Lehman Brothers Holdings Inc. v. Michael Breene
Claim Number: FA1110001410641
Complainant is Lehman Brothers Holdings Inc. (“Complainant”), represented by James J. Johnston of Dechert LLP, Pennsylvania, USA. Respondent is Michael Breene (“Respondent”), represented by Todd E. Soloway of Pryor Cashman LLP, New York, USA.
REGISTRAR AND DISPUTED DOMAIN NAMES
The domain names at issue are <setaiinternational.com> and <setaihotelsandresorts.com> (“the Domain Names”), registered with Register.com.
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.
Clive L. Elliott as Panelist.
Complainant submitted a Complaint to the National Arbitration Forum electronically on October 7, 2011; the National Arbitration Forum received payment on October 10, 2011.
On October 7, 2011, Register.com confirmed by e-mail to the National Arbitration Forum that the Domain Names are registered with Register.com and that Respondent is the current registrant of the names. Register.com has verified that Respondent is bound by the Register.com 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 October 11, 2011, the Forum served the Complaint and all Annexes, including a Written Notice of the Complaint, setting a deadline of October 31, 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@setaiinternational.com, postmaster@setaihotelsandresorts.com. Also on October 11, 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 October 31, 2011.
On November 9, 2011, pursuant to Complainant's request to have the dispute decided by a single-member Panel, the National Arbitration Forum appointed Clive L. Elliott as Panelist.
Complainant requests that the Domain Names be transferred from Respondent to Complainant.
A. Complainant
Complainant states that it is the owner of the United States trademark THE SETAI GROUP, and the owner, by assignment, of the trademark THE SETAI, with both trademark registrations being issued on November 13, 2001. The SETAI GEOUP and THE SETAI trademarks (“SETAI registrations”) are both for real estate management services, real estate development and construction services and hotel and resort services. Complainant submits that it also owns common law rights in trademarks, service marks and trade names comprising or incorporating the mark SETAI in connection with resort and real estate development and management services.
Complainant advises that The Setai is a resort hotel and residential development located in South Beach, Miami, Florida and that during its ten years in operation it has become known as being prestigious and luxurious resort properties, having received accolades from both domestic and international press and been cited by magazines and periodicals as among the best resort properties in the world. Complainant states that SETAI is also the name of SETAI FIFTH AVENUE, a luxury boutique hotel in New York City, as well as SETAI CLUB, a spa and health club located in lower Manhattan, New York. THE SETAI, THE SETAI FIFTH AVENUE and SETAI CLUB are referred to as the “SETAI Properties”.
Complainant advises that it has entered into branding and marketing agreements with the operators of the SETAI Properties, and has licensed the use of the SETAI mark in connection with luxury hotel and spa facilities in the United States, namely the SETAI Properties. Complainant asserts that the SETAI Properties are the only SETAI-branded hotel and/or spa facilities in the world.
Complainant states that its predecessor in interest, Metropolitan Development Group, LLC, initially applied for registration of the SETAI registrations on May 30, 2000, with the registrations being issued on November 13, 2001.
Complainant asserts that the Domain Names were registered on the same day that it acquired ownership of the SETAI mark and the SETAI registrations and that the registrant of the Domain Names used an anonymizing service to mask its identity in the official WHOIS records. Complainant also asserts that both Domain Names resolve to websites containing generic, sponsored links and advertisements.
Complainant submits that the Domain Names are identical to Complainant’s mark as it consists of it’s famous SETAI mark in combination with generic or descriptive terms, being international, hotels and resorts, which Complainant suggests is intended to communicate to consumers that the marks were related to resort or hotel properties.
Complainant states that Respondent has no rights or legitimate interests with respect to the Domain Names and is not using the Domain Names in connection with a bona fide offering of goods or services. Complainant contends that the Respondent’s websites include no description or reference to SETAI, other than the name of the website itself, and is merely a compilation of commercial links and advertisements.
Complainant contends that the Domain Names were registered, and are being used in bad faith, and asserts that Respondent has registered them primarily for the purpose of intentionally attempting to attract, for commercial gain, Internet users to Respondent’s web sites by creating a likelihood of confusion with Complainant’s mark as to the source, sponsorship, affiliation, or endorsement of such web site.
