17th Feb 2005

 

 

National Arbitration Forum

 

DECISION

 

Tech International, Inc. d/b/a Health Tech v. ClearChoiceofny

Claim Number: FA0412000379875

 

PARTIES

Complainant is Tech International, Inc. d/b/a Health Tech (“Complainant”), 1095 Windward Ridge Parkway, Suite 150, Alpharetta, GA 30005. Respondent is ClearChoiceofny (“Respondent”), represented by Ari Goldberger, of ESQwire.com Law Firm, 35 Cameo Drive, Cherry Hill, NJ, 08003 USA.

 

REGISTRAR AND DISPUTED DOMAIN NAME 

The domain name at issue is <clearchoiceofny.com>, registered with Network Solutions, Inc.

 

PANEL

The undersigned certifies that they have acted independently and impartially and to the best of their knowledge have no known conflict in serving as Panelists in this proceeding.

 

Steven L. Schwartz and Judge Irving H. Perluss (Ret.) as Panelists and Judge Karl V. Fink (Ret.) as Chair.

 

PROCEDURAL HISTORY

Complainant submitted a Complaint to the National Arbitration Forum electronically on December 13, 2004; the National Arbitration Forum received a hard copy of the Complaint on December 14, 2004.

 

On December 16, 2004, Network Solutions, Inc. confirmed by e-mail to the National Arbitration Forum that the domain name <clearchoiceofny.com> is registered with Network Solutions, Inc. and that the Respondent is the current registrant of the name. Network Solutions, Inc. has verified that Respondent is bound by the Network Solutions, 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 December 17, 2004, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of January 6, 2005 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@clearchoiceofny.com by e-mail.

 

A timely Response was received and determined to be complete on January 18, 2005.

 

A timely Additional Submission was received from Complainant January 24, 2005.

 

A timely Response to the Additional Submission was received from Respondent on January 31, 2005.

 

All submissions were considered by the Panel.

 

On January 27, 2005, pursuant to Complainant’s request to have the dispute decided by a three-member Panel, the National Arbitration Forum appointed Steven L. Schwartz and Judge Irving H. Perluss (Ret.) as Panelists and Judge Karl V. Fink (Ret.) as Chair.

 

RELIEF SOUGHT

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

 

PARTIES’ CONTENTIONS

A. Complainant

Complainant is the sole owner of the CLEAR CHOICE trademark, United States Registration Numbers 2,264,493 and 2,483,055, and Canadian Registration Number 548,063. The goods with which the CLEAR CHOICE mark is used relate to nutritional and dietary supplements in the form of carbohydrate shakes, herbal teas, herbal capsules and tablets, liquid additives and beverages.

 

Complainant is the exclusive distributor for a line of CLEAR CHOICE products that are sold to online retailers and hundreds of stores in the United States and Canada. In addition, Complainant markets and sells its CLEAR CHOICE products directly to individuals throughout the world. Complainant has been in business since 1993 and has sold over one million CLEAR CHOICE products since that time.

 

Complainant uses the CLEAR CHOICE trademark as an integral identifying mark in association with its business, and the mark has acquired distinction and notoriety.

 

Complainant selectively grants to qualified companies and individuals a limited license to use the CLEAR CHOICE mark in association with the operation of Authorized Dealer (hereinafter referred to as “Agent”) websites. Respondent was an Agent for Complainant and, as such, was granted a limited license to use Complainant’s intellectual property on its websites pursuant to an Internet Retailer Agreement (the “Agreement”) entered into on February 27, 2003. The Agreement was breached on or before October 1, 2004 and the Agreement was terminated by Complainant for cause and Respondent was notified on November 2, 2004.

 

In direct violation of their specific contractual obligations under the Agreement, Respondent has appropriated for its own use the <clearchoiceofny.com> domain name, which contains the identical trademark owned by Complainant.

 

Respondent has not replied to Complainant’s demand letter dated October 12, 2004 or to the Notice of Termination/Cease and Desist letter sent by Complainant’s attorney on November 2, 2004.

 

The registered <clearchoiceofny.com> domain name is identical or confusingly similar to a trademark or service mark in which the Complainant has rights. Respondent does not have rights or legitimate interests with respect to the <clearchoiceofny.com> domain name.

