Direct Federal Credit Union v. DomainsInvest.net
Claim Number: FA0204000110784
Complainant is Direct Federal Credit Union, Needham, MA (“Complainant”) represented by A. Van C. Lanckton, of Craig and Macauley P.C. Respondent is DomainsInvest.net, Greensboro, NC (“Respondent”) represented by Jonathan Douglas.
The domain name at issue is <direct.biz>, registered with 1st Domain.net.
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.
Fernando Triana, Esq., as Panelist.
Complainant has standing to file a Start-up Trademark Opposition Policy (“STOP”) Complaint, as it timely filed the required Intellectual Property (IP) Claim Form with the Registry Operator, NeuLevel. As an IP Claimant, Complainant timely noted its intent to file a STOP Complaint against Respondent with the Registry Operator, NeuLevel and with the National Arbitration Forum (the “Forum”).
Complainant submitted a Complaint to the Forum electronically on April 23, 2002; the Forum received a hard copy of the Complaint on April 25, 2002.
On May 1, 2002, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of May 21, 2002 by which Respondent could file a Response to the Complaint, was transmitted to Respondent in compliance with paragraph 2(a) of the Rules for the Start-up Trademark Opposition Policy (the “STOP Rules”).
A timely Response was received and determined to be complete on May 21, 2002.
Complainant’s Additional Submission was timely received and determined to be complete on May 28, 2002.
On June 25, 2002, pursuant to STOP Rule 6(b), the Forum appointed Fernando Triana, Esq., as the single Panelist.
Transfer of the domain name from Respondent to Complainant.
Complainant contends that it is a company founded in 1953 by the employees of Polaroid Corporation. It was then named “Polaroid Employees Federal Credit Union” and changed its name to “DIRECT Federal Credit Union” in 1990. Complainant developed a strategy of direct banking, using direct deposits, automatic teller machines, touch-tone telephone banking, “call centers” and the Internet as services available to its clients.
Complainant registered the domain name <direct.com> in 1996 and has used it since 1998 in the field of direct banking.
As a result of its business strategy, Complainant modified its name so that the word DIRECT always appears in capital letters.
Due to its aggressive marketing strategy, Complainant became in year 2000 the 7th largest credit union in Massachusetts, with more than 100 sponsor companies and approximately 35.000 members.
Complainant has the following registered trademarks before the United States Patent and Trademark Office:
FIRST USE IN COMMERCE
DIRECT Federal Credit Union (word mark)
Oct. 25, 1990
Sept. 15, 1992
DIRECT Federal Credit Union (+ Design)
April 17, 1991
July 7, 1992
Complainant has spent more than USD$5.000.000.oo to advertise and support the association in the public mind between the word “DIRECT” and DIRECT’s baking services.
In June, 2001, Complainant registered the domain name <direct.biz> with register.com. This registration was made in good faith, based in the consistent use of the <direct.com> domain name and its previous trademark registrations. However, Complainant then learned that Respondent had also registered the domain name <direct.biz> and despite its several telephone calls to inquire about its intentions, Respondent never answered.
Complainant also contends that Respondent is involved in the business of investing in domain names, which means that it buys domain names that may have value to those with a legitimate interest in the use of the name, and then sells those names to such users at a profit. According to the Complainant, Respondent can not satisfy any of the requirements for establishing its legitimate right over the domain name <direct.biz>, included in the STOP Policy. Respondent has not used the domain name <direct.biz> and registered it with the sole intention of attempting to gain an ownership right that it could then sell to the highest bidder.
Finally, Complainant states that Respondent registered the domain name <direct.biz> in bad faith, since it has not used the domain name at all and accepts that it is in the business of buying and selling domain names. Also, Respondent has refused to answer the Complainant’s inquiries as to its intentions.
Respondent acted in bad faith when registering a domain name that it knew or should have known that affected the rights of a third-party. This behavior was also a violation of Respondent’s registration agreement with its registrar.
