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Sharman License Holdings, Limited v. KazaaLite.com Inc. [2004] GENDND 1136 (9 August 2004)

1. The Parties

The Complainant is Sharman License Holdings, Limited, Port Vila, Vanuatu, represented by Genga & Associates, P.C., United States of America.

The Respondent is KazaaLite.com Inc., Nassau, Bahamas, represented by Online Media Law, PLLC, United States of America.

2. The Domain Name and Registrar

The disputed domain name <kazaalite.com> is registered with Tucows.

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on June 2, 2004. On June 2, 2004, the Center transmitted by email to Tucows a request for registrar verification in connection with the domain name at issue. On June 2, 2004, Tucows transmitted by email to the Center its verification response confirming that the Respondent is listed as the registrant and providing the contact details for the administrative, billing, and technical contact. The Center verified that the Complaint satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (the “Policy”), the Rules for Uniform Domain Name Dispute Resolution Policy (the “Rules”), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (the “Supplemental Rules”).

In accordance with the Rules, paragraphs 2(a) and 4(a), the Center formally notified the Respondent of the Complaint, and the proceedings commenced on June 7, 2004. In accordance with the Rules, paragraph 5(a), the due date for Response was July 17, 2004. The Response was filed with the Center on July 17, 2004.

The Center appointed Ross Carson as the sole panelist in this matter on July 26, 2004. The Panel finds that it was properly constituted. The Panel has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, paragraph 7.

The Complainant filed a Supplemental Filing on August 2, 2004. The Panel advised the Parties on August 3, 2004, that, pursuant to Rule 10 of the “Rules” that having regard to the fact that the proceedings take place with due expedition, there were not exceptional circumstances warranting the acceptance of the Supplemental Filing.

4. Factual Background

The Complainant Sharman License Holdings Limited is the registrant or applicant for the trademark and service mark KAZAA or KAZAA AND DESIGN. Particulars of these trademarks and service marks are as follows:

KAZAA, Community Trade Mark Application No. 001786391filed August 1, 2000, for goods and services in Nice classifications 9, 35, 38, 41, 42. Annex F to the Complaint. The application was opposed by Speedware Software GmbH the owner of the trade mark CASA in relation to those goods and services in classes 9 and 42. By a decision dated May 17, 2004, OHIM rejected the application in respect of the contested goods and services and decided that the application may proceed with respect to the remaining goods and services of the application. Annex F to the Complaint, Annex No. 3 to the Response.

KAZAA, Benelux Trade Mark Application No. 1043348 filed May 11, 2003, for goods and services in classes 09, 35, 38, 41, 42. The trademark and service mark is registered as Registration No. 0747624. Annex F to the Complaint.

KAZAA, Australian Trade Mark Application No. 960655 was filed July 8, 2003, in classes 9, 35, 38, 41, 42. This application is under examination. Annex F to the Complaint.

The Complainant also states in the Complaint that the Complainant has filed an application in the United States for the trademark KAZAA AND DESIGN, Application No. 78295070, filed in International Classes 009, 025 and 038. The United States application was filed on September 02, 2003. The applicant named in United States Application No. 78295070 is SNL License Holdings Limited, a corporation incorporated in Australia. The address of the applicant SNL License Holdings Limited is in Port Vila, Vanuatu. The address of the applicant is substantially the same as the address for the Complainant, provided in the Complainant’s contact details in the Complaint. A non-final action was mailed to the applicant on March 15, 2004. Annex F to the Complaint. Annex No. 4 to the Response.

The Complainant is the registrant of the domain name <kazaa.com>. The Administrative Contact, Technical Contact and Zone Contact for the domain name <kazaa.com> is Sharman License Holdings Ltd. whose mailing address is in Port Vila, Vanuatu. The domain name <kazaa.com> was created on June 9, 2000.

The Respondent is the registrant of the domain name in dispute <kazaalite.com>. The domain name in dispute was created on March 22, 2002. Appendix A to the Complaint. Respondent states at page 7 of the Response that the Respondent has owned the <kazaalite.com> domain since January 2004, when the domain was acquired from a 3rd party.

In January 2002, Sharman Networks Limited purchased assets from the Dutch company Kazaa BV, including: (i) the user interface for the Kazaa Media Desktop (or “KMD”), the P2P application; (ii) the right to use the KAZAA mark when identifying and marketing KMD; (iii) the “www.kazaa.com” website” and related websites (including “www.desktop.kazaa.com”), which are used in connection with the KMD application for advertising and other purposes; and (iv) a license to certain software modules within the KMD application that SNL did not purchase. Complaint, para. ll; Annex No. 2 to the Response at pp. 2, 3; and Annex No. 1 to the Response at pp. 1, 2.

