Inhold, LLC v. Indusco Distribution of America, Inc.
Claim Number: FA1008001341201
PARTIES
Complainant is Inhold, LLC (“Complainant”), represented by James L. Lester, North Carolina, USA. Respondent is Indusco Distribution of America, Inc. (“Respondent”), represented by Joe Raich, Florida, USA.
REGISTRAR AND DISPUTED DOMAIN NAME
The domain name at issue is <bioshield75.com> (“the disputed domain name”), and it is registered with GoDaddy.com, Inc. (“GoDaddy”).
PANEL
The undersigned, Mr. David H Tatham, 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.
PROCEDURAL HISTORY
Complainant submitted a Complaint to the National Arbitration Forum (“the Forum”) electronically on August 16, 2010.
On August 17, 2010, GoDaddy confirmed by e-mail to the Forum that the <bioshield75.com> domain name was registered with it and that the Respondent is the current registrant of the name. GoDaddy has verified that Respondent is bound by its 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 August 20, 2010, the Forum served the Complaint and all Annexes, including a Written Notice of the Complaint, setting a deadline of September 9, 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@bioshield75.com by e-mail. Also on August 20, 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 September 9, 2010.
Additional Submissions were received from Complainant on September 13, 2010 and from Respondent on September 15, 2010. Both were deemed to be timely and in compliance with the Forum’s Supplemental Rule 7.
On September 27, 2010, pursuant to Complainant’s request to have the dispute decided by a single-member Panel, the Forum appointed Mr. David H Tatham as Panelist.
RELIEF SOUGHT
Complainant requests that the domain name be transferred from Respondent to Complainant.
PARTIES’ CONTENTIONS
A. Complainant
Complainant submits that the disputed domain is virtually identical to the trademark BIOSHIELD in which it has rights by virtue of its US Federal trademark registration No. 2,629,566 which was registered on October 8, 2002 for “Antimicrobial compounds and preparations for treating a variety of surfaces and articles, not for use in the field of animal health”, claiming June 1996 as its date of first use.
Complainant contends that the disputed domain name – <bioshield75.com> – is spelled almost exactly the same as its trademark, and that the additional number ‘75’ is not enough to distinguish it from the BIOSHIELD mark. The disputed domain name sounds like, looks like, and is used for the same type of goods as the BIOSHIELD trademark.
Furthermore, although Complainant says it has been using the BIOSHIELD mark in commerce since 1996, it points out that the disputed domain name was not created until 2005.
Complainant contends that the use of the disputed domain name is confusing as to the source of the goods on the website associated with it and could mislead visitors to the site into believing that the goods displayed there are associated with Complainant’s product BIOSHIELD. This is especially true since the site redirects consumers to antimicrobial goods which are similar to those with which the BIOSHIELD trademark is registered and used.
Complainant says that Respondent applied to register the trademark BIOSHIELD 75 with the U.S. Patent and Trademark Office (“USPTO”) on October 15, 2007 in respect of “antimicrobial coating to inhibit the growth of mould, mildew, bacteria and fungus on various surfaces” but that on February 4, 2008, the USPTO refused the mark because “when used on or in connection with the identified goods, [it] so resembles the mark in U.S. Registration No. 2629566 [BIOSHIELD] as to be likely to cause confusion, to cause mistake, or to deceive.” The Office Action further stated that “the marks are very highly related and the goods will likely be sold to the same type of consumers and through similar channels of trade and the similarities between the marks and the goods are so great as to create a likelihood of confusion among consumers.”
Complainant submits that the Respondent has no rights or legitimate interest with respect to the disputed domain name because, firstly, the use thereof infringes Complainant's trademark rights. Secondly, the term “Bioshield” has no meaning or significance other than as its own trademark which identifies products and distinguishes goods and services from those of its competitors. Thirdly, the trademark BIOSHIELD is registered and used for antimicrobial compounds and preparations, and these are precisely the type of products being advertised at the disputed domain name
Complainant operates as, and does business with, many premier antimicrobial protecting companies, it uses the BIOSHIELD trademark widely, and it has built up a reputation associated particularly with the BIOSHIELD name which has consequently acquired substantial and exclusive goodwill.
According to Complainant, Respondent previously had an agreement with it and was a distributor for its own BioShield75 product, but this relationship was terminated and Respondent no longer acts as a distributor for BioShield75. However, Complainant maintains that Respondent continues to use the disputed domain name to divert potential customers to another site promoting a competitive product, and this use by Respondent confuses and draws Complainant’s customers familiar with BIOSHIELD to its site while having no association or agreement with Complainant. In turn, Complainant asserts, consumers are misleadingly diverted to a competitors' site with competitive products which have not been licensed for use by, and which have no connection to, nor are they endorsed by, Complainant. This site belongs to International Distribution Alliance where, according to Complainant, it touts AM500 as a “biostatic surface protectant” for “antimicrobial protection.”