Complainant states that it is very unlikely that Respondent was unaware of Complainant’s rights over the DIRECT mark when it entered into the Service Agreement. Respondent must have known of the existence of Complainant through its use of the domain name <direct.com> and its trademark registrations before the United States Patent and Trademark Office, which can be found through the link to the USPTO website provided by the registrar register.com. Additionally, Respondent must have been aware of the existence of the IP Claim filed by Complainant before Neulevel, and its persistence in registering the domain name is an evidence of its bad faith.
Respondent is a division of the company Resource Marketing, which is devoted to marketing products on the Internet. Respondent registers domain names for Resource Marketing to market products. According to Respondent, since it has become so good in acquiring domains, such domains are often sold and the profits are used to either purchase other domain names or used to help Resource Marketing with marketing and other business expenses. Respondent states that it only offers for sale domain names ended in “.com” or “.net”, and has never offered for sale domain names ended in “.biz”.
Respondent contends that it registered the domain name <direct.biz> through a very challenging process due to the fact that it was lottery based. Therefore, to increase the chances of acquiring the domain name, Respondent worked with multiple registrars. Respondent states that the domain name <direct.biz> was registered with full knowledge of the rules and the laws set by ICANN and its purpose was to create an online business to business portal through which companies could buy and sell products directly to other companies. Respondent would be willing to sell the domain name <direct.biz> only if the buyer were willing to compensate it for the costs incurred in developing the business for the domain name. However, Respondent did not register the domain name <direct.biz> with the purpose of selling it.
With respect to the allegation of the Complainant regarding the telephone calls made to the Respondent without answer, Respondent contends that it has never received any telephone call, voice mail or had any contact with Complainant.
Respondent also contends that its parent company, Resource Marketing, has incurred a cost of USD$6.000.oo in developing the <direct.biz> domain. Respondent planned to start marketing the domain by the end of May, 2002, allowing business to provide products and services to one another.
Respondent further contends that the Complainant’s trademarks are registered to cover financial services, namely on-line computer banking services. Respondent’s use of the domain name <direct.biz> for an on-line business to business portal will not conflict with the Complainant’s rights. Respondent registered the domain name <direct.biz> with full knowledge of the <direct.com> trademark. According to the Respondent, it is very unlikely that consumers confuse <direct.biz> and <direct.com> as being the same business.
Finally, Respondent states that the word “direct” is a general term that can be used for many purposes such as “direct marketing”, “direct banking”, direct ordering”, “direct tv” and “business to business” operations. The, Complainant can not allege to have exclusive rights over the <direct.biz> domain name and can not imply that it has also rights over all domains with have “direct” as their base.
C. Additional Submissions
Complainant filed an additional submission, replying to the Response to the Complaint filed by Respondent. With respect to the Response, Complainant contends that Respondent has not submitted any support to its statements under the penalties of perjury.
According to the Complainant, Respondent conceded in its Response that capturing domain names for sale is its central business. Likewise, although Respondent initially denies that the domain name <direct.biz> was registered for sale, Respondent then accepts that it your sell the <direct.biz> domain name if the buyer were willing to compensate Resource Marketing for the cost incurred in developing the business of the domain name.
Complainant insists that Respondent has violated the representations and warranties pursuant to which it applied for registration of <direct.biz>, since it registered the domain name knowing that Complainant was already using <direct.com> as a trademark and has acquired rights over such sign. Complainant concludes that Respondent meets the four circumstances identified in paragraph 4 (b) of the STOP Policy as evidence of registration or use of a domain name in bad faith.
Consequently, Complainant concludes that the Panel should grant the relief requested in the Complaint and order the transfer of the domain name <direct.biz> in its favor.
Paragraph 15(a) of the STOP 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 STOP Policy requires that the Complainant must prove each of the following three elements to obtain an order that a domain name should be transferred:
(1) the domain name is identical to a trademark or service mark in which the Complainant has rights; and
(2) the Respondent has no rights or legitimate interests in respect of the domain name; and
(3) the domain name has been registered or is being used in bad faith.
Due to the common authority of the ICANN policy governing both the Uniform Domain Name Dispute Resolution Policy (“UDRP”) and these STOP proceedings, the Panel will exercise its discretion to rely on relevant UDRP precedent where applicable.
