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S.L.I. Société des Lubrifiants IPONE v. CLIX International, L.L.C., Carbon Development, Chad Boulton [2004] GENDND 696 (26 June 2004)

1. The Parties

The Complainant is S.L.I. Société des Lubrifiants IPONE (“the Complainant”) of Plan de Campagne, Cabries, France, represented by William Peterson, France.

The Respondents are CLIX International, L.L.C., Carbon Development, and Chad Boulton of Utah, United States of America (together “the Respondents”), represented by Nelson, Snuffer, Dahle & Poulsen, P.C., United States of America.

2. The Domain Names and Registrars

The disputed domain name <iponeusa.com> (“the First Domain Name”) is registered with Network Solutions, LLC. The disputed domain name <ipone.com> (“the Second Domain Name”) is registered with OnlineNic, Inc. d/b/a China-Channel.com. The disputed domain name <iponeusa.net> (“the Third Domain Name”) is registered with NamesDirect.com. Together, the three disputed domain names are referred to herein as “the Domain Names”).

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on May 7, 2004. On May 7, 2004, the Center transmitted by email to each of OnlineNic, Inc. d/b/a China-Channel.com, Network Solutions, LLC, and NamesDirect.com a request for registrar verification in connection with the Domain Names. On May 9, May 17 and May 7 respectively, OnlineNic, Inc. d/b/a China-Channel.com, Network Solutions, LLC and NamesDirect.com transmitted by email to the Center their verification responses confirming that the Respondents are listed as the registrants and providing the contact details for the administrative, billing, and technical contacts. In response to a notification by the Center that the Complaint was administratively deficient, the Complainant filed an amendment to the Complaint on May 14, 2004. The Center verified that the Complaint together with the amendment to 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 May 24, 2004. In accordance with the Rules, paragraph 5(a), the due date for Response was June 13, 2004. The Response was filed with the Center on June 14, 2004.

The Center appointed Tony Willoughby as the sole panelist in this matter on June 24, 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.

It will be noted above that the Domain Names are three in number and that there are three registrants. Paragraph 3(c) of the Rules provides that “the Complaint may relate to more than one domain name, provided that the domain names are registered by the same domain name holder.” In formulating the Complaint as it has, the Complainant has clearly taken the view that the Respondents are effectively one and the same. This appears to the Panel to be a justifiable line to take given the contact details on the respective Whois databases for the Domain Names. Accordingly, the Panel accepts the Complaint as a single complaint and the Panel treats the three registrants as being one and the same, it being common ground between the parties that the controlling registrant is Clix International, which entered into a Distribution Agreement in May 2001.

Simultaneously with the filing of the Response, the Respondents filed a “motion to dismiss” largely on the basis that this dispute forms part of a larger dispute arising from an agreement between the parties and that under the terms of that agreement all issues arising (including this dispute) are to be resolved by way of arbitration. Thus, this dispute is not fit to be heard under the Policy. The Panel believes that this dispute is capable of being dealt with under the Policy and treats the contents of the motion to dismiss as part of the Response.

Following completion of the draft decision and the submission of it to the Center for formatting, the Complainant sent a further submission to the Center and requested the Panel to consider it. The submission requested permission to file a supplementary response to the Respondent’s motion to dismiss. The essence of the supplementary response was to be that, notwithstanding the Respondent’s submission of the dispute for arbitration, the Panel has jurisdiction to decide this aspect of the dispute, namely the complaint that the Domain Names are abusive registrations within the meaning of the Policy. The Panel has considered the request, but declines to accede to it. The Panel has already (albeit unknown to the parties) concluded that he has jurisdiction to decide the matter under the Policy and has done so.

4. Factual Background

The Complainant is a French manufacturer of lubricating oils. It is the proprietor of a variety of trademark registrations of device marks, the most prominent feature of which is the mark IPONE. The UK and Canadian registrations are for a mark comprising a bullet point and the mark IPONE. The US registration is for a mark comprising a bullet point and the words ‘IPONE, L’huile de combat.’

The Respondents registered the Domain Names on December 18, 2000, November 8, 2001, and September 9, 2003, respectively.

On May 3, 2001, the Complainant entered into a distribution agreement with the Respondents for the distribution of the Complainant’s products in the United States.

The agreement contains, inter alia, the following provisions from which the parties, or one or other of them rely in this dispute:

“1.7 Trademarks shall mean the trademarks, trade names, logos and sets of initials or numbers listed in Annex 1.7 hereto, as well as any other trademarks, tradenames, logos and sets of initials or numbers to be used in the future by IPONE for the Products, that are added to Annex 1.7 by IPONE at its sole discretion.

