Vortal Group,
Inc. v. Digital Transport c/o Kent Smith
Claim Number:
FA0312000222968
PARTIES
Complainant is Vortal Group, Inc. (“Complainant”), represented by Roger N. Behle Jr., of Behle Law Corporation, 575 Anton
Boulevard, Suite 710, Costa Mesa, CA 92626.
Respondent is Digital Transport c/o Kent Smith (“Respondent”), represented
by Michael P. Eddy, #510, 2683 Via
De La Valle, Suite G., Del Mar, CA 92014.
REGISTRAR AND
DISPUTED DOMAIN NAME
The domain name at issue is <policeauction.com>, registered
with Enom, 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.
Hon. Jerry J. Kaufman and Paul M.
DeCicco as Panelists and Jacques A. Léger, Q.C., as Chair.
PROCEDURAL
HISTORY
Complainant submitted a Complaint to
the National Arbitration Forum (the “Forum”) electronically on December 30,
2003; the Forum received a hard copy of the Complaint on January 5, 2004.
On January 5, 2004, Enom, Inc.
confirmed by e-mail to the Forum that the domain name <policeauction.com> is registered with Enom, Inc. and that
the Respondent is the current registrant of the name. Enom, Inc. has verified
that Respondent is bound by the Enom, 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 January 12, 2004, a Notification
of Complaint and Commencement of Administrative Proceeding (the “Commencement
Notification”), setting a deadline of February 2, 2004 by which Respondent
could file a Response to the Complaint, was transmitted to Respondent via
e-mail, post and fax, to all entities and persons listed on Respondent’s
registration as technical, administrative and billing contacts, and to
postmaster@policeauction.com by e-mail.
A timely Response was received and
determined to be complete on February 2, 2004.
On February
17, 2004, pursuant to Respondent’s request to have the dispute decided by a three-member
Panel, the Forum appointed Hon.
Jerry J. Kaufman and Paul M. DeCicco as Panelists and Jacques A. Léger, Q.C.,
as Chair.
On
March 2, 2004, Panel ordered an extension of time to render its decision until
March 9, 2004.
PRELIMINARY
FINDING ON THE ADMISSIBILITY OF THE ADDITIONAL SUBMISSIONS
Complainant submitted an Additional
Submission, received and determined to be in compliance with Forum Supplemental
Rule #7, on February 6, 2004. The Panel notes that Respondent maintains that it was not served with Complainant’s Additional
Submission, as required by Forum Supplemental Rule #7(b)(iii), until it
received a copy from the Forum on February 9, 2004, and that Complainant failed
to file valid proof of service with the Forum as required under that same rule.
Respondent argues that because Complainant failed to properly serve a complete
copy of its Additional Submission, Respondent was unable to prepare its
Response to that Submission until two days prior to the deadline for that
Response. The sole deficiency in Complainant’s Additional Submission is that
portions of page 7 were lost in facsimile transmission. Given the minor impact
this deficiency had on Respondent’s capacity to file a Reply to Complainant’s
Additional Submission, the Panel chooses to consider it. See generally Strum v. Nordic Net Exch. AB,
FA 102843 (Nat. Arb. Forum Feb. 21, 2002) (“Ruling a Response inadmissible
because of formal deficiencies would be an extreme remedy not consistent with
the basic principles of due process.").
Respondent submitted an Additional
Submission, received and determined to be in compliance with Forum Supplemental
Rule #7, on February 11, 2004. In all fairness, the Panel also accepts
Respondent’s Additional Submission.
RELIEF SOUGHT
Complainant requests that the domain
name be transferred from Respondent to Complainant.
PARTIES’
CONTENTIONS
A. Complainant
Factual Background
Complainant, located in Orange County, California,
provides subscription-based content and publishing services via newsletter
technology. Since April 2000, Complainant has used the policeauctions.com mark in connection with its website that
provides information on governmental and non-governmental auctions. In March
1999, Complainant registered the domain name <policeauctions.com> and has
used it as an indication of source since that time. As a result of
Complainant's long, continuous, and exclusive use of the policeauctions.com mark, and the
extensive promotion and advertisement of its services, the policeauctions.com mark has gained wide
public acceptance and association with Complainant, both in the United States
and abroad, as well as significant goodwill and recognition in the government
auction industry. According to Complainant, the policeauctions.com mark has thus become distinctive and
enjoys secondary meaning.