Complainant contends that Respondent has no right to be identified by the BIOSHIELD mark and it is offering goods and services through its website that play upon the goodwill associated with Complainant’s BIOSHIELD mark in an effort to misleadingly divert consumers to Respondent’s website and its antimicrobial products.
Complainant concludes that the above facts also prove that the disputed domain name has been registered and used in bad faith.
Additionally, when Respondent was directly notified of its improper use of this registered trademark, it failed to discontinue use of the BIOSHIELD mark or to consider a transfer of the domain. By Respondent’s continued use of this domain name and its sustained effort to sell directly competitive goods, Respondent is disrupting Complainant’s business and interfering with its rights to the BIOSHIELD mark.
Therefore, not only is Respondent using the site at the disputed domain name to divert consumers to other products and direct competitors of BIOSHIELD in bad faith for increased commercial gain, but they are also knowingly playing on and infringing the registered trademark BIOSHIELD by suggesting a sponsorship or affiliation with it.
B. Respondent
In its Response, Respondent states that its majority shareholder – Mr. Joe Raich – is part owner and manager of Complainant, the other owners and managers being Mr. Joe Mason and Mr. Andy Robinson. Respondent alleges that the present dispute is part of an ongoing dispute between Messrs. Raich and Mason.
Respondent maintains that the above three managers govern Complainant through an operating Agreement dated January 31, 2007 a copy of which was annexed to the Response. Respondent states that under the terms of this Agreement the vote, consent, approval or ratification of at least a majority is required to constitute the actions of the managers and that such a majority did not vote, consent, approve or ratify the filing of the Complaint. It was filed by Mr. Mason, despite having been told by the other two managers that he did not have the authority to do so.
Respondent contends that it registered the disputed domain name in 2005 in good faith and that it has been using it ever since in respect of biological surface protectors that inhibit bacteria, odor causing bacteria, fungi, mold, and mildew on both porous and non-porous surfaces, or which form a bio-shield against these microorganisms. However Complainant only acquired the trademark registration of BIOSHIELD in 2007 namely 2 years after Respondent began to use the name. A copy of the trademark assignment was annexed to the Response. Respondent therefore maintains that its use the disputed domain name, over a period of 5 years, has been in connection with a bona fide offering of goods prior to any notice of the dispute.
Respondent further maintains that despite Complainant’s claim that the name BIOSHIELD has no meaning other than as its trademark, an internet search reveals that there are several other companies using this name and annexed to the Response were details of six of these.
Respondent concludes by pointing out that Complainant has produced no evidence of any of its customers having being confused or mistakenly drawn to the site at the disputed domain name.
C. Additional Submissions
As noted above, both parties filed Additional Submissions, that of Complainant being somewhat lengthier than that of Respondent. They are summarized below –
Complainant
Complainant disputes Respondent’s assertion that the Complaint is unauthorized, and maintains that Respondent misunderstands the purpose of proceeding brought under the Policy. This is concerned exclusively with domain names and it is not the job of a Panel to determine whether or not a party has the authority to act. Complainant states that the proper forum for deciding any claim against a managing member’s action is the court, and Complainant refers to the Operating Agreement that was annexed to the Response which states that persons dealing with the company shall have no duty to inquire into the actions of any manager. Each manager is liable to the Company for the company’s damages if they knowingly exceed their authority or breach their fiduciary duty.
However should the Panel reject this argument, Complainant points out that Mr. Mason is the managing member who is tasked with all of Complainant’s day to day business, including the protection of its intellectual property. He only needs permission to act from the other two owners for expenditures in excess of $10,000 and, since this dispute does not exceed that amount, he is within his rights to bring this action in protection of Complainant’s intellectual property rights.
Complainant then itemizes the following facts which it considers to be pertinent –
· Complainant is separate from Respondent and has exclusively licensed the trademark BIOSHIELD to a company called IndusCo. Ltd. who was the original owner of the site at the disputed domain name. When Respondent became IndusCo’s national distributor for BIOSHIELD products, ownership of the site was transferred to Respondent in June 2006.
· Respondent was given permission to utilize the name ‘bioshield.com’ for marketing BIOSHIELD products.
· The trademark BIOSHIELD was not acquired by Complainant until 2007 from a company called Nova Biogenetics, Inc.
· When IndusCo Ltd. subsequently discovered that Respondent was offering both BIOSHIELD products as well as a competing product, namely AM500, it gave Respondent the option of either ceasing to offer the competing product or of having its distributorship terminated. Respondent did not do so and the distributorship was terminated, at which point Respondent ceased to offer BIOSHIELD products. However Respondent continued to use the BIOSHIELD 75 site and has redirected all visitors to this site to another site advertising competitive antimicrobial products, namely AM500.
· The site at the disputed domain name was obtained for the purpose of selling BIOSHIELD antimicrobial products until Respondent began to misuse it in late 2008.
Complainant maintains that the present dispute is a case of a former authorized distributor – namely Respondent – refusing to relinquish control of the website associated with the product which it no longer distributes.
