Nady Systems Inc. v. NineWire Digital
Solutions aka Aaron Lynch
Claim Number: FA0201000103935
PARTIES
The
Complainant is Nady Systems, Inc.,
Emeryville, CA (“Complainant”) represented by Frederic D. Schrag. The
Respondent is NineWire Digital Solutions,
Seattle, WA (“Respondent”) Aaron Lynch
REGISTRAR AND DISPUTED DOMAIN NAME
The
domain name at issue is <nady.com>,
registered with Tucows, Inc.
PANEL
The
undersigned certifies that he has acted independently and impartially and to
the best of his knowledge, has no known conflict in serving as Panelist in this
proceeding.
P.
Jay Hines
PROCEDURAL HISTORY
Complainant
submitted a Complaint to the National Arbitration Forum (“the Forum”)
electronically on January 19, 2002; the Forum received a hard copy of the
Complaint on January 23, 2002.
On
January 22, 2002, Tucows, Inc. confirmed by e-mail to the Forum that the domain
name nady.com is registered with Tucows,
Inc. and that the Respondent is the current registrant of the name. Tucows, Inc. has verified that Respondent is
bound by the Tucows, Inc. registration agreement and has thereby agreed to
resolve domain-name disputes brought by third parties in accordance with
ICANN’s Uniform Domain Name Dispute Resolution Policy (the “Policy”).
On
January 23, 2002, a Notification of Complaint and Commencement of
Administrative Proceeding (the “Commencement Notification”), setting a deadline
of February 12, 2002 by which Respondent could file a Response to the
Complaint, was transmitted to Respondent via e-mail, post and fax, to all
entities and persons listed on Respondent’s registration as technical,
administrative and billing contacts, and to postmaster@nady.com by e-mail.
A
timely Response was received and determined to be complete on February 12, 2002.
On February 20, 2002, pursuant to Complainant’s request
to have the dispute decided by a single-member
Panel, the Forum appointed P. Jay Hines as
Panelist.
RELIEF SOUGHT
The
Complainant requests that the domain name be transferred from the Respondent to
the Complainant.
PARTIES’ CONTENTIONS
A. Complainant
Complainant
is a leading manufacturer of audio and video equipment. Its founder, John Nady, pioneered wireless
microphones for top performing musical acts.
Common law use of the mark NADY is claimed since 1976.
Complainant alleges that
Respondent’s domain name, <nady.com>,
is identical to complainant’s mark.
Complainant alleges that Respondent
is an Internet service provider who registered the domain name <nady.com>, without authorization from
Complainant, and leased its use as a web site to Planet DJ, a retailer of the
products of Complainant and
Complainant’s competitors. When
Complainant objected to Planet DJ about the domain name, Planet DJ was unable
to transfer the domain name because it was not the registered owner. Complainant alleges that Respondent made an
unsolicited offer to sell the domain name for $15,000 and after that Respondent
rejected a counter offer of $2000. Hard
fought negotiations reduced the offer to transfer the domain name to a price of
$7000 and later to $3000, but without any resolution. Thereafter, Respondent
began advertising the Complainant’s competitors on the domain name web site.
Complainant alleges that Respondent
is not commonly known by the name Nady, but rather NineWire Digital Solutions,
Inc., and before that Digital Speed Networks.
The domain name was originally registered on June 15, 1998 to
Mobster.net. The Complainant did not
license or otherwise authorize the Respondent to use its trademark or to apply
for any domain name incorporating the trademark.
Complainant alleges that
Respondent’s use was not non-commercial fair use or legitimate nominative fair
use. Complainant alleges that any
possible “fair use” right to use a trademark within the content of a web site
does not extend to using the trademark as a domain name. Because Respondent had no “fair use” or
other non-infringing right to use Complainant’s mark in a domain name,
Complainant alleges that his offering of goods or services on the web site
cannot constitute a “bona fide” offering under UDRP Policy Paragraph 4(c)(i).
Complainant alleges that Respondent
registered and used the domain name to attract Internet users to its web site
for commercial gain by creating a likelihood of confusion with the
Complainant’s mark. Respondent received
$500 per month from Planet DJ to operate a web site under the domain name <nady.com>. The home page of the web site referred to the Complainant and
called itself the “‘official’ un-official Nady Web site,” referenced an
official Nady site, and linked to Complainant’s web site at <nadywireless.com>.
Complainant also alleges that
Respondent registered and used the domain name primarily for purpose of selling
it to the Complainant for excessive consideration. Complainant alleges that Respondent’s further bad faith is shown
by “parking” the domain name at a computer dating service web site that was
never operational. The changing uses
after Planet DJ’s use of the domain name for its web site are claimed to be
additional indications of bad faith.
B. Respondent
Respondent
alleges that it registered the domain name in advance of Complainant’s
application for a Federal trademark registration, which issued under
Registration No. 2,531,147 on January 22, 2002. Respondent alleges that it did not deprive Complainant of using
its name since Complainant registered the domain name <nadywireless.com> on December 3,
1995. Further, Respondent was not the
first person to use the domain name <nady.com>.