 

Respondent has used, and is continuing to use, the domain name in connection with an offering of Complainant’s goods. Such use has been a restricted use subject to the terms of the Agreement. The Agreement merely granted to Respondent the limited right to use the mark with the consent of Complainant and according to the terms of the Agreement.

 

Since the Agreement was terminated by Complainants for cause on November 2, 2004, Respondent has not been using the domain name for a legitimate noncommercial use and Respondent has not made fair use of the domain name.

 

Respondent’s actions with respect to the continued use of the domain name after Complainant’s Termination of the Agreement for cause evidence bad faith. Respondent has been promoting and selling competing products using the domain name containing the CLEAR CHOICE mark, thereby disrupting the business of Complainant. Respondent has persisted in using the trademarks of Complainant for commercial gain, to misleadingly divert consumers, and to tarnish the trademark at issue. In attempting to attract, for commercial gain, customers by creating a likelihood of confusion with Complainant’s mark as to the source, sponsorship, affiliation, endorsement of the websites, Respondent has acted in bad faith.

 

While the ICANN Uniform Domain Name Dispute Resolution Policy states in the conjunctive that the domain name “has been registered and is being used in bad faith,” the codified examples of bad faith are alternative and include the following in Paragraph 4 (b) (iv):

“by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your web site or other on-line location, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of your web site or location or of a product or service on your web site or location.”

Respondent’s intentions in continued use of the domain name, despite its original motivations, are precisely so. Respondent has retained the domain name in order to either sell the Complainant’s products which Respondent has obtained without payment, and/or to sell competing products.

 

B. Respondent

This is a case of Reverse Domain Name Hijacking and unfair trade practice. The Complaint should be denied because i) Respondent has been commonly known as Clear Choice of New York, the name incorporated in the domain name, prior to the registration date of any of Complainant’s registered trademarks; ii) Complainant has at all times been aware of, approved of and encouraged Respondent’s use of the disputed domain; and iii) Respondent’s sale of Complainant’s products in connection with the disputed domain irrefutably constitutes use of the domain name in connection with a bona fide offering of goods or services before any notice of this dispute. For the same reason, it cannot be held that Respondent has engaged in bad faith registration and use.

 

Respondent is a New York corporation known as Clear Choice of New York, Inc. This corporation has been in existence since December 18, 1998. Since as early as 1998, Complainant has had knowledge of, has approved of, and has actively encouraged Respondent’s use of the corporate name Clear Choice of New York, as well as Respondent’s web site located at the <clearchoiceofny.com> domain name. The agreement with Complainant and Respondent is in the name of Clear Choice of New York, Complainant has emailed Respondent at its info@clearchoiceofny.com email address, and billings to and payments received from Respondent have been in Respondent’s corporate name. Complainant even produced a brochure for Respondent, which promoted Respondent’s <clearchoiceofny.com> website.

 

This dispute has arisen because Complainant has recently dramatically raised the prices it charges Respondent for its products by 35 percent, forcing Respondent to seek alternative suppliers. Respondent has several hundred thousand customers that know it as Clear Choice of New York and know its website as <clearchoiceofny.com> and Respondent has spent thousands of dollars promoting its website across the Internet. Complainant’s goal is to appropriate the fruit of Respondent’s hard work, capture its customers, and steal its business by hijacking Respondent’s domain name.

 

Clear Choice of NY is not Complainant’s intellectual property. It is Respondent’s corporate name, which preceded and existed independently of the Sales Agreement. In fact, the Sales Agreement itself is written in Respondent’s corporate name of Clear Choice of NY. Respondent formed its corporation and registered the disputed domain before Complainant even registered its trademarks.

 

Complainant has long approved of Respondent’s sale of third party products on its website, which compete with its own products. It is disingenuous for Complainant to argue that Respondent is misleadingly diverting consumers seeking Complainant’s website to its own site. The only users who would access the <clearchoiceofny.com> domain name would be those users who are seeking Respondent, who is known as Clearchoice of NY.

 

The term “clear choice” is an extremely common descriptive term. Complainant does not have exclusive rights to this term, a fact borne out by the more than 50 third party active and pending U.S. trademarks which incorporate the term “clear choice.” 

