DECISION

Vortal Group, Inc. v. Digital Transport c/o Kent Smith

Claim Number: FA0312000222968

PARTIES

Complainant is Vortal Group, Inc. (“Complainant”), represented by Roger N. Behle Jr., of Behle Law Corporation, 575 Anton Boulevard, Suite 710, Costa Mesa, CA 92626.  Respondent is Digital Transport c/o Kent Smith (“Respondent”), represented by Michael P. Eddy, #510, 2683 Via De La Valle, Suite G., Del Mar, CA 92014.

REGISTRAR AND DISPUTED DOMAIN NAME 

The domain name at issue is <policeauction.com>, registered with Enom, Inc.

PANEL

The undersigned certifies that he or she 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.

Hon. Jerry J. Kaufman and Paul M. DeCicco as Panelists and Jacques A. Léger, Q.C., as Chair.

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum (the “Forum”) electronically on December 30, 2003; the Forum received a hard copy of the Complaint on January 5, 2004.

On January 5, 2004, Enom, Inc. confirmed by e-mail to the Forum that the domain name <policeauction.com> is registered with Enom, Inc. and that the Respondent is the current registrant of the name. Enom, Inc. has verified that Respondent is bound by the Enom, Inc. registration agreement and has thereby agreed to resolve domain-name disputes brought by third parties in accordance with ICANN’s Uniform Domain Name Dispute Resolution Policy (the “Policy”).

On January 12, 2004, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of February 2, 2004 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@policeauction.com by e-mail.

A timely Response was received and determined to be complete on February 2, 2004.

On February 17, 2004, pursuant to Respondent’s request to have the dispute decided by a three-member Panel, the Forum appointed Hon. Jerry J. Kaufman and Paul M. DeCicco as Panelists and Jacques A. Léger, Q.C., as Chair.

On March 2, 2004, Panel ordered an extension of time to render its decision until March 9, 2004.

PRELIMINARY FINDING ON THE ADMISSIBILITY OF THE ADDITIONAL SUBMISSIONS

Complainant submitted an Additional Submission, received and determined to be in compliance with Forum Supplemental Rule #7, on February 6, 2004. The Panel notes that Respondent maintains that it was not served with Complainant’s Additional Submission, as required by Forum Supplemental Rule #7(b)(iii), until it received a copy from the Forum on February 9, 2004, and that Complainant failed to file valid proof of service with the Forum as required under that same rule. Respondent argues that because Complainant failed to properly serve a complete copy of its Additional Submission, Respondent was unable to prepare its Response to that Submission until two days prior to the deadline for that Response. The sole deficiency in Complainant’s Additional Submission is that portions of page 7 were lost in facsimile transmission. Given the minor impact this deficiency had on Respondent’s capacity to file a Reply to Complainant’s Additional Submission, the Panel chooses to consider it. See generally Strum v. Nordic Net Exch. AB, FA 102843 (Nat. Arb. Forum Feb. 21, 2002) (“Ruling a Response inadmissible because of formal deficiencies would be an extreme remedy not consistent with the basic principles of due process.").

 

Respondent submitted an Additional Submission, received and determined to be in compliance with Forum Supplemental Rule #7, on February 11, 2004. In all fairness, the Panel also accepts Respondent’s Additional Submission.

RELIEF SOUGHT

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

PARTIES’ CONTENTIONS

A. Complainant

Factual Background

Complainant, located in Orange County, California, provides subscription-based content and publishing services via newsletter technology. Since April 2000, Complainant has used the policeauctions.com mark in connection with its website that provides information on governmental and non-governmental auctions. In March 1999, Complainant registered the domain name <policeauctions.com> and has used it as an indication of source since that time. As a result of Complainant's long, continuous, and exclusive use of the policeauctions.com mark, and the extensive promotion and advertisement of its services, the policeauctions.com mark has gained wide public acceptance and association with Complainant, both in the United States and abroad, as well as significant goodwill and recognition in the government auction industry. According to Complainant, the policeauctions.com mark has thus become distinctive and enjoys secondary meaning.  

Identical or Confusingly Similar

The domain name <policeauction.com> is identical or confusingly similar to Complainant's mark, trade name and <policeauctions.com> domain name.

