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Digi International Inc. v. DDI Systems [2002] GENDND 1477 (24 October 2002)


National Arbitration Forum

DECISION

Digi International Inc. v. DDI Systems

Claim Number: FA0209000124506

PARTIES

Complainant is Digi International, Minnetonka, MN (“Complainant”) represented by Marsh Stolt, of Fish & Richardson P.C., P.A.  Respondent is DDI Systems, Minneapolis, MN (“Respondent”).

REGISTRAR AND DISPUTED DOMAIN NAME 

The domain name at issue is <digidis.com>, registered with Network Solutions.

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.

Judge Irving H. Perluss (Retired) is the Panelist.

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum (the “Forum”) electronically on September 3, 2002; the Forum received a hard copy of the Complaint on September 3, 2002.

On September 4, 2002, Network Solutions confirmed by e-mail to the Forum that the domain name <digidis.com> is registered with Network Solutions and that the Respondent is the current registrant of the name.  Network Solutions has verified that Respondent is bound by the Network Solutions 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 September 4, 2002, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of September 24, 2002 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@digidis.com by e-mail.

A timely Response was received and determined to be complete on October 1, 2002.

Complainant made a timely Additional Submission on October 7, 2002.  Respondent made a timely Addition Submission on October 11, 2002.

On October 11, 2002, pursuant to Complainant’s request to have the dispute decided by a single-member Panel, the Forum appointed Judge Irving H. Perluss (Retired) as Panelist.

RELIEF SOUGHT

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

PARTIES’ CONTENTIONS

A. Complainant

            1.         Complainant, Digi International, Inc., is the owner of 84 trademark registrations for marks consisting of or including the term DIGI worldwide, including 11 U.S. registrations, all registered and used in connection with computer network computer connectivity hardware and software.

            2.         Complainant is a well-known manufacturer of computer hardware and software used to provide connectivity between local and wide area networks, to facilitate remote access to computer networks and to the Internet, and to connect intelligent devices to local and wide area networks and to the Internet.  Complainant also provides services in the areas of installation, maintenance and repair of computer hardware and software, as well as technical support and training.  All of Complainant’s goods and services are offered under the distinctive DIGI marks.

            3.         Complainant created and adopted the DIGI® mark as a brand name for its computer hardware and software products in 1985.  In 1989 Complainant changed its corporate name from Digiboard, Inc. to Digi International, Inc. and has done business under the name continuously since that date.

            4.         Respondent knowingly acted in bad faith in registering the <digidis.com> domain name while well aware of Complainant’s rights in the registered DIGI marks.  Respondent’s purpose in registering the <digidis.com> domain name was to create the false impression that it was a division of Digi International, thereby creating confusion and interfering with Complainant’s business.

            5.         The disputed domain name <digidis.com> is identical and/or confusingly similar to Complainant’s registered DIGI® mark.  Numerous UDRP decisions have found that the addition of a word or an acronym to a mark in constructing the domain name does not alter the fact that the domain name is confusingly similar to the mark to which the word or acronym has been appended.  Thus, the addition of “dis” to the proprietary registered DIGI® mark is not sufficient to create a distinguishable mark or domain name.  in fact, the addition of “dis” to DIGI to form the <digidis.com> domain name clearly creates the impression of a sublevel of the primary domain name <digi.com>.

            6.         Anyone viewing the <digidis.com> domain name, which is apparently used to facilitate the closely related services of distributing computer hardware and software, could easily be led to believe the website is affiliated with or sponsored by Digi International, whose primary web address is <digi.com>.

            7.         Respondent has no rights or a legitimate interest in the disputed domain name because Respondent is not using and has made no demonstrable preparation to use the name in connection with a bona fide offering of goods or services.  The <digidis.com> domain name resolves to a site that provides little information about the owner, or its goods and/or services.  Almost every link that appears on the website resolves to a page that says “coming soon.”  The <digidis.com> domain name obviously was chosen for the purpose of diverting Internet traffic to the Respondent’s site and to lend legitimacy to Respondent’s claims that it is affiliated with Complainant.  It is well established that there is no bona fide use where Respondent used the domain name to divert Internet users to its competing websites.

