Domain name - Domain name dispute resolution policy – Nike  - No legitimate interest – Bad faith registration –Bad faith use - Competing legal interest - Contractual relations.
 
The Complainant is NIKE Inc., a corporation organized and existing under the laws of the State of Oregon (U.S), and the registered proprietor of US trademark for NIKE TOWN. The Complainant currently operates 13 retail outlets trading under the mark NIKE TOWN.

Respondent's principal place of business is in Omaha, Nebraska, USA. The Respondent had a contractual relationship with the Complainant whereby the Respondent was to establish an in-depth virtual and on-line marketing concept on behalf of the Complainant, in exchange for a significant sum of money ("the Contract"). The Complainant asserts that the Respondent had registered the Domain Name during that relationship, claiming it was to protect the Complainant’s interests. The Respondent has subsequently acknowledged that the Complainant owns the Domain Name but has declined their requests to transfer the Domain Name.

The Complainant asserts that the Respondent will only transfer the Domain Name in exchange for a ‘substantial sum of money in excess of his out-of-pocket costs directly related to the domain name’. The Respondent was well acquainted with the Trade Mark, as it worked with the Complainant on a marketing concept for a NIKE TOWN store. The Respondent has never made any use of the Domain Name or the Trade Mark.

The Complainant submits that the registration was in bad faith, as the Respondent knew of the Complainant’s ownership of the Trade Mark and his claim to have registered it in the Complainant’s interests cannot be upheld in the face of four years of requests to transfer the Domain Name to the Complainant.

This conduct, in combination with the Respondent’s demand for payment in excess of out-of pocket costs, constitutes bad faith registration and use of the Domain Name.
The Respondent asserts that its primary purpose for registering the Domain Name was to incorporate the Domain Name into the Respondent’s performance of the Contract, with a view to further developing the marketing concept into an ongoing business relationship with the Complainant, rather than merely the Contract.

The Respondent asserts that the termination of the Contract by the Complainant left the Respondent with hardware and software it had purchased for purposes of the Contract and commitments to the purchase of further hardware and software. The Respondent has not voluntarily transferred the Domain Name due to the unresolved contractual issues and obligations outstanding between the parties as a result of the termination of the Contract.

Held, Domain Name transferred to the Complainant.

The Complainant's withdrawal from the contract may give the Respondent a genuine grievance, though it is difficult to tell and the Panel cannot assume jurisdiction to investigate this.

Based on the evidence lodged, all communications between the parties at the time were silent on the issue of the Domain Name. There is no reference in any of the proposals or written communications as to the relevance, need for or otherwise of any Domain Name. 
Accordingly, it seems that the registration of the Domain Name fell outside the active contemplation of the Complainant and the terms of the Contract. The evidence does not support the contention that it was necessary to incorporate registration of the Domain Name into the performance of the Contract.

The Complainant alleges that the Respondent told the Complainant that he registered the Domain Name to protect the Complainant’s interest in the Domain Name, that he recognized the Domain Name belonged to the Complainant and that he would transfer it to the Complainant. The Respondent does not deny these factual allegations. 
However, such facts do no necessarily mean that the Respondent was legitimately entitled to secure that registration in its own name, effectively to the exclusion of the Complainant.

The Respondent was not acting as an independent distributor or other marketer of the Complainant's products. This distinguishes the factual position from that in Adaptive Molecular Technologies, Inc v. Priscilla Woodward & Charles R. Thorton, d/b/a Machines & More (WIPO decision D2000-0006). The Response gives no real indication why, as a supplier of computerised marketing services to the Complainant's New York store, it would want or need a Domain Name for itself, which was virtually
identical with the Complainant's trade mark. The Respondent's alleged subsequent conduct, and in particular a refusal to return the Domain Name to the Complainant, has not been controverted by the Respondent. This supports the view that the Respondent cannot have had any legitimate commercial purpose in acquiring the Domain Name.

Respondent must have known throughout that the Complainant was the true proprietor of all NIKE TOWN property. 
Accordingly, the Respondent could only have sought to protect the Domain Name for and on behalf of the Complainant, and while it may have had a legitimate interest in securing the Domain Name in terms of the overall project, legally, it could have done so by holding the Domain Name in trust for and on behalf of the Complainant. Similarly, the Respondent could have suggested to the Complainant that the Complainant register the Domain Name itself, as the Respondent knew the Complainant had registered nike-town.com itself.