Respondent states that it was
approached in 1996 by Planet DJ to provide Internet services, including domain
name registration and web site construction.
Respondent alleges that Planet DJ represented to Respondent that it was
an authorized dealer of Nady products and had a right to use the name in
connection with the sale of those products.
Based on that information, Respondent registered the domain name in 1998
and provided a full range of Internet services to Planet DJ. Respondent alleges that the dispute between
the Complainant and Planet DJ interfered with its three year relationship with
a client. Respondent alleges that
Complainant coerced Planet DJ into finding another web host.
Respondent
decided to retain registration of the domain name and use it for purposes
unrelated to the Complainant’s products.
Respondent first allowed Jake Nady to create an unrelated site. In exchange for providing free web hosting,
Jake Nady allowed Respondent to put up banner ads and links to other
sites. Respondent advertised the site
of its largest customer at the time, Planet DJ, which banner ads offered Nady
and competing products. Thereafter,
Respondent allowed a Miss Nady Anatova to use the domain name and create a
marriage agency web site. Respondent
claims that the two uses by parties with the name NADY was legitimate and
fair. Respondent also claims that the
use by Planet DJ was a legitimate informational reference to its retail sales
that was authorized pursuant to a dealership agreement between Complainant and
Planet DJ as the dealership agreement did not restrict the nature of
advertising.
Respondent alleges that it received
threatening letters and telephone calls and that the amounts offered for
transfer of the domain name did not fully reflect the time and expenses in
providing web hosting services to Planet DJ.
Respondent alleges that certain correspondence from Complainant or its
attorney, which it no longer has in its possession, have been deleted to
distort the circumstances and fabricate a case of cybersquatting whereas the
parties were simply unable to come to terms for a negotiated resolution.
C.
Additional Submissions
1.
Complainant
Complainant
alleges that it never acquiesced in Respondent’s registry of the <nady.com> domain name. It first learned of the registration and use
of the web site in March 1999. Within a
few days, John Nady demanded that Planet DJ cease and desist using the domain
name, which it at first refused to do.
On June 1, 1999, Complainant demanded that Respondent cease and desist
using the domain name. Complainant
distinguishes the facts of Draw-Tite Inc.
v. Plattsburgh Spring, Inc., D2000-0017 (WIPO Mar. 14, 2000) on grounds of
consent and acquiescence.
Complainant
states that to the best of John Nady’s knowledge and the Complainant’s
advertising and sales departments, there is no dealership agreement between the
Complainant and Planet DJ mentioning a right to use “nady” in their
advertising. Complainant questions whether Respondent would have any firsthand
personal knowledge of matters concerning any relationship between the
Complainant and Planet DJ and questions the lack of certification of
Respondent’s Response.
Complainant
alleges that the hallmark of fair use is that there be no confusion as to
sponsorship or endorsement by the trademark holder. Complainant relies upon the dissenting opinion in Estate of Sam Frances v. Magidson Fine Art, D2000-0673
(WIPO Sept 27, 2000) and Patmont Motor
Works, Inc. v. Gateway Marine, Inc., 1997
WL 811770, 1997 U.S. Dist. LEXIS 20877 (N.D.CAL. 1997) for the proposition that
the nominative fair use doctrine of New
Kids on the Block v. News America Publishing, 971 F2d 302 (9th
Cir. 1992) does not extend to using the trademark as a domain name as that
creates a likelihood of confusion as to the source, sponsorship, affiliation or
endorsement of the web site. Finally,
Complainant seeks to distinguish a line of cases relied upon by the Respondent
for the principal that one may in good faith make reference to a trademark in a
domain name used for legitimate commercial trade or commentary connected with
the genuine offering of goods or services.
2.
Respondent
Respondent
claims that it personally reviewed the dealer agreement between Complainant and
Planet DJ and that there was such a document in 1998 that specifically stated
that Planet DJ could use Nady’s marks in their advertising, without any
restriction regarding the medium.
Respondent is unable to seek assistance from Planet DJ in producing the
document due to litigation over the cessation of their relationship. Respondent alleges that Complainant made it
clear to Planet DJ that it would not be able to continue in the role of a Nady
dealer if it continued to use the domain name or Respondent as an Internet
service provider. Respondent asserts a
lack of timeliness in bringing this matter before the forum and claims that the
only fair way to resolve the dispute is in a court of law where the rights of
Planet DJ at the time could be established.
DISCUSSION AND FINDINGS
Paragraph 15(a) of the Rules for Uniform Domain Name Dispute Resolution
Policy (the “Rules”) instructs this Panel to “decide a complaint on the basis
of the statements and documents submitted in accordance with the Policy, these
Rules and any rules and principles of law that it deems applicable.”
Paragraph 4(a)
of the Policy requires that the Complainant must prove each of the following
three elements to obtain an order that a domain name should be cancelled or
transferred:
(1) the domain
name registered by the Respondent is identical or confusingly similar to a
trademark or service mark in which the Complainant has rights;
(2) the
Respondent has no rights or legitimate interests in respect of the domain name;
and
(3) the domain
name has been registered and is being used in bad faith.
