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Charles Chips Enterprises, Inc. v.Mark Patterson d/b/a Innate 2 Create and Ted Henderson [2005] GENDND 1609 (23 September 2005)

World Intellectual Property Organization

WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Charles Chips Enterprises, Inc. v. Mark Patterson d/b/a Innate 2 Create and Ted Henderson

Case No. D2005-0836

1. The Parties

Complainant is Charles Chips Enterprises, Inc., a Delaware corporation with offices in North Arlington, New Jersey, United States of America, which is represented by Winston & Strawn LLP, United States of America.

Respondents are Mark Patterson, doing business as Innate 2 Create, and Ted Henderson, individuals with addresses in Los Angeles, California, United States of America.

2. The Domain Name and Registrar

The disputed domain name <charleschips.com> is registered with Intercosmos Media Group, which does business as directNIC.com.

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (“Center”) on August 3, 2005. On August 4, 2005, the Center transmitted by email to directNIC.com a request for registrar verification in connection with the domain name at issue. On August 4, 2005, directNIC.com transmitted by email to the Center its verification response confirming that “Charles Chips and Innate 2 Cre” is listed as the registrant for the domain name, confirming details of its registration agreement, and providing the contact details for the administrative and technical contacts. The Center verified that the Complaint satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (“Policy”), the Rules for Uniform Domain Name Dispute Resolution Policy (“Rules”), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (“Supplemental Rules”).

In accordance with Rules, paragraphs 2(a) and 4(a), the Center formally notified Respondents of the Complaint, and the proceedings commenced on August 11, 2005. In accordance with Rules, paragraph 5(a), the Response was due on August 31, 2005. On August 31, 2005, the Response was filed with the Center.

The Center appointed Debra J. Stanek as the sole panelist in this matter on September 9, 2005. The Panel finds that the Panel 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 Rules, paragraph 7.

4. Factual Background

Complainant owns a United States federal trademark registration, issued in 1976, for the mark CHARLES CHIPS in a stylized form for potato chips. Complainant also owns other federal registrations consisting of the word mark CHARLES and a stylized form of “Charles” alone and combined with other terms, such as “cookies” and “pretzels,” for a variety of snack foods. In addition, Complainant claims common law rights in the CHARLES CHIPS mark dating back to 1942. According to Complainant, the mark CHARLES CHIPS has been in use in connection with various of the goods and services of Complainant since the 1940s and is well-known within the snack food industry and among the general public.

The disputed domain name was registered in August 1998. The “www.charleschips.com” website appears to offer CHARLES CHIPS potato chips and tins and offers an array of other snack foods, both generic products and third party products, offered under the brand names of those third parties.

5. Parties’ Contentions

A. Complainant

Complainant makes the following contentions:

Its CHARLES CHIPS and CHARLES marks have been in use for decades and have acquired widespread recognition generally and within the snack food industry. The disputed domain name, <charleschips.com>, is identical to Complainant’s CHARLES CHIPS mark. Respondents are using the mark in a “counterfeit” website, inasmuch as Complainant has not authorized use of its mark in the domain name, and are using the mark with “counterfeit” goods, inasmuch as Complainant does not make the goods sold on the “www.charleschips.com” website.

Respondents have no rights or legitimate interests in respect of the disputed domain name. Complainant contends that Respondents cannot have obtained any rights in the domain name because “all use of the mark CHARLES CHIPS by Respondents constitutes an infringement” of Complainant’s trademark rights, which rights predate registration of the domain name. Respondents’ website expressly disclaims any relationship with Charles Chips distributors and states that it is merely a web reseller. Complainant has no relationship with Respondents and has not authorized them to use the CHARLES CHIPS name or mark in any manner.

Complainant contends that Respondents’ use of the <charleschips.com> domain name is neither a legitimate non-commercial use nor a fair use. Complainant points to the fact that visitors to Respondents’ site are likely to be confused as to the source, sponsorship, or affiliation of the site and the products offered on the site.

Finally, Complainant contends that Respondents have registered and are using the disputed domain name in bad faith, citing a number of facts, including:

The website identifies its operators as “Charles Chips of Century City California,” a false name.

Respondents’ website at one time offered the disputed domain name for sale for $500,000 and subsequently offered to sell the domain name, along with a distribution route, for various sums.

Respondents’ website contains a disclaimer that falsely implies that Respondents have some interest in Complainant and that is “designed to create confusion and deception” by not clearly explaining the relationship (or lack of relationship) between the parties.

Respondents’ registration of <charleschips.com> is the most logical choice for a website offering CHARLES CHIPS products and therefore deprives the trademark owner of the opportunity to use its registered mark in a corresponding domain name.

