national arbitration forum

 

DECISION

 

Kyowa America Corporation v. Quilite International L.L.C.

Claim Number: FA1103001376292

 

PARTIES

Complainant is Kyowa America Corporation (“Complainant”), represented by Ahmed Ibrahim of Snell & Wilmer L.L.P., California, USA.  Respondent is Quilite International L.L.C. (“Respondent”), represented by Richard L. Cooling, California, USA.

 

REGISTRAR AND DISPUTED DOMAIN NAME

The domain name at issue is <quilite.com>, registered with Network Solutions, LLC.

 

PANEL

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.

 

David P. Miranda, Esq., as Panelist.

 

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum electronically on March 4, 2011; the National Arbitration Forum received payment on March 11, 2011.

 

On March 7, 2011, Network Solutions, LLC. confirmed by e-mail to the National Arbitration Forum that the <quilite.com> domain name is registered with Network Solutions, LLC. and that Respondent is the current registrant of the name.  Network Solutions, LLC. has verified that Respondent is bound by the Network Solutions, LLC. registration agreement and has thereby agreed to resolve domain disputes brought by third parties in accordance with ICANN’s Uniform Domain Name Dispute Resolution Policy (the “Policy”).

 

On March 14, 2011, the Forum served the Complaint and all Annexes, including a Written Notice of the Complaint, setting a deadline of April 25, 2011 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@quilite.com.  Also on March 14, 2011, 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 April 26, 2011.

 

On May 2, 2011, pursuant to Complainant's request to have the dispute decided by a single-member Panel, the National Arbitration Forum appointed David P. Miranda, Esq., as Panelist.

 

RELIEF SOUGHT

Complainant requests that the domain name be transferred from Respondent to Complainant.

 

PARTIES' CONTENTIONS

A. Complainant

Complainant, Kyowa America Corporation (“Complainant”) claims ownership of a federal registration of trademark for “QUILITE”, U.S. Reg. No. 1,931,884, and seeks transfer of the domain name <quilite.com> from Respondent Quilite International LLC (“Respondent”).  Complainant contends that Respondent pledged its intellectual property to Complainant, pursuant to a written security agreement.  Complainant further contends that when Respondent defaulted on its payment obligation, Complainant exercised its remedies under the security agreement, foreclosed on its security interest in the intellectual property of Respondent and is now the owner of Quilite’s intellectual property.  Complainant further submits registration information for the trademark at issue, QUILITE, from the U.S.P.T.O., however the named owner in the document provided is not Complainant but rather Rodman W. Kotter.  Complainant contends that pursuant to the various agreements and legal proceedings between the parties that Respondent is required to transfer ownership of the domain name to Complainant.  Complainant contends that Respondent has no rights or legitimate interests in the domain name because it has relinquished ownership by defaulting on its obligations to Complainant.  Complainant contends that Respondent is using the domain name in bad faith to sell confusingly similar products and creating a likelihood of confusion with Complainant’s mark.

 

B. Respondent

Respondent contends that it has been operating its business under the name of Quilite International L.L.C. from 1995 through the present, and has been operating the domain name <quilite.com> in connection with that business since 1999.  Respondent contends that the U.S.P.T.O. data base does not show that Complainant is the owner of the QUILITE trademark.  Respondent acknowledges that there are ongoing commercial disputes between Complainant and Respondent and with respect to the domain name, Respondent “unequivocally denies the transfer of this asset”.

 

C. Additional Submissions

Complainant submits a Reply that although Respondent was the original owner and registrant of <quilite.com> and of the QUILITE trademark, Respondent relinquished its ownership, pledging its intellectual property as security for the payment of money pursuant to a Settlement Agreement, and thus Complainant is the proper owner of the <quilite.com> domain name.

 

FINDINGS

The panel concludes that the instant dispute contains a question of contractual interpretation and thus falls outside the scope of the UDRP, and as such, the remainder of the claims and allegations will not be addressed.

 

DISCUSSION

Paragraph 15(a) of 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 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 Respondent is identical or confusingly similar to a trademark or service mark in which Complainant has rights; and

(2)  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.