            8.         Respondent has no rights or a legitimate interest in the disputed domain name because Respondent is not known by the name DIGI or the name DIGIDIS.  Respondent registered the subject domain name under the name “DDI Systems” with no reference to any organization whose name consists of the word “DIGI” or “DIGIDIS.”  The entity identified on the website located at <digidis.com> is Digital Distribution, Inc.  The website contains no mention of any entity whose name consists of the word DIGI or DIGIDIS.

            9.         Respondent has no rights or a legitimate interest in the disputed domain name because Respondent owns no trademark or service mark registrations for DIGI or DIGIDS.  A Saegis® search of the federal and state databases revealed no application or registration for any “DIGI” mark owned by DDI Systems, Inc., Digital Distribution, Inc., or Steve Larson, individually.

            10.       Respondent has no rights or legitimate interests in the disputed domain name because Respondent is not making a legitimate, noncommercial, or fair use of the domain name.  The domain name resolves to a website that identifies Digital Distribution, Inc.  Although the information contained on the site is sketchy at best, it is clearly a commercial site.  As such, obviously, it cannot be contended that this use of the domain name constitutes non-commercial fair use.

            11.       It follows that Respondent has no legitimate interests in the disputed domain name, as legitimate interests are defined in Paragraphs 4(c)(i)-(iii) of the UDRP.  As such, Complainant has satisfied the second element of its complaint under the UDRP, Paragraph 4(a)(ii).

            12.       Respondent registered the domain name on May 12, 1998, long after Complainant had adopted, used, and secured federal registrations for its DIGI marks for computer network connectivity hardware and software, and associated services, in the United States and throughout the world.  Further, Complainant is well known in the computer industry, is a large local employer of computer professionals, and is located only a few miles from Respondent.  In addition to the evidence of constructive notice of Complainant’s rights in the DIGI® mark, it is clear from the record that Respondent had actual knowledge of Complainant and its products, and that it purposefully registered the <digidis.com> name to draw attention to its website by trading on the goodwill of the DIGI® mark.  It is well established that registering a domain name with actual or constructive knowledge of a complainant’s rights indicates bad faith registration and use.

            13.       Respondent has not only registered the disputed domain name despite its actual and constructive knowledge of Complainant’s rights in the DIGI® mark, but it has purposely registered and used the <digidis.com> domain name in order to intentionally play off the goodwill of Complainant established in its marks and to create a likelihood of confusion as to the source, sponsorship, or affiliation with Complainant, all in violation of Sections 4(b)(iii) and 4(b)(iv) of the UDRP.  Respondent has purposely acted to create confusion as to the source of its services and to lead customers to believe that it is affiliated with Complainant.

B. Respondent

            1.         Respondent registered the disputed domain name, <digidis.com>, in 1998 as a logical abbreviation of the name Digital Distribution, Inc.  While searching for a domain name, Respondent’s preference was <ddi.com> but it was already registered as was <digitaldistribution.com>.  The goal was to choose something that would be short and easy to type and remember.  Upon further searching, Respondent settled on “DIGIDIS” as a logical shortening of the word “digital” (digi) and “distribution” (dis) to give Respondent the domain name <digidis.com>.  To assert that the suffix “dis” was added to <digi.com> in order to propagate fraud makes little sense as on its own or even added to “digi,” it has no meaning and is not a logical selection to search.

            2.         There are 48 names still available that would be far easier to confuse with <digi.com>.

            3.         It can be estimated that there are 9,835 companies in the United States whose names start with the four letters “digi.”

            4.         The domain name was registered legally in 1998 and has quietly existed on the web since then.

            5.         Respondent’s business is dependent upon “word of mouth” advertising and it does no commercial advertising other than references and “word of mouth.”  Respondent does not advertise the existence of the website except to companies that need and use the warranty search function.  No company literature, business cards, invoices, or other published material lists the website.  The website is for use of existing customers only but does identify Respondent very clearly with address, phone, and fax numbers, as well as a page that will forward a message to Respondent if someone does stumble upon the site and wishes more information.  There is no mention of an association with any other company including, but not limited to, Complainant, Digi International.

            6.         Respondent has no interest in selling or otherwise transferring its domain name.  The name <digidis.com> was chosen only as a natural condensation of the words “Digital” and “Distribution.”  A thorough search was done at the time to ensure that there would be no confusion between Respondent’s website and others that were registered at the time.  To Respondent’s knowledge, it has never received or responded to an inquiry concerning Complainant, its products, and/or services.  The contact button generates less than one inquiry per month and is there only to allow browsers to verify who Respondent is.  Respondent does not have any interest in selling digiboards or competing products.  Respondent has two customers that have networks that use this type of product and sales and services of those components are referred to the company that sold those products and rendered those services originally.

