DECISION

 

Stability AI Ltd v. Loren Heyns / DreamStudio

Claim Number: FA2502002142063

 

PARTIES

Complainant is Stability AI Ltd ("Complainant"), represented by Caroline Y. Barbee of Kilpatrick Townsend & Stockton LLP, California, USA. Respondent is Loren Heyns / DreamStudio ("Respondent"), Georgia, USA.

 

REGISTRAR AND DISPUTED DOMAIN NAME

The domain name at issue is <dreamstudio.com> (the "Disputed Domain Name"), registered with Cloudflare, Inc.

 

PANEL

The undersigned certifies that they have acted independently and impartially and to the best of their knowledge have no known conflict in serving as Panelist in this proceeding.

 

Robert Badgley and Ho-Hyun Nahm as Panelists and Douglas M. Isenberg as Chair.

 

PROCEDURAL HISTORY

Complainant submitted a Complaint to Forum electronically on February 25, 2025; Forum received payment on February 25, 2025.

 

On February 27, 2025, Cloudflare, Inc. confirmed by e-mail to Forum that the <dreamstudio.com> domain name is registered with Cloudflare, Inc. and that Respondent is the current registrant of the name. Cloudflare, Inc. has verified that Respondent is bound by the Cloudflare, Inc. 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 3, 2025, Forum served the Complaint and all Annexes, including a Written Notice of the Complaint, setting a deadline of March 24, 2025 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@dreamstudio.com. Also on March 3, 2025, 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 March 24, 2025.

 

On March 31, 2025, Complainant filed an additional submission. On April 1, 2024, Respondent filed an additional submission.

 

On April 2, 2025, pursuant to Complainant's request to have the dispute decided by a three-member Panel, Forum appointed Robert Badgley and Ho-Hyun Nahm as Panelists and Douglas M. Isenberg as Chair.

 

Having reviewed the communications records, the Administrative Panel (the "Panel") finds that 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.

 

RELIEF SOUGHT

Complainant requests that the Disputed Domain Name be transferred from Respondent to Complainant.

 

PARTIES' CONTENTIONS

A. Complainant

Complainant states that it was founded in 2019 and "is the world's leading open-source generative AI company, collaborating with public and private sector partners to bring next-generation infrastructure to a global audience"; that it "develops cutting-edge open models in image, video, 3D, and audio, as well as professional applications designed for enterprise-grade visual media creation."; that its "models have garnered immense popularity among creators, developers and enterprises alike, with over 260 million downloads and counting"; that in August 2022 it "unveiled its premier text-to-image consumer application DreamStudio, offering far more control and rapid generation"; and that "[w]ithin a few months of its launch, DreamStudio quickly grew to over 1 million registered users in over 50 countries." 

 

Complainant states, and provides evidence to support, that it is the owner of two registrations for the mark DREAMSTUDIO (the "DREAMSTUDIO Trademark"), namely, UK Reg. No. 4086473 (registered December 13, 2024) and EU Reg. 19066705 (registered January 9, 2025). Complainant also states that it is the owner of applications for the DREAMSTUDIO Trademark in the United States and China.

 

The Disputed Domain Name was created on April 29, 2002. Complainant states that "[t]he Whois history for the Disputed Domain Name shows a change in registrant to Loren Heyns at some point between November 9, 2000, and June 12, 2003"; and that "[b]ased on the Whois historical records, the Disputed Domain Name appears to have been re-registered by Respondent on an annual basis in April of every year, including in both April 2023 and April 2024."

 

Complainant states that "the website at the Disputed Domain Name was previously used to lure and mislead visitors into thinking they accessed an official website for Complainant," by making "repeated references to Complainant" and using "the DreamStudio logo in the website favicon"; that "[s]creenshots captured by the Internet Archive Wayback Machine show that Respondent changed the content of the Infringing Website to start using Complainant's Marks as early as May 20, 2023"; that "multiple pages of the Infringing Website appear to have previously scraped or copied content from Complainant's <stability.ai> website or Complainant's Stability AI GitHub Account"; and that the Disputed Domain Name "was also previously used to redirect to Complainant's own website at <dreamstudio.ai/generate>, when a user clicked on the 'Stability AI Assistant' button on the home page of the Respondent's website." Complainant further states that it sent a cease-and-desist letter to Respondent about the Disputed Domain Name on January 25, 2025, and that "Respondent replied the same day and removed Complainant's marks and the copied content from the Infringing Website, as well as stop[ped] the redirect from the Disputed Domain Name to Complainant's website" but "Respondent did not address Complainant's request for domain transfer." Complainant states that, in subsequent communications between Complainant's counsel and Respondent from January 28, 2025, to February 4, 2025, Respondent sought "a salaried position at Complainant's company, Stability AI, in addition to 'fair compensation' for the Disputed Domain," Respondent stated that "he had listed the domain for sale at $750,000" and Respondent later "modified his monetary demand to transfer the domain to $200,000."

