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Generic Top Level Domain Name (gTLD) Decisions |
Salem Five Cents Savings Bank v. Direct
Federal Credit Union
Claim Number: FA0112000103058
PARTIES
The
Complainant is Salem Five Cents Savings
Bank, Salem, MA (“Complainant”) represented by Brenda R. Sharton, of Goodwin
Procter LLP. The Respondent is Direct Federal Credit Union, Needham,
MA (“Respondent”) represented by A. Van C. Lanckton of Craig and Macauley.
The
domain name at issue is <directbanking.biz>,
registered with Register.com.
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.
Mr.
Peter L. Michaelson, Esq., as Panelist.
The
Complaint was brought pursuant to the Start‑up Trademark Opposition
Policy (“STOP" or "Policy”) available at http://www.neulevel.biz/ardp/docs/stop.html, which was adopted by
NeuLevel, Inc. ("NeuLevel"), as the registry operator, and approved
by Internet Corporation for Assigned
Names and Numbers (ICANN) on May 11, 2001,
and revised by NeuLevel on September 19, 2001; and in accordance with the
Rules for STOP
as adopted by NeuLevel and also approved by ICANN on May 11,
2001 ("STOP Rules") and as supplemented by the National Arbitration
Forum Start‑up Trademark Opposition Policy for .BIZ "STOP"
Supplemental Rules then in effect (“STOP Supplemental
Rules”).
Complainant
has standing to file a Start-up Trademark Opposition Policy (“STOP”) Complaint,
as it timely filed the required Intellectual
Property (IP) Claim Form with the
Registry Operator, NeuLevel. As an IP
Claimant, Complainant timely noted its intent to file a STOP Complaint against
Respondent with the Registry Operator, NeuLevel
and with the National
Arbitration Forum (the “Forum”).
Complainant
submitted a Complaint to the Forum electronically on December 14, 2001; the
Forum received a hard copy of the Complaint
on December 17, 2001.
On
December 19, 2001, a Notification of Complaint and Commencement of
Administrative Proceeding (the “Commencement Notification”),
setting a deadline
of January 8, 2002 by which Respondent could file a Response to the Complaint,
was transmitted to Respondent in
compliance with paragraph 2(a) of the Rules for
the Start-up Trademark Opposition Policy (the “STOP Rules”).
A
timely Response was received and determined to be complete on January 8, 2002.
Complainant’s
Additional Submission, captioned a Reply to the Response, was received on
January 14, 2002.
Respondent’s
Additional Submission, captioned a Rejoinder to the Reply, was received on
January 17, 2002.
On January 25, 2002, pursuant to STOP Rule 6(b), the
Forum appointed Mr. Peter L. Michaelson, Esq. as the single Panelist.
Due
to various time conflicts experienced by the Panel, the Panel issued an order
dated January 28, 2002 which extended the due date
of the decision from
February 8, 2002 to February 15, 2002.
The
Panel has now considered all the filings made by the Parties including both
additional submissions.
Though
the Complaint does not specifically state the relief sought by the Complainant,
the Panel infers that the Complainant seeks
to have the domain name transferred
from the Respondent to the Complainant.
The
Respondent requests that the Complaint be dismissed and that no subsequent
challenges under the STOP against the disputed domain
name be granted.
A.
Complainant
1. Identicality
The Complainant contends that the
disputed domain name <directbanking.biz> is identical to its
trademark for the term “DIRECT BANKING”.
Hence,
the Complainant concludes that the requirements of paragraph 4(a)(i) of the
Policy are satisfied.
2.
Rights and legitimate interests
The Complainant contends that the
Respondent has no rights or legitimate interests in the disputed domain name.
Specifically, the Complainant asserts that there is no
indication that the Respondent has ever been commonly known as “directbanking”
or any similar
variation (citing to the declaration of Mr. Jay Spahr, Senior
Vice President of Electronic Commerce at the Complainant; a copy of
that
declaration was filed with the Complaint).
Further and with reference to the Spahr declaration, the Complainant
contends that: (a) there is no indication that the Respondent
has ever used the
term “directbanking” in connection with any of its services; (b) the Respondent
presently owns several domain names,
none of which includes the terms
“directbanking” or “banking”; (c)
the Respondent owns several federal
trademarks, none of which includes the term “banking”, much less
“directbanking”; and (d) there is
no evidence that the Respondent is the owner
or beneficiary of a trade or service mark that is identical to the domain name.
The
Complainant also contends that the Respondent’s attempt to register the
disputed domain name cannot be found to be a demonstrable
preparation to use
its website in connection with a bona fide offering of goods or services. In that regard, the Complainant states that:
"[i]t
is inconceivable that the Credit Union [Respondent] was unaware of Salem Five’s
[Complainant's] directbanking.com service
and of Salem Five’s rights in the
Mark [direct banking.com]. Salem Five
and the Credit Union are located just miles apart near Boston, Massachusetts. They offer similar online services and serve
the same Boston area customers. In
addition, Salem Five was a pioneer in the online banking industry and has been
aggressively promoting its directbanking.com service
and the DIRECTBANKING.COM
Mark since 1999 - especially in the metropolitan Boston area. It has been profiled numerous times in
national and Boston area periodicals.
To anyone cognizant of the
online banking industry – which the Credit Union must certainly be - Salem
Five’s rights in the Mark is well known.
Even minimal effort would have revealed Salem Five’s established rights
in the Mark".
