By Rachel Ehrlich Albanese and Avi Fox, Greenberg Traurig, LLP 

The sale of Internet domain names belonging to distressed retailers is a byproduct of technology and opportunity in the current economic environment. Although the retailers have ceased to operate during the economic downturn, their presence on the Internet has persevered. Most of these retailers sold their domain names and associated intellectual property while in bankruptcy. Consistent with the purpose and goals of chapter 11, such sales helped to maximize the value of their estates for the benefit of creditors.

Ironically, however, the liquidators that led the retailers through their last days are the ones rejuvenating the brand names. “The liquidators say they see themselves as brand licensing experts who will receive royalties for the products without the need to pay rent or a sales staff.” These firms bought the intellectual property “with the intention of licensing the brand names for products that will sell wholesale, in department and mass merchandise stores, and online.” Yet, “[t]hose familiar with intellectual property rights say there is no guarantee that a revived brand will be successful after a retailer has gone under.” After all, these brands must still compete with others that have managed to survive. On the other hand, in these difficult economic times, consumers may be attracted to merchandise with familiar names.

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