Western Point,
Inc. v. ENIVA Direct, Inc. c/o Terrence Swedzinski
Claim Number: FA0503000440091
PARTIES
Complainant is Western Point, Inc. (“Complainant”), represented by Grant Fairbairn, of Fredrikson and Byron,
P.A. Suite 4000, 200 South Sixth Street, Minneapolis, MN 55402. Respondent is ENIVA Direct, Inc. c/o Terrence Swedzinski (“Respondent”), represented by Peter G. Nikolai, of Nikolai &
Mersereau, P.A., 900 Second Avenue South, 820
International Centre, Minneapolis, MN 55102.
REGISTRAR AND
DISPUTED DOMAIN NAME
The domain name at issue is <estrusalert.com>, registered
with Intercosmos Media Group, Inc. d/b/a Directnic.com.
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.
Clive Elliott as Panelist.
PROCEDURAL
HISTORY
Complainant submitted a Complaint to the
National Arbitration Forum electronically on March 11, 2005; the National
Arbitration Forum received a hard copy of the Complaint on March 14, 2005.
On March 11, 2005, Intercosmos Media
Group, Inc. d/b/a Directnic.com confirmed by e-mail to the National Arbitration
Forum that the domain name <estrusalert.com>
is registered with Intercosmos Media Group, Inc. d/b/a Directnic.com and that
Respondent is the current registrant of the name. Intercosmos Media Group, Inc. d/b/a Directnic.com has verified
that Respondent is bound by the Intercosmos Media Group, Inc. d/b/a
Directnic.com 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 March 17, 2005, a Notification of
Complaint and Commencement of Administrative Proceeding (the “Commencement
Notification”), setting a deadline of April 6, 2005 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@estrusalert.com
by e-mail.
A timely Response was received and
determined to be complete on April 6, 2005.
On April 12, 2005 Complainant filed further
submissions.
On April 12, 2005,
pursuant to Complainant’s request to have the dispute decided by a single-member Panel, the National Arbitration Forum appointed
Clive Elliott as Panelist.
RELIEF SOUGHT
Complainant requests that the domain name
be transferred from Respondent to Complainant.
PARTIES’
CONTENTIONS
A. Complainant
Complainant asserts that it is the
inventor of ESTRU$ ALERT a self adhesive strip attached to the back of a cow to
determine when it is on heat. It owns
the patents and technology relating thereto. ESTRU$ ALERT is also subject to a
Federal trademark registration in the U.S. - (Reg. No. 2,792,981). Use of the aforesaid mark is also
asserted.
Complainant alleges that on March 20,
2002, Respondent (while employed by Complainant) registered the disputed domain
name. It is common ground that
Complainant filed an intent-to-use
trademark application for ESTRU$ ALERT 20 days later, on April 9, 2002. Complainant states that it asked Respondent
to register the domain name and that Respondent registered the domain name as
requested, but in doing so named Respondent as the lawful holder and
used its address details as the point of contact. Complainant also alleges that Respondent has registered and
holds/held other domain names of products of Complainant and has profited in
the past from selling these domain names back to it.
Complainant submits that the domain name
differs from its trademark by just one letter - where the “$” is substituted
for an “S”. Complainant submits that Respondent’s
domain name is phonetically identical to Complainant’s mark and that confusion
is likely because the domain name resolves to a website containing information
about Complainant’s product.
B. Respondent
Respondent accepts that it registered the
domain name on March 20, 2002, in conjunction with the business in which Mr.
Swedzinski (the operator of Respondent) was an investor. Respondent disputes Complainant’s
characterization of Respondent as an employee of Complainant. Respondent contends that it is an investor
and claims to have registered the domain name to facilitate and further that
investment.
Respondent claims that Mr. Swedzinski
assisted Complainant with finances for its invention and that Complainant
agreed to pay 49% of its profits to Respondent. This it says was the subject of
an oral contract. It also states that Respondent paid for Complainant’s legal
fees for securing patent protection and promotion of the purported
invention. Respondent asserts that none
of these monies have been repaid.