Lastly,
the Complainant avers, by reference to the Spahr declaration, that the
Respondent is not the licensee or assignee of any rights
in the DIRECTBANKING.COM
mark, nor is it owner or beneficiary of any other trade or service mark that is
identical to this mark.
Thus, the Complainant concludes that the
Respondent cannot demonstrate any rights or legitimate interests in the
disputed domain name
pursuant to paragraph 4(a)(ii) of the Policy.
3.
Bad faith use or registration
The Complainant contends that the
Respondent's conduct evidences bad faith registration and use of the disputed
domain name.
Specifically,
the Complainant believes that such bad faith is evidenced by: (a) the
Respondent having violated its registration agreement
by attempting to register
a domain name which it knew or should have known affected the rights of a
third-party; and (2) the Respondent's
representation of itself as a bank, when
it is not a bank, is deceptive, and a violation of the Federal Trade Commission
Act.
First,
Respondent breached its registration agreement with its registrar by
misrepresenting that the registration of the disputed
domain name did not
infringe any third-party rights.
Specifically, paragraph 1(e) of
that agreement expressly states as follows:
“By
applying to register a domain name …, you hereby represent and warrant to us
that (a) the statements that you made in connection
with such registration …
are complete and accurate; [and] (b) to your knowledge, the registration of the
domain name will not infringe
upon or otherwise violate the rights of any third
party …. You agree and acknowledge that
it is your responsibility to determine whether your domain name registration
infringes or violates
someone else’s rights….”
Second,
the Complainant expresses serious doubt that the Respondent was unaware of its
neighboring competitor, Complainant's, rights
in the mark when the former
entered into the registration agreement.
A simple visit to the website http://www.directbanking.com - an endeavor
which the Complainant believes that the Respondent must have
taken prior to its
registration of the disputed domain name would have revealed the Complainant's
rights in the mark. In that regard, the
Complainant states that the <register.com> homepage provides a link
entitled “Trademark Search” which directly
connects the user to the
Nameprotect.com trademark search service and easily reveals the Complainant's trademark
rights. Hence, the Complainant takes
the position that "representing that a domain name does not infringe the
rights of a third party
is evidence of bad faith where rudimentary checks such
as an on-line trademark or domain name search would have revealed Salem Five’s
[Complainant's] rights in the Mark".
Further,
the Complainant asserts that if the Respondent is allowed to maintain the
disputed domain name, it would be representing
that it is a bank when it is
not. The Complainant states that such
action would violate the Federal Trade Commission Act’s proscription against
unfair and deceptive
trade practices.
In this regard, the Complainant specifically contends that the
Respondent's misrepresentation that it is a bank would be unfair and
deceptive
to customers inasmuch as banks and credit unions are entirely different
financial entities. They have different
statutory powers and are regulated by the federal and state governments in
entirely different manners. See e.g.,
2 U.S.C. § 21 (banks); 12 U.S.C. § 1751 (federal credit unions); Mass. Gen. Laws ch. 168, 1 et seq. (state authorized savings
banks); Mass. Gen. Laws ch. 171
§1 et seq. (state authorized credit unions).
Consequently, the Complainant concludes
that the Respondent’s activities demonstrate
bad faith registration or use of the disputed domain name pursuant to
paragraph 4(a)(iii) of the Policy.
B.
Respondent
1. Identicality
While
the Respondent does not contest that the disputed domain name is identical to
the term "directbanking.com", it contends
that, inasmuch as the term
is incapable of serving as a trademark or service mark, the Complainant has no
rights in it.
Specifically,
the Respondent contends that the Complainant views the terms ”directbanking”
and “directbanking.com” as being generic
and thus not susceptible of serving as
trademarks. In that regard, the
Respondent points to the express disclaimer of the term
"directbanking.com" made by the Complainant
during the course of
prosecuting its Federal trademark application for a stylized version of this
term (that application ultimately
being registered as US registration
2,516,343).
2.
Rights and legitimate interests
The
Respondent contends that it has rights and legitimate interests in the disputed
domain name.
Specifically,
the Respondent states that the Complainant is incorrect in asserting that
credit unions do not provide banking services.
The Respondent states they do.
The Respondent asserts that the words “direct banking” describe, i.e. as
a generic descriptor, a method of providing banking services
that is
Respondent's entire business.
Specifically, it contends that the Complainant has imitated the
Respondent's business method by having started in the area of direct
banking
only after visiting the Respondent's facility in 1996. Accordingly, the Respondent asserts that the
Complainant learned from the Respondent that the Respondent had adopted its
name in 1990
specifically to highlight the Respondent's marketing strategy of
direct banking.
3.
Bad faith use or registration
The
Respondent contends that it neither registered nor is using the disputed domain
name in bad faith.
In
that regard, the Respondent states that it did not register the disputed domain
name: (a) primarily for the purpose of selling,
renting or otherwise
transferring the registration to the Complainant or its competitor; (b) in order to prevent the Complainant from
reflecting any protected mark in a corresponding domain name; or (c) primarily
for the purpose
of disrupting the business of Salem Five Cents or any
competitor. Furthermore, the Respondent
states that it has not, by using the domain name, intentionally attempted to
attract, for commercial gain,
Internet users to its web site or other on-line
location by creating a likelihood of confusion with any protected mark of the
Complainant.
Moreover,
with respect to the Complainants'
specific allegations of bad faith, first, the Respondent did not violate its
registration agreement by
registering the disputed domain name <directbanking.biz>. Specifically, the Respondent asserts that
the Complainant has no protected rights in that name standing alone, nor in any
cognate
name such as “directbanking.com.”
