Pipex in a pickle: David Hasselhoff drunken antics last straw for $1 billion sale of UK ISP

At the worst possible time, with UK broadband and web hosting company Pipex up for sale, David Hasselhoff, the celebrity fronting its TV advertising campaign is on YouTube drunk, the ISP has been hit by a deluge of complaints by disgruntled clients and is embroiled in a dispute over its claimed intellectual property likely to create more uncertainty and negative publicity.

Pipex Communications Plc chaired by Peter Dubens is the UK broadband and webhosting ISP currently up for sale.

According to a report in The Mail on Sunday newspaper two weeks ago, one bidder, The Carphone Warehouse, was keen to buy Pipex for close to a $1 billion USD.

Since then, everything seems to have gone disastrously wrong for Pipex and as a consequence The Carphone Warehouse and other potential buyers, such as Virgin Media and BT, have lost interest. However the company is still in play as a takeover target and the BlackRock Group has purchased several million shares.

One factor may have been the recent news stories publicising complaints by highly disgruntled Pipex clients. It now appears that the business may have been built up rapidly with repeated acquisitions with a view to it being sold, but without proper service support being put in place for Pipex clients. In other words, a business built on sand.

As part of the build up to the sale, Pipex hired the popular TV celebrity, David Hasselhoff, to front a massive TV adverting campaign presenting Hasselhoff as "The King of the Internet". It was all very amusing until a video of Hasselhoff in a highly intoxicated state was released onto the internet; an ironic and unwelcome development for Pipex at such a sensitive time.

Pipex may also have a problem with its claimed intellectual property rights. Another very unwelcome complication when a company is up for sale.

It turns out that a 90 year old British army veteran Alfred Donovan acquired the domain name www.pipextelecommunicationsplc.com a year ago. It is the precise company name of Pipex Communications Plc, which claims trade mark rights to the corresponding dotcom domain name owned by Donovan. On the surface it appeared to be a straightforward case of "cyber-squatting" remedied by action through the World Intellectual Property Organisation, with Donovan being forced to transfer the domain name.

Pipex duly sent an email ultimatum to Donovan threatening proceedings only to discover that he made global news in a landmark domain name case in 2005 when, at the age of 88, he successfully repulsed WIPO proceedings brought by the oil giant Royal Dutch Shell. The action was in relation to the dotcom domain name for Shell's unified $226 billion company, Royal Dutch Shell Plc.

Wall Street Journal Report: http://shell2004.com/week22/shell_wages_legal_fight_over_web2june05.htm

After Donovan won the Shell case, he continued to wage a relentless campaign against Shell on a gripe website co-owned with his son John, which has cost Shell billions, literally. The gripe site was for a time hosted by Pipex, but was plagued with problems which put it out of commission, often for several days at a time. In response Donovan launched a gripe site directed against Pipex, obtaining the dotcom domain name for Pipex, repeating his coup with the Royal Dutch Shell Plc domain name.

Incidentally, a Russian government environmental official, Oleg Mitvol, confirmed that it was Shell leaked internal documents, passed to him by Donovan, which provided the evidence for a threatened $30 billion dollar lawsuit against Shell in respect of its Sakhalin2 project. Backed into a corner, Shell surrendered ownership of the mega project and had to write down its reserves by 400,000 million barrels (400,000 x $65 = $26 billion loss). In other words, Donovan cost Shell billions.

See Prospect magazine article:
http://www.prospect-magazine.co.uk/article_details.php?id=8209

The huge cost to Shell of Donovan's intervention in the Kremlin/Shell Sakhalin2 negotiations became clearer recently with revelations by The Wall Street Journal of the surrender terms imposed on Shell. Royal Dutch Shell with its partners, was forced to agree to "pay a substantial annual dividend to the Russian government". The report went on to say that the exact amount wasn't clear and will vary, but "It's going to be something under a billion dollars every year." That is on top of the lost hydrocarbon reserves.

Pipex management ignored Donovan's gripe site for nearly a year, until they decided to put the company up for auction. This is when Donovan received the ultimatum from Pipex out of the blue, presumably after it dawned on Pipex that the disputed intellectual property - the domain name - might foul up the sale of the company, which was already in a precarious state of play.

The relevant email correspondence can be read on the following link:
http://pipexcommunicationsplc.com/email-received-from-david-blackwell-pipex-april-2007.html

Donovan won the Royal Dutch Shell case by successfully arguing that his website operated on an entirely non-commercial basis i.e. he was not profiting from exploiting domain names claimed by Shell, but merely exercising his right to free speech on the Internet to criticise a company with whom he had a legitimate gripe. He relied on the same legal principle in obtaining and using the Pipex domain name now in dispute.

Pipex now finds itself in the same highly embarrassing position as Royal Dutch Shell, faced with an even older "old soldier", who is prepared to take on big business. If anything, the situation is even more sensitive bearing in mind that Pipex is up for sale, but cannot pass on title to the top level domain name for the company.

Recently, Donovan was contacted by Luke Todd, Pipex Customer Support Director who put forward a ceasefire proposal in which he promised to resolve all outstanding issues. Todd investigated matters and then apologised "unreservedly" for the poor level of service Donovan had encountered which he described as "unacceptable". In the same email, Todd made an open offer involving a substantial sum as a nominal payment in compensation, plus a free website for five years. He also invited Donovan to transfer the domain name.

Donovan declined the offer on the grounds that it was insufficient to cover his losses arising from the alleged bad service. This included a leafleting campaign against Shell at their HQ offices in London and The Hague which floundered when the website went down. Consequently, the two sides remain in dispute and the Pipex sale remains uncertain.

Pipex clearly picked on the wrong person when they ignored Donovan's complaints. They had not counted on facing a 90 year old ex-soldier armed with his trusty old Sony laptop and bags of fighting spirit who has already humiliated an oil giant.

Donovan says "I fought the Japanese in Burma over 60 years ago, so I am not the least bit frightened to take on bullying corporations, multinational or otherwise, which I consider to be grossly inefficient". Donovan went on to point out "Pipex Chief Executive, Mike Read, was aware of my advanced years, yet evidently had no qualms about issuing an ultimatum threatening me with a law firm which has an army of lawyers".

Donovan claims that despite sending numerous letters of complaint to Read over several months, he has never received the courtesy of a response from him. He is however pleased that Pipex has now admitted its unacceptable support service.

News on the aborted sale of the company and other information about Pipex Communications Plc can be found on: http://en.wikipedia.org/wiki/Pipex

Royal Dutch Shell and Pipex Communications have both discovered to their cost and embarrassment, the power of a $2 a week gripe website to hit them where it hurts. It is ironic in the case of Pipex that its own product is being used against it.