The Panel found, on balance, that the Complainant did not know, at the relevant time, that the Respondent had registered the Domain Name.  However, had there been knowledge of the registration, the domain name might have been registered in good faith.  The Panel also took the view that the Respondent could have secured the position quite satisfactorily by registering the Domain Name in the Complainant's name or recommend that it do so itself. This would have protected the position for the parties but not allowed the Respondent to effectively obtain a competing legal interest in an almost identical domain name. 

Evidence of bad faith use is found in the Respondents continued use of the Domain Name to obtain leverage in the contractual dispute.  It also appears that the Respondent promised and then refused to transfer the Domain Name to the Complainant. In the circumstances of this case the Panel regards this as prima facie amounting to conduct in bad faith.

Policies referred to
Uniform Domain Name Dispute Resolution Policy

Cases referred to
Adaptive Molecular Technologies, Inc v. Priscilla Woodward & Charles R. Thorton, d/b/a Machines & More (WIPO decision D2000-0006)

Panel Decision referred to
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Elliot, Panelist: - 

The Parties

The Complainant is NIKE Inc. a corporation organised and existing under the laws of the State of Oregon (U.S) and having its principal place of business in Beaverton, Oregon, USA ("the Complainant").

The Respondent is Granger and Associates having its principal place of business in Omaha, Nebraska, USA ("the Respondent").

The Domain Name and Registrar

The domain name the subject of this dispute is <niketown.com>, which was first registered on March 15, 1996 ("the Domain Name").

The registrar of the Domain Name is Network Solutions, Inc., Herndon, Virginia, USA ("the Registrar).

Procedural History

A Complainant pursuant to the Uniform Domain Name Dispute Resolution Policy ("the Policy") and the Rules for the Uniform Domain Name Dispute Resolution Policy ("the Rules"), both of which were implemented by ICANN on the October 24, 1999, was received by WIPO on February 29, 2000. The Complainant elected that the proceeding be heard by a one person administrative panel and stated that copies of the Complaint were also sent to the Respondent and the Registrar on February 29, 2000.

On March 2, 2000, an Acknowledgement of Receipt (Complaint) was sent to the Complainant.

On March 4, 2000, the Complaint, having been checked by WIPO for compliance with the Policy, the Rules and with the World Intellectual Property Organisation Supplemental Rules for Uniform Domain Name Dispute Resolution Policy ("the Supplemental Rules"), was verified as being satisfactory. In particular, that document noted that the appropriate fee for a one person administrative panel had been paid.

On March 4, 2000, a Notification of Complaint and Commencement of Administrative Proceeding was sent to the Respondent and his attorney by overnight courier, by facsimile and by email, advising that the Response was due by March 23, 2000. Copies were also sent to the Complainant, the Registrar and ICANN.

On March 2, 2000, a Request for Registrar Verification was sent to the Registrar requesting the information set out in paragraphs 2(a) and 4 of the Rules.

On March 2, 2000, the Registrar responded, stating that it had not received a copy of the Complaint from the Complainant, but confirming that the Domain Name was currently registered with it, that Granger & Associates were the current registrant of the Domain Name and advising that the Domain Name was active. It stated that the policy was in effect by virtue of the Registrar’s 5.0 Service Agreement. The Panel notes that clause 8 of this agreement (http://www.networksolutions.com/legal/service-agreement.html) incorporates the Policy.

On March 23, 2000, a Response pursuant to the Policy, the Rules and the Supplemental Rules was received by WIPO. The Respondent elected that the proceeding be heard by a three person administrative panel and nominated names and contact details of three ICANN-approved panelists.

On March 28, 2000, an Acknowledgment of Receipt (Response) was sent to the Respondent and other parties.

WIPO then selected three panelists and sent a Request for Statement of Acceptance and Declaration of Impartiality and Independence to each of the Panelists.

On April 4, 2000, a signed Statement of Acceptance and Declaration of Impartiality and Independence was received by WIPO from each of the two non-presiding Panelists.