Respondent asserts that it is maintaining
control of the <estrusalert.com>
domain name in lieu of payment owed to Respondent by Complainant, referring to
it, rather frankly, as a
"bargaining chip" in a dispute over money paid by Complainant.
Respondent points out that Complainant
filed its trademark application for ESTRU$ ALERT on April 9, 2002, but that it
did not actually use the said trademark until October 2002. Respondent also points out that the USPTO
granted the trademark registration on December 9, 2003. Accordingly, it is submitted that Respondent
registered the domain name before the trademark was in use.
It is asserted that to date, neither
Complainant, nor Mr. Stampe, who operates that business, has paid Mr.
Swedzinski his share of the profits from sales of the invention or for the
initial investment into the venture and that until this is done Mr.
Swedzinski is within his rights to own
the domain names.
Respondent points to existing legal
proceedings between the parties or their associates, being Rockway, Inc. et al v. Stampe No. 03-5282-JMR-FLN (D. Minn. filed
Sept. 22, 2003) and states that these proceedings relate to who owns the
technology. Respondent asserts that,
because of these legal proceedings and because of the nature of the dispute
between the parties, that Complainant is using the wrong forum.
An extract of a deposition transcript is
provided, as is a copy of a press article which states, inter alia, that
Messrs Stampe and Swedzinski were "stepping up their advertising efforts”
and planned to attend various shows. The article also indicates that Mr.
Swedzinski was at the time (December 6, 2002) the CFO of Complainant and that
Mr. Stampe had previously worked for Mr. Swedzinski.
Finally it is asserted that the complaint
was brought in bad faith, amounts to reverse domain name hijacking and
constitutes an abuse of the administrative proceeding.
C. Additional Submissions
In reply, Complainant states that when
Respondent registered the domain name (on March 20, 2002) it was involved in
and had knowledge of Complainant’s company, either as an employee or
investor. Complainant indicates that
Respondent knew at the time it registered the domain name that Complainant
intended to produce a product named ESTRU$ ALERT and file for a trademark with
that name.
It is argued that Respondent’s inability
to use the domain name for any legitimate purpose and its admission that it is
holding the domain name in the hope of receiving money from Complainant
establishes that it is using the domain name in bad faith.
In terms of
the trademark timing issue, it notes that under the ICANN Policy, a registrant
may have undertaken a domain name registration in bad faith even if the
complainant’s trademark rights arose after the domain name’s registration. ExecuJet Holdings Ltd. v. Air Alpha
America, Inc., D2002-0669 (WIPO Oct. 7, 2002). It submits that one example is where the registrant bases its
domain name registration on insider knowledge about the intent of a business
partner or employer to develop a new trademark.
Complainant
does not dispute the content or truth of the transcript or the press article
referred to above.
FINDINGS
(1)
the domain name <estrusalert.com> is identical
or confusingly similar to the ESTRU$ ALERT trademark; but that
(2)
Respondent has a right or legitimate interests in respect of
the <estrusalert.com> domain name; and
(3)
the <estrusalert.com> domain name is not being
used in bad faith; and
(4)
the dispute is not a proper one for resolution under the
UDRP.
DISCUSSION
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 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;
(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.
The normal
position is that
registration of a mark is prima facie evidence
of validity, which creates a rebuttable presumption that the mark is inherently
distinctive and that the respondent has the burden of refuting this
assumption. However in this case,
Respondent asserts that it registered the <estrusalert.com> domain
name on March 20, 2002, nearly a month before Complainant filed an
intent-to-use trademark application on April 9, 2002 and several months before
Complainant actually started to use the ESTRU$ ALERT mark in October 2002, and,
accordingly, that this necessarily implies that Complainant’s rights do not
predate Respondent’s registration of the domain name.