Based on data from “www.download.com”, Kazaa Media Desktop is the most popular downloadable software application in Internet history; in December 2003, it passed 300 million total downloads and, as of today, has been downloaded nearly 350 million times. See Annex C to the Complaint. Millions of users make multiple millions of files available to each other with KMD. See Annex D to the Complaint.

The Complainant Sharman License Holdings Limited submits that Complainant owns the trademarks and service marks of SNL, including the KAZAA trademarks and service marks through an acquisition of the mark by a related entity Sharman Networks Limited. Complaint p.5. The Respondent submits that the Complainant Sharman License Holdings Limited has not presented any documentation to record that the Complainant has authority to file the Complaint. Response pp. 3, 4. This issue will be addressed in the discussion and findings.

5. Parties’ Contentions

A. Complainant

Confusingly Similar

The Complainant submits that the domain names in dispute registered by the Respondent is confusingly similar to the Complainant’s trademark and service mark KAZAA. The Complainant submits that the trademark and service mark is a strong mark being a fanciful term which has been extensively used to identify and market software that enables peer-to-peer communications over the internet. The Complainant states that the Respondent uses the domain name in dispute to attract consumers to a site which offers peer-to-peer or file-sharing software to Internet users.

No Rights or Legitimate Interests

Complainant submits that the Respondent has no rights or legitimate interests in respect to the domain name in dispute.

Complainant submits that it knows of no evidence that, before any notice to the Respondent of the dispute, that Respondent used or demonstrably prepared to use the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services. Specifically, Respondent did not and do not offer the Kazaa software, and have had no license from Complainant to do so.

Complainant submits that it knows of no evidence the Respondent has been commonly known by the domain name in dispute. To the contrary, it is Complainant’s software that has been commonly and widely known by the trademark and service mark KAZAA.

Complainant further submits that the Respondent is not making a legitimate non-commercial or fair use of the domain name in dispute. Rather it is using the “Kazaa” name in association with Lite for commercial gain misleadingly to divert consumers to its site, charging a fee for access to file-sharing software that is not Kazaa Media Desktop or any licensed variation or derivative thereof. Complainant, by contrast, offers its software for download at no charge, and its efficacy and ease of use has resulted in nearly 350 million downloads of the software to date. Respondent’s offering of infringing software that is not licensed by Complainant, and charging a fee therefore, tarnishes the KAZAA mark.

Registered And Used In Bad Faith

The Complainant submits that the domain name at issue has been registered for improper purposes, including disrupting Complainant’s business. The Complainant further submits that Respondent has intentionally attempted to attract, for commercial gain, Internet users to its website by creating a likelihood of confusion with the Complainant’s KAZAA mark as to the source, sponsorship, affiliation, or endorsement of the Respondent’s site or of the product Respondent’ offers on its site. In addition, the term “Kazaa” is a non-generic, invented word. As such, it is not a term a domain name registrant would legitimately choose unless it was seeking to create an impression of an association with Complainant. Telstra Corporation Limited v. Nuclear Marshmallows, WIPO Case No. D2000-0003, paragraph 7.2;Union Electrica Fenosa v. Sydey Hussain, WIPO Case No. D2000-0893. Complainant submits it is clear Respondents registered their domain names in bad faith.

B. Respondent

Whether the Domain Name is Identical or Confusingly Similar to a Trademark or Service Mark in which the Complainant has Rights

The Respondent submits the following issues for consideration by the Panel under the Policy, paragraph 4(a)(i):

(i) Complainant has not established that it is the holder of the rights it seeks to assert.

(ii) The trademark KAZAA is used by the Complainant in relation to unlawful software or an illegal service and does not constitute a basis for an enforceable right.

(iii) The relief requested by the Complainant should be denied for failure to fully disclose to the Panel the adverse status of two relevant trademark applications relied on by the Complainant.

(iv) Not Identical or Confusingly Similar

Following are the Respondent’s submissions with respect to the above noted issues numbered as (i) to (iv)

(i) The Complainant has not established that it is the holder of the rights it seeks to assert.

The Respondent submits that as set forth in numerous news reports, including the report submitted as Annex 1 to the Response, the Complainant is one in a long line of entities that has sought to profit from the distribution of “file-sharing software” that facilitates copyright infringement, while evading the jurisdiction of copyright lawsuits filed by media plaintiffs. The distributor of the software at “www.kazaa.com” is Sharman Networks Limited (“SNL”). SNL sells advertising based on the large number of users who download its “free” file-sharing software.

