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DJR Holdings, LLC v. Paul Gordon a/k/a IQManagement Corporation [2003] GENDND 225 (4 March 2003)


National Arbitration Forum

DECISION

DJR Holdings, LLC v. Paul Gordon a/k/a IQ Management Corporation

Claim Number: FA0301000141813

PARTIES

Complainant is DJR Holdings, LLC, New York, NY (“Complainant”) represented by Brad D. Rose, of Pryor Cashman Sherman & Flynn, LLP.  Respondent is Paul Gordon IQ Management Corporation, Ladyville, BZ (“Respondent”) represented by Ari Goldberger, of ESQwire.com Law Firm.

REGISTRAR AND DISPUTED DOMAIN NAME 

The domain name at issue is <defjamsouth.com>, registered with Key-systems Gmbh.

PANEL

The undersigned certify that each of them has acted independently and impartially and to the best of his or her knowledge has no known conflict in serving as Panelist in this proceeding.

Anne M. Wallace, Q.C., James A. Carmody and David Sorkin as Panelists.

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum (the “Forum”) electronically on January 10, 2003; the Forum received a hard copy of the Complaint on January 8, 2003.

On January 13, 2003, Key-systems Gmbh confirmed by e-mail to the Forum that the domain name <defjamsouth.com> is registered with Key-systems Gmbh and that the Respondent is the current registrant of the name.  Key-systems Gmbh has verified that Respondent is bound by the Key-systems Gmbh 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 January 16, 2003, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of February 5, 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@defjamsouth.com by e-mail.

A timely Response was received and determined to be complete on February 5, 2003.

Complainant filed a timely Additional Submission on February 10, 2003.  Respondent filed a timely Additional Submission on February 12, 2003.

On February 19, 2003, pursuant to Complainant’s request to have the dispute decided by a three-member Panel, the Forum appointed Anne M. Wallace, Q.C., James A. Carmody and David Sorkin as Panelists.

RELIEF SOUGHT

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

PARTIES’ CONTENTIONS

A. Complainant

DEF JAM RECORDINGS (“DEF JAM”) was founded in the early 1980s. DEF JAM’s business in producing, promoting and releasing rap, hip-hop and “R & B” styles of music. DEF JAM has launched the careers of some significant performers in the history of rap music. Complainant owns several DEF JAM marks and has authorized Universal Music Group the sole and exclusive use of the marks on and in connection with recorded and live music. The DEF JAM “family” of marks include DEF JAM, DEF JAM RECORDINGS, DEF JAM SOUTH, DEF JAM SOUTH RECORDINGS, DEF POETRY JAM, DEF COMEDY JAM and DEF JAM UNIVERSITY. Complainant asserts that these marks have come to signify Complainant as a source of high quality entertainment and urban lifestyle products and services. Complainant filed evidence to show widespread use of the DEF JAM family of marks.

DEF JAM SOUTH was launched in 1999 as a “Southern division” of DEF JAM, which consisted of talented rap artists from the South with a unique style of rap music.

Respondent registered the name <defjamsouth.com> with actual knowledge of Complainant’s successful and highly publicized entertainment business including DEF JAM and DEF JAM SOUTH. Respondent has no rights or legitimate interests in the domain name because its registration infringes Complainant’s family of DEF JAM marks. At the time of registration of the domain name, Respondent knew of Complainant’s business, its trademarks, its domain name and website located at defjam.com and Complainant’s growing label DEF JAM SOUTH.

Complainant produced evidence of nineteen DEF JAM SOUTH trademark and service mark applications and registrations filed in the United States Patent and Trademark Office (“USPTO”). Complainant also produced evidence of trademark registrations for many of the other marks in the DEF JAM family.

Respondent registered <defjamsouth.com> on July 23, 2002, two decades after Complainant first began using and promoting its DEF JAM label and family of DEF JAM marks and three years after Complainant launched the record label DEF JAM SOUTH at a time when the DEF JAM SOUTH artists had sold collectively over six million albums. The domain name is identical to Complainant’s DEF JAM SOUTH mark in sound, appearance, meaning and overall commercial impression.