6.1 Authorized Use. The DISTRIBUTOR is authorized to use the Trademarks solely for the distribution, resale and after-sales service of the Products in the Territory pursuant to this Agreement and during the term thereof. The Trademarks shall remain the sole property of IPONE and neither the DISTRIBUTOR (nor any of its employees, dealers, distributors or resellers) shall acquire any proprietary right with respect to the Trademarks.

6.3 Authorized Distributor, No Use in DISTRIBUTOR’s Name. The DISTRIBUTOR shall place on its shop signs, advertisement boards, invoices, commercial and advertising documents its capacity as “Authorized Distributor of IPONE products in the United States”. The DISTRIBUTOR shall take all necessary precautions when using such mention in order to avoid any confusion with its trademarks, legal entity name or its trade or business name (or those of its resellers). The DISTRIBUTOR shall not use, authorize or permit the use of Trademarks as part of its firm, legal entity or business name.

6.5 At Termination. All rights to use the Trademarks shall automatically terminate upon the termination or failure to renew this Agreement for any reason whatsoever and the DISTRIBUTOR shall immediately discontinue all use of the Trademarks and shall immediately return, and cause its agents, dealers, distributors or resellers to return, all materials bearing the Trademarks to IPONE.

12.2 Arbitration. The parties hereto agree that, upon the written demand of either party, any controversy or claim arising hereunder shall be resolved by submission to binding arbitration by the American Arbitration Association (the “AAA”) in accordance with their then prevailing rules and procedures. Such arbitration shall be before a panel of three arbitrators, one to be appointed by IPONE, one by DISTRIBUTOR and one by the AAA. If any such arbitrator is unable or unwilling to serve as such arbitrator, the person entitled to appoint such arbitrator shall appoint an alternate arbitrator. Any such arbitration shall take place at an AAA office located in Salt Lake City, Utah.”

On September 17, 2003, the Complainant writes to the Respondents setting out various matters of complaint and terminating the contract “effective immediately.” The letter included the following paragraph:

“We also discovered that you are using “Ipone” in your business name on your Website in violation of the section 613 of the Contract. This is surprising as we asked you to change your name at the beginning of the contractual negotiations and inserted section 6.3 into the contract to prohibit use of Ipone’s name in your business name. You also indicate on the site that you are the “exclusive importer” of Ipone products in the USA and the “only authorized Ipone distributor in the U.S.A.!”, in addition to not being true, you are violating section 6.3 of the contract and creating confusion in the eyes of potential clients.”

On November 18, 2003, the Respondents’ representatives replied raising a number of matters of complaint on behalf of the Respondents. In relation to the Domain Names the Respondents’ representatives had this to say:

“Fourth, there is the matter of the domain names of iponeusa.net, ipone.com, and iponeusa.com and the actual website that has been built for the product. The website receives more than 1,000 hits per day and has been an active part of Clix’s retail business. As stated in our conversation, the selling price for those items is $180,000.00 U.S. dollars. You intimated that Ipone would not be interested in the website or the domain names. This is fine. If Ipone is not interested in purchasing those items, they will remain in Clix International’s name and possession and will be used to publish the difficulties Clix is having with Ipone and to market our client’s remaining inventory of Ipone products as well as competing products. Those domain names are legitimately property of Clix International, and have gained certain recognition in the market place. They can and will be used in ways other than what they are being used for now should Ipone choose not to purchase them.”

On May 6, 2004, the Complainant filed its original Complaint by way of email. On May 24, 2004, the final Complaint was notified to the Respondents.

On June 3, 2004, the Respondents filed a demand for arbitration with the American Arbitration Association.

5. Parties’ Contentions

A. Complainant

The Complainant contends that the Domain Names are identical or confusingly similar to the Complainant’s trademark IPONE on the basis that if one ignores the generic domain suffixes, the Domain Names comprise either IPONE or IPONE USA.

The Complainant contends that the Respondents have no rights or legitimate interests in respect of the Domain Names or any of them. The Complainant summarises this aspect of the Complaint as follows:

• “As its contract to distribute Complainant’s products was terminated on 17 September 2003, Respondent Clix is no longer distributing Complainant’s products.

Even during the term of the Distribution Agreement, Clix International had no rights to the domain names, as use of Complainant’s marks was severely restricted,

• There is no bona fide offer of goods or services, Respondent Clix is simply holding the domain names to try to force a sale of its website to Complainant as it no longer sells Ipone products although it intends to sell competing products on its website.

• Permitted use of the mark “Ipone” during the distribution contract was simply to resell Complainant’s products as an authorized distributor,

• Under the jurisprudence of the Center, a distributor does not obtain the right to a domain name using a supplier’s trademark unless that right is specifically granted.