SNL is a defendant in Metro-Goldwyn-Mayer Studios Inc., v. Grokster, Ltd, et al., U.S.D.C. Central California Case No. CV 01-08541-SVW (PJWx) (herein, “the MGM case”). Annex 2 to the Response. In that case, District Court Judge Stephen V. Wilson determined in a written order issued on January 9, 2003, that “in January 2002, while related legal action was pending against it in the Netherlands, Kazaa BV … transferred the “www.kazaa.com” website and domain, and the Kazaa Media Desktop” to SNL, “a company organized under the island-nation of Vanuatu,” that “explicitly disclaimed assumption of any of Kazaa BV’s liabilities, including any liability arising from these lawsuits. Further, Judge Wilson found that “Sharman was apparently formed for the sole purpose of acquiring Kazaa BV’s key assets and taking over operation of the Kazaa system.” (Annex 2, page 27, line 26 – page 28, line 1.) Another defendant in the MGM case, LEF Interactive PTY, Ltd. (“LEF”), sought dismissal by arguing it was “a management company that merely provides services to other businesses ….” (Annex 2, page 39, lines 17 – 19.) Judge Wilson, however found that “Sharman’s activities are predominantly instigated or maintained by employees of LEF,” and there was a “tremendous degree of ‘merger’ between the two companies.” (Annex 2, page 45, lines 12 – 20.) Thus, in the MGM case, three different entities were sued as purveyors of KMD file-sharing software, and all three attempted but failed to escape the District Court’s jurisdiction by various ruses.

The Respondent further submits that the current Complainant is not Kazaa BV, or SNL, or LEF. but a fourth entity, Sharman License Holdings, Ltd. No documentation or other form of document has been presented to record that this Complainant has authority to file this Complaint. SNL’s operators have been cavalier about incurring copyright liability, and brazen in spinning out multiple entities in an effort to evade the consequences of their conduct. Accordingly, the Complainant should be required to submit into evidence, as a preliminary requirement to asserting the claim herein, a true copy of the instrument pursuant to which Complainant claims the right to prosecute this UDRP proceeding. Without that information, Complainant lacks standing to make a Complaint herein, and the matter should be dismissed on that ground without further inquiry.

(ii) The trademark or service mark KAZAA is used by the Complainant in relation to unlawful software or an illegal service and does not constitute a basis for an enforceable right.

The Respondent submits that it is axiomatic that trademarks protect commerce, which is to say, lawful commerce that is in compliance with all civil and criminal laws. SNL engages in commerce that may very well be illegal, for several reasons, as noted below.

SNL is a primary defendant in a copyright action in the United States, see Annex 2 to the Response. Judge Wilson, in his January 2003 ruling denying SNL’s motion to dismiss, found that “Sharman is and has been well aware of the charge that its users are infringing copyrights ….” (Annex 2, page 23, lines 1 – 4.) Judge Wilson’s cited ruling necessarily presumes that, if MGM and the other plaintiffs can prove what they allege (and what seems largely undisputed by SNL), the SNL may well be destroyed in a firestorm of copyright liability like the one that leveled Napster, the very first file-sharing service. (Annex 2, page 24, lines 7 – 12.)

The Respondent further submits that SNL is also the primary defendant in a copyright lawsuit pending against it in Australia. In connection with that lawsuit, the news has widely reported that the Australian court recently upheld the use of an Anton Piller order permitting the seizure of documents from the SNL headquarters, and ruled that they would be admissible in trial against the company for copyright infringement.

The Respondent further submits that ’Sharman Networks, Inc. distributes file-sharing software rife with “adware” and “spyware,” programs that invade user privacy using cookies to generate ad pop-ups and tracking statistics that Sharman Networks sells to generate revenue from the activities of its “free” users. As Judge Wilson found, “the advertising seen by users is served by third-party companies, which pay Sharman to bundle their advertising software with Sharman’s KMD.” See Annex 2 to the Response at page 15, lines 12 – 14.

The Respondent further submits that Complainant and SNL’s active evasion of jurisdiction in countries where it is happy to harvest millions of users is in itself an unethical business practice. SNL is brazenly arguing, against reason, that it has built a trademark by providing what may be unlawful products and services through a shifting array of corporate shells arranged to evade liability. Respondent submits that having taken no heed of the law, and acting everywhere in defiance of law, SNL should not be permitted to allow its new shell, the Complainant, to lift the UDRP as a sword against businesses that are offering file-sharing software that is both free and free of ad and spyware. To allow SNL this power would be to literally allow illegal commercial enterprises to stamp out lawful alternatives offered by responsible businesses. Accordingly, Complainant’s request should be denied on the grounds that it has no protectable right in any mark that might attach to the provision of an illegal service or the operation of an outlaw business entity.

(iii) The relief requested by the Complainant should be denied for failure to fully disclose to the Panel the adverse status of two relevant Trademark Applications relied on by the Complainant.

