National Arbitration Forum

 

DECISION

 

Katadyn North America, Inc. v. Black Mountain Stores

Claim Number: FA0507000520677

 

 

PARTIES

Complainant, Katadyn North America, Inc. (“Complainant”), is represented by Miki Griffin of Leonard, Street and Deinard, P.A., 150 South Fifth Street, Suite 2300, Minneapolis, MN 55402.  Respondent is Black Mountain Stores (“Respondent”), 1721 N. Texas, Odessa, TX 79761.

 

REGISTRAR AND DISPUTED DOMAIN NAME

The domain name at issue is <katadyn.net>, registered with Network Solutions, Inc.

 

PANEL

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.

 

Honorable Richard B. Wickersham, Judge (Ret.), as Panelist.

 

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum electronically on July 20, 2005; the National Arbitration Forum received a hard copy of the Complaint on July 21, 2005.

 

On July 22, 2005, Network Solutions, Inc. confirmed by e-mail to the National Arbitration Forum that the domain name <katadyn.net> is registered with Network Solutions, Inc. and that the Respondent is the current registrant of the name.  Network Solutions, Inc. has verified that Respondent is bound by the Network Solutions, 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 July 26, 2005, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of August 15, 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@katadyn.net by e-mail.

 

A timely Response was received and determined to be complete on August 12, 2005.

 

On August 16, 2005, a timely Additional Submission from Complainant was received. 

 

On August 24, 2005, pursuant to Complainant’s request to have the dispute decided by a single-member Panel, the National Arbitration Forum appointed Richard B. Wickersham, Judge (Ret.), as Panelist.

 

RELIEF SOUGHT

Complainant requests that the domain name be transferred from Respondent to Complainant.

 

PARTIES’ CONTENTIONS

A. Complainant

 

Complainant, Katadyn North America, Inc., is a wholly-owned subsidiary of Katadyn Produkte, A.G. (collectively, “Katadyn”).  Complainant is the world leader in portable water treatment products.  Since 1928, Katadyn of Switzerland has manufactured and distributed high-quality water-treatment products for use wherever safe drinking water is unavailable – for travel, camping, and humanitarian operations.  Katadyn Produkte A.G. has subsidiaries in the United States, Germany, France, and Singapore.  Additional information about Complainant’s products and humanitarian efforts may be found at its website at the <katadyn.com> domain name.

 

Since its inception in 1928, Complainant has continuously operated under the KATADYN name, and has used the KATADYN mark in connection with its products.  The KATADYN mark was first registered in the United States in 1957.  Over the years, Complainant has devoted substantial resources and efforts to building goodwill in the KATADYN mark and to distinguish Complainant’s products from all other products in the same class.

 

Respondent operates a website at the <katadyn.net> domain name.  Via its web site, Respondent sells a variety of products, including Complainant’s water purification products.  Complainant, however, has no relationship with, nor sponsorship of, Respondent’s site.

 

In February 2005, Complainant contacted Respondent by telephone, requesting a transfer of the <katadyn.net> domain name to Complainant, and offering to post a link to Respondent’s website on Complainant’s official site, located at <katadyn.com>.  Respondent refused.  On March 15, 2005, Complainant sent a letter to Respondent asking Respondent to voluntarily transfer the domain to Complainant, and offering to forgive Respondent’s substantial debt.   Respondent did not reply.

 

B. Respondent

 

Respondent, Black Mountain Stores, is a sole proprietorship that made its first Katadyn water filters purchase in June of 1998 from Suunto USA, the North American distributor for Katadyn, Primus, Suunto and other European-made products.  Suunto was the North American representative for Katadyn products. In 1998, Complianant, Katadyn North America (KNA) had not yet existed. Katadyn AG (Switzerland), the owner of the KATADYN name, had no substantial presence in the United States. Katadyn North America was not an entity in the United States until 2001.

 

Black Mountain Stores incorporated in the State of Texas in January of 1999 to become Black Mountain Stores, Inc (Respondent).  Respondent has a brick and mortar building at 1721 N Texas Ave, Odessa, TX and operates from that location.