• The website does not accurately disclose Respondent Clix’s relationship with the trademark owner Complainant. This is even more evident now that the Distribution Agreement has been terminated for more than 6 months (the entire website is false).

• Respondents are holding domain names important for Complainant’s business causing it on going damages.”

In relation to the Respondent, Carbon Development, which is the registrant of the First Domain Name, the Complainant relies upon an email from Chad Boulton of Carbon Development dated February 4, 2004, reading as follows:

“I Chad Boulton am a contractor for Clix International. Neither me nor Carbon Development have any rights or controls over the domain name iponeusa.com as it was purchased by Clix International. I manage their web activities and helped them keep their domains up to date and that is the limit of my actions. All enquiries about this domain need to be directed to Travis Hawkins of Clix International.”

The Complainant further contends that the Domain Names were registered and are being used in bad faith. This aspect of the Complaint is summarised as follows:

• “Complainant did not authorize registration and use of the domain names,

• Respondent Clix International knowingly infringed the property rights of Complainant in its trademark Ipone and violated its contractual obligations contained in section 6 of the Distribution Agreement.

• As Respondent Clix International had no rights or legitimate interests to the domain names, registration of the names with actual knowledge of a existing trademark demonstrates bad faith (numerous panelists have so found, see Produits Berger v. Wellmark Supplies, WIPO Case No. D2003-0392).

• Even if Respondents did not have actual knowledge of Complainants marks at the time Iponeusa.com was registered on 18 December 2000, which is unlikely as it was just 2 months before Clix initiated negotiations with Complainant to distribute Ipone products (see the second draft of the distribution contract sent to Complainant on 9 March 2001, annex 14 and the Whois results for this domain name that indicate Travis Hawkins as the administrative contact —Mr Hawkins is the managing member of Clix—in annex 1), under US law, Respondents have constructive notice as the Ipone mark has been registered in the USA since 1987.

• Respondent Clix International is using the domain names Iponeusa.com and Ipone.com (it links to Iponeusa.com) to harass and cause damages to Complainant threatening to publish disparaging remarks on this website to damage Complainant’s reputation. Its offer to sell Complainant the three domains, in lieu of bringing an interference with contract claim is abusive. Despite the fact the contract claim has no foundation; Respondent has no rights in the domain names to sell. Regardless, a price of $180,000, largely in excess of any out of pocket costs, is simply an abusive attempt to gain commercially. Respondent Clix is holding Complainant hostage with the domain names, thereby incurring ongoing damages in an attempt to force Complainant to purchase the domain names.

• The disputed domain names are not being used in connection with a bona fide offering of goods or services (Iponeusa.net is not being used at all). Even if Respondent Clix had a legitimate use for the domain names, it no longer sells the Complainants products that are the subject of the website and the domain names.

• The disputed domain names Iponeusa.com and Ipone.com mislead visitors to the site into believing that the disputed domain names are those of Complainant or that the Complainant has approved the site’s content. In fact, with the additional of the county flags and associated links to Complainant and some of its distributors on Ipone.com, one has the impression that this is the official website of Complainant.

• Respondent Clix International has failed to forward to Complainant any inquiries about its potential sales of products in the USA. In doing so, Clix is deliberately disrupting the business of Complainant and the relationship between Complainant and its potential customers (Complainant is considering filing an action for damages). The Respondent Clix International admits to receiving more than 1000 hits per day (see Annex 9). These elements fall directly within paragraph 4 (b) (iv) of the Policy.”

B. Respondent

The Response opens with a reference to the motion to dismiss. The motion to dismiss contends that this dispute is part and parcel of the larger contractual dispute and that if a party demands arbitration as the Respondents have done, clause 12.2 of the Distribution Agreement applies and the matter falls to be decided by way of the arbitration process identified in that clause. The Complainant should not be invoking the Policy.

The Respondents make no admissions in relation to the validity of the Complainant’s trademark registrations, but concede that they entered into the Distribution Agreement which gave them certain usage rights in respect of the Complainant’s trademarks.

The Respondents contend that they do have rights and legitimate interests in respect of the Domain Names. They refer to the terms of the Distribution Agreement and further contend that at all material times the Complainant was aware of the Domain Names and the website to which the Domain Names were connected. They contend that the website contained links to Ipone websites in other parts of the world.

The Respondents deny that they registered the Domain Names in bad faith and that they are using the Domain Names in bad faith. They contend that the Domain Names were registered with a view to selling the Complainant’s products in the USA in accordance with the terms of the Distribution Agreement.

6. Discussion and Findings

According to paragraph 4(a) of the Policy, for this Complaint to succeed in relation to any of the Domain Names the Complainant must prove that

(i) The Domain Name is identical or confusingly similar to a trademark or service mark in which the Complainant has rights; and

(ii) The Respondent has no rights or legitimate interest in respect of the Domain Name; and

(iii) The Domain Name has been registered in bad faith and is being used in bad faith.