Under the STOP proceedings, a STOP Complaint may only be filed when the domain name in dispute is identical to a trademark or service mark for which a Complainant has registered an Intellectual Property (IP) claim form. Therefore, every STOP proceeding necessarily involves a disputed domain name that is identical to a trademark or service mark in which a Complainant asserts rights. The existence of the “.biz” generic top-level domain (gTLD) in the disputed domain name is not a factor for purposes of determining that a disputed domain name is not identical to the mark in which the Complainant asserts rights.
Complainant has filed evidence of its trademark registrations of “DIRECT FEDERAL CREDIT UNION” both as a word and as a mixed mark, to cover services of International Class 36, namely “federal credit union services” and “credit union and related financial services” respectively.
The Panel notes that the trademarks over which Complainant holds rights are prima facie not identical to the domain name <direct.biz>. However, a deeper analysis will show a different result.
The trademark “DIRECT FEDERAL CREDIT UNION” is registered before the United States Patent and Trademark Office under certificates N° 1717173 for the word mark and N° 74157902 for the mixed mark. Examining the results of the U.S. Trademark Electronic Search Systems (TESS) filed by Complainant, it can be evidenced that both trademark registrations have the following disclaimer: “No claim is made to the exclusive right to use “Federal Credit Union” apart from the mark as shown”.
According to the above, the only part over which the Complainant claims and holds exclusive rights is precisely the word “DIRECT”. Therefore, for the purposes of this controversy, the Panel considers that the identity between the Complainant’s trademarks and the domain name <direct.biz> will be determined taking into account only the word “DIRECT”, since it is this word over which the Complainant has exclusive trademark rights. Additionally, the Panel notes that the “.biz” suffix is not a factor for purposes of determining that a disputed domain name is not identical to the mark in which the Complainant asserts rights (see Princeton Linear Assoc., Inc. v. Copland o/b/o LAN Solutions Inc.) Consequently, the Panel finds that the Complainant’s trademarks “DIRECT FEDERAL CREDIT UNION” (with no claim as to Federal Credit Union) and the domain name <direct.biz> are identical.
The Panel notes that the Respondent did not contest the trademark registrations filed by Complainant. Then, it can be understood that Respondent accepts the existence of such trademark rights on behalf of Complainant.
Additionally, Respondent has stated that Complainant owns a registration of the trademark <direct.com> as word mark, to cover services of International Class 36. Notwithstanding, the Panel has undertook a search before the USPTO website and found that the mentioned trademark was denied for registration and therefore can not be used to assert trademark rights on behalf of the Complainant.
Respondent asserts in its Response that “Direct is a very general term and can be used for many purposes (…)”. The Panel notes that Respondent implied that the term “direct” is generic and therefore, can be freely used by anyone. In this respect, the Panel wishes to make the following comments.
Although the word “direct” is a common English word, it can not by itself be called generic as it is not the name by which any good or service is called. The word “direct” alone does not have a generic meaning. However, when the term “direct” is accompanied by other word, it can become descriptive instead of generic. It would be the case, as Respondent states, of “direct marketing”, “direct tv” and particularly “direct banking”, which was found by a previous Panel to be a descriptive term. But the present case is different, as the domain name at issue involves the word “direct” alone, and therefore it is neither a generic nor a descriptive term. As a conclusion, the word “direct” has enough distinctive force to be deemed as a legitimate trademark and this was also found by the USPTO when registering the Complainant’s trademarks.
Based on the foregoing, the Panel finds that the domain name at issue is identical to the trademarks over which the Complainant has rights.
Complainant states that Respondent lacks of any right or legitimate interest over the domain name <direct.biz>. According to paragraph 4 (c) of the STOP Policy, Respondent shall demonstrate its rights or legitimate interests to the domain name in particular but without limitation, by the following:
i. Proving that he is the owner or beneficiary of a trade or service mark that is identical to the domain name; or
ii. Proving that before any notice of the dispute, he used or made demonstrable preparations to use the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or
iii. Proving that he has been commonly known by the domain name, even if he has acquired no trademark or service mark rights.
In the present case, Respondent attempted to prove its rights or legitimate interests according to paragraph 4 (c) (ii) of the STOP Policy, by proving that it has made demonstrable preparations to use the domain name <direct.biz> in connection with a bona fide offering of goods or services.
