G.V. Cosmetics Ltd. v. Dror Huja / BiotopUSA
Claim Number: FA1812001822094
Complainant is G.V. Cosmetics Ltd. (“Complainant”), represented by Janet B. Linn of Tarter Krinsky & Drogin LLP, New York, USA. Respondent is Dror Huja / BiotopUSA (“Respondent”), Florida, USA.
REGISTRAR AND DISPUTED DOMAIN NAME
The domain name at issue is <biotopusa.com>, registered with GoDaddy.com, LLC.
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.
The Honourable Neil Anthony Brown QC as Panelist.
Complainant submitted a Complaint to the Forum electronically on December 20, 2018; the Forum received payment on December 20, 2018.
On December 27, 2018, GoDaddy.com, LLC confirmed by e-mail to the Forum that the <biotopusa.com> domain name is registered with GoDaddy.com, LLC and that Respondent is the current registrant of the name. GoDaddy.com, LLC has verified that Respondent is bound by the GoDaddy.com, 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 January 3, 2019, the Forum served the Complaint and all Annexes, including a Written Notice of the Complaint, setting a deadline of January 23, 2019 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@biotopusa.com. Also on January 3, 2019, the Written Notice of the Complaint, notifying Respondent of the e-mail 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 January 22, 2019.
On January 28, 2019, pursuant to Complainant's request to have the dispute decided by a single-member Panel, the Forum appointed The Honourable Neil Anthony Brown QC as Panelist.
Having reviewed the communications records, the Administrative Panel (the "Panel") finds that the Forum has discharged its responsibility under Paragraph 2(a) of the Rules for Uniform Domain Name Dispute Resolution Policy (the "Rules") "to employ reasonably available means calculated to achieve actual notice to Respondent" through submission of Electronic and Written Notices, as defined in Rule 1 and Rule 2.
Complainant requests that the domain name be transferred from Respondent to Complainant.
A. Complainant
Complainant made the following contentions.
Complainant, GV Cosmetics Ltd, is an Israeli-based, global company that offers haircare related goods and services. Complainant has rights in the BIOTOP and BIOTOP PROFESSIONAL marks through its trademark registrations around the world, including the United States Patent and Trademark Office (“USPTO”) (e.g., BIOTOP PROFESSIONAL - Reg. No. 5,383,462, registered Jan. 23, 2018) and the Israeli Intellectual Property Office (“IIPO”) (e.g., BIOTOP – Reg. No. 246,040, registered May 9, 2012). See Amend. Compl. Exs. 3 and 4. Respondent’s <biotopusa.com> domain name is confusingly similar to Complainant’s BIOTOP mark as it incorporates the mark in its entirety while adding the geographic term “usa” and a “.com” generic top-level domain (“gTLD”). Further, the disputed domain name is confusingly similar to Complainant’s BIOTOP PROFESSIONAL mark as it incorporates the dominant portion of the mark, with the geographic term “usa” and the “.com” gTLD.
Respondent has no rights or legitimate interests in the <biotopusa.com> domain name. Respondent is not authorized or licensed to use Complainant’s BIOTOP mark and is not commonly known by the disputed domain name. Additionally, Respondent fails to use the disputed domain name in connection with a bona fide offering of goods or services or a legitimate noncommercial or fair use. Rather, Respondent uses the disputed domain name to sell Complainant’s products without any authorization. Further, Respondent attempted to sell the disputed domain name to Complainant for $50,000.00.
Respondent registered and uses the <biotopusa.com> domain name in bad faith. Respondent attempted to sell the disputed domain name to Complainant for $50,000.00. Further, Respondent disrupts Complainant’s business and attempts to attract, for commercial gain, users to the disputed domain name where it sells Complainant’s goods. Finally, Respondent had actual knowledge of Complainant’s rights in the BIOTOP mark prior to registering and subsequent use of the disputed domain name.
B. Respondent
Respondent made the following contentions.
Respondent, Creative Distribution Group LLC (“CDG”), has solely and exclusively bought its products from Complainant for its salons in South Florida. Respondent entered into a distribution agreement with Complainant for BIOTOP related hair products. Complainant does not own any trademark registrations for the word “Biotop USA” or any of those variations. Complainant also does not own several other domain names that infringe on its rights in the BIOTOP mark, including <biotopprofessional.com>.
Respondent has rights and legitimate interests in the <biotopusa.com> domain name. Respondent uses the disputed domain name to sell its inventory of Complainant’s goods as a result of its contract termination. Further, Respondent informs its customers through disclaimers that it is now an unauthorized reseller of Complainant’s goods.