 

Respondent understands that Complainant has devoted substantial resources and efforts building goodwill in the KATADYN mark, and Respondent contends that they have done the same.  Respondent procured the <katadyn.net> domain name on June 30, 1998 for the purpose of driving Katadyn product sales.   Garry Vaughn and Denise Hayward have been with Respondent since it was incorporated. They were aware that if the search term “katadyn” were in the URL, specifically, the domain name, the website would be ranked at the top in the search engines. Along with a few other html programming techniques, Respondent was able to get its website at <katadyn.net> ranked highly in the major search engines.  Garry has previous experience with water filter technology and sales and decided the Katadyn filters were the ones that Respondent was going to carry. Sales skyrocketed. Respondent was ordering Katadyn water filters by the truckloads. Respondent had not even considered the buying patterns of consumers because of Y2K. In fact, consumers were purchasing water filters in anticipation of the bottom falling out at the turn of the millennium. Respondent could not get them fast enough and Katadyn AG (Switzerland) could not keep up with the demand. Respondent had hundreds of backorders for customers waiting for Katadyn water filters.

 

Respondent procured the <survivalequipment.net> domain name in January of 1999, in anticipation of the increased sales due to Y2K.  Respondent started with Suunto and Primus products on the new website; Complainant’s products were kept isolated on another website at the <katadyn.net> domain name. Katadyn was the only brand of water filter Respondent carried until the end of 1999. Respondent was not able to get Katadyn filters due to the high demand worldwide; however, Respondent had to service its customers. Respondent added the MSR line of water filters to have another quality water filter available and only listed it at the <survivalequipment.net> domain name. Katadyn was still Respondent’s primary product and that is what Respondent focused on.

 

Respondent does not dispute that it was contacted by Complainant (by telephone and by letter), requesting a transfer of the <katadyn.net> domain name to Complainant. Respondent refused. Complainant offered to forgive a portion of Respondent’s debt. Until a few months ago, Respondent ordered Katadyn products directly from Complainant. Because Respondent incurred debt with Complainant, Complainant and Respondent mutually agreed that Respondent would not be able to purchase Katadyn products directly from Complainant until some of the debt could be paid down. Respondent has been making regular payments towards debt reduction.

 

Respondent currently does business with another Katadyn distributor. The Katadyn product line is a major percentage of its business and there is a possibility that Respondent would fail if the primary venue it uses to sell Katadyn products is taken away. Since incorporating in 1999, Respondent has generated $1,025,623 in sales of Katadyn products. This represents a very high percentage of Respondent’s revenue.  Furthermore, Respondent ordered over $75,000 worth of Katadyn products from Suunto, the North American distributor of Katadyn, in the second half of 1998. 

           

Respondent contends that Complainant has given Respondent authority and implied consent to use the domain name to generate sales for Complainant. Complainant has assisted Respondent in generating sales for them and has even expressed appreciation for the sales Respondent has generated for them.

 

C. Additional Submissions

 

Respondent’s principle argument in its Response is that Complainant has impliedly consented to Respondent’s use of the KATADYN trademark as Respondent’s domain name.  Even if that were the case, however, Complainant has clearly revoked any such implied consent.  Respondent’s continued use of the KATADYN mark, in the absence of an express authorization, creates a substantial likelihood of confusion.  Moreover, the ever-expanding array of competitive products Respondent offers under Complainant’s name clearly demonstrates that Respondent has no legitimate interest in the domain name, and is using the domain name in bad faith.  This Panel should, therefore, order the immediate transfer of the domain name to Complainant. 