On April 19, 2000, a signed Statement of Acceptance and Declaration of Impartiality and Independence was received by WIPO from the Presiding Panelist.

On April 18, 2000, a Notification of Appointment of Administrative Panel and Projected Decision Date ("the Appointment Notification") was sent to the parties. The Appointment Notification informed the parties that the Panel would be comprised of three Panelists, Mr. Clive Elliott (Presiding Panelist), Professor William Cornish and Mr. Richard Page ("the Panel"). It also informed the parties and the Panel that the decision should be forwarded to WIPO by May 2, 2000, in accordance with paragraph 15 of the Rules.

Having reviewed the communications records the Panel is satisfied that the formal requirements of the administrative proceeding have been satisfied.

Factual background: Complainant

The Complainant asserted and provided evidence in support of the following, which is accepted by the Panel.

The Complainant is the registered proprietor of US trademark No. 1,775,629 for NIKE TOWN in class 25 in respect of clothing and in class 42 in respect of retail store services in the field of clothing and related goods ("the Trade Mark") and has used the Trade Mark in relation to those goods and services since 1990.

The Complainant currently operates 13 retail outlets trading under the mark NIKE TOWN.

The Complainant asserted the following, but did not provide supporting evidence.

A corporate subsidiary of the Complainant currently owns trademark registrations for the NIKE TOWN mark in Australia, Canada, France, Germany, Hong Kong, Italy, Japan, Korea, Singapore, Spain, and the United Kingdom.

The Respondent was well acquainted with the Trade Mark, as it worked with the Complainant on a marketing concept for a NIKE TOWN store. The Respondent registered the Domain Name during that relationship, claiming it was to protect the Complainant’s interests. The respondent has subsequently acknowledged that the Complainant owns the Domain Name but has declined their requests to transfer
the Domain Name.

The Complainant asserts that the Respondent will only transfer the Domain Name in exchange for a ‘substantial sum of money in excess of his out-of-pocket costs directly related to the domain name’.

The Respondent has never made any use of the Domain Name or the Trade Mark.

The Complainant submits that the registration was in bad faith, as the Respondent knew of the Complainant’s ownership of the Trade Mark and his claim to have registered it in the Complainant’s interests cannot be upheld in the face of four years of requests to transfer the Domain Name to the Complainant.

This conduct, in combination with the Respondent’s demand for payment in excess of out-of pocket costs, constitutes bad faith registration and use of the Domain Name.

Factual background: Respondent

The Respondent asserted and provided evidence in support of the following, which is accepted by the Panel.

The Complainant and Respondent entered into a contractual relationship whereby the Respondent was to establish an in-depth virtual and on-line marketing concept on behalf of the Complainant, in exchange for a significant sum of money ("the Contract").

Performance of the Contract by the Respondent began and scheduled payments were made by the Complainant in accordance with the Contract. At a later date, after the Domain Name was registered by the Respondent, the Complainant ‘chose not to implement’ the marketing concept governed by the Contract and ceased payments to the Respondent.

The Respondent asserts but has not provided evidence in support of the following.
The Respondent’s primary purpose for registering the Domain Name was to incorporate the Domain Name into the Respondent’s performance of the Contract, with a view to further developing the marketing concept into an ongoing business relationship with the Complainant, rather than merely the Contract.

The termination of the Contract by the Complainant left the Respondent with hardware and software it had purchased for purposes of the Contract and commitments to the purchase of further hardware and software.

The Respondent has not voluntarily transferred the Domain Name due to the unresolved contractual issues and obligations outstanding between the parties as a result of the termination of the Contract.

Discussion and Findings

The key issue in this proceeding is not whether the Domain Name is identical and/or confusingly similar to the Complaint’s trade mark or whether the Complainant is the true proprietor. In terms of paragraph 4(a) of the Policy, to succeed the Complainant must show that:

i. the Respondent had no right or legitimate interest in the Domain Name; 
ii. the Domain Name was registered in bad faith; and 
iii. the Domain Name was used in bad faith. 

These are dealt with in turn.