Business / Contractual Dispute Outside the Scope of UDRP

 

Complainant argues that in 2005 Respondent failed to make payments to satisfy debts pursuant to certain manufacturing agreements, and Complainant sued Respondent to recover payment. Complainant contends that it entered into a settlement agreement with Respondent in 2007 where Respondent agreed to pay the sum of $1,000,000 in installment payments to Complainant. Complainant alleges that Respondent secured the payment obligation by giving Complainant a security interest in Respondent’s trademark and other intellectual property.  Respondent ultimately defaulted on the terms of the settlement and security agreements. As a result, Complainant contends that it exercised its rights under the UCC by foreclosing on the security interest in Respondent’s intellectual property. Complainant alleges that it subsequently took ownership of Respondent’s intellectual property pursuant to a Bill of Sale and Assignment Agreement, which Complainant recorded against Respondent’s registered trademarks and patents with the USPTO.  Complainant thus asserts that it is the rightful owner of Respondent’s trademarks and patents, including the QUILITE mark, but that Respondent continues to maintain a website at the <quilite.com> domain name, which it refuses to relinquish to Complainant and which it uses to sell identical products and services in competition with Complainant.

 

Respondent argues that it has been in existence as a company since 1995 through the present and has owned the <quilite.com> domain name from 1999 to the present. Respondent asserts that, despite arguments made by Complainant, the U.S. Trademark Electronic Search System (“TESS”) shows that the QUILITE trademark is live, was applied for on October 9, 1992, was registered on October 31, 1995, and has been owned by Respondent.  The USPTO submission by Complainant shows ownership to be in the name of Rodman W. Kotter.  Respondent argues that there are ongoing commercial disputes between itself and Complainant, denies the QUILITE mark was ever transferred to Complainant, and Complainant has no rights or legitimate interests which would justify it to bring this Complaint.

 

The Panel has discretion to determine whether or not it has jurisdiction over this dispute.  If the Panel finds that there is sufficient evidence for it to properly decide the dispute under the UDRP, it may proceed with the case and consider the contentions of Complainant and Respondent as outlined below.  See Weber-Stephen Prod. Co. v. Armitage Hardware, D2000-0187 (WIPO May 11, 2000); see also Draw-Tite, Inc. v. Plattsburgh Spring Inc., D2000-0017 (WIPO Mar. 14, 2000) (“This Panel well recognizes that its jurisdiction is limited to providing a remedy in cases of ‘the abusive registration of domain names,’ or ‘Cybersquatting’ ... Like any other tribunal, however, this Panel can determine whether it has jurisdiction only from the facts and arguments presented to it.

 

Although the Panel has broad discretion to make a determination where there is a dispute over ownership, the Complainant has not come forward with sufficient proof to satisfy the panel that a UDRP determination is appropriate without making a legal determination over the parties’ contract rights or the enforcement of the various legal proceedings.  In this instance, the Panel finds that this is a contractual dispute between two companies that falls outside the scope of the UDRP.  In 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.  Thus, the majority holds that the subject matter is outside the scope of the UDRP and dismisses the Complaint.

In this case, Respondent contends that certain relevant issues are currently pending with the courts.  Accordingly, cases such as the one presented here may be better decided by the courts than by a UDRP panel:

 

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.  The courts are better equipped to take evidence and to evaluate its credibility. Love, supra.

 

The panel in Luvilon Industries NV v. Top Serve Tennis Pty Ltd., DAU2005-0004 (WIPO Sept. 6, 2005) concurred with this reasoning:

 

The Policy’s purpose is to combat abusive domain name registrations and not to provide a prescriptive code for resolving more complex trade mark disputes .…  The issues between the parties are not limited to the law of trade marks.  There are other intellectual property issues.  There are serious contractual issues.  There are questions of governing law and proper forum if the matter were litigated.  Were all the issues fully decided before a Court of competent jurisdiction, there could be findings addressing the domain name at issue.

 

Based upon the reasoning outlined in the aforementioned cases and the record, the Panel concludes that the instant dispute contains a question of contractual interpretation, and thus falls outside the scope of the UDRP, and dismisses the Complaint without prejudice.  See Everingham Bros. Bait Co. v. Contigo Visual, FA 440219 (Nat. Arb. Forum Apr. 27, 2005) (“The Panel finds that this matter is outside the scope of the Policy because it involves a business dispute between two parties.  The UDRP was implemented to address abusive cybersquatting, not contractual or legitimate business disputes.”); 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.”); see also 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).

 

DECISION

The elements required under the ICANN Policy can not be established without contractual interpretations, thus the Panel concludes that the requested relief shall be DENIED without prejudice.

 

Accordingly, it is Ordered that the <quilite.com> domain name REMAIN WITH Respondent.

 

 

David P. Miranda, Esq., Panelist

Dated:  May 17, 2011

 

 

 

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