 

Complainant argues that the Disputed Domain Name is confusingly similar to the DREAMSTUDIO Trademark because "it fully incorporates the DREAMSTUDIO Mark with only the addition of the gTLD <.com>."

 

Complainant argues that Respondent has no rights or legitimate interests in the Disputed Domain Name because, inter alia, "Respondent began using the Disputed Domain Name to resolve to a website that was designed to falsely appear as though it originated with the Complainant"; "there is no relationship between Complainant and Respondent giving rise to any license, permission, or other right by which Respondent could own or use any domain name incorporating Complainant's DREAMSTUDIO mark to resolve to a website that bears the DREAMSTUDIO Marks and copies content from Complainant's website and GitHub account, nor has Complainant given Respondent any such permission"; "the Disputed Domain Name previously redirected to Complainant's official website, in a clear effort to mislead consumers to believe mistakenly that the Disputed Domain Name is associated with Complainant and its goods and services"; and "[m]aking changes to a website after notice of a dispute" – as Respondent did here by "remov[ing] the infringing content from the website at the Disputed Domain Name after receiving Complainant's cease-and-desist letter" – "can negate a finding of rights or legitimate interests."

 

Complainant argues that the Disputed Domain Name was registered and is being used in bad faith because, inter alia, "Respondent has registered and used the Disputed Domain Name in bad faith to benefit from the goodwill and reputation associated with Complainant's DREAMSTUDIO Marks, and to profit from Complainant, as evidenced by Respondent's demands for a job and a six-figure sum to transfer the domain"; "[g]iven that Respondent copied Complainant's DREAMSTUDIO Marks, as well as content from Complainant's <stability.ai> website and Stability AI GitHub Account, to create a website that attempts to pass itself off as an official website of Complainant, there can be no doubt that Respondent was well aware of Complainant when Respondent re-registered the Disputed Domain Name in April 2023 and April 2024, demonstrating opportunistic bad faith"; "Respondent's offer to transfer the Disputed Domain Name to Complainant in exchange for a job and $200,000 (after an initial offer of $750,000), and rejection of Complainant's $20,000 counter-offer, is evidence of Respondent leveraging the DREAMSTUDIO Mark for its own significant profit in bad faith"; and "Respondent also has a pattern of bad faith registration" by "list[ing] 25 domain names as available for sale to the general public for amounts as high as $250,000, at least some of which appear to contain marks used by other third parties."

 

Complainant acknowledges "that the Disputed Domain Name was first registered before Complainant had trademark rights in the DREAMSTUDIO Marks" but adds that this "does not blankly preclude the Panel from finding bad faith under Policy ¶ 4(a)(iii)" because "Respondent re-registered the Disputed Domain Name and changed the content of the resolving website to bear infringing content after becoming aware of Complainant's rights, which is sufficient to show bad faith use and registration."

 

B. Respondent

Respondent states, and provides documentation in support thereof, that it "was formed as an S-Corp in 1997 (initially DreamMaker Studios)" and that it "simplified the name from DreamStudio Interactive Inc…. to DreamStudio when changing to an LLC in 2016." Respondent further states that it "purchased our company's domain DreamStudio.com in 2001for use as our primary website which focuses on services for government, nonprofits and volunteer management."  Respondent adds that "[s]ince our inception in 1997, DeamStudio has focused on data-driven visual projects, including video gallery tools, storyboard generation using local industry data, CNN Newsdesk satellite video feed management system, Georgia film scouting location directories and community membership management databases."

 

Respondent also provides much additional detail about its activities, as well as Complainant's activities, which the Panel does not consider relevant to this proceeding.

 

Respondent does not directly address whether the Disputed Domain Name is identical or confusingly similar to the DREAMSTUDIO Trademark.

 

As to whether Respondent has rights or legitimate interests in the Disputed Domain Name, Respondent argues that it has been providing "data-driven visual Projects" since 1997, and that Complainant has been "providing dreamstudio.ai as an AI image generation service since 2023"; that Respondent is "known as DreamStudio and DreamStudio.com in connection with a wide range of community-focused websites for government and nonprofits"; and that its "modules are open source," that "we engage with over 300 volunteers per year in the development of tools for government and nonprofits" and that "[o]ur modules are provided for free and project contributors are mentored throughout their coding contributions."