Respondent is not known as or doing business as DEF JAM or DEF JAM SOUTH. When unsuspecting consumers encounter Respondent’s web link, they will erroneously believe that Complainant has authorized or is sponsoring the auctioning off of its DEF JAM and DEF JAM SOUTH products on eBay when no such sponsorship or authorization exists.

Respondent has no rights or legitimate interests in the domain name because Respondent’s registration has been and continues to be in violation of Complainant’s prior and paramount trademark rights. Respondent is using the domain name to compete with Complainant by selling Complainant’s own products. Since DEF JAM dates back to 1982 and DEF JAM SOUTH dates back to 1999, Complainant has established prior and paramount rights.

Respondent’s use of the domain name cannot be considered legitimate under Policy ¶ 4(c). Respondent is not using the name in connection with a bona fide offering of goods or services because Complainant has not licensed use of the trademark to Respondent. Furthermore, Respondent’s use cannot constitute fair use of the domain name since Respondent does not use the domain name for purposes of comparative advertising, news commentary or reporting. Rather, Respondent is using the domain name to profit from Complainant’s successful products sold under its famous trademarks by reselling these products on eBay via a domain name that incorporates Complainant’s DEF JAM SOUTH mark.

Complainant also points out that in an attempt to resolve the matter amicably, Complainant contacted Respondent regarding its infringing activities and requested transfer of the domain name to Complainant. The offer was rejected by Respondent and Respondent has continued to sell Complainant’s products via its web link. Complainant asserts that these actions establish that Respondent’s only interest in the domain name is to capitalize on and profit from the success and notoriety of Complainant who is the rightful owner of the trademarks DEF JAM and DEF JAM SOUTH.

When Respondent registered the disputed domain name on July 23, 2002, Complainant was already the owner of all of the trade and service mark applications for its family of DEF JAM marks, including its DEF JAM SOUTH mark, and had already sold millions of record albums worldwide under those marks. Respondent’s activities reselling DEF JAM products for inflated prices in eBay, combined with Complainant’s international publicity, leads to the obvious conclusion that Respondent had actual knowledge of Complainant at the time Respondent registered the domain name and that Respondent intended to profit from the success of Complainant and its famous family of DEF JAM marks. A rudimentary search of the USPTO would have revealed Complainant’s numerous DEF JAM and DEF JAM SOUTH trademark registrations and applications. A simple search in the Internet would have directed Respondent to Complainant’s website and to multiple references to DEF JAM and DEF JAM SOUTH.

Respondent is intentionally attempting to profit from its bad faith registration. Complainant’s marks are valuable commercial assets, Complainant had expended substantial amounts of  money promoting its DEF JAM SOUTH and DEF JAM record labels, Complainant has applied for registration of its marks in USPTO and Respondent is using the disputed domain name to sell Complainant’s products bearing DEF JAM and DEF JAM SOUTH trademarks without permission.

B. Respondent

Respondent assets that it registered the <defjamsouth.com> domain name for the purpose of promoting DEF JAM and DEF JAM SOUTH merchandise on the eBay Internet auction site.

Respondent asserts that the <defjamsouth.com> domain name registration predates Complainant’s DEF JAM SOUTH registered mark (registered January 28, 2003), and that Complainant has failed to establish a common law interest in the mark prior to the domain name registration date. Complainant has no enforceable rights with respect to DEF JAM SOUTH because the domain name pre-dated Complainant’s interests.

Respondent further submits that the DEF JAM mark is generic because it is slang meaning, “first rate musical performance.” Therefore, Respondent contends that the Complaint should be dismissed because Complainant has no “protectible” legal interest in the term.

Respondent argues that it has a legitimate interest in the domain name to use it to sell used/second hand genuine goods branded with DEF JAM marks. Respondent contends use of the domain name to direct traffic to an eBay auction website is a legitimate use because there is no confusion as to whether the goods are being directly distributed by Complainant.

Respondent submits that it does not intend to cause source or sponsorship confusion. It directs to an eBay auction website that is not in any way connected to Complainant. Respondent asserts that nothing on Respondent’s auction website would cause a consumer to believe that the DEF JAM related goods are being sold directly by Complainant.