Rights and Legitimate Interest

Complainant has offered to purchase said domain name from Respondent for a reasonable price.  However, Respondent would not participate in negotiations for the sale of the domain name. 

Respondent does not have any trademark or other intellectual property rights in the <policeauction.com> domain name. The <policeauction.com> domain name does not consist of Respondent's legal name or any other name commonly used to identify Respondent, including any fictitious names under which it does business. 

Respondent had not used the <policeauction.com> domain name in connection with the bona fide offering of any goods or services prior to registering said domain name. Upon information and belief, Respondent has not used, and does not use, the <policeauction.com> domain name in any way constituting a non-commercial or fair use of the mark.

Bad Faith

The domain name does not resolve to a website or other on-line presence. Furthermore, customers and/or competitors of Complainant have been and continue to be diverted to Respondent's <policeauction.com> which has no legitimate website or other presence, which has harmed and will harm the goodwill of Complainant by suggesting, among other things, that Complainant is no longer in business.  

In light of the fact that Respondent has no legitimate rights or interests in the domain name, had knowledge of Complainant’s <policeauctions.com> domain name and website and still refuses to sell the domain name to Complainant, it is clear that Respondent has registered the <policeauction.com> domain name in bad faith.   In addition, subsequent to being contacted by Complainant, Respondent continued holding the domain name and failed to take any positive action with it, further demonstrating that it had registered the domain name in bad faith, in spite of the fact that it had registered <policeauction.com> before the date when Complainant first commenced use of policeauctions.com.  See NetLearning, Inc. v. Parisi, FA 95471(Nat. Arb. Forum Oct. 16, 2000).

Respondent has taken no positive action in relation to the domain name.  In this case, inactivity amounts to the domain name being used in bad faith, as supported by Policy ¶ 4(b).  See Telestra Corp. v. Nuclear Marshmallows, D2000-003 (WIPO Feb. 18, 2000).  As the circumstances identified in Policy ¶ 4(b) are “without limitation,” Policy ¶ 4(b) thereby expressly recognizes that other circumstances can be evidence that a domain name was registered and is being used in bad faith. Therefore, Complainant cannot conceive of any plausible actual or contemplated active use of the domain name by Respondent that would not be illegitimate, such as by being a passing off, an infringement of consumer protection legislation, or an infringement of Complainant’s rights under trademark law.  To that end, Complainant alleges that Respondent’s passive holding of the domain name satisfies the requirement that the domain name is being used in bad faith.

B. Respondent

Identical or Confusingly Similar

Complainant’s domain name, <policeauctions.com>, consists of two generic terms, “police” and “auctions,” which have no sufficient secondary meaning. The combined term “Policeauction” is generic and has been historically used to describe the sale of unclaimed and confiscated property, which is primarily derived from law enforcement seizure activities.

Complainant does not present any evidence which one could conclude that its trademark is famous or well known. Both terms in combination are additionally primarily descriptive of Complainant’s generic services. In Rollerblade, Inc. v. CBNO, D2000-0427 (WIPO Aug. 24, 2000), the panelist found that "genericness, if established, will defeat a claim of trademark rights, even in a mark which is the subject of an incontestable registration." According to Respondent, this instance falls below that case’s benchmark, as the present mark is indeed contestable, as it is generic as well as descriptive of the services in which the domain name is used.

As more evidence of this, a website located at the web address <salesauctions-online.com/police-auctions> lists police auctions on <ebay.com> and it does not in any way refer to Complainant. More evidence that this term is widely used in its generic sense can be found with a <google.com> search of this term in user group postings. Further, court decisions have stated that common phrases such as "bake sale" and "flea market," both very similar to “police auction,” are not eligible for a trade or service mark protection. Even the relatively obscure phrase "softchew" was denied trademark protection as a generic descriptor because it was in general use. See Novartis Consumer Health, Inc. v. McNeil-PPC, Inc., 1999 WL 707721 (D.N.J. Sept.13, 1999).

Finally, Complainant does not denote "TM" or "SM" adjacent to the term “police auctions” on the <policeauctions.com> website.