 

As to whether the Disputed Domain Name was registered and is being used in bad faith, Respondent argues that "DreamStudio.com has been in use by our company for over 20 years prior to when Stability AI CTO Tom Mason registered Dreamstudio.ai in July 2022"; that "[w]e stopped featuring StableStudio in our website when it became apparent the open source project was not being maintained"; and that "DreamStudio had been promoting our site development and open-source modules with the domain DreamStudio.com since 2001."

 

FINDINGS

For the reasons set out below, the Panel finds for Respondent and denies transfer of the Disputed Domain Name.

 

DISCUSSION

Paragraph 15(a) of the Rules instructs this Panel to "decide a complaint on the basis of the statements and documents submitted and 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.

 

Identical and/or Confusingly Similar

Based upon the trademark registrations cited by Complainant, it is apparent that Complainant has rights in and to the DREAMSTUDIO Trademark.

 

As to whether the Disputed Domain Name is identical or confusingly similar to the DREAMSTUDIO Trademark, the relevant comparison to be made is with the second-level portion of the Disputed Domain Name only (i.e., "dreamstudio") because "[t]he applicable Top-Level Domain ('TLD') in a domain name (e.g., '.com', '.club', '.nyc') is viewed as a standard registration requirement and as such is disregarded under the first element confusing similarity test". WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Third Edition ("WIPO Overview 3.0"), section 1.11.1.

 

As set forth in section 1.7 of WIPO Overview 3.0, "in cases where a domain name incorporates the entirety of a trademark, or where at least a dominant feature of the relevant mark is recognizable in the domain name, the domain name will normally be considered confusingly similar to that mark for purposes of UDRP standing." Here, it is obvious that the Disputed Domain Name incorporates the entirety of the DREAMSTUDIO Trademark. Further, the Disputed Domain Name consists solely of the DREAMSTUDIO Trademark, which means that "it is apparent without the need for elaboration, that the Disputed Domain Name is identical or confusingly similar to" the trademark, Société Air France v. Indra Armansyah, WIPO Case No. D2016-2027, because in such case "[t]he disputed domain name is obviously identical to the Complainant's mark." Icebug AB v. Domain Administrator, WIPO Case No. D2013-1823.

 

Accordingly, the Panel finds that Complainant has proven the first element of the Policy.

 

Rights or Legitimate Interests

Pursuant to Policy para. 4(c), a Respondent can demonstrate that it has rights or legitimate interests in a domain name by proving any of the following:

 

(i) before any notice to [Respondent] of the dispute, [Respondent's] use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or

 

(ii) [Respondent] (as an individual, business, or other organization) ha[s] been commonly known by the domain name, even if [Respondent] ha[s] acquired no trademark or service mark rights; or

 

(iii) [Respondent is] making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.

 

Here, it appears as if Respondent has argued that it has rights or legitimate interests pursuant to paragraphs 4(c)(i) and/or 4(c)(ii) of the Policy. In particular, the Panel notes that Respondent states – and Complainant does not dispute – that Respondent was created in 1997, registered the Disputed Domain Name in 2001 and offered services unrelated to those associated with Complainant or Complainant's DREAMSTUDIO Trademark (neither of which existed in 1997 or 2001) for a number of years. In support thereof, among other things, Respondent has provided the following: a document from the Department of the Treasury, Internal Revenue Service, dated February 19, 2016, assigning an Employer Identification Number to Loren Kevin Heyns, Dreamstudio; and a "Certificate of Name Change Amendment" from the Georgia Secretary of State, effective September 4, 2002, changing its name from Dreammaker Studios, Inc., to Dreamstudio Interactive, Inc.

 

While a corporate name registration is often irrelevant to a proceeding under the Policy, the Panel here finds the above documents, as well as Respondent's registration of the Disputed Domain Name many years before Complainant or its DREAMSTUDIO Trademark existed, quite applicable. Indeed, proof of a bona fide offering of goods or services includes "evidence of business formation-related due diligence/legal advice/correspondence,… evidence of credible investment in website development or promotional materials such as advertising, letterhead, or business cards[, and]… proof of a genuine (i.e., not pretextual) business plan utilizing the domain name, and credible signs of pursuit of the business plan." WIPO Overview 3.0, section 2.2. And proof that a respondent is commonly known by a domain name includes "articles of incorporation." WIPO Overview 3.0, section 2.3. In some cases, it is apparent that a Respondent obtained its corporate name solely in an attempt to evade cybersquatting issues. See, e.g., A&G Insurance Services Pty Ltd v. AAA Budget Greenslips Pty Ltd, WIPO Case No. DAU2012-0014 ("Respondent was indeed well aware of its competitor's mark and illegitimately sought to take advantage of the Complainant's goodwill by registering a corporate name and corresponding domain name incorporating the Complainant's mark"). Here, however, it would have been impossible for Respondent to take advantage of Complainant's goodwill when Respondent obtained its corporate name, because Complainant did not exist at that time.