 

Respondent is correct in asserting that there is no requirement that a trademark license be set forth in writing.  In fact, courts have repeatedly recognized that the existence of a trademark license may be implied from the conduct of the parties.  See 2 J. McCarthy, Trademarks & Unfair Competition, § 18:43.1 (4th ed. 2004) (“McCarthy”).  See also Villanova Univ. v. Villanova Alumni Educ. Found., Inc., 123 F. Supp. 2d 293, 307 (E.D. Pa. 2000); Birthright v. Birthright Inc., 827 F. Supp. 1114, 1134 (D.N.J. 1993); Univ. Book Store v. Univ. of Wisc. Bd. of Regents, 33 U.S.P.Q.2d 1385, 1396 (T.T.A.B. 1994); Bishops Bay Founders Group, Inc. v. Bishops Bay Apartments, LLC, 301 F. Supp. 2d 901, 907 (E.D. Wisc. 2003).

 

Even if Complainant had previously authorized Respondent to use the KATADYN mark as a domain name, such prior authorization does not grant Respondent a legal right to continue to do so once the implied license has been revoked.  “To say that [a] licensee has acquired rights that survive the legal termination of that license, destroys the entire concept of a license.”  U.S. Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 143 (3rd Cir. 1981).  A licensee acquires no ownership interest through the use of licensed marks regardless of the duration of such use.  McCarthy at § 18:52 (citing cases).  Accordingly, upon the termination of a license, a licensee is obligated to discontinue use of the licensor’s mark.  See Bunn-o-matic Corp. v. Bunn Coffee Service, Inc., 88 F. Supp. 2d 914, 921-22 (C.D. Ill. 2000).

 

An implied license of no definite duration, such as the one Respondent argues was created in this case, is terminable at will.  See Bunn-O-Matic Corp., 88 F. Supp. 2d at 922 (“A license containing no time frame is generally terminable at will”); Villanova Univ., 123 F. Supp. 2d at 307-09 (finding implied license terminable at will despite 28 years of use of mark by defendant); Birthright, 827 F. Supp. at 1135 (finding implied license terminable at will despite more than 20 years of use by defendant); W.K.T. Distrib. Co. v. Sharp Elects. Corp., 746 F.2d 1333, 1335 (8th Cir. 1984) (agreements with no fixed term are terminable at will).  Respondent does not contend, and certainly has not demonstrated through any documentary evidence, that Katadyn authorized Respondent’s use of the KATADYN mark as a domain name for any definite term.  Accordingly, any license to use the mark as a domain was terminable at will. 

 

Complainant terminated Respondent’s right to use the KATADYN mark in February 2005, when it contacted Respondent requesting a transfer of the domain name.  Respondent’s continued use of the mark is without authorization and constitutes trademark infringement.  This Panel should, therefore, order the immediate transfer of the domain to Complainant.  Panel agrees with this Additional Submission by Complainant.

 

 

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 the 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 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.

 

 

 

FINDINGS

 

Identical and/or Confusingly Similar

 

Complainant argues that its registrations of the KATADYN mark with the United States Patent and Trademark Office (“USPTO”) (Reg. No. 2,750,396 issued August 12, 2003; Reg. No. 1,736,371 issued December 1, 1992; 649,935 issued August 13, 1957) are sufficient to establish Complainant’s rights in the mark.  See Innomed Techs., Inc. v. DRP Servs., FA 221171 (Nat. Arb. Forum Feb. 18, 2004) (“Registration of the NASAL-AIRE mark with the USPTO establishes Complainant's rights in the mark.”); see also Vivendi Universal Games v. XBNetVentures Inc., FA 198803 (Nat. Arb. Forum Nov. 11, 2003) (“Complainant's federal trademark registrations establish Complainant's rights in the BLIZZARD mark.”).

 

Complainant contends that Respondent’s <katadyn.net> domain name is identical to Complainant’s KATADYN mark.  The Panel finds that the addition of the generic top-level domain (gTLD) “.net” is irrelevant for purposes of determining whether a domain name is identical to a mark.  See Rollerblade, Inc. v. McCrady, D2000-0429 (WIPO June 25, 2000) (finding that the top level of the domain name such as “.net” or “.com” does not affect the domain name for the purpose of determining whether it is identical or confusingly similar); see also Isleworth Land Co. v. Lost in Space, SA, FA 117330 (Nat. Arb. Forum Sept. 27, 2002) (finding it is a “well established principle that generic top-level domains are irrelevant when conducting a Policy ¶ 4(a)(i) analysis”).

