Netro Corporation v. James Koustas
Claim Number: FA0204000109723
The Complainant is Netro Corporation, San Jose, CA (“Complainant”) represented by Clark S. Stone, of Skjerven Morrill LLP. The Respondent is James Koustas, Littleton, CO (“Respondent”) represented by Robert A. Badgley, of Lord, Bissell & Brook.
REGISTRAR AND DISPUTED DOMAIN NAME
The domain name at issue is <netro.com>, registered with Network Solutions.
The undersigned certifies that they have acted independently and impartially and to the best of their knowledge have no known conflict in serving as Panelists in this proceeding.
Hon Irving H. Perluss (Ret.) served as Panelist.
Prof. David Sorkin served as Panelist.
R. Glen Ayers served as Panelist.
Complainant submitted a Complaint to the National Arbitration Forum (“the Forum”) electronically on April 16, 2002; the Forum received a hard copy of the Complaint on April 18, 2002.
On April 23, 2002, Network Solutions confirmed by e-mail to the Forum that the domain name <netro.com> is registered with Network Solutions and that the Respondent is the current registrant of the name. Network Solutions has verified that Respondent is bound by the Network Solutions 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 April 24, 2002, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of May 14, 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 email@example.com by e-mail.
A timely Response was received and determined to be complete on May 7, 2002.
Complainant submitted a timely additional submission pursuant to Forum Supplemental Rule 7 on May 13, 2002. Respondent also submitted an additional submission in compliance with Supplemental Rule 7, on May 15, 2002.
On May 29, 2002, pursuant to Respondent’s request to have the dispute decided by a three-member Panel, the Forum appointed Hon. Irving H. Perluss, Prof. David Sorkin, and R. Glen Ayers as Panelists.
Complainant requests that the domain name be transferred from Respondent to Complainant.
Complainant Netro Corporation (“Netro” or “Complainant”) says that it is a global provider of broadband fixed wireless access systems, founded in November 1994. It alleges that it has used the mark NETRO continuously in connection with its business. Netro became a publicly traded company in August 1999; it trades on the NASDAQ market under the symbol NTRO. Netro registered the domain name <netro-corp.com> in September of 1996 and has maintained a web page since 1996. Netro applied for registration of the trademark NETRO with the United States Patent and Trademark Office in January of 2000.
Netro states that it was unable to register <netro.com> in 1995, because that domain name was unavailable; it later learned that the name was registered to and being used by an unidentified offshore Internet Service Provider. Sometime after 1996, Respondent James Koustas (“Koustas”or “Respondent”) acquired the <netro.com> domain name.
Complainant asserts that the domain name is identical or confusingly similar to Netro’s name and also to the trademark it uses. It asserts use – particularly as its corporate name -- since November of 1994. Netro also asserts common law trademark rights based on continuous use since at least November 1994.
Netro says that Respondent, Koustas, is not offering any bona fide goods or services in connection with <netro.com>; that he is not known by the name “Netro”; and, that he does not operate a business or other organization under the name. Netro says that <netro.com> is has been used to divert visitors to the web page of “Fighting Bull Technologies LLC,” a web site that appears to lack any information more current that August of 2000, and where the majority of the information on the website dates from 1999. Complainant asserts that there is no legitimate business purpose involved and that Koustas is attempting to “hold” the domain so that he can auction the name to the highest bidder. Netro alleges that Koustas is in the business of acquiring and selling Internet domain names and that he has asserted that he own “thousands of domain names.”
Upon being informed of Complainant’s interest in the name, Koustas attempted to sell the domain name for a substantial sum; he allegedly demanded “six figures.”
Netro says that, while Koustas variously claims to have owned the <netro.com> domain since either 1994 or 1995, Network Solution’s records indicate that Koustas registered <netro.com> with Network Solutions on or about July 19, 2000. Under Policy ¶ 2, it was Koustas’ responsibility to determine whether his domain name registration infringed or violated someone else’s right.