Respondent asserts there is no evidence Respondent intended to sell the domain name to Complainant, to prevent Complainant from reflecting its trademark in a domain name, to disrupt Complainant’s business or to confuse consumers. There is no doubt the eBay site is operated by eBay and that no consumer could possibly be confused that the website is associated with Complainant.

Both Complainant and Respondent cited numerous cases in their submissions. The Panel has considered these in coming to our conclusions.

C. Additional Submissions

Both Complainant and Respondent filed additional submissions. The Panel has considered the Complainant’s additional submission to the extent it is a reply to issues raised by Respondent, including the fair use defense which the Complainant could not reasonably have anticipated in the Complaint. The Panel has considered the Respondent’s additional submission to the extent Respondent answered Complainant’s allegations with respect to counterfeit merchandise, again, because Respondent could not reasonably have anticipated those allegations.

Complainant

In its additional submission, Complainant asserts that some of the goods offered at the eBay auction website are counterfeit merchandise. Complainant says that Complainant never manufactured, licensed or otherwise authorized the production and/or sale of any DEF JAM pendants and yet DEF JAM  pendants are available for sale on the eBay site accessible via <defjamsouth.com>. In addition, the eBay site lists DEF JAM VENDETTA games for sale. Complainant is in process of creating games under this moniker; however, these items have not yet been released and in fact are not even finished being manufactured. Accordingly, these items are either counterfeit or illegally diverted product. Therefore, Complainant contends Respondent is using Complainant’s trademark to redirect users looking for genuine DEF JAM or DEF JAM SOUTH products to a site that auctions off counterfeit DEF JAM merchandise.

Complainant argues that Respondent does not merely sell DEF JAM SOUTH products, but also numerous products associated with the DEF JAM family of marks and thus it is not necessary that Respondent use the registered DEF JAM SOUTH mark for its domain name. Complainant further argues that Respondent’s sale of goods related to a variety of DEF JAM marks and to the counterfeit nature of the foods defeats Respondent’s fair use argument.

Complainant also asserts that Respondent has engaged in a pattern of, without permission, registering domain names that reflect the trademarks of others. Complainant cites V & S Vin & Spirit Aktiebolag v. IQ Management Corp. FA 98440 (Nat. Arb. Forum Sept. 14, 2001) where Respondent registered the domain name <absolutbeach.com> which is identical to Complainant’s famous mark ABSOLUT. Similar to this case, Respondent, among other things, argued that he was making fair use of the German dictionary word ABSOLUT and the English dictionary word BEACH. The Panel, in ordering the transfer of the domain name, found that Respondent had no rights or legitimate interests in the domain name since it was not licensed to use the mark ABSOLUT nor was currently known by that name.

Complainant also cites Fatbrain.com Inc. v. IQ Management Corp., FA 96374 (Nat. Arb. Forum Feb. 28, 2001), where Complainant filed a complaint to recover the domain name <clbooks.com>, which was identical to Complainant’s trademark. In that case Respondent was using the domain name, much as he is using the disputed domain name in this case, i.e. to redirect Internet users to a website at search .vu which offered products that were in direct competition with Complainant’s products. Respondent argues it had rights and legitimate interests in the domain name because he registered it with the express intention of operating an e-commerce website relevant to one of the domain names generic meanings. He also claimed that he did not know of Complainant’s use of the clbooks.com mark or its registration.  The Panel found that “Respondent has no rights or legitimate interests in the domain name in question because Respondent is not commonly known by the domain name, nor has Respondent used the domain name in connection with a legitimate noncommercial or fair use without intent for commercial gain.” The Panel noted that Respondent registered the domain name to intentionally deprive Complainant of Internet traffic intended for Complainant and to attract for commercial gain Internet users to its website or other online location by creating a likelihood of confusion with Complainant’s mark.

The panel in Fatbrain also noted that Respondent had demonstrated a pattern of conduct by registering domain names comprised of infringing marks, which prevents trademark owners from reflecting their marks in corresponding domain names. Complainant submits that a similar conclusion can be reached in this case.