            7.         Respondent denies that anyone in its company has represented themselves as Complainant or any subsidiary thereof.

            8.         Respondent does not offer any of the products offered by Complainant.

C. Additional Submission by Complainant

            1.         As argued by Respondent, Complainant recognizes that other parties have established rights in marks beginning with the letter string “digi” and that such marks are being used by the owners as domain names.  Trademark law prevents the use of a similar mark on such goods or services as would probably cause confusion.  The <digidis.com> domain name is confusingly similar to Complainant’s trademarks DIGI, DIGI ONE, DIGI NEO, DIGILABS, DIGIFAX and DIGIBOARD, among others.  Respondent’s use of the domain name <digidis.com> to market computer hardware, however, has caused actual confusion as to the source of the products sold by Respondent, and is likely to cause further confusion if such use is allowed to continue.  Complainant has been diligent in protecting its rights in its DIGI marks by objecting to use or registration of similar marks when they are used in connection with similar goods and services.  Complainant does not waste its valuable resources on objecting to uses of similar marks in connection with unrelated goods and services.

            2.         Respondent makes no argument that supports a legitimate interest in the DIGIDIS name.  The term is not included in Respondent’s legal name, Digital Distribution, Inc., or in its apparent d/b/a, DDI SYSTEMS.  Respondent owns no applications for DIGIDIS as a trademark or service mark, and makes no claim that is using the term as a trademark or service mark.   Respondent specifically states that it does not advertise the existence of the website except to companies that need and use the warranty information search function, and that no company literature, business card, invoices, or other published material lists the website.

            3.         Respondent is using the domain to create the impression that it is part of, or affiliated, with Complainant.  Contrary to Respondent’s assertion that the <digidis.com> website “quietly exists” on the Internet as a passive site for its customers to search warranty information, the evidence shows that Respondent is also sending and receiving business e-mails from the <digidis.com> e-mail address.

            4.         Despite its denial that Respondent offers products comparable to Complainant’s products, the evidence submitted by Complainant clearly shows that Respondent is selling computer hardware products, namely computer touch screens.  These products are similar enough in nature to Complainant’s products to mislead a customer into believing that the source of such products is Complainant.  Respondent’s use of the domain name <digidis.com> to market this computer hardware has caused confusion as to the source of the products, and is likely to cause further confusion if such use is allowed to continue.

D.  Additional Submission by Respondent

            1.         The disputed domain name is not confusingly similar to Complainant’s marks.  No proof has been offered other than the false declaration of one person, who was in dispute with Respondent.  There have been no inquiries about any possible affiliation with Complainant.

            2.         Respondent has rights and a legitimate interest in the disputed domain name because it is being used on a daily basis for warranty searches and e-mail.

            3.         Respondent has not and does not intend to use the disputed domain name in bad faith.  There never was and there is not an intent by Respondent to harm anyone.  Respondent did know of Complainant before the registration of the disputed domain name in 1998.

            4.         A disclaimer has been placed on the website.

 

FINDINGS AND CONCLUSIONS

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.

Professor McCarthy teaches us that the keystone of common law and statutory trademark infringement is the “likelihood of confusion,” and so it is here.[1]

The Panelist here does find that there is likelihood of confusion, i.e., the disputed domain name and Complainant’s mark are confusingly similar, and further finds that both Complainant and Respondent are both in the computer business, albeit with different products.

Professor McCarthy sets out the 1983 Restatement of Torts, Section 731, which listed nine foundational factors to be considered which have been utilized in both competitive and non-competitive cases.[2]  These factors have been utilized by each of the various Federal Circuit Courts to formulate their own list of factors.[3]

The 1938 Restatement factors are:

1.         The likelihood that the actor’s goods, services or business will be mistaken for those of the other;

2.         The likelihood that the other may expand his business so as to compete with the actor;

3.         The extent to which the goods or services of the actor and those of the other have common purchasers or users;

4.         The extent to which the goods or services of the actor and those of the other are marketed through the same channels;

5.         The relation between the functions of the goods or services of the actor and those of the other;

6.         The degree of distinctiveness of the trademark or trade name;

7.         The degree of attention usually given to trade symbols in the purchase of goods or services of the actor and those of the other;

8.         The length of time during which the actor has used the designation;

9.         The intent of the actor in adopting and using the designation.

Clearly, factors 1, 2, 3, 4, 5, 7, and 9 are here applicable.