 

Tens of thousands of Respondent’s customers know the domain name <clearchoiceofny.com> as Respondent’s online location. Complainant cannot now be permitted to essentially shut Respondent’s business down after having approved and consented to its use of its corporate name and website for six years.

 

In early December 1998, Respondent advised Complainant that he planned on calling his company Clear Choice of New York and that he would operate a website at the <clearchoiceofny.com> domain name. Complainant voiced no objection to the corporate name or domain name.

 

Respondent is known as “Clear Choice of New York,” which is wholly incorporated in the disputed domain (with New York abbreviated as NY). At all times, Complainant has had knowledge, has approved, and promoted Respondent’s Clear Choice of New York business name and the <clearchoiceofny.com> domain name.

 

Although Complainant argues that Respondent breached the Internet Sales Agreement by carrying products of competitors, Complainant has been aware of and has not objected to Respondent’s sale of such products carried on Respondent’s website throughout their business relationship.

 

Complainant does not even own the <clearchoice.com> domain name — the logical domain name that users would type in seeking to find Complainant. If Complainant is not entitled to the domain name that is identical to its registered trademark, it certainly should not be entitled to a domain that clearly is different from that mark in a way that clearly identifies a different party who conducts business under a corporate name identical to the domain name.

 

The registration dates of each of Complainant’s three trademark registrations post-date the 1998 registration date of the disputed domain. Accordingly, Complainant’s alleged mark provides no enforceable rights under the Policy with respect to the disputed domain. In the event the Panel concludes that Complainant has enforceable trademark rights to Clear Choice, it should find that the mark is not confusingly similar to the disputed domain.

 

Respondent has a legitimate interest to the disputed domain for several reasons. It is well established that the use of a domain name in connection with a bona fide offering of goods or services establishes Respondent’s legitimate interest pursuant to paragraph 4(c)(i). There can be no doubt that Respondent has engaged in the bona fide offering of goods and services. Respondent has sold drug-testing related products through its website since 1998, purchasing thousands of dollars worth of goods each month from Complainant.

 

Respondent’s selection of Clear Choice of New York as its corporate name and its registration of <clearchoiceofny.com> was entirely in good faith, with the full knowledge, approval and encouragement of Complainant. Complainant’s Internet Sales Agreement denotes Respondent’s business name as Clear Choice of New York. Complainant cannot now take the position that Respondent lacks a legitimate interest in the Disputed Domain, after consenting to the use of this corporate name and website name for six years.

 

Respondent has “been commonly known by the domain name,” thus further establishing Respondent’s legitimate interest under paragraph 4(c)(ii) of the Policy. The Internet Sales Agreement was entered into in February 2003 – more than four years after Respondent had incorporated as Clear Choice of New York and registered the <clearchoiceofny.com> domain name.

 

The first to register a domain name incorporating a common descriptive term subject to substantial third party use has a legitimate interest in such domain name.

 

Complainant must prove that the disputed domain was registered in bad faith. This is impossible to prove where, as here, the Complainant consented to registration of the domain name at the time it was registered. There is absolutely no evidence that Complainant registered <clearchoiceofny.com> with the intent to sell it to Complainant, to disrupt its business, to prevent it from registering its trademark, or to confuse consumers.

 

Respondent submits that this is a case of Reverse Domain Name Hijacking and, pursuant to Paragraph 15(e) of the Rules, this Panel should declare in its decision that the Complaint was brought in bad faith and constitutes an abuse of the administrative proceeding. Where a Complainant has condoned and encouraged the use of a domain name, the filing of a complaint that contains allegations that Respondent lacks a legitimate interest or engaged in bad faith constitutes reverse domain name hijacking.

 

Here a finding of Reverse Domain Hijacking is particularly warranted because Complainant has threatened to challenge Respondent’s domain name as a strong-arm tactic in an attempt to force it to submit to Complainant’s outrageous price increases. Through this action, Complainant is attempting to appropriate those customers and steal Respondent’s business that has been built over the past six years.

 

C. Additional Submissions

Complainant

Unbeknownst to Complainant, after the parties signed their authorized dealership agreement, the Respondent formed a corporation integrating Complainant’s trademark, and registered the domain name in dispute in this matter. Just a few months ago, Complainant received actual knowledge that Respondent had actually incorporated with Complainant’s trademark.