B. Respondent
Respondent states that Setai is a highly-successful and well-known brand specializing in developing luxury residential and five-star hotel properties in selected markets and prime locations around the world. It asserts that over the past ten years, the Setai has built its brand to include boutique, five star hotels, residential properties, award-winning restaurants and luxury spas.
Respondent further asserts that two different companies hold an interest in the Setai brand. Firstly, Setai (Turks & Caicos) Ltd (“Setai T&C”) owns the rights in and to the non-US SETAI trademarks. Respondent advises that it is the registered owner of Setai trademarks and/or service marks, and/or has filed for registration, in countries throughout the world (“the Setai International Marks”). It has also registered numerous Setai-related domain names, including the Domain Names.
Respondent asserts that it has been actively involved in plans to develop “Setai” properties throughout the world, including Greece, Uruguay, London, Paris, Spain and Amsterdam. By way of example Respondent advises that it has purchased property in Uruguay for the building of The Setai Jose Ignacio, a hotel, spa and residences, and has marketed this property to prospective future visitors and investors. Respondent gives another example in that it is currently involved in the development of a residence and hotel property in Greece.
Secondly, the Setai Group, LLC (“Setai US”) is the Setai-related entity in the United States. Respondent accepts that Setai US has developed several “Setai” properties in the United States, which properties appear to correspond with the properties Complainant alleges it is involved with.
Respondent advises that Complainant and Respondent are currently engaged in litigation regarding the ownership of the Setai Marks, which dispute involves contractual interpretation, commercial reasonableness under the Uniform Commercial Code, and related claims for unfair competition, breach of contract and a declaratory judgment as to the parties’ respective rights in and to the Setai Marks. Respondent contends that this litigation will determine the rights of the parties in and to the Setai Marks and will, as a result, resolve this instant Complaint.
Respondent asserts that Complainant has a long-standing contractual relationship that predates this dispute, but that relationship has now become adversarial with Complainant filing an action in the Supreme Court of the State of New York. Respondent contends that as a result of Complainant’s wrongful interference with the Setai marks, Respondent and Setai US have filed counterclaims and third party claims against Complainant in the New York action.
Respondent argues that with the existence of the New York action and the contractual, factual and legal disputes involved therein mandates dismissal of this complaint.
Respondent advises that it owns a European Union community trademark (“CTM”) registration in numerous classes, covering, inter-alia, real estate development, hotel and resort services and spa services, which provides registration for the “Setai” mark in 27 European Union countries, and has actively been engaged in the development of properties located in several countries and has marketed the brand in connection therewith.
Respondent advises that on August 25, 2011 Complainant commenced a proceeding in the Office for Harmonization in the Internal Market to cancel Setai T&C’s CTM and also filed its own CTM registration for “Setai”. Respondent asserts that it intends to vigorously oppose Complainant’s cancellation proceeding and any attempts to file Complainant’s own Setai registrations with the CTM.
Respondent submits that, given the ongoing legal dispute between the parties, which involves, inter alia, contractual disputes regarding the rights in and to the Setai Marks, this Complaint should be dismissed pending the New York Action and Third Party Complaint. Respondent asserts that it is not the purpose of the Policy to resolve disputes between the parties who each claim legitimate rights in a domain name but rather to protect trademark owners from cyber squatters. Respondent states that Complainant claims that it is the owner of the Setai US Marks, and may claim that its rights to the US Marks enable it to expand its trademark rights abroad. It is alleged that Complainant’s rights in and to the Setai US Marks are being challenged in the New York Action. Respondent and Setai US contend that Complainant has no rights in and to the Setai Marks, rather Setai US and Respondent are the rightful owners of the US and international marks, respectively. In the New York Action and third party complaint, Respondent claims that Complainant’s conduct in this proceeding is part of its wrongful attempt to interfere with Respondent’s intellectual property rights.
Respondent submits that as these issues are currently being litigated in the New York Action and Third Party Complainant and the outcome of that action will decide whether Complainant has any right to bring the instant Complaint.
Respondent advises that should the Panel decide not to dismiss this proceeding based on the New York Action and Third Party Complainant, the CTM proceedings and the contractual and legal dispute between the parties, the Complaint should nevertheless be dismissed on the merits.
For the reasons that follow the Panel considers that it is inappropriate to proceed with the arbitration and declines to do so.
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."
