NEW YORK, Sept 21 (Reuters) - Barnes & Noble Inc, which won the customer information of its bankrupt competitor Borders Group Inc at auction, says it should not have to comply with certain customer privacy standards recommended by a third-party ombudsman.
In court papers, Barnes & Noble said on Wednesday that its own privacy standards are sufficient to protect the privacy of customers whose information it won during an auction last week for Borders' intellectual property assets.
Borders, which is going out of business after filing for bankruptcy in February, raised $15.8 million at auction from multiple buyers who bid on various pieces of its IP portfolio. Borders is scheduled to seek court approval of the sale at a hearing tomorrow in U.S. Bankruptcy Court in Manhattan.
Consumer privacy ombudsman Michael St. Patrick Baxter, an attorney at Washington law firm Covington & Burling, issued a report Wednesday outlining terms under which he believes Barnes & Noble should be able to take on Borders' customer information.
Among Baxter's recommendations is a promise from Barnes & Noble that it will comply with a Borders privacy policy implemented in May of 2008. If Barnes & Noble takes on customer information collected before that policy was enacted, it should be required to get the consent of the customers, Baxter recommended.
Barnes & Noble rejected the consent requirement as "completely unrealistic." The retailer proposed narrowing the recommendations to allow it to use its own privacy policy to govern the customers, which it said provides as much protection as Borders' policy, if not more.
The stringent recommendations set out by Baxter could cause the assets to lose value, and puts the transaction as a whole "at risk," Barnes & Noble said.
Spokespersons for Borders did not respond to requests for comment. An attorney for the company declined to comment. Borders was expected to issue a statement in response to Barnes & Noble's concerns Wednesday evening.
Baxter could not be immediately reached for comment.
Borders announced it would liquidate in July after a proposed sale to buyout firm Najafi Cos fell through amid creditor opposition. Once the nation's second-largest book retailer, Borders could not withstand rising competition from online booksellers and from makers of e-readers like Barnes & Noble's Nook and Amazon.com Inc's Kindle.
The case is In re Borders Group Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-10614
For Borders: Andrew Glenn, David Friedman and Jeffrey Gleit of Kasowitz, Benson, Torres & Friedman; Michael Hammer of Dickinson Wright; Kevin Montee of Horner & Singer.
(Reporting by Nick Brown)
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