 

Prices under the dealership agreement generally remained unchanged or actually decreased over the course of the six-year relationship of the parties. Recently, when Respondent objected to an 11.22% average percentage increase in prices, which was specifically permitted under the dealership agreement, Respondent ordered a great amount of product from Complainant just before the price increase. Respondent was on a net-30 term with Complainant. At 30 days, Complainant attempted to charge Respondent’s credit card, which was declined. Respondent unilaterally decided to split the $20,949.90 owed Complainant into 12 monthly installments, and sent Complainant a check for $1690.42, which was the first installment. When Complainant attempted to deposit the check, it was returned because Respondent had placed a “stop-payment” order on the check. 

 

Thereafter, as Respondent depleted its inventory of various Clear Choice products, it started selling detoxification products that directly compete with Clear Choice. At this time, the Respondent engaged in a “bait and switch” campaign, where visitors to Respondent’s various websites would click on links with graphics of Complainant’s products, but then be transported to an order page with a competing product in the shopping cart.

 

Because the distribution agreement has been terminated for cause, Respondent has no legitimate rights in a domain name containing the CLEAR CHOICE mark. Additionally, Respondent’s actions all combine to create a clear record of bad faith supporting Complainant’s UDRP complaint.

 

Complainant started using the CLEAR CHOICE trademark (hereinafter, the “Mark”), within the category of its registration, in 1993. Accordingly, the date of first use and the date of first use in commerce as noticed in the registered trademark is October 1993. Complainant filed the Mark application for the CLEAR CHOICE word mark on February 27, 1998, almost ten months before Complainant and Respondent signed their first contract.

 

Complainant’s use of the Mark has also been extensive since 1993. The Mark is the only mark by which Complainant markets its detoxification products, and since 1993, Complainant has placed the Mark conspicuously on all product packaging, sales and marketing materials, contracts and business cards. The Mark is well known in the industry, and hundreds of thousands of consumers nationwide associate the Mark with Complainant’s goods.

 

Significant secondary meaning for the term “Clear Choice” had developed in the marketplace, between 1993 and the point at which Respondent registered the disputed domain name.

 

At no time did Complainant authorize Respondent to register a domain name containing Complainant’s trademark, nor did Complainant have prior knowledge of Respondent creating a corporation with a name containing Complainant’s trademark. The key dates in the history of the relationship between the parties are as follows:

 

·     September 28, 1998: Complainant sent written correspondence to Respondent thanking Respondent for its interest in working with Complainant.

·     Fall 1998: Respondent approached Complainant and asked for permission to sell a line of non-Health Tech detection kits on Respondent’s website.

·     December 1, 1998: The parties entered an “Authorized Dealership” agreement, which was a one-page fax, confirmed by Respondent’s signature. The agreement referenced both exclusivity and Complainant’s CLEAR CHOICE trademark, and it only refers to Michael Fichera personally, with no reference to any company. Notably, this agreement was signed just three days before Respondent registered the disputed domain name, <clearchoiceofny.com>. Also, this agreement was signed 17 days before Respondent incorporated in New York as “Clear Choice of New York, Inc.”

·     December 30, 1999: A second, more thorough agreement between the parties was signed. Respondent was not referred to as a corporation, and there was no designation on the agreement indicating a corporation (i.e. “Inc.,” “Incorporated,” etc.).

·     November 8, 2001: A third agreement was signed, which was substantially similar to the December 30, 1999 agreement. There is no reference to Respondent as a corporation.

·     February 27, 2003: A fourth agreement was signed, which was substantially similar to the previous two written agreements. Complainant’s attorney redrafted the header section of the agreement, and Complainant inadvertently and mistakenly handwrote “NY” into the agreement. Despite this language in the agreement, Complainant had no direct knowledge that Respondent had actually incorporated with Complainant’s trademark.

 

This timeline is important because Respondent, in its Response, focuses exclusively on the February 27, 2003 agreement without any reference whatsoever to the prior written agreements, one of which precedes the registration of the domain name and Respondent’s incorporation.

 

On July 27, 2004, Complainant gave Respondent notice of a product price increase averaging 11%.