In that regard, the Respondent points to the express disclaimer by the
Complainant of any rights to the latter term during prosecution
of the latter's
own federal trademark application.
Further,
the Respondent asserts that it is also not misleading the public or anyone else
by describing the services it provides as
“banking” services. It takes the position that those services
are the very services that all credit unions provide. The use of that term "directbanking" does not in any
way suggest or imply that that the Respondent is a bank rather than
a credit
union. No visitor to its web site or
reader of its advertisements could possibly think otherwise, given the numerous
references that the
Respondent makes to itself as a credit union.
Specifically,
the Respondent states that it is a federal credit union. Federal credit unions are regulated by the
National Credit Union Administration (“NCUA”) under Chapter 14 (“Federal Credit
Unions”)
of Title 12 (“Banks and Banking”) of the United States Code, 12 U.S.C.
§§ 1751 et seq. As defined in §
1752(1), a federal credit union is “a cooperative association organized in
accordance with the provisions of [Chapter
14 of Title 12] for the purpose of
promoting thrift among its members and creating a source of credit for
provident or productive
purposes.”
The
Respondent states Federal law grants to every federal credit union the
following powers, among others: to make loans and extend
lines of credit to its
members; to receive deposits (known as “payments, representing equity, on
shares and share certificates”);
to invest its funds in loans to members, in
certain securities and in other specified investments; to make deposits in
other financial
institutions; to borrow within specified limits; to levy late
charges for failure of members to meet their obligations to the credit
union
promptly; to enforce loan obligations by offsetting liens on shares and
dividends of members; to sell negotiable checks, money
orders and similar money
transfer instruments to members; to cash checks and money orders for members
for a fee; to purchase, sell,
pledge or discount or otherwise receive or
dispose of any eligible obligations of its members. See 12 U.S.C. § 1757. In
short, the Respondent asserts, contrary to the Complainant, that federal credit
unions engage in the business of banking.
The Respondent states that the same conclusion follows
from examining Massachusetts state law.
In Massachusetts credit unions that are not federal credit unions are
regulated by a state official. In Massachusetts,
that official is the Commissioner of Banks.
See Mass. Gen. Laws, Ch. 171, § 1.
Moreover, state credit unions are specifically subject to all of the
provisions of the Massachusetts statute pursuant to which the
Commissioner of
Banks regulates banks, “so far as applicable.”
Mass. Gen. Laws, Ch. 171, § 6.
Consequently,
the Respondent asserts that it is in the direct banking business and had every
right to register the disputed domain
name.
It states that it had no obligation to point out the existence of the
domain name <directbanking.com> to the registrar because
the Complainant
has no trademark protection for that name and no superior right to those of the
Respondent for registering the domain
name <directbanking.biz>.
C.
Additional Submissions
1.
The Complainant's Reply
The
Complainant, through its reply, counters, contrary to the Respondent's view,
that the term "directbanking.com" is not
a generic mark, inasmuch as
that term does not refer to a genus of online financial services which the
particular product or service
is a species.
In
particular, the Complainant asserts that this term is a suggestive mark. In that regard, it asserts that the term
“directbanking.com” suggests a streamlined, efficient and rapid financial
transaction. Hence, the Complainant
contends that " it takes some degree of imagination and thought to
conclude that the term DIRECTBANKING.COM
refers to a service allowing customers
to conduct a wide variety of financial transactions over a personal
computer. Therefore, DIRECTBANKING.COM
is an inherently distinctive suggestive composite mark that is entitled to
trademark protection without
proof of any secondary meaning."
Further,
the Complainant contends, through its reply, that even if "DIRECTBANKING.COM is categorized as
simply descriptive of Complainant's online financial services, it is nevertheless
a protected
trademark" inasmuch as this mark has acquired sufficient
secondary meaning in the marketplace.
The Complainant states that such secondary meaning is often established
by showing that the owner of the mark -- as the Complainant
contends it has
done -- has successfully promoted and advertised the goods and services sold
under the mark.
In
that regard, the Complainant states that since 1999 it has expended a
significant amount of money promoting its DIRECTBANKING.COM
mark and its
<directbanking.com> service.
These endeavors have included national television, radio, print and
online advertisements, as well as outdoor signage in the Boston
area. Further, Salem Five’s
<directbanking.com> service has garnered significant press coverage in publications
such as The Wall Street Journal and The Boston Globe, as well as
in many financial industry publications.
As a result of this promotion, the Mark has acquired strong secondary
meaning and distinctiveness, and has become well known among
online banking
customers.
As
to the disclaimer in its federal trademark application, the Complainant
contends that it agreed to the disclaimer “[n]o claim is
made to the exclusive
right to use DIRECTBANKING.COM apart from the mark as shown” only at the
insistence of the Patent and Trademark
Office examiner and merely for
"obtaining approval of this application". In fact, in amending its trademark application, the Complainant
explicitly stated that it was adding the disclaimer “solely for the
purpose of
obtaining approval of this application.”
See Applicant’s Response to Office Action No. 2 issued by the US
Patent and Trademark Office (PTO) during prosecution of the 75/835,936
federal
trademark application, a copy of both of which have been included in Annex H to
the Response.
Further, in its response, the
Complainant explicitly stated that “[t]he foregoing disclaimer should not be
construed as a waiver of
any of [Salem Five’s] other rights and defenses with
respect to any element of the mark.” Id. Hence, the Complainant contends that it
expressly reserved all of its common law and state trademark rights in the
mark. Given this, the Complainant
states that any disclaimer it added to its federal trademark application is
wholly irrelevant to the trademark
protection afforded by the common law and
state trademark laws.