 

Rights or Legitimate Interests

 

The Panel is aware that once Complainant makes a prima facie case in support of its allegations, the burden shifts to Respondent to show that it does have rights or legitimate interests pursuant to Policy ¶ 4(a)(ii).  See Do The Hustle, LLC v. Tropic Web, D2000-0624 (WIPO Aug. 21, 2000) (holding that, where the complainant has asserted that the respondent has no rights or legitimate interests with respect to the domain name, it is incumbent on the respondent to come forward with concrete evidence rebutting this assertion because this information is “uniquely within the knowledge and control of the respondent”); see also G.D. Searle v. Martin Mktg., FA 118277 (Nat. Arb. Forum Oct. 1, 2002) (“Because Complainant’s Submission constitutes a prima facie case under the Policy, the burden effectively shifts to Respondent.”).

 

Complainant alleges that Respondent is not commonly known by the disputed domain name. The Panel finds that Respondent is not commonly known by the disputed domain name.  The Panel concludes that Respondent does not have rights or legitimate interests under Policy ¶ 4(c)(ii).  See Gallup, Inc. v. Amish Country Store, FA 96209 (Nat. Arb. Forum Jan. 23, 2001) (finding that the respondent does not have rights in a domain name when the respondent is not known by the mark); see also Compagnie de Saint Gobain v. Com-Union Corp., D2000-0020 (WIPO Mar. 14, 2000) (finding no rights or legitimate interest where the respondent was not commonly known by the mark and never applied for a license or permission from the complainant to use the trademarked name).

 

Complainant avers that Respondent is not an authorized distributor and is not licensed to use Complainant’s mark.  The Panel finds that without such authorization, Respondent lacks rights or legitimate interests in the disputed domain name under Policy ¶ 4(a)(ii).  See Telstra Corp. v. Nuclear Marshmallows, D2000-0003 (WIPO Feb.18, 2000) (finding (i) the fact that the complainant has not licensed or otherwise permitted the respondent to use any of its trademarks, and (ii) the fact that the word TELSTRA appears to be an invented word, and as such is not one traders would legitimately choose unless seeking to create an impression of an association with the complainant, demonstrate that the respondent lacks rights or legitimate interests in the domain name); see Hewlett-Packard Co. v. Burgar, FA 93564 (Nat. Arb. Forum Apr. 10, 2000) (finding that the respondent has no rights or legitimate interests in the <hewlettpackard.com> domain name, because the respondent is not a licensed dealer of Hewlett-Packard products and has not demonstrated any right except to declare that he is affiliated with a licensed re-seller of the complainant’s products). 

 

The Panel also finds that Respondent’s sales of Complainant’s goods without Complainant’s authority does not constitute a use in connection with a bona fide offering of goods or services under Policy ¶ 4(c)(i) or a legitimate noncommercial or fair use under Policy ¶ 4(c)(iii).  See Nat’l Collegiate Athletic Ass’n v. Halpern, D2000-0700 (WIPO Dec. 10, 2000) (finding that domain names used to sell the complainant’s goods without the complainant’s authority, as well as others’ goods, is not bona fide use); see also Chanel, Inc. v. Cologne Zone, D2000-1809 (WIPO Feb. 22, 2001) (finding that use of the complainant’s mark to sell the complainant’s perfume, as well as other brands of perfume, is not bona fide use).

 

Alternatively, Complainant contends that even if Respondent is deemed to be an authorized distributor, merely being a distributor does not confer rights or legitimate interests to use Complainant’s mark under Policy ¶ 4(a)(ii).  See Procter & Gamble Co. v. Hlad, FA 126656 (Nat. Arb. Forum Nov. 20, 2002) (“Respondent, merely a distributor of PUR brand products, has no authorization to use the PUR mark for any trademark purpose, such as the use in the domain name.”); see also Carlon Meter Co. v. Jerman, D2002-0553 (WIPO July 30, 2002) (“Respondent may well be an important distributor of Complainant's products, but its right to use the trademarks of Complainant do not necessarily extend to a right to use the globally extensive domain name system by incorporating these trademarks in the Domain Names in a manner which links them to Respondent's web site.”).