In Interactive Television Corporation v. Noname. Com, WIPO Case No. D2000-0358 (June 26, 2000), in denying the transfer of a disputed domain, the Panel noted “we are troubled by Complainant’s apparent lack of candor in not disclosing the Trademark Office Actions issued prior to the filing of this Complaint.” The Respondent submits that the Complainant in this matter has also not been candid with the arbitrator, leaving it to the Respondent to discover the true facts concerning the status of trademark applications by the applicant relevant to this proceeding in the European Union and the United States.

On May 17, 2004, the Office for Harmonization in the Internal Market (Trade Marks and Designs) Trademarks Department (“OHIM”) issued a decision denying a trademark application for “Kazaa”, ruling in favor of objector SpeedWare Software GmbH, which has German trade mark registration No. 300 18 460, of the word mark “CASA”. The Respondent submits that the Complainant failed to inform the Panel that the Community trademark application had been denied in an opposition decision.

The Respondent submits that the USPTO has two Kazaa trademark applications currently pending relevant to the claim asserted by Complainant herein. Both applications, under Serial Numbers 78295070 and 78295064, were submitted on September 2, 2003. With respect to both applications, the current status is listed as follows: “A non-final action has be mailed. This is a letter from the examining attorney requesting additional information and/or making an initial refusal. However, no final determination as to the registrability of the mark has been made.” The Respondent submits that the Complainant did not advise the Panel of the outstanding action.

The Respondent submits that the request for transfer should be refused for failure by the Complainant to make candid disclosure of all the facts relevant to fair adjudication of the claims.

(iv) Not Identical or Confusingly Similar

The Respondent submits that the term “kazaa” or any of the many other spellings of words that sound like it (see “www.kazaa.com”, “www.kaza.de”, and “www.kawza.com”) are generically descriptive of any number of file-sharing systems that are competing for consumer attention. Currently, a Google search for “kazaa” generates 15,700,000 results, while a search for “kaza” generates 9,670,000 results.

The Respondent submits that the domain name in dispute <kazaalite.com> is a suggestive mark that makes fair nominative use of the “kazaa” term. The Respondent submits that “Fair Use” of a trademark means that “competitors may use a rival’s trademark in advertising and other channels of communications if the use is not false or misleading.” New Kids On The Block v. News American Publishing, Inc., [1992] USCA9 2148; 971 F. 2d 302 (9 cir. 1992.)

Rights or Legitimate Interests (Policy, paragraph 4(a)(ii))

Respondent submits that before receiving any notice of the dispute, Respondent used the domain name in dispute with a bona fide offering of a file-sharing program that has no adware or spyware. The Respondent further submits that Sharman Networks’ file-sharing software is heavily loaded with privacy-invasive features that install themselves on the user’s computer, barrage with advertising, and mine their activities for saleable data. As these undesirable features have become known, some file-sharing products that wish to distinguish themselves by their lack of adware and spyware have adopted the suggestive “lite” term as part of their online distribution efforts. At this time, a Google search of “k” and “lite” jointly generates 9,600,000 results. (See also “www.dietk.com” and similar marks.) Sharman Networks, Inc. offers a version of its file-sharing software without adware and spyware for $29.95 USD at “www.kazaaplus.com/download. htm”.

Respondent has owned the <kazaalite.com> domain name since January 2004,when it was acquired for value, and has always operated a redirection service that directs all Internet traffic to a service that offers WinMX, a product that is described by its designers as follows: “ WinMX is a FREE file-sharing program like no other. It allows you to connect, download, and share files with MILLIONS of other users through the decentralized WinMX Peer Network. Once WinMX is installed, you’ll have access to one of the largest and most diverse networks of shared media files in the world. And unlike many other ‘peer to peer’ software providers, we respect your privacy and will never sell you out to spyware.”

Respondent submits that it had no knowledge about the dispute with SNL until receiving service by email of the Complaint herein on June 7, 2004. Accordingly, before the dispute herein arose, Respondent had used the domain in a bona fide offering of goods and services.

Respondent further submits that Respondent is making a commercial fair use of the domain name in dispute as a suggestive nominative trademark that accurately identifies Respondent’s commercial offerings as distinct from the Complainant’s.