Moreover, the Complainant states
that it only disclaimed the term “apart from the mark as shown”; hence, it
contends that its disclaimer
is irrelevant to its position that the
Respondent's maintenance of the disputed domain name would be confusingly
similar to and infringe
upon the stylized version of the DIRECTBANKING.COM
federal trademark.
2.
The Respondent's Rejoinder
First,
the Respondent contends that inasmuch as the Complainant has conceded that it
disclaimed Federal trademark protection for the
term “directbanking.com”
standing alone, then this concession suffices to show that the Respondent did
not act in bad faith in registering
the disputed domain name.
Responding to the Complainant's
allegation that it has common law rights in the term
"directbanking.com", the Respondent
contends that the term is merely
descriptive, specifically descriptive of the banking services which the
Complainant directly provides
to its customers. Further, the Respondent contends that, in the absence of showing
that this term has acquired sufficient secondary meaning, this term
is not
susceptible of gaining status as a common law trademark. In that regard, the Respondent cites to
language apparently propounded by the Supreme Court of North Carolina (though
without citing
to a specific case) stating:
"When a particular business has used
words publici juris for so long or so exclusively or when it has
promoted its product to such an extent that the words do not register their
literal
meaning on the public mind but are instantly associated with one
enterprise, such words have attained a secondary meaning. That is
to say, a
secondary meaning exists when in addition to their literal, or dictionary
meaning, words connote to the public a product
from a unique source.
Proof that others are using a term
descriptively on the same or closely related goods, is evidence tending to
rebut alleged secondary
meaning in a descriptive term. . . . .
. . . .
The more descriptive the term, the
greater the evidentiary burden on plaintiff to prove secondary meaning. The
“descriptive” category
is not a monolithic set of terms. Some terms are only
slightly descriptive and need only a minimum quantum of evidence of secondary
meaning. Other terms are highly descriptive and may need a massive quantity and
quality of secondary meaning evidence to become a
trademark."
With this in mind, the Respondent
contends that, given the highly descriptive nature of the term
"directbanking.com", the
Complainant is impressed with a very heavy
evidentiary burden to show secondary meaning, and simply stated, its proof
fails to met
that burden. In
particular, the Respondent takes the position that regardless of the expenditures
which the Complainant incurred in advertising,
those expenditures are
irrelevant inasmuch as no amount of advertising will suffice to overcome the
descriptive nature of the term.
Lastly, the Respondent takes the position
that the Complainant conceded that it visited the Respondent's headquarters, observed the Respondent's business and did
not begin offering its direct banking services until some time after that
visit. Hence, the Respondent concludes
that since it, and not the Complainant, was the first entity to offer direct
banking services, it
and not the Complainant has the right to register the
disputed domain name.
A. The Complainant's registered mark
The Complainant owns a United States
service mark registration for the mark "directbanking.com", in a
stylized fashion,
on which this dispute is partially based. A copy of the entry for this mark, from the
US PTO Trademark Electronic Search System (TESS), appears in Annex 3 to the
Response. This registration is
currently active.
directbanking.com (stylized)
US
registration 2,516,343; registered December 11, 2001
This mark was registered for use in
connection with: "Banking services" in International class 36. This mark claims first use and first use in
inter‑state commerce in both classes of March 13, 1999.
B. The Parties and their respective
businesses and marks
The
Complainant states that it was founded in 1855 in Salem, Massachusetts and is
now a billion-dollar financial services company
and a national leader in online
banking. In 1995, the Complainant
established an online banking division, making it one of the first banks in the
world to offer banking services
on the Internet, and the first New England bank
to do so. Subsequently, starting no earlier than March 13, 1999 (the first use date
it claims for its 2,516,343 trademark),
the Complainant re-branded its online banking services as
“directbanking.com” and proceeded to offer those services from its website
located at http://www.directbanking.com.
Since that time, the Complainant has provided comprehensive full service
online banking to customers around the world under the disputed
name
<directbanking.com>. Such banking services allow the Complainant's
customers to perform personal banking transactions
over the Internet. Through its web site at
"directbanking.com", the Complainant's customers can access their
account information, transfer
funds among accounts, and pay bills
electronically through a personal computer.
As a result of its endeavors, the Complainant has been nationally recognized
as an online banking pioneer and leader, having received
the following
accolades and awards:
Named
1995 Internet Bank of the Year by Gomez Advisors;
Gomez
Advisors’ Top Ten List
of Internet Banks for five consecutive quarters;
Named a National Torch Bearer for
Community Banks by Financial Services Online Magazine;
Forbes Magazine Top Ten List of
Internet Banks;
Yahoo! Internet Life Magazine Top Ten List
of Internet Banks;
Online Banking Report Top Ten List
of Internet Banks; and
Mother Earth News Top Ten List
of Internet Banks.
During
October 2000, the Complainant opened a physical branch for
"directbanking.com" in the heart of Boston’s financial
district at 52
Congress Street. This branch is the
physical manifestation of the "directbanking.com" brand and features
six so-called "video banker"
Internet kiosks with video conferencing
capabilities, a stock ticker, and on-site staff to help customers navigate the
options that
are available. At that branch,
customers are able to participate in live video conferencing with financial
consultants and learn the nuances of Internet
banking from trained
professionals. The investment in the
branch was over $1 million and was well reported in The Wall Street Journal
and The Boston Globe. Id.;
see The Wall Street Journal, July 20, 2000, The Boston
Globe, Oct. 18, 2000, (copies of all of which are enclosed along with the
Spahr Declaration annexed to the Complaint.