Even if Koustas did not know of Netro’s rights in NETRO at the time he registered “netro.com”, Koustas’ continued use of “netro.com” is in bad faith as defined by Policy ¶ 4(b).
Koustas has told Complainant that he will not sell the domain name to Netro for less than “six figures,” or $100,000, an amount far in excess of any out-of-pocket costs he may have incurred for the domain name. Registration and use of a domain name for the purpose of selling it to a trademark holder, or to a competitor of a trademark holder, for valuable consideration in excess of out-of-pocket costs is evidence of bad faith registration and use.
Complainant says that additional evidence of the bad faith acquisition or registration of <netro.com> can be found in the nature of Koustas’ business, which is the buying and selling of domain names. Koustas’ July 19, 2001 email states that his business partner is his brother, Nick Koustas. Nicholas Koustas is the President of “Rolling Dice Productions” (“RDP”), and Koustas is a Director of RDP. RDP is in the business of buying and selling domain names: “RDP, Inc., leases, purchases and sells domain names while also representing third parties in related transactions.” Based on Koustas’ assertions about owning “thousands of domains”, and his affiliation with RDP, it is apparent that Koustas is in the business of acquiring domain names and selling them for profit. This type of business practice is strongly indicative of bad faith.
Respondent says first that Complainant has no registered trademark for “Netro.” While Complainant has applied for registration in the United States, the Complainant did not file its application until January 13, 2000, and the application was not published for opposition until May 8, 2001. A third party has filed a request for an extension of time in which to oppose the mark’s registration. More than two years have passed without registration being granted to Complainant.
In its Complaint, Netro alleges that the mark “NETRO” has been in continuous use since November 1994, but in its filings with the Patent and Trademark Office, Netro stated that it first used the mark on July 15, 1996, and first used it in commerce on that same date. This is a 21-month discrepancy.
Complainant also has not shown that the alleged mark is a common law mark. Netro has not alleged that the mark has acquired distinctiveness. Complainant has failed to provide evidence that the alleged mark “Netro” identifies Complainant’s goods or services.
In its 2000 Annual Report, Complainant states this it has just “successfully transitioned from being an early-stage company supplying equipment primarily for pilot sales and customer trials to a more mature company, delivering equipment for the first commercial rollouts of our broadband wireless access solutions.” In that Annual Report there is no indication that Complainant sells any goods or services under the mark “Netro.” Respondent asserts that the name NETRO is at best a trade name which is not used as a mark.
Respondent asserts that Complainant’s unregistered alleged mark is, at best, very weak, and in any event is limited in commercial scope to the telecommunications sector.
Respondent asserts that his family businesses have controlled and used the domain name, <netro.com>,” since 1996. Prior to 1996, the Domain Name was owned and used by a company that was purchased in 1996 from “Shaman” by entities owned by his family.
The name <netro.com> was acquired in 1996 from a company whose business activities included the development of a three-dimensional network browser software product known as DpIV, and the operation of an Internet Service Provider known as “DASH.com” (“Denver Area Super Highway”). The DASH Web site prominently featured the term “Netro” -- shorthand for “Netropolis.”
To this day, the Domain Name <netro.com> continues to resolve to a Web page featuring the DpIV technology and inviting visitors to enter the “Netropolis” offered by Fighting Bull. From 1996 to the present, the Koustas companies (Takshele and Fighting Bull) have pointed their Shaman-acquired domain names, including <dpiv.com>, <netro.com>, and <netropolis.com>, to Web sites featuring and/or linking to the DpIV software and the “Netropolis” virtual city where the Koustas companies’ software and services are showcased.