The domain name <policeauction.com>
is identical or confusingly similar to Complainant's mark, trade name and
<policeauctions.com> domain name.
Complainant has offered to purchase said domain name
from Respondent for a reasonable price.
However, Respondent would not participate in negotiations for the sale
of the domain name.
Respondent does not have any
trademark or other intellectual property rights in the <policeauction.com>
domain name. The <policeauction.com> domain name does not consist
of Respondent's legal name or any other name commonly used to identify
Respondent, including any fictitious names under which it does business.
Respondent had not used the <policeauction.com>
domain name in connection with the bona
fide offering of any goods or services prior to registering said domain
name. Upon information and belief, Respondent has not used, and does not use,
the <policeauction.com> domain name in any way constituting a
non-commercial or fair use of the mark.
The domain name does not resolve to
a website or other on-line presence. Furthermore, customers and/or competitors
of Complainant have been and continue to be diverted to Respondent's <policeauction.com>
which has no legitimate website or other presence, which has harmed and will
harm the goodwill of Complainant by suggesting, among other things, that Complainant
is no longer in business.
In light of the fact that Respondent
has no legitimate rights or interests in the domain name, had knowledge of
Complainant’s <policeauctions.com> domain name and website and still
refuses to sell the domain name to Complainant, it is clear that Respondent has
registered the <policeauction.com> domain name in bad faith. In addition, subsequent to being contacted
by Complainant, Respondent continued holding the domain name and failed to take
any positive action with it, further demonstrating that it had registered the
domain name in bad faith, in spite of the fact that it had registered <policeauction.com>
before the date when Complainant first commenced use of policeauctions.com. See
NetLearning, Inc. v. Parisi, FA 95471(Nat.
Arb. Forum Oct. 16, 2000).
Respondent
has taken no positive action in relation to the domain name. In this case, inactivity amounts to the
domain name being used in bad faith, as supported by Policy ¶ 4(b). See Telestra Corp. v. Nuclear Marshmallows, D2000-003 (WIPO Feb. 18, 2000). As the circumstances identified in Policy ¶ 4(b) are “without
limitation,” Policy ¶ 4(b) thereby expressly recognizes that other
circumstances can be evidence that a domain name was registered and is being
used in bad faith. Therefore, Complainant cannot conceive of any plausible
actual or contemplated active use of the domain name by Respondent that would
not be illegitimate, such as by being a passing off, an infringement of
consumer protection legislation, or an infringement of Complainant’s rights
under trademark law. To that end,
Complainant alleges that Respondent’s passive holding of the domain name
satisfies the requirement that the domain name is being used in bad faith.
B. Respondent
Complainant’s domain name,
<policeauctions.com>, consists of two generic terms, “police” and
“auctions,” which have no sufficient secondary meaning. The combined term
“Policeauction” is generic and has been historically used to describe the sale
of unclaimed and confiscated property, which is primarily derived from law
enforcement seizure activities.
Complainant does not present any evidence
which one could conclude that its trademark is famous or well known. Both terms
in combination are additionally primarily descriptive of Complainant’s generic
services. In Rollerblade, Inc. v. CBNO,
D2000-0427 (WIPO Aug. 24, 2000), the panelist found that "genericness, if
established, will defeat a claim of trademark rights, even in a mark which is
the subject of an incontestable registration." According to Respondent,
this instance falls below that case’s benchmark, as the present mark is indeed
contestable, as it is generic as well as descriptive of the services in which
the domain name is used.
As more evidence of this, a website
located at the web address <salesauctions-online.com/police-auctions>
lists police auctions on <ebay.com> and it does not in any way refer to
Complainant. More evidence that this term is widely used in its generic sense
can be found with a <google.com> search of this term in user group
postings. Further, court decisions have stated that common phrases such as
"bake sale" and "flea market," both very similar to “police
auction,” are not eligible for a trade or service mark protection. Even the
relatively obscure phrase "softchew" was denied trademark protection
as a generic descriptor because it was in general use. See Novartis Consumer Health, Inc. v.
McNeil-PPC, Inc., 1999 WL 707721 (D.N.J. Sept.13, 1999).
Finally, Complainant does not denote
"TM" or "SM" adjacent to the term “police auctions” on the
<policeauctions.com> website.