Since
March 13, 1999, the Complainant has used its trademark
"directbanking.com" continuously in connection with its
<directbanking.com>
online banking service, bank statements and credit
cards. The Complainant has owned the
domain name <directbanking.com> since 1996 and has operated its
"directbanking" service
from that domain continuously since March 13,
1999. Since 1999, the Complainant has
also owned the domain names <directbanking.net> and
<directbanking.org>.
The
Complainant has actively marketed its online banking services in the United
States using its "directbanking" mark since
1999 using a wide variety
of media outlets. Specifically, it has promoted its directbanking.com brand
with advertisements on popular Boston area radio stations WBZ, WBOS and WCRB. It has placed television advertisements on
national networks such as CBS, NBC and ABC and on targeted cable television
stations, including
New England Sports Network. It has also actively promoted <directbanking.com> by using
the Mark in print advertisements in The Boston Globe, The Boston
Business Journal and various local Massachusetts newspapers, as well as in
regional issues of national magazines Newsweek and Business Week. To attract technology-savvy banking
customers, the Complainant has also placed advertisements for its site at
<directbanking.com>
in high technology magazines such as PC Week.
Furthermore,
the Complainant has also advertised its site at <directbanking.com> over
the Internet by placing banner ads at
popular websites and portals such as
Yahoo!, America Online, <bankrate.com> and <quicken.com>. Finally, the Complainant has also placed
highly visible outdoor billboards promoting <directbanking.com> on
highways that surround
the metropolitan Boston area.
In
fiscal years 2000 and 2001, the Complainant spent US $1,000,000.00 and
$750,000.00, respectively, promoting <directbanking.com>
and the its
"directbanking" mark. The
Complainant has also expended US $1,600,000 alone building and promoting its
"directbanking.com" branch office in Boston. As a result of the Complainant's
promotional, its business through <directbanking.com> has grown to serve
clients in all fifty
states and in fourteen foreign countries.
On
October 29, 1999, the Complainant filed an application in the PTO to federally
register a stylized mark that includes the term
“directbanking.com.” In an office action dated December 14, 2000,
the examining attorney at the US PTO stated that the wording
"DIRECTBANKING.COM"
was merely descriptive and, as such, required the
Complainant to specifically disclaim any trademark protection for that term apart
from its stylized mark shown in the application. The Examiner set forth a properly worded disclaimer for the
Complainant to adopt. On January 5,
2001, the Complainant filed a response to the office action in which it
provided the required disclaimer and in the
language sought by the
Examiner. The disclaimer reads "No
claim is made to the exclusive right to use 'DIRECTBANKING.COM' apart from the
mark as shown.”
The
Respondent is a credit union based in Massachusetts and has its offices located
less than 10 miles away from the Complainant's
directbanking.com’s branch
situated in downtown Boston. Similar to
the Complainant, the Respondent allows its customers to perform various
personal banking functions over the Internet.
The Respondent operates its online financial services at its website
located at http://www.direct.com, and has apparently done so
since the
inception of its online financial services.
The Complainant and Respondent are direct competitors, offer similar online
financial services and compete for the same Boston area
banking customers.
Specifically,
the employees of the Polaroid Corporation founded the Respondent in 1953. It was then called “Polaroid Employees
Federal Credit Union.” Its field of
membership was limited at that time to Polaroid employees and their
families. See the affidavit, a copy of
which is annexed to the Response, of Mr. David C. Breslin, President and Chief
Executive Officer of the
Respondent.
The
Respondent changed its name in 1990 to "DIRECT Federal Credit Union"
to support a business strategy that the Respondent
developed by that time. The Respondent was then moving away from
using branch locations for individuals to interact with tellers and, in doing
so, had moved
to adopt a business plan involving direct banking. This form of banking included the following:
(a) encouraging
members to use direct deposits;
(b) encouraging
members to use the mail;
(c) expanding
the use of automatic teller machines;
(d) introducing
and then expanding touch-tone telephone banking;
(e) creating
a “call center” staffed by the Respondent's employees equipped with headsets
and computers to handle banking transactions
through telephone conversations
with members; and
(f) making available banking services
directly over the Internet through the Respondent's web site.
As
the Respondent expanded its services in the field of direct banking, it adopted
and has used the domain name <direct.com>,
which it obtained in
1996. The Respondent has operated a web
site with the domain name <direct.com> since 1998. The site makes clear from its welcoming page
that the Respondent is a "federally chartered credit union.” The site describes the Respondent's banking
services as “DIRECT access banking” and identifies those services as: “Call
Center, Direct
Deposit, ATM Card, Telephone Banking, Web Banking, Bank By
Mail.” The site further describes the
Respondent's call center under the heading “CALL 24 Telephone Banking.” The site includes the full text of the
“Direct.Com Web Banking Agreement & Schedule of Fees” which describes in
detail the types
of transactions that can be conducted using the Respondent's
web banking service.
As
a result of its business efforts, by the year 2000, the Respondent had grown to
become the seventh largest credit union in Massachusetts,
with more than 100
sponsor companies and approximately 35,000 members.
On
October 25, 1990, the Respondent filed an application with the PTO to
federally register as a word mark the terms “DIRECT Federal
Credit Union”,
claiming first use from April 1, 1991.