In addition, from the mid-1990s to the present, the Koustas brothers conceived of a novel Internet business concept in early 2000 which, when brought to fruition, would introduce a new type of insurance pertinent to the Internet. The Koustas brothers engaged one of the nation’s premier law firms, Bartlit Beck Herman Palenchar & Scot, and incorporated Netro, Inc. in June 2000. The Koustas brothers successfully sought strategic partners for the new insurance concept, including a major insurance broker (A.J. Gallagher) and a major law firm with a prominent insurance practice (Lord, Bissell & Brook). Respondent’s brother, Nicholas Koustas, is presently negotiating with one of the largest insurance companies in the world and another large publicly-traded company, to bring about this new insurance product.
The foregoing uses of <netro.com> by the Koustas brothers since the mid-1990s easily qualify as pre-dispute use, and/or preparations to use, the Domain Name in connection with a bona fide offering of goods or services under UDRP ¶ 4.(c)(i).
As to “bad faith use”, Netro has proven no bad faith: “This case is nothing more than one company coveting a domain name, failing to persuade the owner to part with it, and then launching a UDRP complaint to acquire the domain name on the cheap.”
Koustas then asserts that there is absolutely no evidence that Respondent acquired <netro.com> with Complainant or its alleged mark in mind. Respondent had never heard of Complainant or its alleged “Netro” trademark in 1996, when Respondent’s company acquired and began using the Domain Name. He first learned of the competing use when he received an e-mail inquiry in June 1999.
There is no evidence that Respondent even should have known of Complainant or its alleged marks when Respondent’s related company acquired <netro.com> in 1996, for Complainant had at that time only an unregistered mark for which no application had been filed.
Complainant admits that Respondent did not register <netro.com> in bad faith, as reflected in the assertion that “[e]ven if Koustas did not know of Netro’s rights in NETRO at the time he registered netro.com, Koustas’ continued use of netro.com is in bad faith ¼.” Respondent asserts that Complainant must prove both bad faith registration and bad faith use.
Complainant does not allege any violation of ¶ 4.(b)(iii) (disrupting a competitor’s business) or ¶ 4.(b)(iv) (intentionally diverting Internet traffic for commercial gain). With regard to ¶ 4.(b)(ii), Complainant does not allege “preclusive registration” by Respondent. Complainant neither alleges nor proves that a single domain name in Respondent’s inventory is offensive to someone else’s trademark. Respondent’s alleged ownership of “thousands of domain names” is no more remarkable than a supermarket’s ownership of dozens of cash registers. While several thousand UDRP arbitrations have been filed in the past two and a half years, not a single case names the Koustas brothers (or any related entity) as a Respondent.
The gravamen of Complainant’s “bad faith” claim seems to be under ¶ 4.(b)(i). Complainant alleges that Respondent “has maintained the domain name netro.com only for the purpose of selling, renting or otherwise transferring the domain name registration to [Complainant] for valuable consideration in excess of his out-of-pocket costs.” This claim falls flat for two reasons. First, the UDRP does not apply to bad faith maintenance of a domain name.
Second, there is not a shred of evidence that Respondent’s primary purpose for registering the Domain Name was to sell it at a profit. Respondent strongly denies the assertion that Respondent “has threatened to sell netro.com to the highest bidder....” The e-mails attached to the Complaint confirm the opposite. Further, Respondent says that there is nothing unusual, improper, or (most importantly in the present context) actionable about a domain name owner responding to a series of non-hostile solicitations from another company with a statement that his domain name is valuable to him and he will not part with it for less than “six figures.”
It is not bad faith for the owner of a valuable domain name to reject an unacceptable purchase offer, absent other evidence of bad faith.
Complainant’s own “evidence” demonstrates that Respondent did not register <netro.com> with the primary purpose of selling, leasing, or otherwise transferring it at a profit. Complainant heard nothing from Respondent in 1996, 1997, and 1998. As noted above, Respondent had never heard of Complainant until being contacted by Complainant in 1999. Indeed, Respondent never offered to sell or lease the Domain Name until the subject was raised by Complainant in 1999.
