Aliso Viejo-based CitizenHawk Inc., which provides online brand protection services to some of the world’s largest retailers, has been acquired by a New York company that specializes in trademark infringement.
Wolters Kluwer Corporate Legal Services aims to expand its services to law firms and other clients with CitizenHawk under its umbrella.
“They had a strong interest in getting in the online space,” said Dave Duckwitz, who served as chief executive of CitizenHawk until its sale and is a vice president under the new owner.
Financial terms of the deal were not disclosed. Privately held CitizenHawk’s annual revenue is estimated at between $5 million and $10 million. The company is profitable, and its revenue has been increasing at a 15% annual clip, Duckwitz said in an earlier interview.
All 25 of CitizenHawk’s employees are expected to be retained at its office in Aliso Viejo.
Before the Deal
The two companies had worked together for some time and were exploring a strategic partnership before turning to talks of a sale, according to Duckwitz.
“It just materialized into more formal conversations and something larger than a partnership,” he said.
CitizenHawk will maintain its name and operate as part of its new owner’s Corsearch division, which provides research and services on trademark and intellectual property protection to U.S. and international brands.
The company said it typically is the first to inform potential customers they’re being targeted by so-called typosquatters and other online fraudsters.
Typosquatting is the practice of registering misspelled versions of popular website names to capture Web traffic.
Its software scans the Web to identify infringements and redirections. Some typosquatters offer bogus websites designed to look like the original, while others direct traffic to a competitor or knock-off brand. The company takes screenshots of the offending sites and brings them to the attention of targeted client companies.
CitizenHawk will issue warnings, cease-and-desist letters, or policy violation notices to search engine providers on behalf of clients. If that doesn’t work, it files what’s called a UDRP—short for Uniform Domain-Name Dispute-Resolution Policy—triggering a review by a dispute-arbitration panel.
A win means CitizenHawk customers assume control of the offending website and redirect future traffic to the proper website. It gets a percentage of sales that might result.
Customers
The company targets large companies that tie into affiliated marketing networks to drive traffic. It typically is retained on a commission basis or other revenue-sharing agreements. Customers include Apple, Staples, Travelocity, Pacific Sunwear and freecreditreport.com—a unit of Ireland-based Experian PLC, which has North American headquarters in Costa Mesa.
The 500 largest online retailers each have an average of 100 websites infringing on their brand, according to a 2010 Harvard University study on typosquatting. The study estimated the 250 most-visited websites lose almost 440 million impressions annually, along with $364 million in business.
Growth Prospects
CitizenHawk is expected to grow operations with the financial backing of Wolters Kluwer Corporate Legal Services, itself a unit of Netherlands-based information services provider Wolters Kluwer, which is traded on the Euronext Amsterdam exchange and had more than $4.8 billion in revenue in 2012.
“They bought us and are very interested in growing the business and eager to invest in the long haul,” Duckwitz said.
Wolters Kluwer Corporate Legal Services serves 70% of Fortune 500 companies, 90 of the 100 largest global law firms, and 80 of the 100 largest U.S. banks, according to its website. It employs more than 1,500 people in 54 offices around the world.
CitizenHawk had raised $5.1 million in venture capital funding. Its lead investor was Seattle-based Maveron LLC.
Other backers include Match.com founder Gary Kremen and Mark Vadon of jewelry retailer BlueNile.com and kids-clothing site zoolilly.com, according to CitizenHawk’s website.
Seven-year-old CitizenHawk has grown amid a rising wave of online commerce, which topped $225 billion in the U.S. last year, up 16% from 2011, according to the U.S. Department of Commerce.
New York-based market tracker eMarketer Inc. forecasts that figure to jump 45% to $327 billion by 2016, when some 192 million U.S. consumers are expected to make an online purchase, up 15% from 2011, according to Cambridge, Mass.-based Forrester Research Inc.