The PTO issued registration number 1,717,173 on September 15, 1992, for
that mark in the field of "federal credit union services". On April 17, 1991, the Respondent filed an
application in the PTO to federally register a mark that includes the words
“DIRECT Federal
Credit Union” and a logo, and claimed first use of April 1,
1991. The PTO issued registration
number 1,699,401 on July 7, 1992, for that mark in the field of
"credit union and related financial
services". Copies of the entries from the PTO TESS
system for these marks appear in Annexes B and C to the Response.
Since
1991, the Respondent has spent more than US $ 5,000,000 to advertise services
under its registered marks so as to for an association
in the public mind
between the word “DIRECT” and the Respondent's banking services.
In
1996, an individual then employed by the Respondent had a conversation with an
individual who had been his supervisor in another
financial institution and
was, at the time of the conversation, employed by the Complainant. In that conversation, the two agreed that
representatives of the Complainant could come to the Respondent's office in
Needham, Massachusetts,
to observe the direct banking services that the Respondent
was then providing. The planned visit
occurred shortly thereafter. The
Respondent gave the representatives of the Complainant a full tour of the
Respondent's Call Center and provided a full description
of the direct banking
services that the Respondent then provided.
At the time of the visit, the Complainant had not been using the term
“direct banking” in connection with its business. After that visit, the Complainant began using that term in
connection with its service offerings.
Other
entities have sought trademark protection for a mark that includes the term
“directbanking” or “direct banking”, specifically: the United Services Automobile Association (mark USAA
DIRECTBANKING, now registration
2,166,151 claiming first use of May 31, 1995), Chase Manhattan Bank (mark CHASE
DIRECT BANKING, now registration
2,436,735 claiming first use of September 17,
1999) and Raymond James Bank (mark RAYMOND JAMES DIRECT BANKING, registration
2,358,038
claiming first use of May 31, 1997).
All have expressly disclaimed any trademark protection for that term, in
identical language: “no claim is made
to the exclusive right to use ‘directbanking’ apart from the mark as
shown.” Copies of the entries from the
PTO TESS system for these marks appears in Annexes E, F and G to the Response,
respectively.
On
August 28, 2001, the Complainant submitted an Intellectual Property Claim to
Neulevel.com, the exclusive registry operator, for
"directbanking.biz"
On November 19, 2001, the Respondent
registered the disputed domain name <directbanking.biz> with the
Registrar. A copy of the WHOIS registration record for this name has been
supplied by The Forum. In response to
the registration, Neulevel.com placed the registration on “hold” and informed
the Complainant Five that the Respondent
had attempted to register a domain
name identical to the Intellectual Property Claim submitted by the Complainant
for its directbanking.com
mark.
On December 14, 2001, The Complainant
timely filed its STOP Complaint (ticket number 18G79F6cK9, challenge priority
First) with The
Forum to challenge the
Respondent's registration of the disputed domain name, and to which the
Respondent has timely responded.
Paragraph 15(a) of the STOP 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 STOP Policy requires that the Complainant must prove each of the
following three elements to obtain an order
that a domain name should be
transferred:
(1)
the domain name is identical to a trademark or service mark in which
the Complainant has rights;
and
(2) the Respondent has no rights or
legitimate interests in respect of the domain name; and
(3)
the domain name has been registered or is being used in bad faith.
Substantial
commonality exists between the ICANN policies governing both the Uniform Domain
Name Dispute Resolution Policy (“UDRP”)
and STOP proceedings. While relatively few, if any, STOP decisions
having been rendered to date, a corpus of several thousand UDRP decisions
currently exists
and which provides very useful guidance for many of the same
issues that arise under STOP. Hence,
the Panel, where appropriate and pursuant to paragraph 15(a) of the STOP Rules,
will exercise its discretion and rely on relevant
UDRP decisions as applicable
precedent here.
Identicality/Complainant's
rights in its mark
Under
the STOP proceedings, a STOP complaint, as here, may only be filed where the
disputed domain name is identical to a trademark
or service mark for which a
complainant has registered an Intellectual Property (IP) claim form. Therefore, every STOP proceeding necessarily
involves a disputed domain name that is identical to a trademark or service
mark in which
a complainant asserts rights.
The existence of the “.biz” generic top‑level domain (gTLD) in the
disputed domain name is not a factor, and hence is to be
ignored, in
determining whether a disputed domain name is identical or not to the mark in
which the Complainant asserts rights.
In that regard, UDRP panels ‑‑
including this one ‑‑ have repeatedly and uniformly held that gTLDs
are to be ignored in assessing
confusing similarity/identicality under
paragraph 4(a)(i) of the UDRP. See,
e.g., Ticketmaster Corporation vs. DiscoverNet, Inc. D2001‑0252
(WIPO Apr. 9, 2001) and Ticketmaster
Corporation v. Dmitri Prem, D2000‑1550 (WIPO Jan. 16, 2001).
Therefore,
as a threshold matter, identicality between the Complainant's mark and the
disputed domain name should never be an issue
in a STOP proceeding. It certainly is not here.
Given
this, the Panel faces the question as to whether the Complainant has rights in
the mark "DIRECT BANKING"; if it does
not, the Complaint must be
dismissed.
By
virtue of its active federal registration for the mark
"directbanking.com" though in stylized form, the Complainant has
rights in this particular mark. The
Panel has no reason, based on the very limited record before it, to doubt the
validity of the Complainant's registration.
However,
for federal purposes, the Complainant has expressly disclaimed any rights in
the words "directbanking.com" themselves. Regardless of the Complainant's reason behind the disclaimer,
i.e. as it suggests "solely for the purpose of obtaining approval
of this
application" (see the Complainant's Response filed January 5, 2001 in the
US PTO appearing in Annex H to the Response),
the fact is that the Complainant
acquiesced to the Examiner's request.