Respondent also has filed a request under Rule 15(e) for a finding that the Complainant has engaged in reverse domain name hijacking. Respondent asserts that the Complaint has been filed in bad faith because both Complainant and its counsel should have known that the Complainant could not show that it held a mark in the name “Netro;” that Complainant knew of Respondents use of the word for years and never asserted any claim; and, that Complainant and counsel should have known that the requisite showing of “bad faith” could not be made. “A Rule 15(e) declaration is proper where the complainant knows or clearly should know that it cannot prove all three UDRP elements and nevertheless files the complaint.”
C. Additional Submissions
Both parties submitted additional pleadings. Both were timely. In Complainant’s “Written Response ...,” Complainant argues that Respondent has provided no or insufficient evidence of any pre-Complaint use of the domain name. Complainant also asserts that it holds a mark. As to “bad faith,” Complainant once again asserts that Respondent is affiliated with “Rolling Dice Productions,” which allegedly holds domain names for sale or resale.
In the “Respondent’s Additional Submission ...,” Respondent continues to attack the Complainant’s assertion that it holds a mark. As to “rights in the name,” Respondent again asserts that it has been using the domain name since 1996. As to “bad faith,” Respondent points out that the thrust of the Complainant’s additional submission is Respondent’s failure “to explain his affiliation with Rolling Dice Productions, Inc. This, of course, assumes that there is something that needs explaining. Complainant fails to allege, still less prove, that a single domain name held by Rolling Dice or Respondent infringes on the rights of anyone. Respondent will not waste its, the Panel’s, time rebutting phantom allegations.”
First, the Panel finds that the Complainant has failed to establish the existence of a mark at common law. The mark is not registered in the United States or in any other jurisdiction. Therefore, the Complainant must come forward with sufficient evidence to show the existence of the mark as a common law mark. The evidence presented is not sufficient; conclusory affidavits and arguments are not enough. Complainant asserts that the disputed domain name is identical to NETRO, a mark in which it holds rights by way of trademark application currently pending before the U.S. Patent and Trademark Office. See SeekAmerica Networks Inc. v. Masood, D2000-0131 (WIPO Apr. 13, 2000) (finding that the Rules do not require that the Complainant's trademark or service mark be registered by a government authority or agency for such rights to exist. Rights in the mark can be established by pending trademark applications); see also British Broadcasting Corp. v. Renteria, D2000-0050 (WIPO Mar. 23, 2000) (noting that the UDRP “does not distinguish between registered and unregistered trademarks and service marks in the context of abusive registration of domain names” and applying the UDRP to “unregistered trademarks and service marks”).
That said, Complainant has not established common law rights in the NETRO mark. The application has not been granted and is contested. There is no real evidence of a common law mark. See Cyberimprints.com, Inc. v. Alberga, FA 100608 (Nat. Arb. Forum Dec. 11, 2001) (finding that the Complainant failed to prove trademark rights at common law because it did not prove the CYBERIMPRINTS.COM mark was used to identify the source or sponsorship of goods or services or that there was strong customer identification of the mark as indicating the source of such goods or services); see also Lowestfare.com LLA v. US Tours & Travel, Inc., AF-0284 (eResolution Sept. 9, 2000) (finding that marks classified as descriptive cannot be protected unless secondary meaning is proven, and to establish secondary meaning the Complainant must show that the public identifies the source of the product rather than the product itself).
Registration of a company name with a state’s secretary of state does not create protectable rights under the Policy. See Cyberimprints.com, Inc. v. Alberga, supra (finding that, without further evidence of common law trademark, the Complainant did not establish rights to the CYBERIMPRINTS.COM mark within the meaning of Policy ¶ 4(a)(i) by registering its company name CYBERIMPRINTS.COM, INC. with the California Secretary of State); see also Sampatti.com Ltd. v. Rana, AF-0249 (eResolution July 31, 2000) (“[T]he mere fact of creating and operating a company having as a name a common word plus a dot and a TLD suffix does not give to the company itself the sole right to the word.”).