 

Accordingly, the Panel finds that Complainant has not proven the second element of the Policy.

 

Registration and Use in Bad Faith

Whether a domain name is registered and used in bad faith for purposes of the Policy may be determined by evaluating four (non-exhaustive) factors set forth in the Policy: (i) circumstances indicating that the registrant has registered or acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of the registrant's documented out-of-pocket costs directly related to the domain name; or (ii) the registrant has registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the registrant has engaged in a pattern of such conduct; or (iii) the registrant has registered the domain name primarily for the purpose of disrupting the business of a competitor; or (iv) by using the domain name, the registrant has intentionally attempted to attract, for commercial gain, Internet users to the registrant's website or other online location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of the registrant's website or location or of a product or service on the registrant's website or location. Policy, paragraph 4(b).

 

While it seems obvious that Respondent's use of the Disputed Domain Name recently may have caused a likelihood of confusion with the DREAMSTUDIO Trademark, the Policy clearly requires both that a domain name "has been registered and is being used in bad faith." Policy, para. 4(a)(iii) (emphasis added). Numerous decisions have made clear that this is a conjunctive requirement. "The consensus view since the Policy was implemented in 1999 has been that the conjunctive 'and' indicates that there must be bad faith both at the time of registration and subsequently. Apart from unusual cases of a respondent's advance knowledge of a trademark, it is not logically possible for a respondent to register a domain name in bad faith contemplation of a mark that does not yet exist or of which the respondent is not aware." Mile, Inc. v. Michael Burg, WIPO Case No. D2010-2011.  This has been recognized in section 3.8 of WIPO Overview 3.0: "[W]here a respondent registers a domain name before the complainant's trademark rights accrue, panels will not normally find bad faith on the part of the respondent." In this case, the Disputed Domain Name was created on April 29, 2002, and Complainant's only two registrations for the DREAMSTUDIO Trademark were not issued until December 13, 2024, and January 9, 2025.

 

Complainant appears to recognize this weakness in its case and, accordingly, cites Developmentex.com, Incorporated v. Manuel Schraner, FA1755537 (Forum Nov. 27, 2017) for the proposition that "the respondent's intentional abuse of complainant's trademark rights for commercial gain discredits any notion that Policy ¶ 4(a)(iii) bad faith necessitates that there must be an existing trademark at the time an at-issue domain name is registered." In response thereto, the Panel notes that this decision is an outlier largely inconsistent with decisions under the Policy as a whole. Indeed, a subsequent panel referred to the decision as containing a "discredited legal theory." Toast, Inc. v. Jared Isaacman / Harbortouch, FA2007428 (Forum Sept. 6, 2022).  This Panel agrees.

 

Complainant also argues that although the Disputed Domain Name was created in 2002, it has been renewed by Respondent more recently, and that such renewal is itself an act of registration – which occurred subsequent to the creation of Complainant's rights in the DREAMSTUDIO Trademark. However, as set forth in section 3.9 of WIPO Overview 3.0, "panels have found that the mere renewal of a domain name registration by the same registrant is insufficient to support a finding of registration in bad faith." Given that the record contains no indication that the registrant of the Disputed Domain Name has changed in recent years, the Panel sees no reason to treat a simple renewal of the Disputed Domain Name as a registration for purposes of bad faith.

 

Accordingly, the Panel finds that Complainant has not proven the third element of the Policy.

 

To be clear, the Panel expresses no opinion as to whether Respondent's use of the Disputed Domain Name may be in bad faith (including by causing a likelihood of confusion with the DREAMSTUDIO Trademark), or whether an action by Complainant in a court of law would be appropriate, only that the Policy requires registration in bad faith, which does not exist here.

 

DECISION

Having not established all three elements required under the ICANN Policy, the Panel concludes that relief shall be DENIED.

 

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

 

 

 

Douglas M. Isenberg, Chair

 

Robert Badgley, Panelist

Ho-Hyun Nahm, Panelist

Dated: April 14, 2025