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Western Research 3000, Inc. v. NEP Products, Inc. [2004] GENDND 1503 (5 November 2004)

World Intellectual Property Organization

WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Western Research 3000, Inc. v. NEP Products, Inc.

Case No. D2004-0755

1. The Parties

The Complainant is Western Research 3000, Inc., Westlake Village, California, United States of America.

The Respondent is NEP Products, Inc., Encino, California, United States of America.

2. The Domain Name and Registrar

The disputed domain name <magnarx.com> is registered with InnerWise, Inc. d/b/a ItsYourDomain.com.

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on September 16, 2004. On September 17, 2004, the Center transmitted by email to InnerWise, Inc. d/b/a ItsYourDomain.com a request for registrar verification in connection with the domain name at issue. On September 21, 2004, InnerWise, Inc. d/b/a ItsYourDomain.com 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 September 29, 2004. In accordance with the Rules, paragraph 5(a), the due date for Response was October 19, 2004. The Respondent did not submit any response. Accordingly, the Center notified the Respondent’s default on October 20, 2004.

The Center appointed M. Scott Donahey as the sole panelist in this matter on October 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.

4. Factual Background

No response was filed, so that all of the facts were supplied by Complainant, and those are sketchy.

The trademark at issue, MAGNA RX+, was applied for by Complainant on June 13, 2003, and registration issued on April 27, 2004, in connection with herbal supplements for use in enhancing male sexual performance. Complaint, Annex 3. Most of the relevant activities occurred prior to the date of application and registration of the mark.

Complainant first began using the mark on August 31, 2001. Sometime in October 2001 (between one and two months after Complainant’s first use of the mark) Complainant entered into a business relationship with an Arizona corporation for the production, distribution and promotion of products using Complainant’s trademark. It is not clear whether this “business relationship” was formalized by a contract.

Without Complainant’s consent (but apparently with Complainant’s knowledge), the Arizona corporation permitted Respondent to advertise and sell products using Complainant’s trademark through the medium of television. It is unclear precisely when this occurred, but apparently it was before October 31, 2001.

On October 31, 2001, without Complainant’s knowledge or consent, Respondent registered the domain name at issue. Complaint, Annex 1. Sometime later (and in any event before October 2002) Complainant became aware of the registration by Respondent of the domain name at issue, but did not object “because Complainant thought Respondent was selling Complainant’s goods on television and brand recognition with the domain name was desirable.” Complaint, at 9.

In approximately October 2002, Respondent ceased advertisement and sales of Complainant’s trademarked goods on television, and, without Complainant’s consent (but perhaps with Complainant’s knowledge) Respondent “began an Internet affiliate program” with a corporation based in Florida to begin selling Complainant’s trademarked goods over the Internet.

In approximately October 2003, Complainant notified Respondent that it objected to the “affiliate program” and requested that Respondent transfer the domain name at issue to Complainant. Complainant thereafter made repeated requests that Respondent transfer the domain name at issue, but Respondent has refused.

5. Parties’ Contentions

A. Complainant

Complainant contends that the domain name at issue is identical or confusingly similar to Complainant’s trademark. Complainant alleges that Respondent has no rights or legitimate interests in respect of the domain name at issue, and that Respondent is not commonly known by the domain name either as an individual or as a business entity. Finally Complainant contends that Respondent has registered and is using the domain name in bad faith in violation of paragraph 4(a)(iii) of the Policy.

B. Respondent

The Respondent did not reply to the Complainant’s contentions.

6. Discussion and Findings

Effect of Respondent’s Default

The Rules provide that in the event of a default, the Panel “shall proceed to a decision on the complaint.” Rule 14(a). Rule 14(b) provides that in a default situation “the Panel shall draw such inferences therefrom as it considers appropriate.” Thus a panel is mandated to exercise its discretion to draw “appropriate” inferences. In light of the Policy and the Rules, what inferences are appropriate to draw from a failure of a Respondent to file a response to a Complaint? In answering this question, the Panel is brought back to the burden of proof dilemma posed by the interplay of paragraphs 4(a) and 4(c) of the Policy. See, e.g., Do the Hustle, LLC v. Tropic Web, WIPO Case No. D2000-0624.

The Rules are designed to implement the Policy adopted by the registrars and made part of any registration agreement for the registration of a domain name in the generic Top Level Domains (“gTLDs”). Thus, the Rules are clearly the servant of the Policy.

Paragraph 4(a) of the Policy directs that the Complainant must prove each of the following:

(1) that the domain name registered by the Respondent is identical or confusingly similar to a trademark or service mark in which the Complainant has rights; and

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

(3) that the domain name has been registered and is being used in bad faith.

In the case of a Respondent’s default, to what degree may the Panel exercise its discretion to draw inferences to reduce or eliminate Complainant’s burden of proving each of the three required elements?

Some Panels have adopted the view that the mandate to exercise panel discretion to draw appropriate inferences, entitles a Panel to accept as true all allegations set forth in the Complaint, so long as such allegations, on their face, engender no substantial doubt. Randstad General Partner (U.S.), LLC v. Domains For Sale For You, WIPO Case No. D2000-0051. Other decisions have adopted this view, but have qualified it by adding that the Complainant must still establish a prima facie case. VeriSign, Inc. v. VeneSign C.A., WIPO Case No. D2000-0303.