Respondent submits that KazaaLite is a suggestive mark that makes fair nominative use of the “kazaa” term. “A suggestive mark requires imagination and perception to determine the nature of the goods or services”. Pet Warehouse v. Pets.Com, Inc., WIPO Case No. D2000-0105; Stix Prods., Inc. v. United Merchants and Mfrs., Inc., 295 F. Supp 479 (S.D.N.Y> 1968). KazaaLite as a suggestive term is very similarly formulated to the most famous suggestive mark of all – “the Uncola.” The Court of Claims and Patent Appeals held in response to the lawsuit of Coca-Cola that 7-Up was entitled to use the term notwithstanding its incorporation of a direct competitor’s mark within its own trademark. Coca-Cola v. Seven-Up Co., 497 F. 2d 1351 (C.C.P.A. 1974). It is clear from the plethora of information on the Internet, that Complainant’s KMD software is clearly identified with its drawbacks – rampant adware, spyware, and the exposure of users to litigation attacks by he same media plaintiffs who are suing SNL directly in the United States and Australia. Respondent’s mark, KazaaLite, is a suggestive mark that accurately communicates a simple concept: “More file sharing, with no adware or spyware, and no association with a pirate company infamously embroiled in copyright litigation.” This is accurate information that the trademark laws seek to further, not to obstruct. “Fair use” of a trademark means that “competitors may use a rival’s trademark in advertising and other channels of communications if the use is not false or misleading.” New Kids On The Block v. News American Publishing, Inc., [1992] USCA9 2148; 971 F.2d 302 (9^th Cir. 1992), citing Smith v. Chanel, Inc., 402 F. 2d 562 (9^th Cir. 1968) maker of imitation perfume may use original’s trademark in promoting product). Explaining its reasoning, the Ninth Circuit quoted Prestonettes, Inc. v. Coty [1924] USSC 81; 264 U.S. 359, 368, [1924] USSC 81; 44 S. Ct. 350, 351, [1924] USSC 81; 68 L. Ed. 731 (1924) for the precedent that trademark law does not allow a claimant to enshrine a word exclusively for its own use: “When the mark is being used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth.”

Respondent submits that Respondent has not misled the public, and has made fair use of the domain since before the dispute arose; accordingly Respondent submits that it has a legitimate right to the use of the domain as its own protected suggestive nominative mark.

Registered and Used in Bad Faith (Policy, paragraph 4(a)(iii))

Respondent submits that Respondent has never offered to sell the domain to the Complainant or SNL. It is also undisputed that Respondent did not register the domain to block the Complainant from reflecting the mark in a corresponding domain name, and has never engaged in such conduct. The Respondent directs Internet traffic to the vendors of a file sharing program that does not include adware or spyware. SNL’s business is only marginally the distribution of file-sharing software, and it is primarily gathering revenue through the sale of online advertising and the collection and sale of personal data obtained by invading the privacy of its users. Respondent therefore is not SNL’s competitor, and even if marginally so in some way there is no evidence that the domain name was registered by the Respondent primarily to disrupt its business.

The Respondent states that “www.kazaalite.com” website has always displayed a clear disclaimer of any association with SNL or KMD, which currently appears on the first page of the website in the following form: “This site is not affiliated with Sharman Networks and does not infringe on their copyrights!”

Respondent submits that where there is a disclaimer at all times in place on the disputed website, it negates any finding that Respondent registered the domain name in a intentional attempt to attract Internet users to the Respondent’s website by creating a likelihood of confusion with the Complainant’s mark. As the Panel made clear in Giddings & Lewis LLC v. Neal McKean et al, WIPO Case No. D2000-1150, a timely disclaimer that negates confusion is a powerful talisman against a finding of bad faith: “Lastly, and perhaps, most importantly, attributing bad faith to the Respondent would be difficult to reconcile with its early and diligent effort to distinguish itself from the Complainant through an appropriate disclaimer…”

6. Discussion and Findings

The Uniform Domain Name Dispute Resolution Policy, adopted by the Internet Corporation for Assigned Names and Numbers (ICANN) on August 26, 1999, (with implementing documents approved on October 24, 1999), is addressed to resolving disputes concerning allegations of abusive domain name registration. The Panel will confine itself to making determinations necessary to resolve this administrative proceeding. See Pet Warehouse v. Pets.Com, Inc., WIPO Case No. D2000-0105.

Paragraph 4(a) of the Policy establishes three elements that must be established by a Complainant to merit a finding that Respondent has engaged in abusive domain name registration, and to obtain relief. These elements are that:

(i) Respondent’s domain name is identical or confusingly similar to a trademark or service mark in which the Complainant has rights; and

(ii) Respondent has no rights or legitimate interests in respect of the domain name; and

(iii) Respondent’s domain name has been registered and is being used in bad faith.

Each of the aforesaid three elements must be proved by a Complainant to warrant relief.

A. Identical or Confusingly Similar to a Trademark or Service Mark in which the Complainant has Rights.

(i) The Respondent submits that Complainant has failed to establish that it is the holder of rights to prosecute this UDRP proceeding. The Complainant has established that it is the registrant of the trademark and service mark KAZAA registered as Registration No. 0747624 for goods and services in classes 09, 35, 38, 41, 42. Annex F to the Complaint. The Complainant is also the named applicant for the trademark and service mark KAZAA filed August 1, 2000, with OHIM in relation to goods and services in Nice classifications 9, 35, 38, 41, 42. Annex F to the Complaint. The Complainant has also established that it is the named applicant of Australian trademark and service mark application no. 960655 filed in Australia. Annex F to the Complaint. The Complainant is named as the registrant of the domain name <kazaa.com> which was created on June 9, 2000.