The activity of the Respondent, as announced in the website <domainsinvest.net>, is clearly related with the massive registration of domain names for sale. When this activity is performed in connection with domain names which include third party’s trademarks, this become an unlawful business known as domain names warehousing, moreover when the registrant is aware of the existence of such third party’s rights.
The requirement of paragraph 4 (a) (ii) of the STOP Policy includes as a conditio sine qua non the existence of a legitimate interest. The Panel considers that the activity performed by Respondent is not legitimate and it can not be used as an evidence for the purposes of succeeding in this administrative proceeding.
Studying the evidence filed by Respondent, the Panel finds that it shows an invoice for the sum of USD$5.964.oo, allegedly correspondent to the costs incurred in the development of the <direct.biz> web page. However, the Panel notes that the invoice does not have any reference as to the web page that it refers to, and consequently it can belong to any work made for Marketing Resources. Additionally, the Respondent filed a printout of a front page of a web portal that allegedly corresponds to <direct.biz>. The Panel has not been able to establish the validity of such evidence since the domain name <direct.biz> is locked due to this administrative proceeding and it can not be accessed.
Notwithstanding, when using such evidence in the present decision, the Panel finds that the documents filed must be studied in connection with the Respondent’s business. As Respondent states in its website <domainsinvest.com>, “DomainsInvest.Net was founded to deliver high quality, high value domains to the global community. This means you get the great domain you need to practically eliminate marketing costs for the next few years. (…) Domain names are our business... period. We buy, sell, and trade.” This leads the Panel to conclude that the Respondent’s main business is the registration of domain names for sale at an economic profit. The Panel has not found evidence that the Respondent registers domain names to keep them for its own or its parent company’s business.
Therefore, the Panel considers that the costs that Respondent contends that have been incurred due to the domain name <direct.biz> are not related to a bona fide offering of goods or services. On the contrary, such costs have been incurred with the primary purpose of increasing the domain name’s value for its consequent sale to the highest bidder. Such costs can not be then accepted as out-of-pocket costs for the purposes of the STOP Policy, nor to prove good faith in the part of Respondent.
On the other hand, Respondent intends to contend that due to the particulars of its business-to-business portal, it has rights and legitimate interests over the domain name <direct.biz>. As aforementioned, the Panel considers that the word “direct” when used alone is not generic nor descriptive. However, it could be contended that anyone with the intention of developing a business with the particularity of being direct in any manner, could be legitimated to register the <direct.biz> domain name. This argument could be accepted if the parties involved in the present controversy were in equal situations. But the Panel notes that in this case the parties are not equal, since the Complainant holds trademark rights over the word “direct” and the Respondent lacks of them. Therefore, although any person with the purpose of developing a direct business through the Internet could have a legitimate interest over the domain name <direct.biz>, the Panel concludes that when such legitimate interest is accompanied by a trademark right, the owner of such right must prevail.
As a consequence, the Panel finds that the Respondent lacks of rights or legitimate interests over the domain name <direct.biz>.
In accordance with paragraph 4 (a) (iii) of the STOP Policy, the following circumstances, in particular but without limitation, shall be considered evidence of the registration or use of a domain name in bad faith:
i. Circumstances indicating that the Respondent has registered the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the Complainant or to a competitor of the Complainant, for valuable consideration in excess of its documented out-of-pocket costs directly related to the domain name; or
ii. Circumstances indicating that the Respondent has registered the domain name in order to prevent the Complainant from reflecting the mark in a corresponding domain name; or
iii. Circumstances indicating that the Respondent has registered the domain name primarily for the purpose of disrupting the business of a competitor; or
iv. Circumstances indicating that by using the domain name, the Respondent has intentionally attempted to attract, for commercial gain, Internet users to its web site or other on-line location, by creating a likelihood of confusion with the Complainant's mark as to the source, sponsorship, affiliation, or endorsement of its web site or location or of a product or service on its web site or location.