Concurrent Court Proceedings
In its complaint Complainant made no reference to any court proceeding involving Respondent or the Domain names. However, Respondent has drawn the Panel's attention to the extant litigation in the Supreme Court of New York, Lehman Bros. Holdings, Inc. v. Setai Group, LLC, Case No. 652472/11 and asserts that its business, Setai (Turks & Caicos) Ltd., has become a third-party plaintiff in the above-mentioned action. The Panel notes in this regard that the Domain Names are specifically referred to in the third-party complaint. Respondent has also drawn the Panel's attention to the dispute regarding trademark rights in the European Union’s Office for Harmonization in the Internal Market. Respondent contends that both matters should require dismissal of this current action with the National Arbitration Forum.
In situations where concurrent court proceedings are pending, as is the situation with respect to the instant Complaint, certain panels have chosen to proceed with the arbitration filing. However, other panels have chosen not to proceed with the arbitration because of the pending litigation. See AmeriPlan Corp. v. Gilbert FA105737 (Nat. Arb. Forum Apr. 22, 2002) (Regarding simultaneous court proceedings and UDRP disputes, Policy ¶ 4(k) requires that ICANN not implement an administrative panel’s decision regarding a UDRP dispute “until the court proceeding is resolved.”).
The rationale for this approach is that a panel should not rule on a decision when there is a court proceeding pending because no purpose is served by the panel rendering a decision on the merits, whether to transfer the Domain Names, or otherwise. However, more fundamentally, in the present situation it is very difficult, if not impossible, to properly adjudicate a dispute where two parties claim to be entitled to the Domain Names and where, in what is clearly a complex commercial situation, little opportunity is given in a forum such as this to adequately test and assess the wide-ranging and conflicting assertions made by the parties. Indeed, justice can hardly be done in such a situation.
Trademark Dispute Outside Scope of UDRP
Complainant offers evidence that it owns two trademark registrations with the United States Patent and Trademark Office ("USPTO") as follows: THE SETAI (Reg. No. 2,506,974 registered November 13, 2001) and THE SETAI GROUP (Reg. No. 2,506,966 registered November 13, 2001). Complainant also submits evidence that it obtained such rights in the mark through an assignment of title and submits the Assignment Abstract of Title from the USPTO as proof of its legitimate ownership of the marks.
Respondent on the other hand first claims that it is the sole owner of a company called Setai (Turks & Caicos) Ltd., and that this company owns international trademark registrations for marks containing the term SETAI. Respondent submits trademark certificates that it claims ownership to a number of trade mark registrations.
In sum, Complainant and Respondent both assert rights to the SETAI and THE SETAI marks. The Panel considers that this dispute falls outside the scope of the Policy. In Commercial Publ’g Co. v. EarthComm, Inc., FA 95013 (Nat. Arb. Forum July 20, 2000), the panel indicated that legitimate disputes should be decided by the courts:
The adopted policy establishes a streamlined, inexpensive administrative-dispute resolution procedure intended only for the relatively narrow class of cases of “abusive registrations.” Thus, the fact that the policy’s administrative dispute-resolution procedure does not extend to cases where a registered domain name is subject to a legitimate dispute is a feature of the policy, not a flaw. The policy relegates all “legitimate disputes” to the courts. Only cases of abusive registrations are intended to be subject to the streamline [sic] administrative dispute-resolution procedure.
Further, previous panels have chosen to dismiss UDRP complaints which centered upon legitimate trademark disputes. See, e.g., Abbott Labs. v. Patel, FA 740337 (Nat. Arb. Forum Aug. 15, 2006) (holding that assertions of trademark infringement are “entirely misplaced and totally inappropriate for resolution” in a domain name dispute proceeding because the UDRP Policy applies only to abusive cybersquatting and nothing else); see also Stevenson Indus., Inc. v. CPAP-PRO Online, FA 105778 (Nat. Arb. Forum Apr. 25, 2002) (“If the existence of [rights or legitimate interests] turns on resolution of a legitimate trademark dispute, then Respondent must prevail, because such disputes are beyond the scope of this proceeding.”).
Therefore, the Panel dismisses the present Complaint on this further ground.
That is not to say that Complainant's allegations are not necessarily well founded or indeed that Respondent’s counter-allegations are not necessarily well founded or that either party may not seek to bring a complaint or further complaint in the future. That however is a matter for the parties.
Accordingly, the present Complaint is DENIED. It is Ordered that the Domain Names REMAIN WITH Respondent.
Clive L. Elliott, Panelist
Dated: November 21, 2011
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