A. Identical or Confusingly Similar

The Panel is mystified by the Respondents’ stance in relation to this head of the Complaint. The Complainant has exhibited what appear to be valid trademark registration certificates for marks all of which have as their most prominent element the mark IPONE. The Respondents have produced nothing to suggest why those registrations might be invalid.

Ignoring, as one is permitted to do for this purpose, the generic domain suffixes, the Domain Names each comprise the essential element of the Complainant’s trademarks, the mark IPONE, on its own or in combination with the geographical indication ‘usa.’

In the circumstances the Panel has no difficulty in finding that the Domain Names are all either identical or confusingly similar to the Complainant’s trademark IPONE.

B. Rights or Legitimate Interests

Given the Panel’s finding under the next heading, it is unnecessary for the Panel to address this issue.

C. Registered and Used in Bad Faith

There are two elements to this head, registration in bad faith and use in bad faith. Paragraph 4(b) of the Policy sets out a non-exhaustive list of examples of what may constitute bad faith registration and use for this purpose. Each of those examples contemplates a bad faith intention on the part of the respondent at the time of registration of the domain name. The bad faith intention is to cause damage to the trademark owner in some way whether it be to extort money or to block him or to disrupt his business or to cause confusion among Internet users. If the intentions of the Respondents at time of registration were bona fide, nothing that has happened since can render the registration of abusive within the meaning of the Policy.

What were the Respondents’ intentions at the time of registration of the Domain Names? One of them was registered several months in advance of the signing of the Distribution Agreement. The other two were registered while the Distribution Agreement was in operation, although one of those was registered at a time when it might have been obvious to the Respondents that the Distribution Agreement was on its last legs.

It is to be noted that in large part the Complainant’s allegations focus on alleged breaches of the Complainant’s rights and the subsequent uses made of the Domain Names rather than on the Respondents’ motives at time of registration.

As to the First Domain Name, which was registered on December 18, 2000, some four and a half months in advance of the signing of the Distribution Agreement, the Panel believes it to be more than likely that the Respondents registered that Domain Name in anticipation of the Distribution Agreement. In his letter of December 19, 2003, the Complainant’s representative makes it clear that “many months” of negotiations preceded the completion of the agreement. There is insufficient evidence before the Panel to enable the Panel to conclude that this registration preceded the opening of the negotiations. The Panel accepts the Respondents’ claim that their intentions at the time of registration were good faith intentions. Certainly, the Complainant has not come forward with anything to satisfy the Panel that the Respondents’ intentions at time of registration were improper.

The fact, if it be a fact, that the various registrations were made without the Complainants’ knowledge and authority is supported solely by a bare assertion on the part of the Complainant. The Respondents, for their part, assert that the Complainant was well aware of the registrations and the Respondents’ website at all material times. The Panel finds it surprising, to say the least, that the Complainant remained unaware of the registrations and therefore silent on the issue until two years after the first two Domain Names had been registered. The Panel would have expected the Complainant to be aware of how its products were being promoted on the Internet by the Respondents. Be that as it may, there is a conflict of evidence, which the Panel is unable to resolve and the burden of proof is on the Complainant.

As to the Second Domain Name, which was registered on November 8, 2001, in the early days of the Distribution Agreement, the Panel takes the same view. The Complainant has failed to establish that the Second Domain Name was registered in bad faith.

As to the Third Domain Name, the situation is or may be somewhat different. The Panel can see that the timing of the registration of this Domain Name is peculiar given the existence of the other two Domain Names and the fact that by then all was not well between the parties. Moreover, the letter of November 18, 2003, from the Respondents’ representatives, the relevant extract from which is quoted in the Factual Background (above), is arguably indicative of an abusive intent as at that date. Nonetheless, while the Panel is more sympathetic to the position of the Complainant in relation to this Domain Name, for the Panel to find in favour of the Complainant would involve a measure of speculation. In the context of an overall dispute which involves so many factual and legal issues, the Panel does not believe it to be either safe or sensible for the Panel to make such a determination.

Accordingly, the Panel finds that the Complainant has failed to prove that any of the Domain Names were registered in bad faith. In so finding, the Panel is conscious that the dispute over the Domain Names will now fall to be resolved by way of the impending arbitration. Nothing in this decision can fetter the arbitrators in any way. Their remit will be far wider and they will have access to much fuller evidence than has been made available to the Panel. The Panel takes the view that that will be a much more satisfactory method of arriving at a just result.

7. Decision

For all the foregoing reasons, the Complaint is denied.

Tony Willoughby
Sole Panelist

Date: June 26, 2004