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IndyMac Bank, F.S.B. v. Jim Kato [2003] GENDND 954 (6 October 2003)


National Arbitration Forum

DECISION

IndyMac Bank, F.S.B. v. Jim Kato

Claim Number: FA0308000190366

PARTIES

Complainant is IndyMac Bank, F.S.B., Pasadena, CA (“Complainant”) represented by B. Brett Heavner, of Finnegan Henderson Farabow Garrett & Dunner LLP.  Respondent is Jim Kato, Fountain Valley, CA (“Respondent”).

REGISTRAR AND DISPUTED DOMAIN NAME 

The domain name at issue is <loanwerks.com>, registered with Intercosmos Media Group, Inc. d/b/a Directnic.Com (hereafter “Directnic.Com”).

PANEL

The undersigned certifies that he has acted independently and impartially and to the best of his knowledge has no known conflict in serving as Panelist in this proceeding.

Tyrus R. Atkinson, Jr., as Panelist.

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum (the “Forum”) electronically on August 21, 2003; the Forum received a hard copy of the Complaint on August 22, 2003.

On August 22, 2003, Directnic.Com confirmed by e-mail to the Forum that the domain name <loanwerks.com> is registered with Directnic.Com and that the Respondent is the current registrant of the name. Directnic.Com has verified that Respondent is bound by the Directnic.Com 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 August 25, 2003, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of September 15, 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@loanwerks.com by e-mail.

A timely Response was received on September 5, 2003, but was not in compliance with UDRP Rule #5 and Forum Supplemental Rule #5. The Panel chooses to consider Respondent’s non-compliant submission in this dispute.

Complainant’s Additional Submission was received and determined to be in compliance with Forum Supplemental Rule #7 on September 10, 2003.

On September 22, 2003, pursuant to Complainant’s request to have the dispute decided by a single-member Panel, the Forum appointed Tyrus R. Atkinson, Jr., as Panelist.

RELIEF SOUGHT

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

PARTIES’ CONTENTIONS

A. Complainant

B.

Complainant is one of the leading mortgage lenders in the United States with earnings of  $143 million in 2002.

Complainant offers multi-channel distribution of its mortgage products and services through a nationwide network of mortgage brokers, mortgage bankers, and community financial institutions, in addition to programs offered directly to consumers through realtors and homebuilders.

Complainant has used the LOANWORKS Marks for several years as the principal trademarks for its mortgage origination services.  In April 2000, Complainant established a separate division called LoanWorks to identify Complainant’s Business-to-Realtor services.  Under its LOANWORKS Marks, Complainant provides online mortgage application services, mortgage loan advance approval letters, and customized loan rates, fees and cost estimates.  Complainant showcases its LOANWORKS services at its website located at the domain name <loanworks.com>.

Having continuously identified Complainant’s services since 1997, and having been promoted and advertised on Complainant’s website and other websites, Complainant’s LOANWORKS Mark has become famous in the financial services community, and enjoys favorable public acceptance and recognition.

Complainant is owner of numerous trademark registrations, including U.S. Registration No. 2,238,058 for the mark LOANWORKS, filed February 19, 1997, issued April 13, 1999, covering services in mortgage lending and banking; and U.S. Registration No’s. 2,238,162; 2,238,221; and 2,341,182, all for the mark LOANWORKS for various financial services relating to mortgage lending and banking.

Complainant owns the domain name <loanworks.com>, which was registered on April 2, 1997, and which has been used to identify Complainant’s website since on or about that date.

HomeSafe Mortgage was one of Complainant’s Broker Associates, and is owned by Respondent.  A Broker Associate is a mortgage broker that has been licensed by Complainant to use Complainant’s electronic mortgage information transaction system to facilitate the processing of mortgage applications with Complainant.  Complainant has never authorized Respondent to use the LOANWORKS Mark in advertising or to register LOANWORKS-formative domain names.  The Customer Agreement between Complainant and Respondent specifically states that all intellectual property rights, including trademarks, belong to and will remain with Complainant.  Complainant signed the Customer Agreement on January 26, 1999.

