access company stressed its investment in the Spree brand.
"We announced our Spree prepaid calling cards in June 1995. It is our main retail prepaid calling card," said Rob Slemmons, Sprint's corporate communications manger. "We have a variety of prepaid cards in close to 30,000 retail locations nationwide, and as of February, we had produced our 100 millionth card."
The company also would not comment on any plans it had for "spree.com," should it end up with the domain name.
The case could have numerous outcomes, said Schlachter. For example, if Sprint can prove that its Spree calling card is "famous," it may gain access to the domain name. "If it's not considered famous, then it strictly comes down to consumer confusion and that is such a toss-up."
Consumer confusion is decided based on a number of factors, such as the way products are advertised, incidents of actual confusion, or a company's deliberate intent to draw business using another party's trademarked product name.
"If Sprint were able to present adequate evidence that its rights to the trademark predate Spree.com's activities, then according to NSI policy, it should be able to prevent Spree from using that name," he added. "That would be fatal to Spree.com's business."