Direct Federal Credit Union v.
DomainsInvest.net
Claim Number: FA0204000110784
PARTIES
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.
A.
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:
|
TRADEMARK |
FILING
DATE |
REGIST.
N° |
REGIST.
DATE |
FIRST
USE IN COMMERCE |
|
DIRECT
Federal Credit Union (word mark) |
Oct.
25, 1990 |
1.717.173 |
Sept.
15, 1992 |
1991/04/01 |
|
DIRECT
Federal Credit Union (+ Design) |
April
17, 1991 |
1.699.401 |
July
7, 1992 |
1991/04/01 |
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.
B.
Respondent
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.[1])
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[2]. 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.
DECISION
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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