Optimum Communications
Services, Inc. v. Optimum Communications Services, Inc. c/o John Pinsent
Claim Number: FA1003001311747
PARTIES
Complainant is Optimum Communications Services, Inc. (“Complainant”), represented by Mark Sandstrom, Canada. Respondent is Optimum Communications Services, Inc. c/o John Pinsent (“Respondent”), Canada.
REGISTRAR AND DISPUTED DOMAIN NAME
The domain name at issue is <optimumzone.net> (“the Disputed Domain Name”), registered with Godaddy.com,
Inc.
PANEL
The undersigned certifies that he or she has acted independently and
impartially and to the best of his or her knowledge has no known conflict in
serving as Panelist in this proceeding.
Michael A. Albert as Panelist.
PROCEDURAL HISTORY
Complainant submitted a Complaint to the National Arbitration Forum
electronically on March 5, 2010.
On March 7, 2010, Godaddy.com, Inc. confirmed by e-mail to the
National Arbitration Forum that the <optimumzone.net> domain name is
registered with Godaddy.com, Inc. and
that the Respondent is the current registrant of the name. Godaddy.com,
Inc. has verified that Respondent is bound by the Godaddy.com, 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 March 10, 2010, the Forum served the Complaint and all Annexes,
including a Written Notice of the Complaint, setting a deadline of March 30,
2010 by which Respondent could file a Response to the Complaint, via e-mail to
all entities and persons listed on Respondent’s registration as technical,
administrative, and billing contacts, and to postmaster@optimumzone.net. Also on March 10, 2010, the Written Notice of
the Complaint, notifying Respondent of the email addresses served and the
deadline for a Response, was transmitted to Respondent
via post and fax, to all entities and persons listed on Respondent’s
registration as technical, administrative and billing contacts.
A timely Response was received and determined to be complete on March 26, 2010.
Complainant filed an Additional Submission with the Forum on April 1,
2010 that was compliant with the Forum’s Supplemental Rule 7.
On April 5, pursuant to Complainant’s request to
have the dispute decided by a single-member
Panel, the National Arbitration Forum
appointed Michael A. Albert as Panelist.
RELIEF SOUGHT
Complainant requests that the domain name be transferred from
Respondent to Complainant.
PARTIES’ CONTENTIONS
A. Complainant
Complainant contends that Mark Sandstrom is the founder of Complainant,
and that Mr. Sandstrom originally registered the Disputed Domain Name in
2001. Mr. Sandstrom transferred the
WHOIS Admin Contact of the Disputed Domain Name to one of Complainant’s IT
employees, Mr. Smith, in 2006. Although
Mr. Smith resigned from Complainant in 2007, he apparently remained the WHOIS
Admin Contact for the Disputed Domain Name.
Complainant further contends that on February 20, 2010, Respondent, a
shareholder of Complainant, granted Mr. Smith discounted stock in Complainant
in exchange for being made the WHOIS Contact Admin of the Disputed Domain
Name. Subsequently, Respondent has shut
down Complainant’s web site and email service, causing harm to Complainant’s
business and its investors.
Complainant further contends that Mr. Sandstrom remains a majority
shareholder of Complainant with ultimate decision-making authority, and that
Respondent was not a lawful director, executive, employee or agent of
Complainant as of February 20, 2010.
Complainant further contends that Respondent intends to sabotage
Complainant’s business, including Mr. Sandstrom’s capability to carry out
business activities. In addition,
Respondent’s takeover of the Disputed Domain Name appears to be part of an
attempt at a change of control of Complainant and an attempt to take control of
all of Complainant’s intellectual property assets. Specifically, Complainant contends that Respondent
attempted to gain control from Complainant by resetting Complainant’s share
price and issuing new shares in December 2009 in order to reduce Mr.
Sandstrom’s position as majority shareholder.
B. Respondent
Respondent contends that Mr. Sandstrom lacked the authority to act as
Complainant’s representative on March 5, 2010, when the Complaint was filed
with the Forum. Respondent contends that
on December 30, 2009, Mr. Sandstrom was removed as the President of Complainant
at a duly called and conducted Board of Directors meeting. Respondent contends that Mr. Sandstrom has
refused to accept his termination or the lawful direction of the Complainant’s
Board and its shareholders. Respondent
also contends that Mr. Sandstrom has submitted fraudulent information
purporting to show that he was elected Director of Complainant on February 17,
2010.
Respondent provides a lengthy history of the company which is
summarized as follows. Respondent and
Mr. Sandstrom founded Complainant, Optimum Communication Services, Inc., in
2005. Mr. Sandstrom had research and
developed a new type of broadband technology and had obtained some investor
funding in California. Respondent, along
with another investor, formed Complainant along with Mr. Sandstrom, and issued
Mr. Sandstrom shares in the newly formed company in exchange for all his
intellectual property assets.
Between 2005 and 2010, Respondent, along with 23 other investors,
invested over $1 million in Complainant.
However, by the summer of 2009, Complainant was in financial
distress. Complainant could not afford
to continue paying fees to its intellectual property lawyers. Mr. Sandstrom believed Complainant could be
saved by recapitalizing in Delaware and pursuing commercialization of its
technology in the United States.
Mr. Sandstrom wished to have shareholders vote on his recapitalization
plan. On December 9, 2009, notice was
sent to shareholders of Mr. Sandstrom’s resolution. However, minority shareholders, including
Respondent, had misgivings about Mr. Sandstrom’s strategy. Some were concerned that recapitalization
would result in effectively giving Mr. Sandstrom control of Complainant’s IP in
a foreign jurisdiction.