 

Moreover, Complainant suggests that Respondent is using the <katadyn.net> domain name to sell competing water filter brands.  The Panel finds that the diversion of Internet users away from Complainant to Respondent’s website for Respondent’s benefit is not a bona fide offering of goods or services under Policy ¶ 4(c)(i) and is not a legitimate noncommercial or fair use under Policy ¶ 4(c)(iii).  See Bank of Am. Corp. v. Nw. Free Cmty. Access, FA 180704 (Nat. Arb. Forum Sept. 30, 2003) (“Respondent's demonstrated intent to divert Internet users seeking Complainant's website to a website of Respondent and for Respondent's benefit is not a bona fide offering of goods or services under Policy ¶ 4(c)(i) and it is not a legitimate noncommercial or fair use under Policy ¶ 4(c)(iii).”); see also Am. Online, Inc. v. Advanced Membership Servs., Inc., FA 180703 (Nat. Arb. Forum Sept. 26, 2003) (“Respondent's registration and use of the <gayaol.com> domain name with the intent to divert Internet users to Respondent's website suggests that Respondent has no rights to or legitimate interests in the disputed domain name pursuant to Policy Paragraph 4(a)(ii).”).

 

Furthermore, the Panel finds that Respondent’s use of a disclaimer on the website at the <katadyn.net> domain name is insufficient to diminish the effect of using Complainant’s KATADYN mark in the domain name.  Consequently, the Panel finds that using a disclaimer does not imply that Respondent is using the disputed domain name in connection with a bona fide offering of goods or services under Policy ¶ 4(c)(i) or a legitimate noncommercial or fair use under Policy ¶ 4(c)(iii).  See AltaVista Co. v. AltaVista, FA 95480 (Nat. Arb. Forum Oct. 31, 2000) (finding that since a disclaimer does not, and could not, accompany the domain name, then the “domain name attracts the consumer’s initial interest and the consumer is misdirected long before he/she has the opportunity to see the disclaimer”); see also DaimlerChrysler Corp. v. Bargman, D2000-0222 (WIPO May 29, 2000) (finding that addition of a disclaimer, when the domain name consists of the complainant’s well-known trademark, does not counter the expectation of Internet users that the domain name is sponsored by the complainant); see also Las Vegas Sands, Inc. v. Red Group, D2001-1057 (WIPO Dec. 6, 2001) (justifying the conclusion that the respondent wishes to trade on the fame of the complainant’s trademark, regardless of the presence of a small-print disclaimer that is unavailable to Internet users until they have already entered the gambling site, because the disclaimer fails to remedy initial confusion).

 

Registration and Use in Bad Faith

 

Complainant professes that in addition to selling Complainant’s goods, Respondent is using the disputed domain name to sell goods that compete with Complainant’s.  The Panel finds that capitalizing on Complainant’s mark to sell competing goods disrupts Complainant’s business and is evidence of bad faith use and registration for purposes of Policy ¶ 4(b)(iii).  See Lambros v. Brown, FA 198963 (Nat. Arb. Forum Nov. 19, 2003) (finding that the respondent registered a domain name primarily to disrupt its competitor when it sold similar goods as those offered by the complainant and “even included Complainant's personal name on the website, leaving Internet users with the assumption that it was Complainant's business they were doing business with”); see also S. Exposure v. S. Exposure, Inc., FA 94864 (Nat. Arb. Forum July 18, 2000) (finding the respondent acted in bad faith by attracting Internet users to a website that competes with the complainant’s business).