Rights and Legitimate Interests

Respondent Kent Smith has been involved in the development of auction Internet websites since 1997, when as a co-owner of <flowerauction.com>, he developed a website for The American Flower Auction. Due to the valuable services the site provided to grower members, it was awarded a grant from the Resource Conservation District of San Diego County. In order to capitalize on the systems, knowledge and experience gained with the <flowerauction.com> endeavour, Respondent registered the Internet domain name <policeauction.com> on December 19, 1997. The domain name was registered with the intent to offer similar types of valuable services to the law enforcement community and consumers that <flowerauction.com> had provided to growers and buyers.

Respondent has invested tens of thousands of dollars of his own capital on the creation and development of <flowerauction.com> and would not have done so if the software, design and framework were not to be a benefit for the future development of the <policeauction.com> domain name.

Respondent next registered "Police Auction" as a fictitious business name, statement number 199800319, with the San Diego County Recorders office on January 06, 1998. Respondent then followed up with considerable expense and effort dedicated to developing the <policeauction.com> website project.

Finally, Respondent used the domain name for its website in demonstrating to potential business partners and inventors both before and after Complainant’s date of registration of <policeauctions.com>. A full launch of the website was delayed for a number of personal and business reasons. Several internal and proprietary studies were also performed with the eventual release of the website in mind.

An independent, well known and widely used Internet resource, the Internet Archive provides results that show that the domain name <policeauction.com> resolved to the <digitaltransport.com> website at least from January of 1999 to April 18, 2001.

Respondent’s use in commerce was to both offer goods and services by Respondent and to invite prospective business partners and interested venture capital firms to contact Digital Transport in regards to the launch of the website at <policeauction.com>. The first actual use of the domain name in commerce to offer goods and services preceded Complainant’s date of registration of the <policeauctions.com> domain name.

Bad Faith

Respondent registered and acquired the domain name for its own legitimate use, prior to Complainant’s registration of <policeauctions.com> and Respondent thereafter filed a fictitious name statement with the San Diego County Recorder.

Respondent has never offered the domain name for sale to any third party. Respondent has informed more than a few inquiring parties that the domain name was in use and not for sale, and this is further evidence of no bad faith on the part of Respondent. Complainant’s own statement serves as evidence that Respondent did not register or acquire the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to Complainant or to any other competitor of Complainant, for valuable consideration in excess of Respondent’s documented out-of-pocket costs directly related to the domain name.

Respondent claims that the only remotely cognizable claim Complainant asserted, that the non-use of the domain name for a short period of time is evidence of bad faith on the part of Respondent, is plainly false. There are many instances where panelists in UDRP proceedings have found no bad faith from delays on the part of respondent in the launching of websites associated with the disputed domain names. One example is Asphalt Tech. Inc, v. Anything.com, D2000-0967 (WIPO Oct. 4, 2000), where the panelist determined that the delay in launching did not diminish respondent’s rights in its domain name.

There are many valid reasons why it is preferable to not have an incomplete or under construction website. One reason is that Internet directories and some search engines can be unforgiving if a first effort is indexed poorly. Lastly, fourteen domain names owned by Complainant do not resolve to websites and thus have no reference in corresponding websites to police or auction in them, even though the words police and auction appear in the domain names.

Respondent claims it has used the domain name in conjunction with services such as email which are not apparent to Complainant and Respondent has spent a considerable amount of effort and finances in the development of a website at <policeauction.com>.

C. Additional Submissions

By Complainant

Complainant first states that the domain name/mark is not generic, since it is not operating, and indeed could not be operating, a police auction. Rather, it operates an Internet-based information service providing its users with, among other things, information on government auctions, including police auctions, real estate foreclosures, Internal Revenue Service auctions, private auctions, government benefits services, including money grants, health benefits and disability benefits, and unclaimed money.

At a minimum, the domain/mark is descriptive or suggestive. Complainant has been using the policeauctions.COM domain/mark continuously since 1999 and, as shown below, has acquired distinctiveness through secondary meaning.

Through Complainant’s long, continuous, and exclusive use of the policeauctions.COM domain/mark, and its extensive promotion and advertisement of the same, the mark has gained wide public acceptance and association with Complainant, both in the United States and abroad, and has come to be widely and favourably recognized.