Respondent did not register or use the <biotopusa.com> domain name in bad faith. Respondent’s offer of $50,000 was to close up business relations between the parties and was not meant to be a threat but a proposal. Respondent registered the disputed domain name in good faith as it enhanced Complainant’s presence in the United States and financially benefited both Complainant and Respondent. Finally, Respondent asks that this Panel find that Complainant has engaged in Reverse Domain Name Hijacking. The Panel may note the <biotopusa.com> domain name was registered on April 23, 2014. See Amend. Compl. Ex. 2.
Preliminary Issue: Business/Contractual Dispute Outside the Scope of the UDRP
Summary
The Panel finds that the dispute between the parties is a commercial and business dispute between the parties and not one coming within the scope and jurisdiction of the ICANN Policy and the Panel and the Complaint will therefore be denied.
However, either party will be able to bring their dispute before a court having jurisdiction. Briefly, the reasons why the Panel has reached this conclusion are, first, that the dispute, which has been described by both parties in some detail, is as to the terms of the contractual arrangements between them, the conduct engaged in by both parties, its legal effect and what, if any effect the conclusions reached on those issues should have on determining the proper entitlement to the domain name. In other words, whether the domain name should be transferred to the Complainant depends on the way the above dispute is resolved.
Secondly, it is clear that the parties disagree on virtually all issues, particularly what the written agreement between them means and whether any implied terms and understandings can be added to the written agreement. To get to the bottom of these issues it will be necessary to have evidence including cross-examination, discovery of documents and interrogatories or their equivalent. A UDRP panel does not have those mechanisms and has no power to order them. Thus, even if a UDRP panel tried to unravel the thorny issues involved by the only process it has at its disposal, a proceeding on the papers, it would not get very far and nowhere near resolving them in a satisfactory manner.
The Panel therefore has no alternative but to deny the Complaint for want of jurisdiction and because it is inappropriate to try to resolve the dispute through the UDRP
Detailed Reasons
Neither party has raised the question of the jurisdiction of the Panel, but the Panel has discretion to raise it on its own initiative. On reading the papers, the Panel decided that there was a real question as to whether it had jurisdiction over the dispute. The Panel has now concluded that it does not have jurisdiction under the UDRP to hear and determine the substantive dispute between the parties. Moreover, even if it did have jurisdiction, it would not be possible for it or any panel to get to the bottom of the contentious issues involved with the limited investigatory powers that a UDRP panel has at its disposal. The reasons for those conclusions are as follows.
First of all, to decide whether a dispute is within or outside the jurisdiction of UDRP panels, we should inquire as to exactly what is the jurisdiction of such panels. A panel is bound by the Uniform Domain Name Dispute Resolution Policy, defined above as “the Policy.” This is binding on the parties to the proceeding because, in the case of the Complainant, it decided to bring the claim under the UDRP and in the case of the Respondent, it is bound by the contract it entered into when it in effect bought the disputed domain name and that contract includes the UDRP.
The closest that the UDRP comes to define the jurisdiction of panels appointed under the Policy is Paragraph 1 which provides that it covers:
“…a dispute between you (the Respondent) and any party other than us (i.e. other than the registrar, in this case meaning the Complainant) over the registration and use of an Internet domain name registered by you (the Respondent).’
So the question here is whether the dispute as described by the Complainant and responded to by the Respondent is a dispute over the registration and use of a domain name. Clearly, the dispute is, in part, over a domain name, as the Complainant is asking for it to be transferred to the Complainant and the Respondents’ reply to this is: no, the Complainant is not entitled to the domain name and we, the Respondent, are entitled to keep it. So the dispute is over a domain name but only in a peripheral and incidental sense. But the more difficult question is whether the dispute is really and in substance a dispute over a domain name.
To answer that question it is important to look at the legal and business relations between the parties.
The legal and business relations between the parties come primarily from an Exclusive Distribution Agreement between the parties (“the distribution agreement”). The Complainant is an Israeli manufacturer of beauty, hair and related products. It was minded to expand into the United States and with that end in view, it entered into the agreement on June 10, 2014 with Creative Distribution Group LLC (“CDG”), a company of which the Respondent and his wife Jordan are the owners. Under that agreement, CDG became the Complainant’s distribution agent in the United States.
For some time, relations between the parties were harmonious but they have since deteriorated and the Complainant has purported to terminate the distribution agreement. It appears that this has been done on the grounds of what is alleged to be non-payment by the Respondent and failure to sell the minimum quantities of products required under the agreement. The Respondent contends that the relationship was a pleasant and collaborative one until June 2018, when the Complainant terminated the agreement suddenly and without warning. The result, according to the Respondent, is that the Complainant has effectively ended CDG’s business of 5 years. He also maintains that the domain name is an asset of his company that he needs to liquidate his remaining stock of the Complainant’s products which he is apparently now doing.