Respondent called the Board meeting on December 18, 2009. Mr. Sandstrom challenged the legality of
holding the Board meeting on that date, and attempted to have corporate counsel
fired when they affirmed the legality of the Board meeting. At the December 18 meeting, the Board agreed
to open a re-start equity round at $0.01 per share. The round opened the following day, and remained
opened for 11 days, until December 29, 2009.
When the round closed, Mr. Sandstrom only owned about one-third of the
outstanding shares.
On the following day, December 30, a Board meeting was held at which
the Board terminated Mr. Sandstrom’s employment, effective immediately. Three weeks later, at a subsequent Board
meeting on January 21, 2010, the Board removed Mr. Sandstrom as a
director. However, Mr. Sandstrom refused
to recognize any of the Board’s actions.
On February 18, 2010, corporate counsel for Complainant delivered a
letter to Mr. Sandstrom reiterating that he had been terminated as President
and director, and demanding that Mr. Sandstrom cease and desist from attempting
to represent himself as anything other than a shareholder.
FINDINGS
At least until 2009, Mr. Sandstrom had been a
majority shareholder of Complainant.
DISCUSSION
Paragraph 15(a) of the Rules for Uniform Domain
Name Dispute Resolution Policy (the “Rules”) instructs this Panel to “decide a
complaint on the basis of the statements and documents submitted in accordance
with the Policy, these Rules and any rules and principles of law that it deems
applicable.”
Paragraph 4(a) of the Policy requires that the Complainant must prove
each of the following three elements to obtain an order that a domain name
should be cancelled or transferred:
(1) the domain name registered by the Respondent
is identical or confusingly similar to a trademark or service mark in which the
Complainant has rights;
(2) the Respondent has no rights or legitimate
interests in respect of the domain name; and
(3) the domain name has been registered and is being
used in bad faith.
The Panel,
however, will need to first consider a preliminary issue, namely whether this
matter is a business dispute outside the scope of the UDRP.
Preliminary Issue: Business Dispute Outside the Scope of the UDRP
This matter is primarily a business dispute
between two parties. The fact that
Complainant and Respondent are identified as the same entity indicates that the
central issue is who has control of, and thus speaks for, the company. In addition, neither party properly addresses
the basic elements of the UDRP Policy: mark similarity, rights or legitimate
interests, and bad faith registration and use.
The UDRP was implemented to address abusive
cybersquatting, not contractual or other non-cybersquatting-related business
disputes. Everingham Bros. Bait Co. v. Contigo Visual,
FA 440219 (Nat. Arb. Forum Apr. 27, 2005) (finding dispute outside scope
of ICANN Policy because issue turned on contract dispute); see also Fuze Beverage, LLC v. CGEYE, Inc., FA 844252 (Nat. Arb.
Forum Jan. 8, 2007) (“The Complaint before us describes what appears to be a
common-form claim of breach of contract or breach of fiduciary duty. It
is not the kind of controversy, grounded exclusively in abusive
cyber-squatting, that the Policy was designed to address.”); Frazier Winery
LLC v. Hernandez, FA 841081 (Nat. Arb. Forum Dec. 27, 2006) (holding that
disputes arising out of a business relationship between the complainant and
respondent regarding control over the domain name registration are outside the
scope of the UDRP Policy); Discover New England v. The
Avanti Group, Inc., FA 123886 (Nat. Arb. Forum Nov. 6, 2002) (finding the dispute
outside the scope of the UDRP because the dispute centered on the
interpretation of contractual language and whether or not a breach occurred); Latent Tech. Group, Inc. v. Fritchie, FA
95285 (Nat. Arb. Forum Sept. 1, 2000) (dispute concerning employee’s registration
of domain name in his own name and subsequent refusal to transfer it to
employer raises issues of breach of contract and breach of fiduciary duty that
are more appropriately decided in court, not before a UDRP Panel); Commercial Publ’g Co. v. EarthComm., Inc.,
FA 95013 (Nat. Arb. Forum July 20, 2000) (stating that the Policy’s
administrative procedure is “intended only for the relatively narrow class of
cases of ‘abusive registrations.’” Cases where registered domain names are
subject to legitimate disputes are relegated to the courts).
Moreover, there is little agreement between
the parties as to the basic facts, many of which raise questions which likely
implicate Alberta’s law governing corporations.
In such circumstances, national courts are better situated to resolve
disputes than the Forum. As the Panel noted in Courtney
Love v. Brooke Barnett, FA 944826 (Nat. Arb. Forum May 14, 2007):
The two parties present very different
accounts of the facts, and use those accounts to support their claims for
common law trademark rights in the disputed domain names. The written evidence submitted by the parties
is inconclusive.
When the parties differ markedly with respect
to the basic facts, and there is no clear and conclusive written evidence, it
is difficult for a Panel operating under the Rules to determine which
presentation of the facts is more credible.
National courts are better equipped to take evidence and to evaluate its
credibility.
Further, the purpose of the Policy is not to
resolve disputes between parties who might each have legitimate rights in a
domain name. The purpose of the Policy
is to protect trademark owners from cybersquatters, that is, from people who
abuse the domain name system in a very specific way, which specific way is outlined
in Paragraph 4(a) of the Policy.
For the reasons stated above, the majority
finds that this is not the proper forum for resolution of the above-described
dispute. Accordingly, it is not
necessary for the Panel to consider the three elements of the Policy.
DECISION
For the reasons presented above, the Panel concludes that relief shall
be DENIED.
Accordingly, the Complaint is DISMISSED.
Michael A. Albert, Panelist
Dated: April 26, 2010
Click Here to return
to the main Domain Decisions Page.
Click
Here to return to our Home Page
National
Arbitration Forum