The materials provided by
Complainant establish its use of the mark NADY in connection with its products
from a time long before creation of the Internet. Complainant need not rely upon its Federal registration but may
rely upon its common law rights, which it has established. Accordingly, the Panelist finds that the
domain name registered by the Respondent is identical to the mark owned by the
Complainant.
It is evident from the record
that Respondent had knowledge of Complainant at the time it registered the
domain name. Its assertion that it
reviewed a dealer agreement between Complainant and Planet DJ around that time
indicates that it considered whether or not it could in good faith register the
domain name. It proceeded on its belief
that Planet DJ was authorized to use the mark NADY in any form of advertising without restriction as to medium. Planet DJ’s use of the mark NADY in
connection with a bona fide offering of goods and services was either
authorized or was nominative fair use by a retailer. However, there is nothing in the record indicating that
Respondent sought legal advice whether it, as agent for Planet DJ, could
register the domain name. This it
should have done, or it should have sought authorization from the trademark
owner.
Respondent acquired no rights
in the mark NADY and neither Respondent nor Planet DJ have been commonly known
by the domain name.
Respondent’s use was not non-commercial. It charged for its web hosting
services. There also was no
non-commercial fair use. Accordingly,
the Panelist finds that Complainant has established no rights or legitimate
interests in the domain name.
The Panel does not believe
that the Respondent registered or acquired the domain name primarily for the
purpose of selling, renting, or otherwise transferring the domain name to the
Complainant or to a competitor of the Complainant. The Panel also does not believe that the initial offer to sell
the domain name for $15,000 after being notified of the dispute amounts to bad
faith under the circumstances. Such an
offer to sell in the context of settlement discussions is more in the nature of
an offer of compromise that should be excluded pursuant to Federal Rule of
Evidence 408, Life Plan v. Life Plan FA
94826 (Nat. Arb. Forum July 13, 2000).
There is also no evidence in
the record that Respondent has engaged in a pattern of registering domain names
in order to prevent the owner of the trademark or service mark from reflecting
the mark in a corresponding domain name.
Complainant has admitted that either through mistake or inadvertence, it
failed to register the domain name <nady.com>
itself in 1995. Likewise, Respondent
did not register the domain name primarily for the purpose of disrupting the
business of a competitor. Its client
was and apparently is a customer of Complainant. The nature of Complainant’s dealings with its customer Planet DJ
is beyond the scope of this proceeding.
However, the Complainant is
correct in that one of the requirements of nominative fair use is that the use
of the trademarks owner’s mark may go only so far as is reasonably necessary to identify goods or services for
sale or comparison purposes. Further,
the user must do nothing that would, in conjunction with the mark, suggest
sponsorship or endorsement by the trademark holder. New Kids on the Block, supra at 308. Even assuming that a dealership agreement existed at the time of
registration of the domain name that authorized Planet DJ to advertise under
the mark Nady without restriction
as to medium, it was not necessary for Planet DJ to sell the goods of
Complainant on its web site to also identify the web site itself by using a
domain name incorporating Complainant’s mark.
Thus, even if the Panel had before it such an agreement, the fair use
doctrine would not encompass Planet DJ, a retailer of Complainant’s as well as
Complainant’s competitor’s products, registering a confusingly similar domain
name. Further, unlike the cases relied
upon by the Respondent, here we are one step removed, Respondent being an agent
of Planet DJ without any direct or implied authority from Complainant to
register a domain name on Planet DJ’s behalf.
Respondent was clearly aware
of Complainant’s mark and its reputation.
Samsonite Corp. v. Colony Holding,
FA 94313 (Nat. Arb. Forum Apr. 17, 2000) (evidence of bad faith includes actual
or constructive knowledge of commonly known mark at the time of
registration). In order to assist its
client, Respondent intentionally attempted to attract, for commercial gain,
Internet users to a web site which it controlled, by creating a likelihood of
confusion with the Complainant’s mark as to the source, sponsorship,
affiliation or endorsement of the web site.
Gorstew Ltd. v. Regency Travel, FA
94921 (Nat. Arb. Forum July 6, 2000).
Accordingly, the Panel finds that the Complainant has established
registration and use in bad faith under UDRP Policy Paragraph 4(b)(iv). What’s more, once Planet DJ’s authority or
implied license to use the mark NADY
had ended, use of the formerly authorized or licensed mark constitutes infringement. United
States JayCees v. Philadelphia JayCees,
639 F.2d 134, 143 (3rd Cir. 1981).
Accordingly, the Planet DJ banner ad on Jake Nady’s web site was also in
bad faith. However, as noted above, the
Panel has determined that the domain name was registered and used in bad faith
before either the use by Jake Nady or Nady Anitova. Thus, the Panel makes no ruling with respect to the later
unrelated use by Ms. Anitova other than to note that it was after notice of the
dispute under UDRP Policy Paragraph
4c.(i).
DECISION
For the reasons set forth
above, the Panel orders that the <nady.com>
domain name be transferred to the Complainant.
P. Jay Hines, Panelist
Dated: March 4, 2002
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