DECISION

BeMusic, Inc. v. Music Trading On-Line (BVI) Ltd. c/o Music Trading On-Line (HK) Ltd.

Claim Number: FA0309000193874

PARTIES

Complainant is BeMusic, Inc., New York, NY (“Complainant”) represented by Andrew J. Wilson of Alston & Bird, LLP, 1201 West Peachtree Street, Atlanta, GA 30309. Respondent is Music Trading On-Line (BVI) Ltd. c/o Music Trading On-Line (HK) Ltd., Kwun Tong, Hong Kong (“Respondent”) represented by Dominic Bray of Nicholson Graham & Jones, 110 Cannon Street, London, England EC4N 6AR.

REGISTRAR AND DISPUTED DOMAIN NAMES

The domain names at issue are <cdwow.com>, <cd-wow.com>, <cdwow.net>, <cd-wow.net>, <cdwow.org> and <cd-wow.org> registered with Tucows, Inc.

PANEL

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

Panelists are Honorable James A. Carmody, Judge Daniel B. Banks, Jr. (Ret.) and Judge Karl V. Fink (Ret.) as Chair.

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum (the “Forum”) electronically on September 9, 2003; the Forum received a hard copy of the Complaint on September 15, 2003.

On September 9, 2003, Tucows, Inc., confirmed by e-mail to the Forum that the domain names <cdwow.com>, <cd-wow.com>, <cdwow.net>, <cd-wow.net>, <cdwow.org> and <cd-wow.org> are registered with Tucows, Inc. and that Respondent is the current registrant of the name. Tucows, Inc. has verified that Respondent is bound by the Tucows, 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 September 18, 2003, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of October 8, 2003 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@cdwow.com, postmaster@cd-wow.com, postmaster@cdwow.net, postmaster@cd-wow.net, postmaster@cdwow.org and postmaster@cd-wow.org by e-mail.

A timely Response was received and determined to be complete on October 8, 2003.

Complainant’s timely additional submission entitled “Reply Submission of Complainant BeMusic, Inc.” was received on October 13, 2003 and was considered by the Panel.

Respondent’s timely additional response was received on October 13, 2003 and was considered by the Panel.

Complainant’s timely second additional submission dated October 17, 2003 was considered by the Panel.

Respondent’s timely second additional submission dated October 20, 2003 was considered by the Panel.

The Panel received additional information which was not submitted in accordance with the rules and the Panel did not consider that material.

On October 16, 2003, pursuant to Complainant’s request to have the dispute decided by a three-member Panel, the Forum appointed as Panelists are:  Honorable James A. Carmody, Judge Daniel B. Banks, Jr. (Ret.), and Judge Karl V. Fink (Ret.) as Chair.

RELIEF SOUGHT

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

PARTIES’ CONTENTIONS

A. Complainant

BeMusic is a wholly owned subsidiary of Bertelsmann AG, a privately owned German media corporation.  BeMusic is one of the largest music retailers in the world, operating both the online music retail site <cdnow.com> and retail music club BGM Music Service.  Between these enterprises, BeMusic is a global leader in direct-to-customer music distribution.

BeMusic launched <cdnow.com> in 1995.  At that time, <cdnow.com> was one of the Internet’s first online music retail stores.

<cdnow.com> has grown to become one of the largest and most recognized online retailers in the world.

BeMusic has engaged in substantial advertising to promote the goods and services it offers under its CDNOW Mark, both in the United States and internationally.

In recognition of the distinctiveness of the CDNOW Mark and BeMusic’s exclusive ownership thereof, BeMusic had been awarded numerous registrations for its mark around the world.  These registrations include Reg. No. 2,334,018 issued by the U.S. Patent and Trademark Office; Registration No. B10910/99 issued by the United Kingdom Patent Office; and Registration No. 2,256,638 issued by the Hong Kong Patent Office.

The registrant of the domain names at issue, <cdwow.com>, <cd-wow.com>, <cdwow.net>, <cd-wow.net>, <cdwow.org> and <cd-wow.org> (the “Domain Names” or the “CDWOW websites”), is Music Trading On-Line (BVI) Ltd. (“Respondent”).  Respondent is using the Domain Names to host an online music retailing business called “CD Wow!” that is directly competitive to BeMusic’s CDNOW service.

BeMusic’s Hong Kong counsel sent a cease and desist letter to Respondent on October 17, 2002.  To date, Respondent continues to conduct business using the Domain Names.

BeMusic owns valid and enforceable rights in the CDNOW Mark, which BeMusic acquired well prior to the date on which Respondent registered and began using the Domain Names.  Internet users who see the Domain Names are certain to associate them with BeMusic because the Domain Names are nearly identical in appearance, differing by only one letter.  The mere fact that the word “Wow” is a unique word in the English language does nothing to change the fact that the Domain Names, taken as a whole, are confusingly similar to the CDNOW Mark.

Respondent’s registration and use of a second-level domain that varies by only one letter from BeMusic’s famous CDNOW Mark is an obvious attempt to trade on the goodwill and fame of the CDNOW Mark.  Respondent has no connection or affiliation with BeMusic of any kind, and it has never received license or consent, express or implied, from BeMusic to use the CDNOW Mark in a domain name or in any other manner.