Thus, the Panelist has concluded that even though the disputed domain name is similar only in part (i.e., the mark plus “dis”), there is a likelihood of confusion by a reasonably prudent buyer.[4]

Respondent argues that many others are using Complainant’s mark, or a  variation of the marks.  Whether there is utilization of Complainant’s marks by others without consent, however, is not relevant to this proceeding.  See, MGM-Pathe Communications v. Pink Panther Patrol (S.D.N.Y., 1991) 774 F.Supp. 869, 873  (“. . . the Patrol contends that another registered trademark for the words ‘pink panther’ exists, and at least 15 other establishments, including a bar and a liquor store, use the Pink Panther name.  These arguments are unavailing . . . .  The fact that there are other establishments that use the name Pink Panther does not contradict the harm suffered by MGM from the Patrol’s use of the mark”).

Because Complainant’s marks were registered with the United States Patent and Trademark Office long before Respondent acquired the domain name in issue, Respondent would have rights and a legitimate interest in the disputed domain name only if its use of the domain name was not in bad faith.

It is of interest to note that the Anticybersquatting Consumer Protection Act (“ACPA”) [15 U.S.C. Section 1125(d)] protects owners of a famous and distinctive mark (as here) from a person who registers or uses a domain name that is confusingly similar to the mark or dilutive of the mark, if such person has a bad faith intent.

As will be seen hereafter, the Panelist necessarily has determined that such bad faith is present here.[5]

Section 4(b) of the Policy sets forth certain circumstances, without limitation, that shall be evidence of registration and use of a domain name in bad faith.  Subparagraph (iv) of Section 4(b) provides:

“by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your 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 your website or location or of a product or service on your website or location.”

The words “source, sponsorship, affiliation, or endorsement” are particularly apt here.  Inevitably, consumers would conclude that the domain name in issue was endorsed and sponsored by Complainant.[6]

It is to be noted, however, that Respondent flatly denies that anyone connected with it represented Respondent as Complainant or any subsidiary of Complainant.

Believability of a witness is almost impossible to ascertain absent confrontation of the witness at a hearing where testimony is taken.[7]

But even if it assumed arguendo that Complainant’s charges are incorrect, in addition to the demonstration of bad faith by the application of subparagraph (iv) of Section 4b of the Policy, there is a legal presumption of bad faith, when Respondent reasonably should have been aware of Complainant’s trademarks, actually or constructively.

In Interstellar Starship Servs., Ltd. v. Epix, Inc. (CA 9th 1999) [1999] USCA9 357; 184 F.3d 1107, 1111, it was said:

“However, ISS became aware of the ‘EPIX’ trademark when it applied for its own registration of ‘EPIX.’  Adopting a designation with knowledge of its trademark status permits a presumption of intent to deceive.  See Brookfield, 174 F.3d at 1059 (citing Official Airline Guides, Inc. v. Goss, [1993] USCA9 3170; 6 F.3d 1385 (9th Cir. 1993)).  In turn, intent to deceive is strong evidence of a likelihood of confusion.  Sleekcraft, 550 F.2d at 354.

Thus, the domain name in issue was registered and is being used in bad faith.

A disclaimer by Respondent on its website does not alleviate the problem.  This is because such disclaimers are not sufficient to prevent initial interest confusion.  See, Madonna v. Parisi, D2000-0847 (WIPO Oct. 12, 2000) (citing Brookfield Comm., Inc. v. West Coast Entertainment Corp. (9th Cir. 1999) [1999] USCA9 225; 174 F.3d 1036, “[r]espondent’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 interest confusion that is inevitable from Respondent’s actions.  Such confusion is a basis for finding a violation of Complainant’s rights”).

DECISION

Based on the above findings and conclusions, and pursuant to Rule 4(i), it is decided that the domain name <digidis.com> registered by Respondent be and the same is ordered TRANSFERRED to Complainant, Digi International, Inc.

JUDGE IRVING H. PERLUSS (Retired), Panelist
Dated: October 24, 2002

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