The registration of and application for the above noted trademarks and service marks and registration of the domain name<kazaa.com> by the Complainant support a finding that the Complainant has rights in the trademarks and service marks KAZAA. The Panel finds that the trademark and service mark KAZAA are used in association with software that enables peer to peer communication over the Internet. The Panel finds Sharman Networks Limited, which purchased assets from the Dutch company Kazaa BV in January 2002, including the user interface for the Kazaa Media Desktop, the P2P application and the Complainant are related entities. At page 3 of the decision of the United States District Court Central District of California, Annex No. 2 to the Response, on a motion by Defendant Sharman Networks Ltd.’s and others motions to dismiss, the Court found that Kazaa BV transferred ownership of key assets to Sharman Networks, Ltd. including the Kazaa Media Desktop (“KMD”) software.

The California Court also found (Annex 2 to the Response, p.3) that Sharman Networks Ltd., is a company organized under the laws of the island-nation of Vanuatu doing business primarily in Australia. As stated in paragraph 2 of the Complaint the Complainant, Sharman License Holdings Limited, is a company incorporated in Port Vila, Vanuatu and has its principal place of business in Sydney, Australia.

At page 5 of the Response the Respondent states that Sharman Networks, Ltd. is also the primary defendant in a copyright lawsuit pending against it in Australia. Both Sharman License Holdings Ltd. and Sharman Networks Ltd. are defendants in the action commenced by Universal Music Australia Pty. Ltd. in Australia. The Complainant states that Sharman Networks Ltd. is a related entity of the Sharman License Holdings Ltd. The Complainant and Sharman Networks Ltd., share the same address in Port Vila, Vanuatu.

The Panel finds that the Complainant Sharman License Holdings, Ltd. is the owner of the trademark and service mark registrations and applications for KAZAA in the Benelux, the Community and Australia. Annex F to the Complaint. The Complainant is also the Registrant of the domain name <kazaa.com>. The panel also finds that on a balance of probabilities the Complainant and Sharman Networks Ltd. are related entities.

The words in paragraph 4(a) of the “Policy” require that the Complainant have rights in a trademark or service mark upon which the Complainant relies. The Panel has found that the Complainant has rights in the trademark and service mark KAZAA which entitle the Complainant to commence this proceeding. It has been accepted in several decisions that a company related to a subsidiary or parent to the registered holder of a mark may be considered to have rights in the mark. Miel, Inc v. Absolute Air Cleaners and Purifiers, WIPO Case No. D2000- 0756; Grupo Televisa, S. A., Televisa, S.A. de C. V., Estrategia, S.A. de C.v., Videoserpel, Ltd. v. Party Night Inc., a/k/a Peter Carrington, WIPO Case No. D2003-0796.

The Panel finds that the Complainant has rights in the trademark and service mark KAZAA which entitle the Complainant to proceed under the “Policy”.

(ii) The Respondent submits that the trademark KAZAA is used by the Complainant in relation to unlawful software or an illegal service and does not constitute a basis for an enforceable right. The Respondent submits that the SNL file sharing technology is rife with “adware” and “spyware”, a program that invades user privacy using cookies to generate ad pop-ups and tracking statistics that Sharman Networks sells to generate revenue from the activities of its “free” users. The Respondent did not submit any authorities holding that the Complainant’s software was unlawful or illegal. The Panel does not accept Respondents submission that the SNL software is unlawful or illegal.

The Respondent also submits that the software associated with the Complainant’s trademarks and service marks may very well enable its users to infringe the copyrights of third parties. The Respondent submits that trademarks may only be protected when the goods or services associated with a trademark are used in lawful commerce.

The Panel finds that the Respondent has not established on the basis of the evidence that the SNL software is unlawful software or software used in unlawful commerce. Courts in a number of countries have held that the provider of peer to peer software is not a copyright infringer.

(iii) The Respondent submits that the Complainant should be denied the relief requested for failure to fully disclose to the Panel the adverse status of two relevant trademark applications relied on by the Complainant.

The Respondent submits that the Office for Harmonization In The Internal Market (Trade Marks And Designs) issued a decision denying the Complainant’s trademark application for KAZAA ruling in favor of the objector SpeedWare Software GmbH the owner of German Trade Mark Registration No. 300 18 460 for the mark CASA. A copy of the decision of the Opposition Division of OHIM is attached as Annex No. 3 to the Response.