Rights and
Legitimate Interests
Respondent
Kent Smith has been involved in the development of auction Internet websites
since 1997, when as a co-owner of <flowerauction.com>, he developed a
website for The American Flower Auction. Due to the valuable services the site
provided to grower members, it was awarded a grant from the Resource
Conservation District of San Diego County. In order to capitalize on the
systems, knowledge and experience gained with the <flowerauction.com>
endeavour, Respondent registered the Internet domain name <policeauction.com> on December 19, 1997. The domain name was registered
with the intent to offer similar types of valuable services to the law
enforcement community and consumers that <flowerauction.com> had provided
to growers and buyers.
Respondent has
invested tens of thousands of dollars of his own capital on the creation and
development of <flowerauction.com> and would not have done so if the
software, design and framework were not to be a benefit for the future
development of the <policeauction.com> domain name.
Respondent
next registered "Police Auction" as a fictitious business name,
statement number 199800319, with the San Diego County Recorders office on
January 06, 1998. Respondent then followed up with considerable expense and
effort dedicated to developing the <policeauction.com> website project.
Finally,
Respondent used the domain name for its website in demonstrating to potential
business partners and inventors both before and after Complainant’s date of
registration of <policeauctions.com>. A full launch of the website was
delayed for a number of personal and business reasons. Several internal and
proprietary studies were also performed with the eventual release of the
website in mind.
An
independent, well known and widely used Internet resource, the Internet Archive
provides results that show that the domain name <policeauction.com> resolved to the <digitaltransport.com> website at
least from January of 1999 to April 18, 2001.
Respondent’s
use in commerce was to both offer goods and services by Respondent and to
invite prospective business partners and interested venture capital firms to
contact Digital Transport in regards to the launch of the website at <policeauction.com>. The first actual use of the domain name in commerce to
offer goods and services preceded Complainant’s date of registration of the
<policeauctions.com> domain name.
Respondent registered and
acquired the domain name for its own legitimate use, prior to Complainant’s
registration of <policeauctions.com> and Respondent thereafter filed a
fictitious name statement with the San Diego County Recorder.
Respondent has never offered
the domain name for sale to any third party. Respondent has informed more than
a few inquiring parties that the domain name was in use and not for sale, and
this is further evidence of no bad faith on the part of Respondent.
Complainant’s own statement serves as evidence that Respondent did not register
or acquire the domain name primarily for the purpose of selling, renting, or
otherwise transferring the domain name registration to Complainant or to any
other competitor of Complainant, for valuable consideration in excess of
Respondent’s documented out-of-pocket costs directly related to the domain
name.
Respondent claims that the
only remotely cognizable claim Complainant asserted, that the non-use of the
domain name for a short period of time is evidence of bad faith on the part of
Respondent, is plainly false. There are many instances where panelists in UDRP
proceedings have found no bad faith from delays on the part of respondent in
the launching of websites associated with the disputed domain names. One
example is Asphalt Tech. Inc, v.
Anything.com, D2000-0967 (WIPO Oct. 4, 2000), where the panelist determined
that the delay in launching did not diminish respondent’s rights in its domain
name.
There are many valid reasons
why it is preferable to not have an incomplete or under construction website.
One reason is that Internet directories and some search engines can be
unforgiving if a first effort is indexed poorly. Lastly, fourteen domain names
owned by Complainant do not resolve to websites and thus have no reference in
corresponding websites to police or auction in them, even though the words
police and auction appear in the domain names.
Respondent claims it has used
the domain name in conjunction with services such as email which are not apparent
to Complainant and Respondent has spent a considerable amount of effort and
finances in the development of a website at <policeauction.com>.
C. Additional Submissions
Complainant first states that the
domain name/mark is not generic, since it is not operating, and indeed could
not be operating, a police auction. Rather, it operates an Internet-based
information service providing its users with, among other things, information on government auctions,
including police auctions, real estate foreclosures, Internal Revenue Service
auctions, private auctions, government benefits services, including money
grants, health benefits and disability benefits, and unclaimed money.
At a
minimum, the domain/mark is descriptive or suggestive. Complainant
has been using the policeauctions.COM
domain/mark continuously since 1999 and, as shown below, has acquired
distinctiveness through secondary meaning.
Through Complainant’s long,
continuous, and exclusive use of the policeauctions.COM
domain/mark, and its extensive promotion and advertisement of the same, the
mark has gained wide public acceptance and association with Complainant, both
in the United States and abroad, and has come to be widely and favourably
recognized.