However,
Respondent does not actually dispute the fact that Complainant considered the ESTRU$ ALERT
mark to be its property, nor that it became aware of the mark through the
parties business relationship. It is reasonable to infer that this relationship
was confidential, given the existence of inventions and technology and the fact
that the parties (or certainly Respondent) were/was investing money in these
commercial efforts. Furthermore,
Respondent does not actually dispute that the trademark has some value. Rather,
its position is that it is maintaining
control of the <estrusalert.com> domain name in lieu of payment owed to
Respondent by Complainant.
There is also
merit in the argument that, in terms of the timing of the trademark registration,
that under the ICANN Policy, a registrant may have undertaken a domain name
registration in bad faith even if the complainant’s trademark rights arose
after the domain name’s registration. ExecuJet Holdings Ltd. v. Air Alpha America,
Inc., D2002-0669 (WIPO Oct. 7, 2002). Complainant submits above that one example
is where the registrant bases its domain name registration on insider knowledge
about the intent of a business partner or employer to develop a new trademark.
It would seem that this analogy is equally applicable as to whether a trademark
exists in the first place, particularly if one party confides its intention to
use a particular trademark to another, and the other party breaches that
confidence.
There also
seems to be an inconsistency in Respondent's position in holding a domain name
that is virtually identical to a trademark
(presumably because it has some collateral value) and at the same time
denying that the mark should be capable of recognition under the Policy. However, it may in the end come down to
simply a question of timing.
Notwithstanding these unusual aspects of this case, the Panel considers
that this ground is sufficiently made out, admittedly by a narrow margin. However, for reasons which will be apparent
below, these findings are obiter, given that relief is declined in any event.
If the Panel finds that Respondent registered the <estrusalert.com>
domain prior to Complainant’s establishment of rights in the ESTRU$ ALERT mark,
the Panel may conclude that Respondent has rights or legitimate interests in
the disputed domain name pursuant to Policy ¶ 4(a)(ii). See Warm Things, Inc. v. Weiss, D2002-0085
(WIPO Apr. 18, 2002) (finding that the respondent had rights or legitimate
interests in a domain name when its registration of that domain name occurred
before the complainant had established rights in its alleged mark). However,
for the reasons given above, the Panel does not consider that this is an
appropriate way to deal with this particular matter. That is, given the close relationship between the parties and the
information and knowledge that was, in all likelihood, provided from one to the
other.
It is
acknowledged that the Panel may find that Respondent’s <estrusalert.com>
domain name is entirely comprised of generic terms. However, once again, this
approach seems to sit awkwardly with the circumstances of this case and the
fact that the parties are clearly at odds about ownership of various rights,
payment for protecting those rights and the holding of other rights as
collateral over unpaid debts.
The argument that probably carries more weight in the current
circumstances is the one advanced by Respondent that it is an investor in
Complainant’s business and “Mr. Swedzinski (Respondent) registered the domain
name at issue to facilitate his investment, and when Mr. Stampe and Western
Point (Complainant) breached its agreement to pay 49% of its profits to Mr.
Swedzinski, Mr. Swedzinski rightfully refused to transfer ownership of the
domain name to Western Point.”
It is also
relevant that Complainant states that it asked Respondent to register the
domain name. The facts that remain in dispute include the basis upon which that
registration occurred and whether, given Respondent’s substantial funding of
the setup phase of Complainant, and indeed, the joint efforts engaged in by the
parties, whether Respondent was entitled to register the domain name in its own
name. It may well be that it is not
legitimate for a party to register a domain name to ensure payment of monies
advanced. However, it is unclear from the record as to just what the
relationship between the parties was.
It does however seem that it was not a completely arm's length relationship
and in these circumstances it is difficult for a panel to find that
registration of a domain name was necessarily without proper basis.
In the present
case, there is simply too much in dispute, a matter which is discussed in more
detail below. Accordingly, at this point in time, the Panel is not able to
conclude that the ground is made out.
