Crossing The Line – When Imitation Is Not Flattering

They say that imitation is the sincerest form of flattery… however when it comes to business, at what point does imitation turn to irritation and blatant infringement of intellectual property rights?

As the internet proliferates and becomes ingrained as an almost natural extension of bricks and mortar businesses regardless of industry, what would you do and how would you react when a business model, brand and/or software that you have strived to develop, establish and grow is compromised by at times blatant and unethical behaviour of others?

Is it a matter of ‘it’s just business, nothing personal’?  And although the option always exists to follow legal pathways –  is this worth the cost to your business, both financially and resource wise? Where do you draw the line and what would you do if faced with a similar situation?

Case In Point – Shoes of Prey vs. Milk and Honey Shoes

This issue has most recently been brought to our attention by Power Retail contributor, Michael Fox, who is Co-Founder of pure play retailer Shoes of Prey. In his blog 22Michaels, Fox wrote:

Shoes of Prey/Milk and Honey Shoes Designers
When comparing the Shoes of Prey and Milk and Honey Shoes designer tool, the similarities are evident.

“Two weeks ago a US based competitor of ours, Milk and Honey Shoes launched a new version of their online shoe designer, and it looks remarkably familiar – it’s nearly identical to ours. We’re torn between being angry, annoyed and flattered and we’re not entirely sure how to react. While we don’t mind well meaning competition, we do mind the outright copying of the work of others.

“The original shoe designer Milk and Honey Shoes had on their site was fairly clunky to use, but Dorian and her sister Ilissa the women behind Milk and Honey Shoes, had come up with it themselves and it did some things arguably better than our designer… Rather than re-iterating on what they had, or taking the time to innovate and develop something new, they’ve instead blatantly copied our work.”

Fox went on to point out the similarities between the Shoes of Prey and the Milk and Honey Shoes site.

“On the one hand we’re flattered. Milk and Honey Shoes are clearly impressed by our work and what we’ve achieved and would like to emulate that. However there comes a point where emulating the work of others becomes unethical and in our view Milk and Honey Shoes have crossed that line.”

The dilemma now faced by Fox and the Shoes of Prey team, is whether or not to pursue the matter through the appropriate legal channels. Shoes of Prey will also need to assess the cost to its business in terms of brand identity, as well as possible loss in market share and PR coverage.

Domain Squatting – Groupon vs. Scoopon vs. BIGLION vs.

Intellectual property is not just limited to software, as experienced by daily deals juggernaut, Groupon, who’s planned expansion to local shores was delayed due to this very reason.

The company found itself embroiled in a legal stoush with local daily deals site, Scoopon. The situation prompting Groupon founder Andrew Mason, to post the following message to the company blog:

“The worldwide proliferation of Groupon clones has been well documented. One particular clone in Australia called Scoopon, created by the brothers Gabby and Hezi Leibovitch, has been making life difficult for us. Scoopon went a little further than just starting their Groupon clone – they actually purchased the domain name, took the company name Groupon Pty Limited, and tried to register the Groupon trademark (filing for the trademark just seven days before us) in Australia.

The way we see things, this is a classic case of domain squatting – an unfortunate reality of the Internet business. As Groupon became internationally known, opportunistic domain squatters around the world started to buy local Groupon domain names, thinking that we’d eventually be forced to buy them at an insane price. In fact, we tried to do just that, reluctantly offering Gabby and Hezi Leibovich about $286,000 for the domain and trademark—an offer they accepted. But now they’ve changed their minds, and we believe that they’ll only sell us the domain and trademark if we’re willing to buy the entire Scoopon business from them. Left with no other options, we’ve filed a lawsuit against Scoopon, claiming that their Groupon trademark was filed in bad faith (amongst other things).”

With the legal stand off still looming, Groupon launched locally earlier this year under the banner of StarDeals. However it remains to be seen whether the inability to leverage its brand identity, will affect the company’s cut through in the Australian daily deals market.

For Groupon however, the outright copying of its brand and model is all too familiar, as reported by Techcrunch with Russian site BigLion and Chinese site, – making no effort to cover up their blatant mimicking of the successful daily deals site, from business model, site design and navigation.

Groupon vs.
Spot the difference - The website replicates similar features of the Groupon site, including its name!

The Learnings?

In the case of Groupon, as pointed out by intellectual property lawyer, Trevor Choy (speaking to the Sydney Morning Herald), “Groupon’s lawyers should have known that US trademarks can’t be enforced outside of the US against a company that does no business there.” He went on to point out that the company was ‘paying the price for its failure to register its trademark or name as it expanded globally’.

When recently asked about what he wished he knew when first starting his business, Ruslan Kogan, Founder and CEO of Kogan and Milan Direct responded that he wished he bought the domain names for his business globally.

Does this demonstrate that with online properties protecting your intellectual property globally should be part of a future-proofing business strategy that all business owners should tick of the list, especially if their business is successful? If not, is it really the case of building a successful concept, nurturing your brand, developing innovative software, then ‘bad luck’, I’m just going to tweak it slightly, buy your brand name and play in the same space?

“It’s ok to take concepts and improve upon them, or to borrow good ideas and meld them into your own. It’s not ok to take someone else’s work, move a menu from the right to the left and call it your own,” comments Fox.

Speaking to Bevan Clark, Co-Founder and Director of Stateless Systems (who developed coupon website RetailMeNot) about his strategy towards ‘imitators’ of the site, was to ‘not look backwards, put their heads down and run like hell’ – “We are constantly innovating and adding features to the website that the users want”.

However when the ‘imitators’ begin to affect your bottom line and possibly your ability to grow your business, is it really that easy to ignore? Placed in a similar situation to Shoes of Prey and/or Groupon, what would you do?

One thought on “Crossing The Line – When Imitation Is Not Flattering

  1. ACTUALLY Shoe of Copcats opps I mean Prey, Are the ones that STOLE the IDEA in the first PLACE I was online on YOUYUBE and seen the ORIGINAL INNOVATORS Of this it is MILK and HONEY couple of weeks later Shoe of Prey stared to COPY what MILK and HONEY Work Hard to Put together and you all copied by trying to POST Youtube Videos up and its just Sad but you will have Competition for a LONG time to Come you can try to COPY Style but not ORIGINALITY!


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