 

The Panel should also factor in all the other facts supporting “bad faith.” Complainant never gave any express permission to Respondent to register a domain name with Complainant’s trademark; the authorized dealership agreement made it clear that the use of Complainant’s mark was for the sole purpose of the agreement and for no other purposes; Respondent has engaged in “bait and switch” tactics. Respondent ordered an unusually large amount of product with the intent of not paying for it. Respondent’s website is currently confusing because it has Complainant’s trademark in the domain name.

 

Perhaps the most important evidence of bad faith is that Respondent, with clear knowledge of Complainant’s mark, is using a domain containing Complainant’s mark to promote a business that is in direct competition with Complainant.

 

Respondent

The fact that Respondent is known by the domain name provides an “independent right” to use the name.

 

None of the cases cited by Complainant support a finding of bad faith under the set of facts present here. Respondent is entitled to retain the domain name.

 

Complainant argues that it only learned that Respondent was incorporated a few months ago, and that the checks were only viewed by the person responsible for handling Complainant’s accounts receivable. Whether Complainant’s president was aware of the corporate status is irrelevant. His organization, by admission, was aware of this fact.

 

The December 1, 1998 agreement contains no limitation, whatsoever, regarding use of the term “Clear Choice” within a dealer’s business name or domain name, so the argument that Respondent registered the disputed domain in violation of that agreement is false.

 

After Complainant sent Respondent notification of price increase, Complainant encouraged Respondent to buy up as much as it could at the old prices and Complainant agreed to 120-day payment terms. It was only after Complainant became aware that Respondent was seeking other suppliers that it changed the terms to net-30, and Respondent countered with an offer to pay in 12 monthly installments.

 

Respondent’s argument is that Complainant had no registered trademark or common law trademark at the time Respondent registered the disputed domain. Complainant has not proven it had enforceable trademark rights prior to the issuance of its federally registered mark. Accordingly, Complainant did not have trademark rights at the time Respondent registered the disputed domain.

 

FINDINGS

For the reasons set forth below, the Panel finds Complainant has not proven that the domain name should be transferred.

 

DISCUSSION

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 each of the following three elements to obtain an order that a domain name should be cancelled or transferred:

 

(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

 

For Complainant to prevail, it must prove all three elements. Because of the Panel’s ruling on the issue of Registration and Use in Bad Faith, the Panel makes no ruling on this issue.

 

Rights or Legitimate Interests

 

For Complainant to prevail, it must prove all three elements. Because of the Panel’s ruling on the issue of Registration and use in Bad Faith, the Panel makes no ruling on this issue.

 

Registration and Use in Bad Faith

 

The Panel finds that Respondent registered the domain name in good faith pursuant to the distribution and licensing agreement it had with Complainant. Thus the Panel concludes that Respondent did not register and use the <clearchoiceofny.com> domain name in bad faith pursuant to Policy ¶ 4(a)(iii). See Urbani Tartufi s.n.c. v. Urbani U.S.A., D2003-0090 (WIPO Apr. 7, 2003) (finding that the disputed domain name was not registered in bad faith where the original registration occurred in the context of a healthy distributor relationship between the parties which was subsequently revoked by Complainant); see also Mark Travel Corp. v. ATHS, FA 154644 (Nat. Arb. Forum May 29, 2003) (stating that Policy ¶ 4(a)(iii) requires a showing of bad faith use and registration, and that any subsequent termination of a distributorship agreement would not allow a particular case to fall under the UDRP in the future); see also Gorstew Ltd., Jamaica & Unique Vacations v. Twinsburg Travel, FA 94944 (Nat. Arb. Forum July 7, 2000) (finding no bad faith where Respondent used <sandalsoutlet.com> and other domain names incorporating the SANDALS mark, as an agent, in good faith, on behalf of Sandals Resorts).

 

Complainant has not proven this element.

 

DECISION

Complainant having failed to prove all three elements required under the ICANN Policy, the Panel concludes and orders that relief shall be DENIED.

 

 

 

 

 

 

 

Judge Karl V. Fink (Ret.), Chair

February 17, 2005

 

Judge Irving H. Perluss, (Ret.) & Steven L. Schwartz, Panelists

 

National Arbitration Forum