Lastly, Respondents registered the disputed domain name to intentionally attract, for commercial gain, Internet users by creating a likelihood of confusion with Complainant’s famous marks as to the source, sponsorship, affiliation and endorsement of Respondents’ website and/or the goods that are offered on that website.

B. Respondents

Respondents make the following contentions:

Respondents contend that in 1988, Respondent Henderson became a distributor of Complainant’s products by acquiring a distribution route known as “Charles Chips of Westwood.” Subsequently, Respondent Patterson acquired an adjacent route, known as “Charles Chips of Century City.” They registered the disputed domain name in 1998, in order to offer, via the Internet, the products offered by a regional distributor of Complainant’s products, “Charles Chips of Southern California.” Respondents characterize themselves as “sub-distributors” of that regional distributor and provide copies of Internal Revenue Service forms 1099 showing that each has received payments from “Charles Chips of Southern California” and copies of invoices to Henderson from “Charles Chips of Southern California” showing his purchases of products from as early as 1988.

Respondents concede that the domain name was registered under the name “Innate 2 Create,” a business operated by Mark Patterson.

Respondents deny offering “counterfeit goods” and instead state that they offer CHARLES CHIPS products, specifically CHARLES CHIPS potato chips and tins, which they purchase from Charles Chips of Southern California, along with the other products offered on the website.

Respondents state that the disclaimer posted on the “www.charleschips.com” website is intended to help explain the role of “Charles Chips of Century City,” thereby alleviating, rather than causing, any confusion.

Respondents further contend that Complainant has known of their use of the disputed domain name since 1998 and that “there were discussions between Charles Chips of Southern California and [Complainant] regarding the use of the disputed domain name.”

Respondents deny offering the website for sale as such, contending that the domain name was included with a legitimate offer to sell the Century City distribution route. Respondents attribute the changes in the price of the domain name, with or without the distribution route, to problems in restoring the website after crashes.

6. Discussion and Findings

A. Procedural Matters

The Complaint identifies as Respondents two individuals, Mark Patterson and Ted Henderson, as well as naming the registrant, which the Complaint identifies as an entity under which Patterson does business. The Rules define the “Respondent” in a proceeding as “the holder of a domain-name registration against which a complaint is initiated.” See Rules, paragraph 1, s.v. “Respondent.”

Here, however, the Response, which is signed by both of the named individuals, Patterson and Henderson, confirms that “Innate 2 Cre,” the designation that appears in the registrar’s whois record, is simply a shortened version of Patterson’s trade name, “Innate 2 Create.” The Response further acknowledges that Patterson and Henderson registered the disputed domain name and operate the “www.charleschips.com” website. Accordingly, under these circumstances, the Panel concludes that Mark Patterson and Ted Henderson are responsible for, and are the beneficial holders of, the domain name registration in issue.

B. Burden of Proof

In order to prevail, Complainant must prove:

(i) The <charleschips.com> domain name is identical or confusingly similar to Complainant’s CHARLES CHIPS mark; and

(ii) Respondents have no rights or legitimate interests in respect of the <charleschips.com> domain name; and

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

The Policy, paragraph 4(b) sets out four sets of circumstances that may evidence a respondent’s bad faith registration and use under Paragraph 4(a)(iii). The Policy, paragraph 4(c) sets out examples of circumstances that may evidence a respondent’s rights or legitimate interests in a domain name, see Policy.

A. Identical or Confusingly Similar

Complainant must establish that the disputed domain name is either identical or confusingly similar to its mark.

Complainant’s federal trademark registrations and other evidence establish its trademark rights in the mark CHARLES CHIPS. The disputed domain name is identical to that mark. For purposes of considering identity or confusing similarity, the “.com” top-level domain and the space between the terms “Charles” and “chips” are not relevant.

The Panel finds that Respondents’ domain name is identical to Complainant’s mark.

B. Rights or Legitimate Interests

Establishing that Respondents have no rights or legitimate interests in a domain name - proving a negative - can be difficult. This Panel concludes that the burden of establishing this element is relatively light, because the evidence typically lies within a respondent’s knowledge. After a complainant makes a prima facie showing, the burden should shift to the respondent to rebut that showing. These approaches are consistent with the general structure of the Rules. See Rules, paragraph 3(b)(ix)(2) (complainant must show why respondent “should be considered” as having no rights or interests in the domain name rather than why respondent “has” no rights or interests); see also Rules, paragraph 5(b) (respondent must “[r]espond specifically to the statements and allegations” of the complaint) (emphasis added).

First, it does not appear that Respondents were making a bona fide use of the domain name before notice of the dispute. See Policy, Paragraph 4(c)(i). As noted above, the disputed domain name is identical to Complainant’s mark, the use and federal registration of which predate the registration – even in 1998 – of the domain name.