The domain name <loanwerks.com> was registered in the year 1999 by Respondent’s wife, after the Customer Agreement between Complainant and Respondent, and was used for a website advertising the mortgage services of HomeSafe Mortgage.

Complainant sent several cease and desist letters to Respondent’s wife.  Thereafter Respondent’s wife transferred the domain name to Respondent on November 23, 2000.

Prior to the transfer in 2000, in the year 1999, the domain name was no longer connected to an active website and Respondent informed Complainant that he did not intend to use the domain name.  Complainant offered to purchase the domain name for $500.

In March 2003, Respondent offered the domain name for sale on the <loanwerks.com>  website.  In May 2003, Respondent again began using the domain name for his HomeSafe Mortgage website.

On June 25, 2003, Complainant notified Respondent that his use of the domain name continued to infringe on Complainant’s rights in the LOANWORKS Mark, and that his use of the domain name violated the terms of the Customer Agreement with Complainant.

Respondent replied and offered to sell the domain name to Complainant for $2,500.

Complainant terminated the Customer Agreement between the parties and thereafter Respondent again offered the domain name for sale to the general public on the Internet.

The domain name and trademark are confusingly similar.

Respondent has no rights or legitimate interests in the domain name.

Respondent registered and used the domain name in bad faith.

B. Respondent

Respondent contends that <loanwerks.com> is to be a financing arm for an e-commerce website at <speedwerks.com>.  <(S)peedwerks.com> is under restructuring.  The past and future website sells larger ticket automotive after-market items and some items will require financing, that is why we reserved the name <loanwerks.com>.  Due to <speedwerks.com> being completely overhauled and basically starting over, Respondent is willing to negotiate a fair price for the domain name.  Respondent’s counter offer of $2,500 was very reasonable and not excessive.

C. Additional Submissions

Complainant’s Additional Submission contends that Respondent did not file the required certification, which must be contained in all pleadings.  Complainant further contends that none of Respondent’s allegations are supported by any evidence and the claims are not credible.  Even if Respondent’s allegations were true, that would give Respondent no right to use the domain name to sell automotive products.

The offer to sell the domain name for $2,500 is in excess of out of pocket expenses and is evidence of bad faith.  Respondent was fully aware of Complainant’s LOANWORKS Mark before registration of <loanwerks.com> and thereafter and is intentionally attempting to attract Internet users to Respondent’s directly competing, commercial website by creating a likelihood of confusion with Complainant and its LOANWORKS Mark.  This, plus offering the domain name for sale on the Internet constitute textbook bad faith under the UDRP.

FINDINGS

1. Complainant is a corporation engaged in mortgage lending which has used the word, LOANWORKS as a mark since at least February 19, 1997, at which time Complainant filed registrations with the United States Patent and Trademark Office for the mark LOANWORKS.  The trademark LOANWORKS was issued to Complainant on April 13, 1999.

2. Respondent became a Broker Associate of Complainant by written contract on January 26, 1999.  The terms of the contract state that Respondent will not reproduce or use Complainant’s Marks or any mark, word or design confusingly similar to Complainant’s Marks in any manner other than as expressly authorized by Complainant.

3. On a date not exactly shown in the pleadings, but subsequent to January 26, 1999, Respondent’s wife registered the domain name <loanwerks.com>.

4. Respondent began to use the domain name <loanwerks.com> to promote his own business, HomeSafe Mortgage, on the Internet.

5. A series of cease and desist letters were dispatched to both Respondent and his wife which resulted in other kinds of communication between the parties regarding the domain name. Complainant offered to purchase the domain name for the sum of $500 from Respondent and his wife but the offer was refused.

6. On November 23, 2000, Respondent became owner of the domain name <loanwerks.com>. 

7. From the time of the cease and desist letters until March of 2003, the domain name was not in use.  In March 2003, Respondent offered the domain name for sale on the Internet (“loanwerks.com is for sale Interested parties should contact:  jkato777@aol.com”).

8. In May 2003, Respondent began using the domain name to refer Internet customers to Respondent’s HomeSafe Mortgage website.

9. After a series of communications between the parties wherein Complainant again protested the infringement of its trademark, the Customer Agreement between the parties was terminated. Respondent offered to sell the domain name to Complainant for $2,500. The offer was refused. Respondent again offered the domain name for sale on the Internet on or about August 14, 2003.