Next, given that the domain name was registered on or about the time that the Complainant was organized, and has been owned by either Respondent or its predecessors in interest since that time, it is very difficult to see bad faith. Complainant, by its own pleadings, learned that the domain name was registered to another as early as 1995, when it attempted to register the domain name; it did register <netro-corp.com> at that time.
While Complainant has rights in the NETRO name, Respondent also has rights in the disputed domain name by way of being the successor to the first person to register the name. See Car Toys, Inc. v. Informa Unlimited, Inc., FA 93682 (Nat. Arb. Forum Mar. 20, 2000) (finding that Respondent has rights and legitimate interests in the domain name where Complainant submitted insufficient evidence to establish either fame or strong secondary meaning in the mark such that consumers are likely to associate <cartoys.net> with the CAR TOYS mark).
The Policy requires both registration and use of a domain name in bad faith in order to make out a successful claim. Policy ¶ 4(a)(iii). Complainant has failed to establish bad faith registration. See Caterpillar Inc. v. Off Road Equip. Parts, FA 95497 (Nat. Arb. Forum Oct. 10, 2000) (refusing to find bad faith registration where the Complainant failed to submit any evidence that the domain name was registered in bad faith).
Respondent’s predecessor also could not have been aware of Complainant’s interest since that entity registered the name before or just after Netro came into existence. See Open Sys. Computing AS v. degli Alessandri, D2000-1393 (WIPO Dec. 11, 2000) (finding no bad faith where Respondent registered the domain name in question before application and commencement of use of the trademark by Complainant).
The fact that Respondent may have then offered to sell the name is not evidence of “bad faith.” See Etam, plc v. Alberta Hot Rods, D2000-1654 (WIPO Jan. 31, 2001) ("Respondent’s offer to sell the domain name does not constitute bad faith, in light of the fact that it has a legitimate interest in the domain name"); see also Physik Instrumente GmbH. v. Kerner, D2000-1001 (WIPO Oct. 3, 2000) (finding no bad faith where the Respondent offered the domain name for sale while their business plans to use the domain name were in a state of unrest).
Offers or counter-offers to sell the disputed domain name do not evidence bad faith as the negotiations were initiated by Complainant. See Pocatello Idaho Auditorium Dist. v. CES Marketing Group, Inc., FA 103186 (Nat. Arb. Forum Feb. 21, 2002) (finding that "when a Complainant indicates a willingness to engage in a market transaction for the name, it does not violate the policy for a [Respondent] to offer to sell for a market price, rather than out-of-pocket expenses"); see also Open Sys. Computing AS v. Alessandri, D2000-1393 (WIPO Dec. 11, 2000) (finding that Respondent was not acting in bad faith by discussing a sale when Complainant initiated an offer to purchase it from Respondent). Respondent clearly did not register the domain name primarily for the purpose of selling it, and thus, Policy ¶ 4(b)(i) has not been satisfied. See Mark Warner 2001 v. Larson, FA 95746 (Nat. Arb. Forum Nov. 15, 2000) (finding that considering or offering to sell a domain name is insufficient to amount to bad faith under the Policy; the domain name must be registered primarily for the purpose of selling it to the owner of trademark for an amount in excess of out-of-pocket expenses).
While this Panel would agree, where a Respondent or an affiliate or close relative is in the business of selling domain names, such could allow an inference and finding of “bad faith.” See Armstrong Holdings, Inc. v. JAZ Assoc., FA 95234 (Nat. Arb. Forum Aug. 17, 2000) (finding that the Respondent violated Policy ¶ 4(b)(ii) by registering multiple domain names which infringe upon others’ famous and registered trademarks); see also Pep Boys Manny, Moe, & Jack v. E-Commerce Today, Ltd., AF-0145 (eResolution May 3, 2000) (finding that, where the Respondent registered many domain names, held them hostage, and prevented the owners from using them, the behavior constituted bad faith); see also Nabisco Brands Co. v. Patron Group, D2000-0032 (WIPO Feb. 23, 2000) (holding that registration of numerous domain names is one factor in determining registration and use in bad faith).