Moreover, Respondent has failed to
produce any evidence from the current
millennium showing any bona fide “preparation
to use the domain.” Respondent has not even operated a single web page at that
web address for the last three (3) years.
Respondent has never operated even a single web page that refers or relates to
government auctions. During the brief periods where Respondent is even shown to
have operated a website linked to the domain name, it chose to merely redirect
all traffic to his Digital Transport website that offered services which had
nothing to do with government auctions.
Respondent has failed to show that
it now has, or ever had, any bona fide intent
to use the domain <policeauction.com>. Thus, it can have no rights
or legitimate interest in the domain. Respondent was fully aware that the only
Internet traffic it would obtain without a legitimate website would be type-in
traffic that came from people typing in “police auction, policeauction, or
policeauction.com” into the browser.
By Respondent
POLICAUCTIONS.COM signifies to
the public that the user of the designation is a commercial entity that
specializes in information related to police auctions. The fact that
Complainant’s services do not technically include actual police actions, but
rather are only services related to police and governmental auctions is of no
consequence.
Furthermore, there is evidence of
Complainant’s premeditated orchestration to attempt to reverse domain name
hijack Respondent’s domain name <policeauction.com>.
In concluding, the alleged use in 1999 and 2000 is
plainly false. Any use of <policeauctions.com> as alleged by Complainant
falls far short of acquiring secondary distinctiveness, even if it could, and
the record is completely devoid of any evidence that purchasers and prospective
purchasers view POLICEAUCITONS.COM as a distinctive source indicator for
Complainant’s services.
DISCUSSION & FINDINGS
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 cumulatively each of the
following three elements if it
is to succeed in obtaining an order for the transfer or cancellation of the
domain name:
(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.
Complainant maintains that it has
established common-law rights in the POLICEAUCTIONS.COM mark through continuous
use, promotion and advertisement of the mark in commerce since March 1999. The
Panel agrees that the ICANN dispute resolution policy is “broad in scope” in
that “the reference to a trademark or service mark ‘in which the complainant
has rights’ means that ownership of a registered mark is not required –
unregistered or common law trademark or service mark rights will suffice” to
support a domain name Complaint under the Policy. See McCarthy on
Trademarks and Unfair Competition, § 25:74.2, Vol. 4 (2000); see also SeekAmerica Networks Inc. v. Masood,
D2000-0131 (WIPO Apr. 13, 2000) (wherein it was found that the Rules do not
require that the Complainant's trademark or service mark be registered by a
government authority or agency for such rights to exist); see also British Broad.
Corp. v. Renteria, D2000-0050 (WIPO Mar. 23, 2000) (wherein it was noted
that the Policy “does not distinguish between registered and unregistered
trademarks and service marks in the context of abusive registration of domain
names”). By way of a sworn declaration attached to the additional submissions
dated February 6, 2004 by William Keck, President and CEO of Complainant,
Complainant has established that it has been using the domain name
<policeauctions.com> for five years, operating information services to
which over two million people have subscribed. This, under normal
circumstances, could be sufficient to justify acquisition of common law rights
in a mark, if the threshold test is met.
However, in
the case at hand, the Panel agrees with Respondent’s contention that
although Complainant’s advertising and promotional expenses may appear to be
substantial, there is nevertheless a need to have substantial direct evidence
from consumers that cause the relevant consumers to view POLICEAUCTIONS.COM as
a distinctive source indicator for Complainant’s services in order to even
begin to look at the issue of whether Complainant’s domain name has become
distinctive of Complainant’s services (mere advertising and promotional
expenses are not use of a mark, but only an indication as to a market segment).
It is the Panel’s opinion that the term “police auction” is highly descriptive
of at least some of
the services provided concerning police auctions, which admittedly concern
police auctions. Consequently, in order to overcome this lack of
inherent distinctiveness, Complainant had the burden to establish secondary
meaning. The Panel finds that Complainant has failed to do so. See Coupons Inc. v. Motherboards.com, FA 192249 (Nat. Arb. Forum Nov. 4, 2003).
Considering the limited evidence as
to advertising and promotional expenses and the lack of evidence relating to
use of the mark filed by Complainant, the Panel is of the opinion that
Complainant has not satisfactorily met the necessary burden imposed on it to
establish rights in the mark POLICEAUCTION.COM. Indeed, the alleged mark being
a domain name, in light of the evidence submitted, the Panel must find that
Complainant has failed to show acquisition of proprietary rights that it might
have otherwise had, if secondary meaning had been proven.