Respondent was on notice of BeMusic’s exclusive rights in the CDNOW Mark as a result of BeMusic’s prominent use and the federal and international registrations of its mark.

In light of the substantial fame of BeMusic’s mark, and the fact that Respondent is operating in the same retail segment as BeMusic and using the Domain Names to offer identical goods and service, it is inconceivable that Respondent could have registered and used the Domain Names without knowledge of BeMusic’s right in its CDNOW Mark.

Respondent has also used the Domain Names in bad faith, as shown by the fact that Respondent is using the Domain Names to host a website offering goods and online music retail services of the same kind as BeMusic, and to the same customer base as BeMusic.

By using the Domain Names to host a website offering goods and online music retail services identical to BeMusic’s, Respondent is using the Domain Names for its own profit.  Respondent is clearly profiting from sales made at its <cdnow.com> website, and such use constitutes bad faith commercialization of BeMusic’s famous mark.

B. Respondent

The domain name <cdwow.com> was registered on July18, 1997, before the registration dates of any of Complainant’s trademarks.  Complainant has failed to establish that it had any common law rights in the CDNOW name at that date.  No evidence or supporting documentation is provided to support the contention that CDNOW was well known before 1997.  It is denied that the award of trademark registration is in itself an indication of the reputation or goodwill residing in the mark CDNOW.

The Domain Names are fundamental to Respondent’s legitimate and long-standing business.

Complainant asserts that it has high sales volumes and site traffic.  There is no documentary evidence to support this.

Although CDNOW and CDNOW differ by only one letter this difference is still of significance.  While it is true that the two marks are visually similar, they are not confusingly similar.

No evidence of confusion has been supplied.  Complainant’s use of the mark and Respondent’s use of CDNOW have run in parallel for at least 3 years.  The total failure of Complainant to provide even a single instance of actual confusion on the part of the public during that time is a very strong indication that Respondent’s contention that confusion has not and will not occur is correct.

Respondent via MTO (HK) has been using the Domain Names to operate a business under the name CDWOW! since February 2000.  The business of MTO (HK) is commonly known by the name CDWOW.

Complainant had no applicable rights at the relevant date.  Respondent did not knowingly select a name that was confusingly similar.

By the date of Complainant’s letter before action, dated October17, 2002, Respondent had been trading from the domain names in dispute for more than 2 years.  Respondent had invested a considerable sum in building up its business and established a substantial customer base.  Complainant then waited nearly 12 months more before making its Complaint, (9 months since the last correspondence from Respondent and nearly a year since the last letter from Complainant).  In circumstances of such delay it would be unconscionable for Complainant to be allowed to deprive Respondent of the fount of its business, its domain names.

C. Additional Submissions

Complainant

There can be little dispute that the Domain Names are confusingly similar to BeMusic’s CDNOW Marks.  The time that Respondent registered the first contested domain name, 1997, the <cdnow.com> website was one on the most well-known and trafficked websites in the world.

By April 1997, CDNOW.COM was averaging about one million hits at its website per month, and was filling more than 1,000 online customer orders per day.  It is virtually impossible that Respondent was not familiar with CDNOW.COM, an industry leader in the very market that Respondent allegedly intended to enter, by the time Respondent registered <cdwow.com> in July 1997.

The panel should consider the visual and phonetic similarity between the Domain Names and the CDNOW Mark, as well as the substantial likelihood that Internet users would be confused by this similarity.

There is direct evidence that Respondent has deliberately selected its name to capitalize upon the substantial fame that BeMusic has developed in the CDNOW Mark.  In its HTML code, Respondent incorporates the CDNOW mark, as well as the famous mark of BeMusic’s strategy partner AMAZON, as metatags imbedded within its code.  This unauthorized use is in clear bad faith.

Respondent

Due to the international nature of the business, “WOW” meant the same in many languages and was widely understood throughout the world.  “WOW” was a word of exclamation and amazement.  We wanted people to think “WOW! What a great website”.  So far as we were aware there was no other online business at the time (i.e. in 1997) which had a similar name.  The existence of a company using the name CDNOW was utterly irrelevant to our choice of trading name.

Since its launch in February 2000, CDWOW! has been very successful.  It has built up a substantial and loyal customer base with a reputation for providing a quality product and service which is widely recognized in many countries throughout the world.

The visitor numbers in July 2003 to our website were approximately 745,000.

Details of traffic for the <cdwow.com> domain name for the period June-September 2003 shows page impressions of around 14 million per month and unique visitors ranging from 830,000 (August 2003) to just over 1 million (September 2003).

CDWOW! has established an extensive and legitimate business operation operating under the Domain Names and has achieved a considerable degree of recognition and goodwill in the online market place.

At the time that we launched our business, CDNOW was a relatively small internet sale site offering services primarily aimed at the U.S. market.  The offerings and the concept behind the two businesses are very different.