Respondent

Respondent repeats that DEF JAM is a generic term, that Respondent has a legitimate interest in the domain name by virtue of pointing it to the eBay site, that no one would confuse Respondent as being endorsed by Complainant and there is no evidence that Respondent registered or used the name in bad faith.

Respondent asserts that the link to eBay is a nominative fair use in connection with the sale of related merchandise. With respect to the allegations of sale of counterfeit merchandise, Respondent asserts that it has not counterfeited this merchandise. Respondent makes no certification as to the authenticity of the products available at eBay. Regardless of Respondent’s use of the domain name, those foods will continue to be sold by third parties at eBay, so the nature of the listings on eBay is not something for which Respondent can be held culpable.

Respondent asserts that the cases cited by Complainant to establish a pattern of bad faith registration bear no relevance to this matter. Respondent says the only time other proceedings are relevant is where they can demonstrate that a respondent engaged in a pattern of registering domain names in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name. Respondent argues for various reasons that the panels in the two cases were wrong in their decisions. Respondent asserts that these cases do not establish the requisite pattern to establish bad faith registration.

FINDINGS

The Panel finds as follows:

1. The domain name <defjamsouth.com> is identical to Complainant’s mark, DEF JAM SOUTH.

2. Respondent does not have rights or legitimate interests in the domain name.

3. Respondent registered and is using the domain name in bad faith.

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

Complainant has established registered rights in the mark DEF JAM. Complainant has filed nineteen trademark applications for DEF JAM SOUTH, all of which pre-date Respondent’s registration of the disputed domain name. While Respondent’s registration of the disputed domain name pre-dated the only registered mark for DEF JAM SOUTH, the other applications were already filed, and Complainant submitted sufficient evidence to establish that Complainant has been using the DEF JAM SOUTH mark since as early as 1999. This Panel is satisfied that for purposes of the UDRP, Complainant has established common law rights in DEF JAM SOUTH prior to Respondent’s registration. That being the case, the Panel finds that the disputed domain name is identical to a trademark in which Complainant has rights.

Even if that were not the case, many of Complainant’s registrations for the DEF JAM mark existed long before Respondent registered the disputed domain name. All Respondent has done in this case is add the word SOUTH to Complainant’s mark. In our opinion, DEF JAM SOUTH is, in any event, confusingly similar to DEF JAM.

Respondent has argued that DEF JAM is a generic term meaning “first rate musical performance,” and that therefore, Complainant has no “protectible” legal interest in the term. Suffice it to say here that the USPTO has on numerous occasions in evidence before us found DEF JAM to be sufficiently distinct to grant trademark rights in the term to Complainant.

Complainant has established the first element under the Policy.

Rights or Legitimate Interests

While we have noted and considered all of Respondent’s arguments, the Complainant’s arguments in this case are more compelling. Applying the tests set out in Policy ¶ 4(c) to this case, we find that Respondent does not have rights or legitimate interests in the domain name.

Respondent is using the disputed domain name to redirect web traffic to eBay, and does not claim to have contemplated any other use of the name.  There is no indication that Respondent has any connection to either eBay or the sellers of items listed for sale on eBay.  Respondent's actions do not qualify as a use "in connection with a bona fide offering of goods or services."

It is also clear that Respondent has never been commonly known by the domain name.

Lastly, Respondent has not established that he is making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain.  Respondent claims that his sole intent with regard to the disputed domain name is "supporting a market for the second-hand sale of Def Jam products."  The Panel does not find this claim credible. After considering all of the evidence before it, the Panel believes it to be more likely than not that Respondent's intentions involve commercial gain, either by using the domain name to promote his own merchandise (on eBay or elsewhere); or, more likely, by holding onto the domain name until he receives a sufficiently profitable purchase offer from Complainant.  In either case, the Panel considers Respondent's present activities to be merely pretextual, and therefore insufficient to support a finding of rights or legitimate interests.