Complainant contends that the Respondent registered the domain name in bad faith, for the purpose of selling it to the higher bidder. Likewise, Complainant asserts that Respondent was aware of Complainant’s trademark rights when registering the domain name <direct.biz> and that this situation constitutes a breach of the service agreement signed by Respondent with its registrar.
The Panel finds that Respondent is devoted to the massive registration of domain names which are in many cases offered for sale in the website <domainsinvest.net>. This conduct, known as domain names warehousing, can also constitute an evidence of bad faith.
Although Respondent first alleges in its Response that the domain name <direct.biz> was not registered for the purpose of selling it, nor has any domain name under the “.biz” suffix, Respondent further concedes that it would sell the domain name at issue if the buyer compensates the costs incurred. In its Response, Respondent states the following: “The only way Domains Invest would consider selling direct.biz is if the buyer was willing to compensate Resource Marketing for the cost incurred in developing the business for the domain name.” This statement by itself does not demonstrates bad faith. However, bearing in mind the business in which Respondent is involved, it is an evidence of its interest in selling the name and therefore, of its registration in bad faith.
Respondent also contends that it registered the domain name <direct.biz> with full knowledge of the trademark rights on behalf of Complainant and of Complainant’s use of the <direct.com> domain name. In fact, Respondent asserts in its Response that: “Domains Invest registered direct.biz with full knowledge of the direct.com trademark”. Likewise, Respondent was notified at the moment of the registration of the domain name <direct.biz>, that there was an IP Claim filed with respect to such name and therefore, its registration could be infringing the industrial property rights of a third party. Notwithstanding, Respondent proceeded with the registration and executed the Service Agreement with its registrar, representing that such registration was not infringing any third party’s rights. Obviously, Respondent was also aware of its lack of trademark rights over the domain name <direct.biz>.
The Panel finds that the Respondent registered the domain name <direct.biz> being aware of the existence of the trademark rights on behalf of Complainant. Notwithstanding, Respondent chose to proceed with the registration proceeding making a false representation before the registrar of its ignorance of the Complainant’s rights over the name.
It has been evidence through this proceeding that Respondent executed a Services Agreement with its registrar register.com, in which Respondent accepted the following:
“By applying to register a domain name …, you hereby represent and warrant to us that (a) the statements that you made in connection with such registration … are complete and accurate; [and] (b) to your knowledge, the registration of the domain name will not infringe upon or otherwise violate the rights of any third party …. You agree and acknowledge that it is your responsibility to determine whether your domain name registration infringes or violates someone else’s rights….” (Underlined is not in the original)
Ignoring the consequences of its wrongdoing, Respondent continued with the registration process of the <direct.biz> domain name, making a false representation before the registrar. The Panel concludes that this is an evidence of bad faith and that Respondent registered the domain name with the purpose of preventing the Complainant from reflecting its mark in a corresponding domain name.
Furthermore, Respondent evidences through his statements that he was aware of the difficulty of registering the domain name <direct.biz>. In its Response, the Respondent sets forth the following: “The process undertaken to acquire direct.biz was very challenging due to the fact that it was lottery based. To increase the chances of acquiring the domains we had to work with multiple registrars.” To the Panel, this has two meanings: i) Respondent wanted the domain name despite that it was aware of the existence of third party’s trademark rights over the domain name <direct.biz>; and ii) Respondent wanted the domain name despite that it knew that it lacked of any rights over the domain name <direct.biz>. In any case, it is clear for the Panel that Respondent was aware that it was difficult for it to obtain the registration of the domain name <direct.biz> but undertook all kinds of maneuvers to get it in an act of bad faith.
The issue of use in bad faith is not studied by the Panel since due to the particulars of STOP proceedings, the domain name at issue was locked by Neulevel and Respondent was not able to use the domain name <direct.biz> before the commencement of this administrative proceeding.
The aforementioned leads the Panel to conclude that the Respondent registered the domain name <direct.biz> in bad faith.
Complainant’s Complaint is hereby granted and therefore the Panel orders that the domain name <direct.biz> be transferred to Complainant. Subsequent challenges to this domain name, as against the Respondent, under the STOP Policy shall not be permitted against this domain name.
Fernando Triana, Panelist
Dated: July 10, 2002
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