No right or legitimate interest in the Domain Name

It is common ground that there was a contractual relationship between the parties. The question, however, is what rights and obligations arose from that relationship. The Respondent had an agreement with the Complainant to provide software and equipment for sales booths in the Complainant's New York store, under which it received two scheduled payments. The Complainant's withdrawal from the contract may give the Respondent a genuine grievance, though it is difficult to tell and the Panel cannot assume
jurisdiction to investigate this.

Based on the evidence lodged, all communications between the parties at the time were silent on the issue of the Domain Name. There is no reference in any of the proposals or written communications as to the relevance, need for or otherwise of any Domain Name. Accordingly, it seems that the registration of the Domain Name fell outside the active contemplation of the Complainant and the terms of the Contract.

In response to this, the Respondent asserts that the relationship was an ongoing business relationship, the parameters of which were evolving at the time the Domain Name was registered (Response (para M)).

The Respondent also asserts it had a legitimate interest in registering the Domain Name. However, the evidence does not support the contention that it was necessary to incorporate registration of the Domain Name into the performance of the Contract.

The Complainant has alleged that Mr. Granger of the Respondent told the Complainant that he registered the Domain Name to protect the Complainant’s interest in the Domain Name, that he recognised the Domain Name belonged to the Complainant and that he would transfer it to the Complainant. If correct, this would support the contention that the Respondent might have had a legitimate interest in securing the Domain Name during the existence of the contract. This does not, however, necessarily mean that the Respondent was legitimately entitled to secure that registration in its own name, effectively to the
exclusion of the Complainant.

The Respondent does not deny the factual allegations in the immediately preceding paragraph. The Respondent was not acting as an independent distributor or other marketer of the Complainant's products. This distinguishes the factual position from that in Adaptive Molecular Technologies, Inc v. Priscilla Woodward & Charles R. Thorton, d/b/a Machines & More (WIPO decision D2000-0006). The Response gives no real indication why, as a supplier of computerised marketing services to the Complainant's New York store, it would want or need a Domain Name for itself, which was virtually
identical with the Complainant's trade mark. The Respondent's alleged subsequent conduct, and in particular a refusal to return the Domain Name to the Complainant, has not been controverted by the Respondent. This supports the view that the Respondent cannot have had any legitimate commercial purpose in acquiring the Domain Name.

In the present situation the Respondent must have known throughout that the Complainant was the true proprietor of all NIKE TOWN property. 
Accordingly, the Respondent could only have sought to protect the Domain Name for and on behalf of the Complainant, and while it may have had a legitimate interest in securing the Domain Name in terms of the overall project, legally, it could have done so by holding the
Domain Name in trust for and on behalf of the Complainant. Similarly, the Respondent could have suggested to the Complainant that the Complainant register the Domain Name itself, as the Respondent knew the Complainant had registered nike-town.com itself.

Accordingly, the Panel’s view is that the Respondent did not have any rights (and indeed does not claim any) and did not have a legitimate interest in registering the Domain Name itself and against the legal interest of its client, the Complainant.

Domain Name registered in bad faith

The Respondent asserts that Mr. Fabel (an officer of the Complainant) knew at the relevant time that the  Respondent had registered the Domain Name. While this issue may be important in the dispute there is no basis for testing the veracity of the assertion. On balance, assuming that it is not satisfactorily established that Mr. Fabel knew that the Respondent had registered the Domain Name, the panel concludes that the Domain Name was not registered in the Respondent’s name in good faith.
In the Panel's view, the Respondent could have secured the position quite satisfactorily by registering the Domain Name in the Complainant’s name or recommended that it do so itself. This would have protected the position for the parties but not allowed the Respondent to effectively obtain a competing legal interest in an almost identical domain name.

Domain Name used in bad faith

It appears that after the contractual relationship ended the Respondent has used (and continues to use) the Domain Name to obtain leverage in the contractual dispute. It also appears that the Respondent promised and then refused to transfer the Domain Name to the Complainant. In the circumstances of this case the Panel regards this as prima facie amounting to conduct in bad faith.

Conclusion

For the above reasons the Panel unanimously decides that the Complainant has made out the three requirements of paragraph 4(a) of the Policy and accordingly rules that the Domain Name be transferred to the Complainant.

Clive Elliott
Presiding Panelist
Richard Page and Professor William Cornish
Panelists