While doing so clearly did expedite approval of the application -- by
resolving an issue raised by the Examiner, nevertheless, this
acquiescence was
willingly made and manifested acceptance of a "bargain" offered by
the Examiner: disclaim the term and
the application will be approved. If the Complainant felt that the term was
not merely descriptive, then it should have rejected the Examiner's offer and
filed argumentation,
supplemented by appropriate and adequate evidentiary
proof, to the effect that the term "directbanking.com" was not
descriptive. It simply did not do so
and will be held to the consequences of its bargain.
In
viewing the effect of disclaimers, the US Circuit Court of Appeals for the
Eleventh Circuit in Lone Star Steakhouse & Saloon, Inc. v. Longhorn
Steaks, Inc. [1997] USCA11 496; 41 U.S.P.Q.2d 1896 (CA11 1997) stated at page 1902, quoting
from McCarthy on Trademarks and Unfair Competition (3d ed. 1992) at §
19.20 [1]:
"The
disclaimer does not have the effect of removing from the registered mark the
matter disclaimed. It disclaims only a claim
that the federal registration
gives an exclusive right in those disclaimed words or symbols per se. That
is, the applicant is merely stating
that he is claiming only the whole composite mark as his property, and makes no claim to those particular
portions disclaimed."
(emphasis
in original).
Hence,
for purposes of the present dispute, the Complainant's federal registration,
when viewed as a whole as it must be, i.e. necessarily
including the design
element, is not identical to the disputed domain name. In that regard, the Court in Lone Star
noted ibid that, when faced with a disclaimer to the word "CAFE"
by the plaintiff-registrant of a composite federal registration for
"LONE
STAR CAFE":
"The district court properly concluded
that the validity of Plaintiff's LONE
STAR CAFE mark is to be determined by viewing the trademark as a whole and not
just the words 'Lone Star.' Estate of P.D. Beckwith, Inc. v. Commissioner of
Patents, [1920] USSC 82; 252 U.S. 538, 545-46, [1920] USSC 82; 40
S.Ct. 414, 416-17, [1920] USSC 82; 64 L.Ed. 705 (1920) ("The commercial impression of a trade-mark is derived from it as a
whole, not from its elements separated
and considered in detail."); see
also California Cooler v. Loretto Winery, Ltd., [1985] USCA9 1877; 774 F.2d 1451, 1455 [ [1985] USCA9 1877; 227 U.S.P.Q. 808 ]
(9th Cir. 1985) [T]he validity of a trademark
is to be determined by viewing the
trademark as a whole.") (citing Union
Carbide Corp. v. Ever-Ready Inc.,
[1976] USCA7 139; 531 F.2d 366, 379; [1976] USCA7 139; 188 U.S.P.Q.
623 (7th Cir.), cert. denied, 429 U.S. 830, 97 S.Ct. 91, 50 L.Ed.2d 94 [191 U.S.P.Q. 416 ] (1976))."
In
In re K-T Zoe Furniture Inc. 29 U.S.P.Q.2d 1787 (CAFC 1994) (an appeal from a refusal by the Trademark Trial
and Appeal Board affirming a refusal by a Trademark Examiner to
permit federal
registration of a stylized form of the mark "THE SOFA AND CHAIR
COMPANY"), the Court stated at page 1789:
"The
purpose of the disclaimer practice is to enable, not to bar, registration. Although occasionally
criticized, e.g., Saul Lefkowitz,
‘Disclaimers--May They Rest in Peace’, 71 Trademark Rep. 215 (1981), the practice can facilitate the commercial
purposes of the trademark law, by enabling registration of a distinctive
style
of displaying words when the words themselves are not registrable. See,
e.g., In re Miller Brewing Co.,
226 U.S.P.Q. 666, 668 (TTAB 1985)
(configuration of disclaimed word "LITE" may be registered on Principal Register if the
style of lettering functions as a trademark). However, a distinctive
configuration of words
does not of itself impart registrability to the words
standing alone.”
Therefore, to
the extent the Complainant has any rights pertinent to the disputed domain
name, those rights must arise from its common
law rights. At first blush, the words "direct
banking" appear to immediately connote to this Panel a class of banking
services directly
rendered by a bank to its customers and as such seem to be
highly descriptive or possibly even generic.
However, the question as to whether a highly descriptive mark has
acquired, through promotional, advertising and other activities,
sufficient
distinctiveness in its marketplace (both as to territory and services offered)
as to have developed requisite secondary
meaning is by necessity a highly
factual one. A generic mark, not matter
how heavily it is promoted, is simply incapable of ever acquiring any
distinctiveness and, as such, is
unable to ever attain trademark status at
common law.
Even
though a textual component of a stylized mark may be disclaimed as being
descriptive for federal purposes, the disclaimer does
not deprive the mark of
any common law rights it may have in the disclaimed matter. See Official Airline Guides, Inc. v. Goss
8 U.S.P.Q. 1157, 1158 (CA9 1988).
However, to acquire common law
rights, the mark, as perceived by its consumers, must be shown to have acquired
distinctiveness. As textual portions of
a mark become increasingly descriptive of the associated goods or services,
increasingly more evidence is required
to show that the mark, as perceived by
its consumers, has acquired requisite secondary meaning in the minds of those
consumers.