10. The domain name <loanwerks.com> is confusingly similar to Complainant’s mark, LOANWORKS.

11. Respondent has no rights to or legitimate interests in the domain name <loanwerks.com>.

12. The domain name <loanwerks.com> was registered and used 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 is required to prove this element. See Policy ¶ 4(a)(i).

 

The first showing to be made is that Complainant has rights in the trademark under consideration.   Complainant has done so in this case.  Complainant’s continuous and widespread use of the word LOANWORKS since 1997 and its registrations of the word with the United States Patent and Trademark Office establish rights in the LOANWORKS mark sufficient to satisfy this initial element.

Complainant also prevails on the issue of the confusingly similarity between the domain name <loanwerks.com> and Complainant’s mark, LOANWORKS.

The two are confusingly similar because the disputed domain name merely replaces the letter “o” with the letter “e”.  Misspelling words and adding letters to words does not create a distinct mark.  See Sports Auth. Mich. Inc. v. villagewebsmith, FA 175291 (Nat. Arb. Forum Sept. 3, 2003) which held that sportsawthority and sports authority are confusingly similar because of the replacement of “u” with “w”.  See also Hewlett-Packard Co. v. Zuccarini, FA 94454 (Nat. Arb. Forum May 30, 2000) comparing <hewlitpackard.com> to HEWLETT-PACKARD.  See Disney Enters., Inc. v. Zuccarini, D2001-0489 (WIPO June 19, 2001) to review a series of one letter misspellings and substitutions which were found to cause the domain names and trademark to be confusingly similar.

Furthermore, <loanwerks.com> and LOANWORKS are confusingly similar because they are phonetically similar. See Hewlett-Packard Co. v. Cupcake City, FA93562 (Nat. Arb. Forum Apr. 7, 2000) finding that a domain name which is phonetically identical to a trademark is confusingly similar the trademark. See also VeriSign Inc. v. VereSign C.A., D2000-0303 (WIPO June 28, 2000).

Complainant prevails under Policy¶ 4(a)(i).

Rights or Legitimate Interests

Complainant bears the burden of proving that Respondent has no rights or legitimate interests with respect to the domain name. See Policy ¶(4)(ii).  Policy ¶ 4(c) instructs a Respondent on how to demonstrate rights to and legitimate interests in the domain name in responding to a Complaint.  Various Panels have interpreted the Policy to state that once Complainant makes a proper showing, that the burden shifts to Respondent to make a showing of Respondent’s rights to and legitimate interests in the disputed domain name.

Reference to the Findings and to the Contentions of Complainant, which were supported by letters, website printouts, contracts signed by the parties, and other evidence, make a showing satisfactory to the Panel that a prima facie case has been made to the effect that Respondent has no rights to or legitimate interests in the domain name in question.

Respondent’s Response was a simple e-mail asserting that the domain name was to be used for financing automobile parts and that the $2,500 sales price demanded by Respondent was fair and reasonable.  There are no supporting documents, affidavits, or other evidence of any kind included in the Response supporting the bare allegations of Respondent.

The first question to be decided is whether to consider the Response at all.  The Response does not include the required certification as mandated by Rule 5(b)(viii).  Complainant contends that the Response should not be considered and the case should be decided in a default posture. See Talk City Inc. v. Robertson, D2000-0009 (WIPO Feb. 29, 2000) which concluded that no weight would be afforded to the facts alleged in Respondent’s deficient submission, partly because it did not contain any certification that the information contained in the e-mail was, to the best of Respondent’s knowledge, complete and accurate in accordance with Rule 5 (b)(viii).  See also Schott Glas v. Necschott, D2001-0127 (WIPO March 14, 2001).

However, a Panel may choose to consider a deficient Response in reaching the decision on the grounds that completely rejecting a Response because of formal deficiencies is an extreme remedy not consistent with the basic principles of due process. See Strum v. Nordic Net Exch. AF, FA102843 (Nat. Arb. Forum Feb. 21, 2002).