Moreover, Respondent has failed to produce any evidence from the current millennium showing any bona fide “preparation to use the domain.” Respondent has not even operated a single web page at that web address for the last three (3) years.

Respondent has never operated even a single web page that refers or relates to government auctions. During the brief periods where Respondent is even shown to have operated a website linked to the domain name, it chose to merely redirect all traffic to his Digital Transport website that offered services which had nothing to do with government auctions.

Respondent has failed to show that it now has, or ever had, any bona fide intent to use the domain <policeauction.com>. Thus, it can have no rights or legitimate interest in the domain. Respondent was fully aware that the only Internet traffic it would obtain without a legitimate website would be type-in traffic that came from people typing in “police auction, policeauction, or policeauction.com” into the browser.

By Respondent

POLICAUCTIONS.COM signifies to the public that the user of the designation is a commercial entity that specializes in information related to police auctions. The fact that Complainant’s services do not technically include actual police actions, but rather are only services related to police and governmental auctions is of no consequence.

Furthermore, there is evidence of Complainant’s premeditated orchestration to attempt to reverse domain name hijack Respondent’s domain name <policeauction.com>.

In concluding, the alleged use in 1999 and 2000 is plainly false. Any use of <policeauctions.com> as alleged by Complainant falls far short of acquiring secondary distinctiveness, even if it could, and the record is completely devoid of any evidence that purchasers and prospective purchasers view POLICEAUCITONS.COM as a distinctive source indicator for Complainant’s services.

DISCUSSION & FINDINGS

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 cumulatively each of the following three elements if it is to succeed in obtaining an order for the transfer or cancellation of the domain name:

(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 maintains that it has established common-law rights in the POLICEAUCTIONS.COM mark through continuous use, promotion and advertisement of the mark in commerce since March 1999. The Panel agrees that the ICANN dispute resolution policy is “broad in scope” in that “the reference to a trademark or service mark ‘in which the complainant has rights’ means that ownership of a registered mark is not required – unregistered or common law trademark or service mark rights will suffice” to support a domain name Complaint under the Policy.  See McCarthy on Trademarks and Unfair Competition, § 25:74.2, Vol. 4 (2000); see also SeekAmerica Networks Inc. v. Masood, D2000-0131 (WIPO Apr. 13, 2000) (wherein it was found that the Rules do not require that the Complainant's trademark or service mark be registered by a government authority or agency for such rights to exist); see also British Broad. Corp. v. Renteria, D2000-0050 (WIPO Mar. 23, 2000) (wherein it was noted that the Policy “does not distinguish between registered and unregistered trademarks and service marks in the context of abusive registration of domain names”). By way of a sworn declaration attached to the additional submissions dated February 6, 2004 by William Keck, President and CEO of Complainant, Complainant has established that it has been using the domain name <policeauctions.com> for five years, operating information services to which over two million people have subscribed. This, under normal circumstances, could be sufficient to justify acquisition of common law rights in a mark, if the threshold test is met.

However, in the case at hand, the Panel agrees with Respondent’s contention that although Complainant’s advertising and promotional expenses may appear to be substantial, there is nevertheless a need to have substantial direct evidence from consumers that cause the relevant consumers to view POLICEAUCTIONS.COM as a distinctive source indicator for Complainant’s services in order to even begin to look at the issue of whether Complainant’s domain name has become distinctive of Complainant’s services (mere advertising and promotional expenses are not use of a mark, but only an indication as to a market segment). It is the Panel’s opinion that the term “police auction” is highly descriptive of at least some of the services provided concerning police auctions, which admittedly concern police auctions. Consequently, in order to overcome this lack of inherent distinctiveness, Complainant had the burden to establish secondary meaning. The Panel finds that Complainant has failed to do so. See Coupons Inc. v. Motherboards.com, FA 192249 (Nat. Arb. Forum  Nov. 4, 2003).

Considering the limited evidence as to advertising and promotional expenses and the lack of evidence relating to use of the mark filed by Complainant, the Panel is of the opinion that Complainant has not satisfactorily met the necessary burden imposed on it to establish rights in the mark POLICEAUCTION.COM. Indeed, the alleged mark being a domain name, in light of the evidence submitted, the Panel must find that Complainant has failed to show acquisition of proprietary rights that it might have otherwise had, if secondary meaning had been proven.