The
Panel notes that given the highly descriptive nature of these terms
"direct" and "banking", bordering possibly
on being
generic, the Complainant faces an extremely heavy, and possibly insurmountable,
burden of proof in showing that its composite
mark, "directbanking",
and as perceived and understood by its consuming public, has acquired requisite
distinctiveness
and hence secondary meaning so as to afford it common law
protection. Such proof is lacking
here. The Complainant has submitted no
survey, testimony by individual consumers or other evidence directly probative
as to how consumers
perceive its "directbanking" mark, whether as a
descriptive/generic term indicative of a class of banking services, or,
as is
necessarily the case with a service mark, as a source identifier associating
those services with the Complainant and only the
Complainant as their
source. Secondary meaning can also be
shown indirectly through circumstantial evidence, such as the nature and extent
of advertising and promotion
of the mark, and the efforts made to promote a
conscious connection by the public between the mark and the source of the
product
or service, but doing so requires at least some evidence that consumers
associate the mark with the source. Although such circumstantial
evidence of
the pervasiveness of the mark may support a conclusion that the mark has
acquired secondary meaning, such evidence cannot
stand alone.
See
Yankee Candle Co. v. Bridgewater Candle Co. 59 U.S.P.Q. 2d 1720, 1730-1731
(discussed in the context of trade dress)
Unfortunately,
summary ICANN arbitration proceedings, such as STOP and UDRP proceedings,
simply do not accord the parties an adequate
opportunity to construct a
sufficiently well‑developed record to permit a Panel to rule on whether a
mark, particularly one
that is arguably highly descriptive as here, has become
sufficiently distinctive and hence susceptible of common law protection. As such, ICANN proceedings, as this one is,
are inappropriate vehicles for deciding such issues.
Notwithstanding
the inadequacy of the record and the Panel's inability to decide the existence
of common law rights, as will be seen
below, this issue is moot given the
Panel's finding on rights and legitimate interests.
The
Panel's inquiry now turns under the Policy to assessing whether the Respondent
has rights and legitimate interests in the disputed
domain name. If the Respondent has such rights and
legitimate interests, then, under paragraph 4(a)(ii) of the Policy, the Panel
must dismiss the
Complaint and permit no subsequent challenges, as against this
Respondent, to the disputed domain name.
Alternatively, if the Respondent does not possess any rights or
legitimate interests, the Panel directs its inquiry, under paragraph
4(a)(iii)
of the Policy, to determining whether the Respondent has registered or is using
the disputed domain name in bad faith.
The
record before this Panel is clear and undisputed that the Respondent has been
offering banking services that are encompassed by
the descriptive phrase
"direct banking" since 1991 -- a market which the Complainant did not
enter until 1995. In fact, the record
shows that the Complainant and Respondents are competitors -- providing highly
similar, if not identical banking
services, with the Complainant, in fact,
having visited the Respondent in 1996, i.e. five years after the Respondent
started offering
its banking services, to ostensibly learn about the direct
banking services which the Respondent then offered and specifically how
the
Respondent then provided those services.
It
simply makes no sense to this Panel to preclude the Respondent from registering
and using a domain name that accurately describes
the type of banking services
it offers. To do anything else would be
to deny a domain name registrant, and correlatively the Internet community, if
not the public at large,
of the benefit of using a term, consistent with its
common ordinary meaning that accurately describes that registrant's services;
to do otherwise would unjustifiably withdraw such terms from the public
lexicon. Furthermore, this view is
particularly telling inasmuch as the Respondent (not the Complainant) is the
party which first registered
the name.
Therefore,
regardless of whether the Complainant is ultimately able to prove it has any
common law rights in simply the term "directbanking"
standing alone
-- and the Panel seriously questions whether it will ever be able to do so,
clearly the Respondent by providing such
services for several years prior to
the time the Complainant entered the market
is certainly and legitimately entitled to utilize a domain name, here
<directbanking.biz>, that merely but accurately describes its own
service offerings.
In
finding rights and legitimate interests, the Panel notes that under the
language of paragraph 4(c) of the STOP, the specific examples
of a respondent's
conduct in paragraphs 4(c)(i-iii) that would demonstrate its having rights and
legitimate interests in a disputed
domain name are not exhaustive. While none of these specific examples seem
to directly apply here, nevertheless the Panel finds support for its finding of
such rights
and legitimate interests here under the broad inclusive provision
of paragraph 4(c), namely: "Any of following circumstances,
in particular but
without limitation shall
demonstrate ... rights or legitimate interests" [emphasis added].
Thus,
this Panel concludes that the Respondent has rights and legitimate interests in
the disputed domain name under paragraph 4(a)(ii),
and specifically paragraph
4(c), of the Policy.
Inasmuch
as the Panel believes, as discussed above, that the Respondent has rights and
legitimate interests in the disputed domain
name when it registered the
disputed domain name and continued using it, the Panel finds that the
Respondent's actions do not evince
bad faith use or registration of the
disputed domain name under paragraph 4(a)(iii) of the Policy.
DECISION
In
accordance with paragraphs 10 of the Policy and 15 of the STOP Rules:
(a)
the relief sought by the Complainant is hereby denied; and
(b)
the relief requested by the Respondent is hereby granted, i.e., the Panel orders that the Complaint be dismissed.
Further,
inasmuch as the Panel finds that the Respondent does have rights and legitimate
interests in the disputed domain name, the
Panel orders that no subsequent STOP challenges to this
domain name, as against the present Respondent, will be permitted.
Peter L. Michaelson, Esq., Panelist
Dated: February 15, 2002
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