 

The Panel finds that Respondent is not authorized to sell Complainant’s goods, and the Panel also finds that such sale is evidence of bad faith use and registration under Policy ¶ 4(b)(iii).  See Wall v. Silva, FA 105899 (Nat. Arb. Forum Apr. 29, 2002) (finding that despite respondent’s claim that it used the <josephinewall.com> domain name, which was identical to complainant’s JOSEPHINE WALL mark, to help complainant become popular in the United States, the Panel found that the respondent’s use of the domain name to sell the complainant’s artwork in the United States constituted disruption pursuant to Policy ¶ 4(b)(iii)); see also G.D. Searle & Co. v. Celebrex Cox-2 Vioxx.com, FA 124508 (Nat. Arb. Forum Oct. 16, 2002) (“Unauthorized use of Complainant’s CELEBREX mark to sell Complainant’s products represents bad faith use under Policy ¶ 4(b)(iii).”).

 

Additionally, Complainant contends that Respondent attracts Internet users to its website for commercial gain by creating a likelihood of confusion with Complainant’s KATADYN mark.  The Panel finds that Respondent’s use of Complainant’s mark to increase its customer base is evidence of bad faith use and registration under Policy ¶ 4(b)(iv).  See Procter & Gamble Co. v. Hlad, FA 126656 (Nat. Arb. Forum Nov. 20, 2002) (finding that the disputed domain name was registered and used in bad faith where the respondent, a distributor of the complainant’s products who was not a licensee of the complainant, used the complainant’s mark in its domain name, suggesting a broader relationship with the complainant and fostering the inference that the respondent was the creator of the complainant’s products rather than a mere distributor); see also Identigene, Inc. v. Genetest Labs., D2000-1100 (WIPO Nov. 30, 2000) (finding bad faith where the respondent's use of the domain name at issue to resolve to a website where similar services are offered to Internet users is likely to confuse the user into believing that the complainant is the source of or is sponsoring the services offered at the site).

 

Moreover, Complainant reasons that Respondent had actual knowledge of Complainant’s rights in the KATADYN mark due to Respondent’s placement of the trademark symbol next to the KATADYN mark on its website.  The Panel finds that Respondent had actual knowledge of Complainant’s rights; the Panel also finds that such knowledge is evidence of bad faith use and registration for purposes of Policy ¶ 4(a)(iii).  See Associated Materials, Inc v. Perma Well, Inc., FA 154121 (Nat. Arb. Forum May 23, 2003) (finding that the respondent’s actual knowledge of the complainant’s rights in the ULTRAGUARD mark, inferred from the fact that the respondent was a distributor of the complainant, along with the respondent being on notice of its own lack of rights evidenced that the domain name was registered in bad faith); see also Pfizer, Inc. v. Suger, D2002-0187 (WIPO Apr. 24, 2002) (finding that because the link between the complainant’s mark and the content advertised on the respondent’s website was obvious, the respondent “must have known about the Complainant’s mark when it registered the subject domain name”).

 

In addition, Complainant maintains that most Internet users are not likely to see Respondent’s disclaimer.  The Panel finds that Respondent’s use of the disclaimer is not sufficient to negate a finding of bad faith registration and use under Policy ¶ 4(a)(iii).  See Ciccone v. Parisi, D2000-0847 (WIPO Oct. 12, 2000) (“Respondent’s use of a disclaimer on its website is insufficient to avoid a finding of bad faith.  First, the disclaimer may be ignored or misunderstood by Internet users.  Second, a disclaimer does nothing to dispel initial interest confusion that is inevitable from Respondent’s actions.  Such confusion is a basis for finding a violation of Complainant’s rights.”); see also Thomas & Betts Int’l, Inc. v. Power Cabling Corp., AF-0274 (eResolution Oct. 23, 2000) (finding bad faith based upon initial interest confusion despite disclaimer and link to the complainant’s website on the respondent’s website).

 

DECISION

Having established all three elements required under the ICANN Policy, the Panel concludes that relief shall be GRANTED.

 

Accordingly, it is Ordered that the <katadyn.net> domain name be TRANSFERRED from Respondent to Complainant.

 

 

 

 

___________________________________________________

 

Honorable Richard B. Wickersham, Judge (Ret.), Panelist
Dated:  September 7, 2005

 

 

 

 

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