The Panel may find that Respondent
registered the domain name in good faith in conjunction with the business in
which he served as Chief Financial Officer and key investor. Thus, the Panel may conclude that there was
no bad faith registration or use pursuant to Policy ¶ 4(a)(iii). See Eddy’s (Nottingham) Ltd v. Smith, D2000-0789 (WIPO Sept. 7, 2000)
(finding no bad faith registration of the domain name where the respondent
registered the domain name in good faith, without objection by the complainant,
and in the interest of promoting the complainant’s business); see also Creative
Paradox LLC v. Talk Am., FA 155175 (Nat. Arb. Forum June 23, 2003) (finding
no bad faith registration of the domain name where the Panel found evidence
that the respondent was authorized to register the disputed domain name by the
complainant).
Moreover, if the Panel finds that
Respondent has rights or legitimate interests in the <estrusalert.com>
domain name pursuant to Policy ¶ 4(a)(ii), the Panel may conclude that
Respondent did not register or use the domain name in bad faith pursuant to
Policy ¶ 4(a)(iii). See Schering AG v. Metagen GmbH, D2000-0728
(WIPO Sept. 11, 2000) (finding that the respondent did not register or use the
domain name <metagen.com> in bad faith where the respondent registered
the domain name in connection with a fair business interest and no likelihood
of confusion was created); see also DJF
Assocs., Inc. v. AIB Communications, FA 95612 (Nat. Arb. Forum Nov. 1,
2000) (finding the respondent has shown that it has a legitimate interest in
the domain name because the respondent selected the name in good faith for its
website, and was offering services under the domain name prior to the
initiation of the dispute).
These factors are certainly not
determinative, and, indeed, it is probably more accurate to say that the merits
are relatively evenly balanced on both issues of legitimate interest in bad
faith. However, they do inform the
Panel on the overall merits of the complaint and as to whether it is
appropriate for the Panel to try and resolve what seems to be an essentially
factual and highly contested dispute.
Accordingly,
the Panel finds that this ground is not sufficiently made out.
Proper Forum/Abuse of Process
As indicated above, Respondent asserts
that because of the existing legal proceedings between the parties and because
of the nature of that and indeed this dispute, Complainant is using the wrong
forum.
Respondent
asserts, entirely frankly, that that it is maintaining control of the <estrusalert.com> domain name in lieu of payment owed to Respondent by Complainant. Thus, the Panel finds that this case is
outside the scope of the UDRP as it involves an extensive business dispute
between the two parties. See Thread.com, LLC v. Poploff, D2000-1470
(WIPO Jan. 5, 2001) (refusing to transfer the domain name and stating that the
ICANN Policy does not apply because attempting “to shoehorn what is essentially
a business dispute between former partners into a proceeding to adjudicate
cybersquatting is, at its core, misguided, if not a misuse of the Policy”); see
also Clinomics Biosciences, Inc. v. Simplicity Software, Inc., D2001-0823
(WIPO Aug. 28, 2001) (Panel declining to rule on the merits after finding that
the dispute centered on whether the respondent could retain control of a domain
name as security for payment for web design work, a subject matter within the
law of liens, and outside the scope of the UDRP Policy).
It appears to
the Panel that the present dispute is inappropriate for this forum. It is clear from the documents filed by
Respondent that the relationship between Messrs Stampe and Swedzinski is a
longstanding and complicated one. No
doubt the current court proceedings are directed to try to resolve part of that
dispute. Complainant asserts that the dispute has nothing to do with the
trademark. That, however, is beside the point.
It is readily apparent from the December 2002 press articles that Messrs
Stampe and Swedzinski were working together in various ways to advance their
interests. There is clearly much in
dispute between the parties as to just what was agreed and what obligations
they had or still have to each other. That however is a matter for a properly
contested hearing, not a summary process of this type.
DECISION
Having failed to establish all three
elements required under the ICANN Policy, the Panel concludes that relief shall
be DENIED.
Clive L Elliott Panelist
Dated: April 29, 2005
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