Nady Systems Inc. v. NineWire Digital Solutions aka Aaron Lynch

Claim Number: FA0201000103935



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



The domain name at issue is <>, registered with Tucows, Inc.



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



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 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 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.



The Complainant requests that the domain name be transferred from the Respondent to the Complainant.




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, <>, is identical to complainant’s mark.


            Complainant alleges that Respondent is an Internet service provider who registered the domain name <>, 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  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 <>.  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 <>. 


            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 <> on December 3, 1995.  Further, Respondent was not the first person to use the domain name <>. 


            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 <> 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. 




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.


Identical and/or Confusingly Similar


                  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.


Rights or Legitimate Interests


                  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. 


Registration and Use in Bad Faith


                  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 <> 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).




                  For the reasons set forth above, the Panel orders that the <> domain name be transferred to the Complainant.




P. Jay Hines, Panelist
Dated:  March 4, 2002






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