Report: Borders intellectual property sale delayed by privacy questions

New York City -- A late Thursday report by Bloomberg revealed that Border Group’s planned sale of its intellectual property to Barnes & Noble was delayed due to questions regarding customer privacy.

U.S. Bankruptcy Judge Martin Glenn, Manhattan, asked that privacy rights for 48 million customers be clarified. He adjourned the Thursday sale-approval hearing in order to explore a privacy expert’s claims that how Barnes & Noble used the acquired rights could violate customer privacy.

Barnes & Noble won the auction to buy most of the trademarks and intellectual property of Borders for $13.9 million. Other trademark assets also were sold, making the sale worth $15.8 million to Borders’ creditors.

“Does Borders have the ability to e-mail blast to all customers in its database, essentially giving them the right to opt out of any sale or transfer?” Glenn asked lawyers for Borders in court on Thursday.

Border’s lawyers said they hadn’t considered the option. The hearing to approve the sale has been rescheduled for Sept. 26.

Privacy expert Michael St. Patrick Baxter filed a report with the court, saying that the Federal Trade Commission’s Bureau of Consumer Protection and New York Attorney General’s office, on behalf of the attorneys general of 25 states, expressed concern about the way the sale would transfer personal information. Baxter recommended that Barnes & Noble adhere to certain standards, including honoring an “opt-out” request from consumers who previously opted out of receiving marketing messages from Borders.