In essence, therefore, there is a contractual dispute between the parties as to what was the agreement between the parties, meaning whether the agreement is contained solely within the written document of whether there were terms implied into it based on conversations between the parties or implied by the law. This will clearly require evidence from the parties that will have to be tested by cross-examination. The question will then arise whether the agreement was terminated properly, whether it is still on foot or whether from equitable and other principles, the agreement can be said to be current to the extent that the Respondent should be able to keep trading until it can liquidate its current stock of products. It may also be a question, although it has not articulated any specific claim, whether the Respondent is entitled to any compensation for the termination.
Complainant‘s next point that throws light on the real dispute between the parties is that while in the midst of negotiating the agreement and thus before the agreement had been finalised, the Respondent Huja registered the disputed domain name in his own name and that he did so without any authorization or permission from the Complainant. The Distribution Agreement between the parties was finalized on June 10, 2014, nearly two months after Respondent registered the disputed domain name. The Respondent denies that he registered the domain name without authority and maintains that he had authority and permission from the Complainant to register the domain name. He also maintains that the agreement in fact contemplates that the Respondent would be making online sales pursuant to the agreement. Complainant also claims that it did not discover Respondent Huja’s registration of the Domain Name until after the Agreement was executed. The Respondent denies this and says that the domain name was registered with the knowledge and approval of the Complainant and that the use of online services is expressly stated in the agreement. He claims that the understanding between the parties was that CDG would use the internet to sell the Complainant’s products that the Complainant knew this at all times and knew and approved of his registering the domain name. The distribution agreement, it is argued, contemplated that the products would be sold online and that the relevant website was owned by the Respondent.
Clearly, this issue goes to whether the Respondent has a right or legitimate interest in the domain name and whether it could be said that he registered and used the domain name in bad faith. But to get to that point it will be necessary for some tribunal to determine if the Respondent’s registration and use of the domain name were carried out with the knowledge and approval of the Complainant and whether the registration and use of the domain name was allowed or required by the terms of the agreement.
The Complainant also says that the Respondent registered CDG as a company with the Florida Department of State and filed a fictitious name registration with the Florida Department of State, Division of Corporations, in November 2014, identifying Biotop USA as the fictitious name of Creative Distribution Group LLC. What flows from that is not entirely clear, but presumably something flows from it as the Complainant has raised it. Presumably the point goes to part of the claim against the Respondent based on some conduct to which the Complainant objects.
The Complainant also alleges that at the time he registered the domain name, Respondent was associated with a different Florida company, MDM SalonSuits LLC and that after forming CDG in May 2014, Respondent has been associated with several other Florida businesses.
The significance of these matters appears to be that it is contended that Respondent Huja registered the Domain Name in anticipation of CDG becoming Complainant’s distributor and to pre-empt registration of the Domain Name by the Complainant and any other United States distributor of Complainant’s goods. The Respondent says that was not his intention but rather that his intention was to have a structure to enable the parties’ venture to function successfully. He also says that the sole purpose of the agreement was to build and promote the Biotop Professional brand and that he and his company did so with utmost integrity.
At this point, it is reasonably clear that there is a dispute between the parties about the whole conduct of the parties during this venture up to and including the present time.
The Complainant also maintains that CDG was licensed by Complainant to use its trademarks until Complainant terminated the agreement. In that regard the Complainant also says that the agreement allows the Respondent to use the trade names or trademarks provided that all such references are in conformance with the Complainant’s requirements regarding such use. The Complainant says that the agreement is now terminated, terminating any right CDG had to use Complainant’s trademarks. These matters involve the interpretation of the agreement and the validity of any use of the trademarks during the performance of the agreement and subsequently. If they have anything to do with a domain name dispute it must be peripheral
A further claim of the Complainant is that on June 12, 2015, in another apparent attempt to secure rights in Complainant’s intellectual property, Respondent Huja filed a trademark application to register Complainant’s trademark BIOTOP PROFESSIONAL with the United States Patent and Trademark Office. The Respondent says that it was the Complainant who asked it to register BIOTOP PROFESSIONAL and related trademarks in the USA and that this was not an attempt to secure rights in Complainant’s intellectual property. Again, these matters involve the parties’ obligations under the agreement.
Complainant purported to terminate the distribution agreement on July 4, 2018, for cause said to be based on CDG’s failure to pay and for failure to make the minimum sales under the Agreement. This clearly raises the contractual law issue of whether the agreement was terminated and properly so and whether the Respondent might be entitled to time to sell its remaining stock or be entitled to some form of compensation.