It makes no difference to the outcome in this proceeding whether the Response is considered or not considered. “Where a complainant has asserted that the respondent has no rights or legitimate interests in respect of the domain name, it is incumbent upon the respondent to come forward with concrete evidence rebutting this assertion.  This information is uniquely within the knowledge and control of the respondent.  Failure of a respondent to come forward with such evidence is tantamount to admitting the truth of complainant’s assertions in this regard.”  “Concrete evidence constitutes more than personal assertions.” See Do The Hustle, LLC v. Tropic Web, D2000-0624 (WIPO Aug. 21, 2000).

Since Respondent has offered the barest of personal assertions in this domain name dispute and no concrete evidence that the assertions are true, Respondent cannot prevail.

Complainant prevails under Policy¶ 4(a)(ii).

Registration and Use in Bad Faith

It is the responsibility of Complainant to prove that the domain name has been registered and is being used in bad faith. See Policy ¶ 4(a)(iii).  Complainant may prove this element in any of the ways set out in Policy ¶ 4(b), or by any other methods which illustrate Respondent’s bad faith registration and use.

Complainant produced as an exhibit a Customer Agreement between Complainant and Respondent, signed by both parties, wherein Respondent became a “Broker Associate” of Complainant.  The Customer Agreement gave Respondent a right to use Complainant’s services in pursuit of mortgage business.  The Customer Agreement quite clearly states that Respondent was not authorized to use Complainant’s marks, or any other terms or devices, which were confusingly similar to Complainant’s marks.  Complainant was then operating under the mark, LOANWORKS.  Within a matter of months, Respondent’s wife registered the domain name <loanwerks.com>.  The domain name was thereafter used to direct Internet customers to Respondent website for HomeSafe Mortgage, a business Respondent owns. 

Complainant contends that Respondent’s registration of an infringing domain name, in contravention of an agreement between the parties, and its subsequent use of the domain name without authorization by Complainant evidences bad faith use and registration.  Registration of a domain name in violation of a license agreement between the Complainant and Respondent that states that no use of the trademark is permissible without authorization is not only an intentional breach of contract but is evidence of bad faith registration.  See Heel Quik! Inc. v. Goldman, FA 92527 (Nat. Arb. Forum Mar. 1, 2000).  See also Associated Materials, Inc. v. Perma Well, Inc. FA 154121 (Nat. Arb. Forum May 23, 2003) which decided that respondent’s actual knowledge of Complainant’s rights in the ULTRAGUARD mark, inferred from the fact that Respondent was a distributor of Complainant, along with Respondent being on notice of its own lack or rights evidenced that the domain name was registered and used in bad faith.

There is no question that Respondent was fully aware of Complainant’s mark prior to the registration of the domain name, <loanwerks.com>.  There is no doubt that Respondent was bound by the terms of the contract between himself and Complainant which specifically prohibited the use and registration of a confusingly similar domain name without authorization by Complainant.  Notwithstanding such knowledge, Respondent registered and used the domain name in intentional violation of the contract between the parties.  That is evidence of bad faith registration and use sufficient to carry this element for Complainant.

The Panel notes that Respondent’s wife made the initial registration.  However, the domain name was thereafter used by Respondent on the Internet while registered to the wife. The inference is made that the registration was made with the knowledge of Respondent and for his benefit.  The conclusion is reached that Respondent was a party to the registration on principles of agency.

The evidence supports the finding that the domain name was registered in bad faith.  Respondent’s use of the domain name to direct Internet users to his website at HomeSafe Mortgage is bad faith use of the domain name.

The Panel does not consider the issues regarding offers to sell the domain name by Respondent to Complainant or to the general public, nor the offer made by Complainant to purchase the domain name from Respondent.  No evidence is presented to support the conclusion that the domain name was registered “primarily” for the purpose of selling or transferring the domain name.  See Policy ¶ 4 (b)(i).

It is unnecessary to consider Complainant’s argument that Respondent violated the bad faith provisions of Policy ¶4 (b)(iv).

Complainant prevails under Policy ¶ 4(a)(iii).

DECISION

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

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

Tyrus R. Atkinson, Jr., Panelist
Dated: October 6, 2003


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