In their Response, Respondents’ characterize themselves as “sub-distributors” of Charles Chips of Southern California, presumably one of Complainant’s authorized distributors. That characterization is at odds with the statement on the “www.charleschips.com” website, which disclaims any affiliation with other distributors and characterizes “Charles Chips of Century City California” as an independent reseller. Nonetheless, Respondents have provided evidence, in the form of copies of the IRS Forms 1099 and invoices, that each Patterson and Henderson have had business dealings with Charles Chips of Southern California.

Although Complainant repeatedly contends that all of the products sold on Respondents’ website are “counterfeit,” it does not cite – nor has the Panel found in the plethora of materials contained in the Annexes to the Complaint – any evidence to support the assertion that the potato chips and tins sold by Respondents on the “www.charleschips.com” website as CHARLES CHIPS potato chips and CHARLES CHIPS tins are not in fact manufactured by Complainant. Respondents provided a copy of what they certify is “representative” packaging for the CHARLES CHIPS potato chips that they sell. That packaging appears consistent with the representative examples provided by Complainant and Complainant has provided no basis on which to conclude that these products are counterfeit.

At best, then, Respondents have established that they are resellers of CHARLES CHIPS potato chips and tins. The Panel, consistent with the consensus view,¹ see WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Paragraph 2.3, concludes that resellers may make bona fide offerings of goods and services and thus have a legitimate interest in a domain name, but only under specific circumstances. Namely, resellers must: (1) actually offer the goods at issue, (2) use the site to sell only the trademarked goods, and (3) accurately disclose the registrant’s relationship with the trademark owner. Respondents use the site to sell goods other than CHARLES CHIPS-branded products, including numerous snack foods that directly compete with Complainant’s products. Accordingly, the Panel concludes that they are not making a bona fide offering of goods giving them a legitimate interest in the domain name.

Second, it does not appear that the disputed domain name is Respondents’ legal name or is used to identify Respondents. See Policy, Paragraph 4(c)(ii). Although the domain name is registered under the name “Charles Chips and Innate 2 Cre,” there is no evidence that that name is the actual name of any entity and the Response concedes, obliquely, that it is not. Further, although the Response contends that Henderson and Patterson acquired and operated distribution routes known, respectively, as “Charles Chips of Westwood” and “Charles Chips of Century City,” there is no evidence that either of those designations are known to the general public or were authorized by Complainant. In this regard, Respondents’ contention that it was “customary” to name routes in that fashion is not relevant. Notably, the invoices and IRS Forms 1099 refer to Henderson and Patterson by their individual names with no indication of any “Charles Chips” designation.

Third, it does not appear that Respondents are making a legitimate noncommercial or fair use of the domain name. See Policy, Paragraph 4(c)(iii).

The Panel finds that Respondents have no rights or legitimate interests in the disputed domain name.

C. Registered and Used in Bad Faith

Complainant must establish that the disputed domain name has been registered and is being used in bad faith. The Policy itself sets out four sets of circumstances, evidence of which can establish bad faith, see Policy, Paragraph 4(b)(i)-(iv):

(1) registering the domain name primarily to sell it for more than the documented out-of-pocket costs; or

(2) registering the domain name to prevent the owner of the trademark from reflecting the mark in a domain name, where there is a pattern of such conduct; or

(3) registering the domain name primarily to disrupt the business of a competitor; or

(4) using the domain name to intentionally attempt to attract, for commercial gain, Internet users to the website linked to the domain name or other on-line location, by creating a likelihood of confusion with a complainant’s mark as to the source, sponsorship, affiliation, or endorsement.

Complainant asserts that Respondents’ registration and use of the disputed domain name constitutes bad faith under Paragraphs 4(b)(i), 4(b)(ii), and 4(b)(iv) of the Policy. Complainant provides no evidence that Respondents primary purpose in registering the name – in 1998 – was to sell it for more than their out-of-pocket costs. Complainant has likewise provided no evidence that Respondents have engaged in a pattern of conduct of registering domain names to prevent trademark owners from using domain names that reflect their trademarks. Complainant has, however, established that Respondents are using the disputed domain name to intentionally try to attract, for commercial gain, visitors to Respondents’ site, by creating a likelihood of confusion with the CHARLES CHIPS mark as to the source, sponsorship, affiliation, or endorsement of Respondents’ site or the goods and services on Respondents’ site. See Policy, paragraph 4(b)(iv).

Under these circumstances, the Panel finds that Respondents have registered and used the domain names in bad faith.

7. Decision

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

Debra J. Stanek
Sole Panelist

Date: September 23, 2005