A review of the opposition decision discloses that the Complainant’s application for the word KAZAA was to register the mark in relation to the goods and services in classes 9, 35, 38, 41 and 42. The opposition was limited to the goods and services in classes 9 and 42 of the Complainant’s application. At page 9 of the decision the Opposition Division held that it rejects the application for KAZAA for all the contested goods/services. The Opposition Division also found that the Applicant may proceed with the application for the remaining goods/services of the application. The opposition was based on likelihood of confusion of CASA and KAZAA.

The particulars of Community Application No. 001786391 for the trademark KAZAA provided to the Panel by the Complainant is part of Annex F to the Complaint. The data provided was taken from OHIM records on May 5, 2004. The OHIM records for May 10, 2004, disclose that there is an opposition pending against the Community application. Particulars of the opponent’s name and date of commencement of the opposition are also provided in the OHIM particulars of the application.

The Panel finds following the opposition decision that the Community Application for KAZAA remains pending in relation to the goods/services in classes 35, 38, 41. The decision in relation to classes 9 and 42 was based on likelihood of confusion. The Panel finds that the decision of OHIM in the opposition is not material with respect to the adjudication in this proceeding as the Complainant’s Community application for KAZAA remains pending in relation to classes 35, 38 and 41. Further, the Panel notes that the OHIM decision in the opposition was rendered fairly recently at a date after the Complainant had downloaded the OHIM particulars of the Community application.

The Respondent also alleges that the Complainant has failed to advise the Panel with respect to office actions pending in the USPTO on two KAZAA applications, Serial Nos. 78295070 and 78295064. The particulars of KAZAA application Serial No. 78295070 attached as part of Annex 7 to the Complaint, discloses at the bottom of page 2, that a non-final action was mailed to the applicant on March 15, 2004. The Respondent has not disclosed any substantially different information in Annex 4 to the Response.

The Panel finds that the Complainant has not shown any lack of candor in disclosing the outstanding office actions with respect to the two United States applications. The Panel, as stated above, notes that the two United States applications for KAZAA are filed in the name of SNL License Holdings Limited, a corporation incorporated in Australia, having the same address in Vanuata as the Complainant. In view of the fact that the Complainant is not the entity named as the applicant for the above noted U.S. Trademark Applications the Panel has not relied on the above noted United States Applications as being applications filed by the applicant.

(iv) Confusingly Similar

The trademark and service mark KAZAA is a created fanciful mark used to distinguish very widely used file-sharing software. Based on Annex C to the Complaint Kazaa Media Desktop has been downloaded nearly 350 million times. The trademark and service mark KAZAA has been in use by the Complainant since January 2002, and prior thereto was in use by the Complainant’s predecessor from sometime in the year 2000.The Respondent has owned the <kazaalite.com> domain since January, 2004. (Response, p.7)

The Respondent cites a number of domain names based on misspellings of the created word KAZAA to support a submission that KAZAA is generically descriptive of any number of file-sharing systems that are competing for consumer attention. The Respondent’s evidence does not support a finding that the trademark or service mark KAZAA is associated by the public with any peer to peer software other than the Kazaa Media Deskto (“KMD”) software. For a history of the (“KMD”) software see Annexes 1 and 2 to the Response.

The domain name in dispute <kazaalite.com> is comprised of the prefix “kazaa” and the suffix “ lite”.

The Panel finds that the addition of the suffix “lite” to the Complainant’s trademark and service mark KAZAA does not avoid a finding that the domain name in dispute is confusingly similar to the Complainant’s trademarks and service mark “KAZAA”. The suffix “lite” merely suggests a select version of Complainant’s software identified by the trademark and service mark KAZAA. The presence of a suffix does not prevent a finding of confusingly similar, see Yahoo! Inc. v. Jorge O Kirovsky, WIPO Case No. D2000-0428. Furthermore, the addition of the generic top level domain name “.com” does not avoid a finding of confusingly similar, see J. D. Edwards & Company v. Nadeem Bedar, WIPO Case No. D2002-0693.

The Panel concludes that the Complainant has proven that the domain name in dispute is confusingly similar to the Complainant’s trademarks and service mark KAZAA.

B. Rights or Legitimate Interests

Paragraph 4(a)(ii) of the Policy inquires as to whether or not the Respondent has any rights or legitimate interests vested in the domain name. Paragraph 4(c) of the Policy provides examples of circumstances that the Respondent can rely on to demonstrate the existence of such rights or legitimate interests: (i) use of, or preparations to use, the domain name in connection with a bona fide offering of goods or services; (ii) the fact that the Respondent has been commonly known by the domain name; and (iii) legitimate non-commercial or fair use of the domain name.