Moreover, Policy ¶ 4(a)(i) requires Complainant to have rights in a mark (registered or common law) before the disputed domain name is registered. Respondent urges that it could not have registered the disputed domain name in bad faith, as Complainant admits that it had no enforceable rights in the POLICEAUCTIONS.COM mark at the time that the domain name was registered. See Ode v. Intership Ltd., D2001-0074 (WIPO May 1, 2001) (“we are of the unanimous view that the trademark must predate the domain name”); see also Aspen Grove, Inc. v. Aspen Grove, D2001-0798 (WIPO Oct. 5, 2001) (wherein it was found that it is impossible for Respondent to register the disputed domain name in bad faith if Complainant's company did not exist at the time of registration). In short, Complainant admits that it had no trademark rights in the at-issue mark prior to the date that Respondent registered its domain name.  Therefore, the Complaint must fail.

For reasons stated above, Complainant cannot make it necessary to review the other two elements necessary to prove a domain name case under the UDRP, and the Panel rules for Respondent.

Reverse Domain Name Hijacking

Respondent alleges that Complainant was well-aware that it had no enforceable rights in any mark containing the word POLICEAUCTION and that the Complaint was therefore brought in bad faith. Complainant did not address this issue, however this is of very little consequence since it appears from the Rules that a panel may decide sui sponte that reverse hijacking occurred. Complainant chose a generic name for the domain referencing its website. In the Panel’s view, the fact that it failed to register around the name cannot be corrected by hijacking the name of a prior similarly sounding registration.

As stated in Sydney Opera House Trust v. Trilynx Pty. Ltd, D2000-1224 (WIPO Oct. 31, 2000), to establish reverse domain name hijacking, Respondent must show knowledge on the part of Complainant of Respondent’s right or legitimate interest in the disputed domain name and evidence of harassment or similar conduct by Complainant in the face of such knowledge.

In Aspen Grove, Inc. v. Aspen Grove, D20001-0798 (WIPO Oct. 5, 2003), the Panel noted that complainant had not demonstrated it had trademark rights in the disputed domain name, respondent demonstrated rights in the disputed domain name, and finally, respondent had registered the domain name some two years before complainant came into existence and thus could not have been in bad faith at registration relative to complainant.

           

In the case at hand, the focus needs to be on the motives, knowledge, and actions of the party whose conduct is being judged. Here we are to consider the conduct of Complainant as to whether or not it has attempted to reverse hijack the domain name.  Respondent registered the name in good faith and therefore had legitimate rights to the name by virtue of the grant from the Registrant. See K2r Produkte AG v. Trigano, D2000-0622 (WIPO Aug. 23, 2000); see also Smart Design LLC v. Hughes, D2000-0993 (WIPO Oct. 18, 2000). The fact that Respondent may not have had trademark rights is irrelevant, trademark rights are not equivalent or prerequisite for a party to have the right to a domain name.

Moreover, the Panel finds that filing a UDRP proceeding - which on its face can be qualified as frivolous - without any basis to do so should be construed in the present case as harassing. Here, Complainant admitted it knew that the domain name was registered prior to its using the at-issue mark in commerce. When, as in the present case, Complainant is unable to show trademark rights through use or otherwise which predate registration of the at-issue domain name, then it becomes impossible for it to prevail. In the case before the Panel, there is no way that Complainant could have reasonably expected to prevail and its counsel should have known better.

To the extent that reverse domain name hijacking can be granted as a relief by virtue of Rule 15(e), and albeit as a very exceptional remedy, the circumstances of this case warrant it.

 

The claim for reverse domain name hijacking is granted, because filing a Complaint which one knows or should have known would fail based upon the admissions of Complainant can be interpreted as harassing per se and should be discouraged.

DECISION

Not having established all three elements required under the ICANN Policy, the Panel concludes that relief shall be DENIED.

The counter-claim of reverse domain name hijacking is GRANTED.

Hon. Jerry J. Kaufman and Paul M. DeCicco as Panelists

and Jacques A. Léger, Q.C., as Chair.

 Dated: March 9, 2004

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