CDWOW! offers a highly focused selection of CDs targeting the buyer of contemporary chart music.

CDNOW no longer appears to be pushing its own brand.  All traffic to <cdnow.com> is diverted to Amazon, where CDNOW branding is very peripheral and the offering is subsumed amongst the Amazon look and feel.

An unrelated third party registered the domain name <cdwow.com>.  UPI purchased the domain name from that third party in June 2000 and subsequently transferred ownership to Respondent.

The only relevance of the dates is to the existence or otherwise of Complainant’s right in the mark.  Respondent submits that the relevant date continues to be the date of registration of the domain name.  If the registration was legitimate at the registration date, then from that date the use, including the transfer of the domain name to Respondent, was also legitimate.

This is not a matter appropriate for arbitration but one that should be addressed at a hearing that allows a full examination for the factual issues and appropriated disclosure, pleadings and oral submissions.

Since Complainant, by its own evidence, had no trademark registrations until March 1999 it is unclear how Complainant can make reference to such a mark being in use since 1995.  If by “trademark” Complainant refers to the common law rights that may have accrued in the name “CDNOW” then it is plain that the existence of such right, their extent and their date of acquisition (if acquired) is in dispute.

Without evidence of how the mark has been used in practice, no conclusion can safely be drawn as to whether the goodwill in the business attaches to the mark.

Respondent did not begin trading from <cdwow.com> until February 2000, although Respondent did carry out a soft launch in November 1999 with test purchases being conducted in November and December 1999.  <cdwow.com> was not registered until September 1999.  Accordingly, there was no delay and it is denied that Respondent “sat on” the domain name.

The mere fact that Respondent was aware of the existence of a similar trading name being used by a company that operated in the same field as Respondent does not mean that Respondent acted in bad faith when it chose its domain name.

Respondent has selected its name because it is a combination of a descriptive element “CD” and a distinctive element “WOW”.  There is no basis for suggesting that Respondent has deliberately aimed to take advantage of a misspelling.

Complainant has still not provided evidence of a single instance of confusion despite more than three years of contemporaneous trading.

Complainant’s Complaint is ill-founded because it has not established that it had rights it could rely upon at the relevant date (i.e. 1997).  The delay on the part of Complainant is unconscionable and it should not be allowed to deprive Respondent of the primary outlet for its goods and services three years after the start of trading and six years after the first registration of the <cdwow.com> domain name.

FINDINGS

For the reasons set forth below, the Panel finds Complainant has not proven that the domain names should be transferred.

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.

Identical and/or Confusingly Similar

For Complainant to prevail, it must prove all 3 elements.  Because of the Panel’s rulings on the issues following, the Panel makes no ruling on this issue.

Rights Or Legitimate Interests

Respondent has been using the disputed domain names in relation to its online CD sales business since February 2000, over 3 years before the Complaint was filed.  The Panel finds that Respondent’s use of the domain names represents a bona fide offering of goods or services under Policy ¶ 4(c)(i). See Modern Props, Inc. v. Wallis, FA 152458 (Nat. Arb. Forum June 2, 2003) (finding that Respondent’s operation of a bona fide business of online prop rentals for over two years was evidence that Respondent had rights or legitimate interests in the disputed domain name); see also Verkaik v. Crownonlinemedia.com, D2001-1502 (WIPO Mar. 19, 2002) (finding that Respondent’s use of the disputed domain name to make a bona fide offering of services bestowed rights and legitimate interests in the domain name).

Complainant has not proven this element.

Registration and Use in Bad Faith

Respondent registered <cdwow.com> over 2 years before the existence of the UDRP.  Respondent has been operating a legitimate online CD sales business under the disputed domain names for several years. The Panel finds that the domain names were neither registered nor used in bad faith because the domain names were registered and used in connection with a legitimate business. See Schering AG v. Metagen GmbH, D2000-0728 (WIPO Sept. 11, 2000) (finding that Respondent did not register or use the domain name <metagen.com> in bad faith where Respondent registered the domain name in connection with a fair business interest and no likelihood of confusion was created); see also Mule Lighting, Inc. v. CPA, FA 95558 (Nat. Arb. Forum Oct. 17, 2000) (finding no bad faith where Respondent has an active website that has been in use for two years and where there was no intent to cause confusion with Complainant’s website and business).

Complainant has not proven this element.

Laches

The Panel additionally finds that Complainant’s delay in bringing its Complaint could constitute laches and be a bar to any relief.  Respondent’s business has grown during the years since it began using the domain names.  Substantial hardship could result if it would be ordered to transfer those names.  Such relief should only be granted after a full court proceeding.

DECISION

Since Complainant has not established all three elements required under the ICANN Policy, it is ORDERED that Complainant’s request that the <cdwow.com>, <cd-wow.com>, <cdwow.net>, <cd-wow.net>, <cdwow.org> and <cd-wow.org> domain names be transferred is denied.

Honorable James A. Carmody, Panelist

Judge Daniel B. Banks, Jr. (Ret.), Panelist

Judge Karl V. Fink (Ret.),Chair

Dated:  November 10, 2003

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