Moreover, Policy ¶ 4(a)(i) requires Complainant to have rights in a mark
(registered or common law) before the disputed domain name is registered.
Respondent urges that it could not have registered the disputed domain name in
bad faith, as Complainant admits that it had no enforceable rights in the
POLICEAUCTIONS.COM mark at the time that the domain name was registered. See
Ode v. Intership Ltd., D2001-0074
(WIPO May 1, 2001) (“we are of the unanimous view that the trademark must
predate the domain name”); see also Aspen
Grove, Inc. v. Aspen Grove, D2001-0798 (WIPO Oct. 5, 2001) (wherein it was
found that it is impossible for Respondent to register the disputed domain name
in bad faith if Complainant's company did not exist at the time of
registration). In short, Complainant admits that it had no trademark rights in
the at-issue mark prior to the date that Respondent registered its domain
name. Therefore, the Complaint must
fail.
For reasons stated above, Complainant cannot make it
necessary to review the other two elements necessary to prove a domain name
case under the UDRP, and the Panel rules for Respondent.
Respondent alleges that Complainant
was well-aware that it had no enforceable rights in any mark containing the
word POLICEAUCTION and that the Complaint was therefore brought in bad faith.
Complainant did not address this issue, however this is of very little
consequence since it
appears from the Rules that a panel may decide sui sponte that reverse hijacking occurred. Complainant
chose a generic name for the domain referencing its website. In the Panel’s
view, the fact that it failed to register around the name cannot be corrected
by hijacking the name of a prior similarly sounding registration.
As stated in Sydney Opera House Trust v. Trilynx Pty. Ltd, D2000-1224 (WIPO Oct.
31, 2000), to establish reverse domain name hijacking, Respondent must show
knowledge on the part of Complainant of Respondent’s right or legitimate
interest in the disputed domain name and evidence of harassment or similar
conduct by Complainant in the face of such knowledge.
In Aspen Grove, Inc. v. Aspen Grove, D20001-0798 (WIPO Oct. 5, 2003),
the Panel noted that complainant had not demonstrated it had trademark rights
in the disputed domain name, respondent demonstrated rights in the disputed
domain name, and finally, respondent had registered the domain name some two
years before complainant came into existence and thus could not have been in
bad faith at registration relative to complainant.
In the case at hand, the focus needs
to be on the motives, knowledge, and actions of the party whose conduct is
being judged. Here we are to consider the conduct of Complainant as to whether
or not it has attempted to reverse hijack the domain name. Respondent registered the name in good faith
and therefore had legitimate rights to the name by virtue of the grant from the
Registrant. See K2r Produkte AG v.
Trigano, D2000-0622 (WIPO
Aug. 23, 2000); see also Smart
Design LLC v. Hughes, D2000-0993
(WIPO Oct. 18, 2000). The fact that Respondent may not have had trademark
rights is irrelevant, trademark rights are not equivalent or prerequisite for a
party to have the right to a domain name.
Moreover, the Panel finds that filing a UDRP
proceeding - which on its face can be qualified as frivolous - without any
basis to do so should be construed in the present case as harassing. Here,
Complainant admitted it knew that the domain name was registered prior to its
using the at-issue mark in commerce. When, as in the present case, Complainant
is unable to show trademark rights through use or otherwise which predate
registration of the at-issue domain name, then it becomes impossible for it to
prevail. In the case before the Panel, there is no way that Complainant could
have reasonably expected to prevail and its counsel should have known better.
To the extent that reverse
domain name hijacking can be granted as a relief by virtue of Rule 15(e), and
albeit as a very exceptional remedy, the circumstances of this case warrant it.
The claim for reverse domain name hijacking is granted, because
filing a Complaint which one knows or should have known would fail based upon
the admissions of Complainant can be interpreted as harassing per se and should be discouraged.
DECISION
Not having established all three
elements required under the ICANN Policy, the Panel concludes that relief shall
be DENIED.
The counter-claim of reverse domain name hijacking is GRANTED.
Hon. Jerry J.
Kaufman and Paul M. DeCicco as Panelists
and Jacques A.
Léger, Q.C., as Chair.
Dated: March 9, 2004
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