At least one line of cases has held that a default by a Respondent is particularly relevant to the issue of bad faith registration and use. In this regard, the Panel has exercised its discretion to draw two inferences: “(i) the Respondent does not deny the facts which the Complainant asserts, and (ii) the Respondent does not deny the conclusions which the Complainant asserts can be drawn from these facts.” However, whether Respondent denies or does not deny the facts and assertions of the Complainant, in this Panel’s view, it is still the duty of the Panel to determine whether the Complainant has met the burden of proof set out in the Policy.

The Policy requires the Complainant to prove each of the three elements. Policy, paragraph 4. If the Complainant alleges facts that are clearly contradicted by information contained in the Annexes or in the Registrar’s report to the provider, whether the Respondent denies them or not, the Panel must determine that such assertions are not true. If the Complainant urges conclusions be drawn from the facts, which conclusions the Panel determines are unwarranted, the Panel must reject such conclusions, even where the Respondent has failed to deny them. In short, the Respondent’s failure to deny the facts advanced or the conclusions argued does not relieve the Panel of its obligation to insure that the Complainant has met its burden under the Policy.

Where then is the power to draw inferences conferred by Rule 14(b) to be exercised? It is the Panel’s belief that the proper area in which such discretionary power is to be exercised is in the interplay between paragraph 4(b)(ii) and 4(c) of the Policy. Paragraph 4(b)(ii) requires the Complainant to prove a negative, that the Respondent has no rights or legitimate interests in respect of the domain name. Paragraph 4(c) directs the Respondent “How to Demonstrate Your Rights to and Legitimate Interests in the Domain Name in Responding to a Complaint,” giving thereafter three non-exclusive ways in which a Respondent can “demonstrate [its] rights or legitimate interests to the domain name . . . .” Clearly, the Policy contemplates an obligation on the part of Respondent to come forward with evidence of rights and legitimate interests. While not a burden of proof, it is surely a burden or production. It is here where the Panel believes it to be “appropriate” to draw the inference that the Respondent has no rights or legitimate interests in respect of the domain name unless the Complainant, in its Complaint and/or its annexes, has asserted or set forth facts that demonstrate Respondent’s rights or legitimate interests. Absent such facts, Complainant has no obligation, where Respondent remains silent, to prove a negative. In all other respects the burden remains on the Complainant to prove its case.

A. Identical or Confusingly Similar

The Complainant has asserted that the domain name <magnarx.com> is identical or confusingly similar to Complainant’s trademark MAGNA RX+. Graphic elements, such as the plus sign, not being reproducible in a domain name are not considered in the assessment of identity. EFG Bank European Financial Group SA v. Jacob Foundation, WIPO Case No. D2000-0036. Accordingly, the Panel determines that the domain name at issue is identical to Complainant’s mark.

B. Rights or Legitimate Interests

Complainant has alleged that Respondent has no rights or legitimate interests in respect of the domain names at issue. Respondent has failed to formally respond. Therefore, applying considerations of Respondent’s default expressed two paragraphs above this paragraph, the Panel may infer that Respondent has no rights or legitimate interests in respect of the domain names at issue. Parfums Christian Dior v. QTR Corporation, WIPO Case No. D2000-0023.

C. Registered and Used in Bad Faith

Complainant has failed to allege and to establish facts sufficient to enable the Panel to find that Respondent has registered and is using the domain name at issue in bad faith. Respondent registered the domain name within two months of Complainant’s first use of its mark. Although Respondent was clearly aware of Complainant’s use of the MEGA RX+ mark in conjunction with the product Respondent was selling at the time that Respondent registered the domain name at issue, the mark had been in use for a very short time, and Complainant made no allegation that the mark had yet acquired secondary meaning, such that the trademarked product was associated with Complainant in the minds of consumers.

When Complainant learned of the registration, Complainant did not object “because Complainant thought Respondent was selling Complainant’s goods on television and brand recognition with the domain name was desirable.”¹ In approximately October 2002, Respondent ceased advertisement and sales of Complainant’s trademarked goods on television, and, without Complainant’s consent (but perhaps with Complainant’s knowledge) Respondent “began an Internet affiliate program” with a corporation based in Florida to begin selling Complainant’s trademarked goods over the Internet. In October 2003, some two years after Respondent registered the domain name at issue, Complainant objected and requested a transfer.

From the facts as set forth above, it is impossible to determine whether the domain name was registered and is being used in bad faith. For example, Respondent’s registration appears to have been done in good faith, and Complainant did not object to the registration when it learned of it. It is impossible to determine if Respondent’s current use of the domain may be permissible under the Policy without knowing more about the product or product(s) being offered for sale on the web site. There may also be a question of acquiescence, laches, or common law trademark, which questions may be so fact intensive as to be beyond the limited purview of the Panel. In short, Complainant has failed to carry its burden of proof.

7. Decision

For all the foregoing reasons, the Complaint is denied.

M. Scott Donahey
Sole Panelist

Dated: November 5, 2004

¹ In fact, Respondent's continuous use of the mark in its television advertisements and on its web site without objection from Complainant for some period of months may well have resulted in consumers associating Respondent as the source of the goods, rather than Complainant.