With regard to the use of the name BIOSHIELD by third parties to which Respondent has referred, one has already been contacted by Complainant regarding its misuse of Complainant’s registered trademark, and the others are using the name for goods that are outside the scope of the trademark.
With regard to the allegation that Complainant has not produced any evidence of confusion, Complainant asserts that it has no burden in these particular proceedings to do so. However Complainant concludes by noting that it has received numerous telephone calls from customers who have reportedly been told by Respondent that there is no difference between its AM500 product and BIOSHIELD 75 which, Complainant states, is simply not true.
Respondent
In its Additional Submission, Respondent makes the following points –
· The present dispute is part of a long term ongoing dispute between the owners of Complainant, all of which belongs in the court system. However Complainant has chosen to bring this Complainant under the Policy and so, in Respondent’s opinion, it must be decided under the terms of the Policy
· If it was the case that a Complaint filed on behalf of a legal entity was unauthorized, then there would be nothing to prevent complaints being filed on behalf of a legal entity without the knowledge of its governing Board. The filing of this Complaint by Mr. Mason on behalf of Complainant is, in the opinion of Respondent, unauthorized and not a legal act by Complainant.
· Complainant voluntarily transferred the disputed domain name to Respondent, is now unhappy with Respondent, and wants the domain name back again.
FINDINGS
Complainant is a business with three managers, of which Mr. Joe Mason, who appears to be the instigator of the Complaint, is the one who manages the company on a day to day basis. Complainant’s majority shareholder is Mr. Joe Raich who also appears to run the Respondent and who is the representative of Respondent in this Complaint. The third manager is Mr. Andy Robinson. Messrs. Raich and Robinson have both made Declarations stating that they did not “vote, consent, approve, or ratify” the filing of the Complaint and indeed had informed Mr. Mason that he did not have the authority to do so.
Both Complainant and Respondent sell very similar antimicrobial products.
A third company, Nova Biogenetics, Inc. originally owned the trademark registration of BIOSHIELD before it assigned it to Complainant. A fourth company, IndusCo Ltd., was the original owner of the site at the disputed domain name and it has been licensed by Complainant to use the name BIOSHIELD. Respondent initially distributed BIOSHIELD products for IndusCo Ltd. but the agreement to do so was terminated. It now offers through the site a very similar if not identical antimicrobial called AM 500.
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.
Preliminary Issue
The Panel must, at the outset, decide whether this Complaint in fact involves a business or contractual dispute that is outside the scope of the Policy. In fact both parties appear to accept that it is part of an ongoing dispute between them, although it is not clear whether it has actually yet reached the courts.
Questions that may require to be answered include: the proper interpretation of the 2007 Operating Agreement which governs Complainant, Inhold LLC; the circumstances under which the trademark registration of BIOSHIELD and the disputed domain name <bioshield75.com> ended up in their present ownership; the right of Respondent to offer for sale products which compete with those of Complainant; the relationship that both Complainant and Respondent have with third parties; and the relationship between the three managers of Complainant, Messrs. Mason, Raich and Robinson. None of these can be satisfactorily answered here and the Panel has concluded that the matter is indeed beyond the scope of the Policy.
According to paragraph 18(a) of the Rules, “In the event of any legal proceedings initiated prior to or during an administrative proceeding in respect of a domain-name dispute that is the subject of the complaint, the Panel shall have the discretion to decide whether to suspend or terminate the administrative proceeding, or to proceed to a decision.”
There have been countless cases under the Policy where the panel has declined to reach a Decision when the parties were engaged in business disputes. For example, in the case of Love v. Barnett, FA 944826 (Nat. Arb. Forum May 14, 2007), the panel stated: “A dispute, such as the present one, between parties who each have at least a prima facie case for rights in the disputed domain names is outside the scope of the Policy … the present case appears to hinge mostly on a business or civil dispute between the parties, with possible causes of action for breach of contract or fiduciary duty.”
and
“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... 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.”
Also, in Luvilon Indus. NV v. Top Serve Tennis Pty Ltd., DAU2005-0004 (WIPO September 6, 2005) the panel Commented that “It has also been said in numerous UDRP decisions that the purpose of that policy is to combat abusive domain name registrations and not to provide a prescriptive code for resolving more complex trade mark disputes.”
It was likewise held in Frazier Winery, LLC v. Hernandez, FA 641081 (Nat. Arb. Forum Dec. 27, 2006) 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.
Based on the reasoning in the aforementioned cases and the facts as presented by the parties, the Panel has concluded that the instant dispute contains a question of contractual interpretation, and thus falls outside the scope of the UDRP.
DECISION
Because this proceeding is outside the scope of the Policy, the Panel concludes that relief shall be DENIED however without prejudice to Complainant’s right to bring proceedings in another forum, with proper jurisdiction.
David H Tatham, Panelist
Dated: October 7, 2010
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