However, according to the Complainant , after receiving Complainant’s termination notice and its cease and desist letter, CDG refused to cease its allegedly infringing activities, and continued to use Complainant’s Marks, photos, and the Domain Name for the CDG website. Moreover, Instead of transferring the disputed domain name to the Complainant, Respondent demanded $50,000 to sell it to the Complainant. The Respondent contests the entire circumstances surrounding this sum and how it came into the discussions. Clearly it has significance as it may determine whether the Respondent was acting in bad faith in that regard. Reaching one conclusion or another, however, will require a substantial investigation of the facts.
The Complainant also has what appears to be a separate claim which is that the Respondent has continued to use the Domain Name for CDG’s competing business, redirecting internet users seeking Complainant’s goods to biotopusa.com, CDG’s competing site, for commercial gain.
The Respondent says in his defence that the agreement is completely silent as to what is to happen to the domain name in event of termination of the agreement and that accordingly the domain name is the Respondent’s property and that he is entitled to sell it.
Having regard to all of the foregoing circumstances, the Panel finds that this is in substance and in reality a business or contractual dispute between two companies that goes into contract and trademark law and which falls outside the scope of the UDRP. It also involves contested issues of fact that the Panel would not be able to adjudicate on as it does not have access to the forensic tools available to a court to resolve such disputes.
The Panel is also of the view that the conclusion it has reached on these issues is consistent with previous UDRP decisions. Some guidance as to what matters are or are not within the jurisdiction of the UDRP is to be found in the decision in Love v. Barnett, FA 944826 (Forum May 14, 2007), where 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. “
To the same effect was the recent decision in Thomas E.Wright v. Oliver Graham Forum Case, (FA1804001783404), 21 May 2018).
Moreover, according to the panel in Love, complex 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. National courts are better equipped to take evidence and to evaluate its credibility.”
The panel in Luvilon Indus. 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 ventilated before a Court of competent jurisdiction, there may be findings of implied contractual terms, minimum termination period, breach of contract, estoppels or other equitable defenses. So far as the facts fit within trade mark law, there may be arguments of infringement, validity of the registrations, ownership of goodwill, local reputation, consent, acquiescence, and so on.’
Virtually all of those points also arise in the present case.
Further, In Bracemart, LLC v. Drew Lima, the Panel declined to make any findings under the UDRP when there was evidence that both the complainant and the respondent at some point acted in an official capacity in the management of the company, and that “[b]ased upon this reasoning, the Panel concludes that the instant dispute relates to contractual interpretation and/or whether the relationship between Complainant and Respondent was one of employer-employee or one of partnership, which determination falls outside the scope of the Policy.” See FA 1494699 (Mar. 28, 2013). Because the question of whether the complainant or the respondent in that case had rights in the domain name relied heavily on the corporate structure of the companies involved, the Panel could not resolve the dispute under the UDRP. See id.
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 as well as other aspects of contract law, trademark law and damages and other relief not available under the UDRP, and thus falls outside the scope of the UDRP. As the Panel makes that finding, it is obliged to dismiss the Complaint. See Everingham Bros. Bait Co. v. Contigo Visual, FA 440219 (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 (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 (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).
It should also be emphasised that the parties disagree on virtually everything and it would be next to impossible for a panel, without evidence, including cross-examination, discovery and interrogatives, to make any findings of fact with confidence that they would be accurate.
On the other hand, 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) (“Like any other tribunal, however, this Panel can determine whether it has jurisdiction only from the facts and arguments presented to it. In this case, Complainant did allege bad-faith use and registration of the domain name at issue. Had Complainant proved those allegations, there would be no proper question as to this Panel’s jurisdiction.”); 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. In this case, Complainant did allege bad-faith use and registration of the domain name at issue. Had Complainant proved those allegations, there would be no proper question as to this Panel’s jurisdiction.”).
The Panel does not think on the foregoing test that there is sufficient clear evidence to justify proceeding with this case in this forum.
1. The Panel finds that the dispute between the parties is not a dispute over the registration and use of an Internet domain name registered by the Respondent.
2. The Panel finds that the dispute between the parties is a commercial and business dispute and consequently is outside the scope and jurisdiction of the Policy and this Panel.
3. Accordingly the Complaint will be denied.
As this matter may go further, and In view of the decision of the Panel, it will not embark on the usual UDRP inquiry and will refrain from reaching any conclusions on the issues arising under paragraph 4 of the Policy and any conclusions on the factual disputes between the parties.
As the Panel finds that this matter is outside the scope and jurisdiction of the ICANN Policy and the Panel as the dispute is a commercial and business dispute between the parties, the Panel concludes that relief shall be DENIED. Accordingly, it is Ordered that the <biotopusa.com> domain name REMAIN WITH Respondent.
The Honourable Neil Anthony Brown QC
Panelist
Dated: January 27, 2019
Click Here to return to the main Domain Decisions Page.
Click Here to return to our Home Page