Registration and Use in Bad Faith

With respect to this element, paragraph 4(b) of the Policy reads:

“For the purposes of Paragraph 4(a)(iii), the following circumstances, in particular but without limitation, if found by the Panel to be present, shall be evidence of the registration and use of a domain name in bad faith:

(i) circumstances indicating that you have registered or you have acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or

(ii) you have registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that you have engaged in a pattern of such conduct; or

(iii) you have registered the domain name primarily for the purpose of disrupting the business of a competitor; or

(iv) by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your website or other on-line 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

Complainant filed no fewer than 19 trademark applications for the DEF JAM SOUTH mark which mark Complainant has been using since 1999 and in relation to which mark more than six million albums have been sold.  Shortly after the trademark applications were filed, Respondent registered <defjamsouth.com> and began using it to link to the eBay auction site. While Respondent argues that the intent in registering the disputed domain name was to create a link to a place where DEF JAM fans could buy DEF JAM second hand or used DEF JAM products at less than regular prices, this Panel has concluded that we can reasonably infer from the circumstances of this case that Respondent registered the disputed domain name primarily for the purpose of selling it at a premium to Complainant or a competitor of Complainant. On this basis, we find bad faith registration and use under Policy ¶ 4(b)(i).

Two members of the panel also find that Complainant has established that Respondent has engaged in a pattern of registering domain names that reflect trademarks owned by others. In spite of Respondent’s arguments to the contrary, Respondent has been found to be deliberately choosing famous marks to incorporate into domain names. In this case he chose a mark that has been used extensively by Complainant for several years and which is the subject of at least 19 trademark applications. He obviously knew about the trademark since the sale on eBay of DEF JAM and DEF JAM SOUTH products is his alleged purpose in registering the disputed domain name. The other two cases demonstrate that Respondent has done this on at least two other occasions. From this pattern of conduct, we can infer that his purpose in so doing is to prevent the owner of the trademark from reflecting that mark in a corresponding domain name. This conclusion is also consistent with our conclusion that the purpose was also to sell the domain name. On this basis, two members of the Panel find bad faith under Policy ¶ 4(b)(ii).  

Lastly, while this case does not fall within Policy ¶ 4(b)(iii) or (iv), the Panel finds bad faith on another basis. Under the UDRP, the Panel is entitled to conclude that there is bad faith for some reason other than the four enumerated circumstances in which a finding of bad faith is required. On our reading of the Policy, each panel is responsible to determine whether there has been bad faith. The four examples enumerated in Policy ¶ 4(b) are situations where, if the evidence exists, the Panel must find bad faith. This does not, however, preclude the Panel finding that other circumstances amount to bad faith in a particular case. The paragraph says, "in particular but without limitation."

In this case, the Panel finds it difficult to accept that Respondent could register and make any use of the disputed domain name in the manner in which he is using the name without creating a false impression of some association with Complainant. While Respondent argues that no one would be confused because the domain name connects directly to eBay, we do not agree. A reasonable person using the Internet could easily get the false impression that the DEF JAM and DEF JAM SOUTH products offered on eBay are being offered for sale by Complainant. This definitely creates confusion as to the affiliation of the eBay website with the Complainant. Furthermore, Complainant submitted unrefuted evidence that Internet users diverted to the eBay webpages in question are being exposed to counterfeit DEF JAM and DEF JAM SOUTH products, with the result that some members of the public may be confused as to the sponsorship of the site and the goods, thereby tarnishing Complainant’s reputation because of the counterfeit products.

By using <defjamsouth.com>, Respondent is essentially making a false representation that the consumer is being led to legitimate DEF JAM and DEF JAM SOUTH products when in fact this is not the case. This means the web surfer is being presented with a site that is not one hundred percent what the domain name suggests. This is in fact false advertising whether or not Respondent is one of the sellers on eBay.

By registering and using the disputed domain name in this fashion, Respondent is engaging in bad faith. For all the reasons outlined, therefore, Complainant succeeds on this element as well.

DECISION

We find in favor of the Complainant in this case and order that the domain name <defjamsouth.com> be transferred to Complainant.

Anne M. Wallace, Q.C., Panel Chair
Dated: March 4, 2003


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