In this case, however, the facts do not fit the allegation, for the Respondent’s predecessor registered the name before or just after the Complainant named itself. How could Rolling Dice, or anyone, have registered the name of a new or even non-existent entity for purposes of hijacking the domain name for later resale? There is no evidence that anyone was aware of the existence of the Complainant as an entity named Netro as of the date the domain name was registered or as of the date it was acquired by the Respondent or one of his family’s entities. There is little evidence that he was aware of the existence of Netro when the name was renewed and or registered in Respondent’s name in 2000. Given these facts, “guilt by association” would be highly improper.
Respondent has asked the Panel to find that Complainant has engaged in Reverse Domain Name Hijacking on the ground that Complainant filed a UDRP Complainant with knowledge that it could not prove the requisite elements of the Complaint. UDRP Rule 1 explains: “Reverse Domain Name Hijacking means using the Policy in bad faith to attempt to deprive a registered domain-name holder of a domain name.”
For cases dealing with Reverse Domain Name Hijacking, see e.g. Koninklijke KPN N.V. v. Telepathy Inc., D2001-0217 (WIPO May 7, 2001) (finding that, to prevail on a claim of reverse domain name hijacking, Respondent must show that Complainant brought the claim in bad faith despite the knowledge that Respondent had an unassailable right or legitimate interest in the disputed domain name, or that Respondent lacked the requisite bad faith registration and use of the disputed domain name); see also Church in Houston v. Moran, D2001-0683 (WIPO Aug. 2, 2001) (noting that a finding of reverse domain name hijacking requires bad faith on Complainant’s part, which is proven when Complainant knew or plainly should have known that one of the three elements in Policy ¶ 4(a) was absent); see also Curb King Borderline Edging Inc. v. Edgetec Int’l Pty., FA 105892 (Nat. Arb. Forum May 10, 2002) (finding that, when Complainant is aware of facts that bear a direct relation to the dispute and fails to include them in its Complaint, Complainant’s omission constitutes an abuse of the administrative proceeding, warranting a finding of reverse domain name hijacking); see also Qtrade Canada Inc. v. Bank of Hydro, AF-0169 (eResolution June 19, 2000) (finding that the Complaint was brought in bad faith given that Complainant spent one year trying to buy the name from Respondent and over-stated to the Panel the status of its pending trademark application).
Respondent also says that Netro’s additional submission provides even greater grounds to find Reverse Domain Name Hijacking. See TWA Airlines LLC v. Heathrow Express Operating Co., FA 102956 (Nat. Arb. Forum Feb. 6, 2002) (finding that Complainant’s filing of an additional submission supported a finding of Reverse Domain Name Hijacking where Respondent previously submitted evidence conclusively demonstrating its rights in the contested domain name under the Startup Trademark Opposition Policy).
This is a close call, but the Panel has determined not to find that Complainant has attempted a Reverse Domain Name Hijacking. True, the case was very weak, and probably should not have been filed, the facts do not justify a finding under Rule 15(e).
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 Complainant has failed to demonstrate the existence of a trade or service mark; therefore, while the Complainant’s name and the domain name are identical, the first element is not shown.
Rights or Legitimate Interests
Respondent’s rights in the name, which are very weak, appear to predate or be almost contemporaneous with the rights of the Complainant.
Registration and Use in Bad Faith
There is simply no evidence of bad faith. Respondent was the first party to register the name (or his predecessor was) or, in the alternative, the name was registered just after the Complainant was created. Given those facts, it is all but impossible to find bad faith on the part of Respondent.
The domain name shall not be transferred; a finding under Rule 15(e) is denied.
R. Glen Ayers, Chair
Honorable Irving H. Perluss
Professor David Sorkin
Dated: June 12, 2002
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