Wal-Mart: Stop leaking Black Friday deals

Retailer is threatening legal action if Web sites leak its highly-popular Black Friday circular before Nov. 19.

By Parija B. Kavilanz, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Wal-Mart, clearly annoyed that some Web sites are leaking its much-anticipated Black Friday circular weeks in advance, is threatening legal action if those sites do it again this year.

Brad Olson, the founder of Gottadeal.com, a Web site that markets itself as one of many "official Black Friday deals sites," told CNNMoney.com that he received an e-mail Wednesday from lawyers representing Wal-Mart (Charts, Fortune 500) warning him against "improper release" of the No. 1 retailer's Black Friday sales circular.

And he isn't the only one. Neal Rapoport, founder of Dealtaker.com which also leaks Black Friday ads, received the same legal notice from Wal-Mart on Wednesday.

"It has recently come to our attention that you and/or your company may potentially obtain possession of and untimely release Wal-Mart's sales circulars, advertisements or other information prior to their authorized release dates," the law firm Baker Hostetler, which represents Wal-Mart, wrote in a legal notice e-mailed to Brad Olson and obtained by CNNMoney.com.

The notice said Wal-Mart's circulars are protected by copyright laws, and any unauthorized reproduction, publication or distribution of that information prior to Wal-Mart's release date of Nov. 19 for its Black Friday ads "violates Wal-Mart's right."

"To the extent that the methods of acquisition or use include criminal activity, criminal penalties may also apply," the notice said.

"This is very unusual. I've never been threatened this way by Wal-Mart before," Olson said.

Last year, Olson provided CNNMoney.com with Wal-Mart's Black Friday ad as early as Oct. 30. Wal-Mart didn't officially release its Black Friday deals until closer to the day-after-Thanksgiving salesfest.

Olson has successfully leaked Wal-Mart's Black Friday circular for the past 2 years.

"While I have heard in the past from 2 or 3 retailers about leaking their Black Friday ads, it always has happened after the ad has been posted," Olson said.

"It appears to me that Wal-Mart knows their ad is going to get leaked and is doing whatever they can to intimidate me to prevent the information from being leaked and posted on my site," he said.

Black Friday traditionally is the kick-off to the holiday shopping season. On that day, retailers try to outdo each other with the deepest discounts, or "doorbuster deals," that they offer only for the first few hours that day.

So it's not unusual for people to line up in front of stores as early as 4 a.m. to bag these special low prices on the season's must-have items.

Typically, retailers release their highly-awaited Black Friday circulars listing doorbuster deals only a few days in advance. But lately, more and more Web sites, such as Gottadeal.com and Dealtaker.com, have leaked circulars from Wal-Mart, Target (Charts, Fortune 500), Best Buy (Charts, Fortune 500), Lowe's and other chains weeks in advance.

Although consumers love the early information, it also means that retailers lose the element of surprise as well as much of the sales hype that they would've liked to generate closer to Thanksgiving.

Olson said he hasn't yet decided what he's going to do.

"I think it's unfair. I don't understand why they would do it," he said. He said he has gotten Wal-Mart's circulars sent to him from people who design the ads, print it, sometimes even from Wal-Mart employees.

John Simley, spokesman for Wal-Mart, said the retailer is focused on stopping the leakage at all levels.

"We have tried other methods with inadequate results," Simley said. "We believe that the unauthorized distribution of [Wal-Mart ads and circulars] is a violation of our legal rights. This needs to be respected."

"Every year Wal-Mart's ad is the most anticipated one on our site. We get 2 million clicks on the ad between October and November," Olson said. "This is great publicity for Wal-Mart."

"Not being able to post Wal-Mart's ad will be a big blow to us," he said, adding that he hasn't received it yet.

The other fear for Olson is that he also has an affiliate relationship with Wal-Mart in which Gottadeal.com gets a commission from walmart.com links on its Web site. "We get a small percentage for any product bought on walmart.com through the our links," Olson said.

Olson said he was relieved that the legal notice didn't address Gottadeal.com's business relationship with Wal-Mart. "I'm nervous that could be next," he said.

Dealtaker.com also has the same affiliate relationship with Wal-Mart and other retailers.

"I haven't asked anyone to do anything criminal in order for us to get the ads. We certainly didn't ask anyone to steal it and we're not trying to get into any fights," Dealtaker's Rapoport said.

Rapoport said last year Best Buy threatened to end its business relationship with his company if he leaked the retailer's Black Friday deals.

"The only reason we agreed to not post their deals was because our business contract with Best Buy explicitly said we can't leak their ads," Rapoport said. "I don't think we have this condition with Wal-Mart."

"I think we will do due diligence with Wal-Mart's ads this year," Rapoport said. "If we get it anonymously, I won't guarantee that we won't post it. But if it's an e-mail marked walmart.com, then I probably won't."

Edward Naughton, an intellectual property attorney with the law firm Holland & Knight, said Wal-Mart doesn't have much of a copyright claim if all that these Web sites are doing is printing a list of Wal-Mart's deals.

"It can be argued that factually a list is not copyrightable," Naughton said. "But if these sites scan Wal-Mart's circular and post it to the Web sites, that gets into copyright infringement issues."

What's more, Naughton believes that Wal-Mart is threatening legal action based more on misuse, or theft of confidential information and trade secrets.

Naughton said any Wal-Mart employee, design firm or distribution firm that is associated with its Black Friday ads is probably under contract with Wal-Mart not to leak the information.

"As a general proposition, someone can be liable for misuse of trade secrets if they know that the information they received was obtained in violation of a confidentiality agreement," Naughton said.

In other words, even if Olson or Rapoport got Wal-Mart's Black Friday ad anonymously, Naughton said Wal-Mart can argue that Olson or Rapoport would've been aware that someone breached their contract with Wal-Mart.

"Still, I am not convinced that these leaks are damaging to Wal-Mart. If anything, they only create more buzz and business for Wal-Mart," he said. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.