The Respondent acquired the domain name in dispute in January 2004. The Respondent submits that until receiving service of the Complaint herein on June 7, 2004, the Respondent had no knowledge about the dispute.

The Respondent has always displayed a clear disclaimer on the first page of its website in the following form: “This site is not affiliated with Sharman Networks and does not infringe on their copyrights!” The fact that the Respondent has used the disclaimer since commencement of use of the domain name in dispute shows that the defendant was aware of the fact that KAZAA was a well known trademark and service mark at the time that the Respondent commenced to use the disputed domain name incorporating the KAZAA mark as a prefix of the domain name in dispute.

The <kazaalite.com> domain resolves to WinMX. The Respondent in its disclaimer implies that WinMX software does not infringe Sharman Networks copyrights in Kazaa Media Desktop (“KDM”) software.

The Panel finds that the use of the domain name in dispute having the prefix KAZAA in association with file sharing software, which is not associated with Kazaa Media Desktop (KMD”) software, is not a use of the domain name in connection with a bona fide offering of goods ore services.

The Respondent submits that <kazaalite.com> is a suggestive term that makes fair nominative use of the “kazaa” term. The Respondent submits that the suffix “lite” is a suggestive term adopted by some distributors of shareware or file sharing products without adware or spyware.

The Respondent further submits that <kazaalite.com> is a suggestive nominative mark that accurately communicates a simple concept: “More file sharing, with no adware or spyware and no association with a pirate company infamously embroiled in copyright litigation.”

The Panel finds that KAZAA is a mark associated with Kazaa Media Desktop (“KMD”) software, which has no association with WinMX software, which allegedly does not infringe “KMD” software. The use of the domain name in dispute is not a fair use of a nominative mark because the prefix KAZAA is primarily associated in the minds of Internet users with Kazaa Media Desktop (“KMD”) software.

C. Registered and Used in Bad Faith

The Respondent has always operated a redirection service in association with the domain name in dispute since acquiring the domain name <kazaalite.com> in January 2004. As found above the redirection is to WinMX file sharing software which, as stated by the Respondent, is not affiliated with Sharman Networks and does not infringe on their copyrights. The Panel finds that the domain name in dispute states a connection with Kazaa Media Desktop (“KMD”) software which is strong evidence of an intent to intercept and siphon off traffic from its intended destination, Littleford Day Inc. v. NRM Equipment Company, WIPO Case No. D2004-0201.

The Complainant’s trademark and service mark are very well known with respect to P2P shareware. The Respondent acquired the domain name in dispute knowing of the success of KAZAA P2P shareware. The Panel finds that the Respondent acquired the domain name in dispute in 2004 knowing that it would attract internet users aware of KAZAA software; see Veuve Cliquot Ponsardin v. The Polygenix Group Co., WIPO Case No. D2000-0163; Parfums Christian Dior v. Javier Garcia, WIPO Case No. D2000-0226.

The Panel finds that the use of the domain name in dispute <kazaalite.com> to direct users looking for Complainant’s website to the website of a third party is strong evidence of an intent to divert traffic from its intended destination. See Littleford Day Inc. v. N R M Equipment Company, WIPO Case No. D2004-0201.

An entity attempting to inform Internet users that it was redirecting business to WinMX P2P shareware free or substantially free of “adware” and “spyware” would select a domain name such as <winmxlite.com>. The Panel does not accept the Respondent’s evidence that <kazaalite.com> is a suggestive normative term which informs software users that the software is file-sharing software with no adware of spyware, and no association with a pirate company embroiled in copyright litigation

The Respondent submits that since it has always displayed a clear disclaimer on the first page of its website, such a disclaimer negates any finding that the Respondent registered the domain name to attract Internet users to the Respondent’s website by creating a likelihood of confusion with the Complainant’s trademark or service mark.

A disclaimer does not overcome initial interest confusion in which an Internet web user is attracted to a website identified by a domain name including the prefix KAZAA, which the consumer associates with the Complainant. The consumer may realize, once at the website, that the site is not operated by the Complainant, but the consumer may continue and purchase the Respondent’s similar goods, thus profiting from use of the Respondent’s confusingly similar domain name. See Sharman License Holdings Limited v. KazaaPlatinum.com, WIPO Case No. D2004-0401.

The Panel finds that by using the domain names in dispute, the Respondent has intentionally attempted to attract, for commercial gain, internet users to its website by creating a likelihood of confusion with the Complainant’s trademark and service mark KAZAA as to source, sponsorship, affiliation, or endorsement of Respondent’s website or person to person shareware.

7. Decision

For all the foregoing reasons, in accordance with Paragraphs 4(i) of the Policy and 15 of the Rules, the Panel orders that the domain name <kazaalite.com> be transferred to the Complainant.

Ross Carson
Sole Panelist

Dated: August 9, 2004