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The Complainant is Paule Ka of Paris, France, represented by Cabinet Lavoix of Lyon, France.

The Respondent is Paula Korenek of San Antonio, Texas, United States of America.

The disputed domain name <paulekacreations.com> is registered with Network Solutions, Inc. Registrar.

The Complaint was filed with the WIPO Arbitration and Mediation Center (the "Center") on June 12, 2003. On June 13, 2003, the Center transmitted by email to Network Solutions, Inc. a request for registrar verification in connection with the domain name at issue. On June 18, 2003, Network Solutions, Inc. transmitted by email to the Center its verification response confirming that the Respondent is listed as the registrant and providing the contact details for the administrative, billing, and technical contact. The Center verified that 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 June 18, 2003. In accordance with the Rules, paragraph 5(a), the due date for Response was July 8, 2003. The Response was filed with the Center on July 8, 2003.

The Center appointed Daniel J. Gervais as the sole panelist in this matter on July 18, 2003. 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.

The Complainant is the owner of the United States trademark registrations PAULE KA and other trademark registrations throughout the world. The complainant has used PAULE KA as a trade name since at least 1974. The Complaint is based on four United States and French trademark registrations.

The Respondent says that she chose the domain name after a trip to Paris, during which she saw the name on a storefront. The store appeared to be empty at the time. The Respondent took a picture of the storefront with the sign, PAULE KA. After returning to the United States, family and friends began calling the Respondent "Paule Ka" because of the picture and her love for France, especially Paris. The Respondent came up with "Paule Ka Creations" for her gift basket business and felt "it was a very classy name and projected the image" that Respondent wanted for her business.

The Parties exchanged correspondence in which Respondent apparently agreed to transfer the domain name to the Complainant, but hesitated because of, among other factors, the costs of changing her site. The Panel takes note of these negotiations, but does not consider them directly relevant. It does not fall within the scope of these proceedings to enforce, on our own volition, any contractual agreement reached during negotiations, if any.

The business name "paulekacreations" was withdrawn by the Respondent from the Bexar County Clerk’s Office in San Antonio, Texas.

In support of its Complaint, the Complainant asserts the following.

The PAULE KA marks are valid and have been in use for many years. The marks are non-descriptive of the designated products. The marks are also non-generic for the clothing, bags, shoes and other fashion accessories. The Complainant PAULE KA has spent substantial time, effort and money advertising and promoting the PAULE KA mark throughout the United States and the world.

The domain name at issue is identical or confusingly similar to the mark PAULE KA. The domain name <paulekacreations.com> consists of the incorporation of the mark PAULE KA in combination with the term "creations" which merely describes the manufacture of the products sold under the mark PAULE KA. The addition of the phrase ".com" is non-distinctive because it is a gTLD required for registration of the domain name. The addition of descriptive or non-distinctive terms in the domain name does not change the similarity between the domain name and the mark.

As such, the domain name is likely to cause confusion, mistake or deception as to the source, origin, sponsorship or approval of the Respondent’s products in that consumers and others are likely to believe PAULE KA authorizes or controls the Respondent, or that Respondent’s domain name is associated with or related to PAULE KA.

The Respondent registered and used the domain name to promote goods, which are identical to those covered and used by the Complainant’s trademarks without the authorization of the Complainant. The Respondent is not a licensee of the Complainant, nor is she authorized to use the Complainant’s marks.

The Respondent was aware of the mark and the web site of the Complainant before registering and using the domain name.

Moreover, since December 26, 2002, the Complainant has searched and found no evidence of any of the three non-exclusive methods by which the Respondent can show she has rights or legitimate interests in the domain name. The Respondent is making an unfair commercial use of the domain name. There is no plausible explanation for the Respondent’s registration of the domain name. The Respondent did not have any personal attachment to the name

The four criteria set forth in the Policy, paragraph 4(b) are non-exclusive. In addition to these criteria, other factors, alone or in combination, can support a finding of bad faith. The Respondent registered the domain name with prior knowledge of the PAULE KA marks. Having knowledge of the Complainant’s shop PAULE KA in Paris, the Respondent should have conducted a search. A search on the date of the registration of the domain name would have confirmed the Complainant’s prior registered trademarks in the United States, where registration implies constructive knowledge of the registered mark.

Finally, the Respondent has registered and is using a domain name, which reproduces the whole prior marks. It is not possible to conceive plausible circumstances in which the Respondent uses the domain name in good faith.

The Respondent uses the domain name to intentionally attract, for commercial gain, Internet users to her web site by creating a likelihood of confusion with the Complainant’s marks as to the source, the origin, the affiliation of the Respondent’s products and web site.

The Respondent asserts the following in her Response.

She did not have the knowledge as to what the steps were to secure an Internet domain. At that time, the Respondent relied on her web designer to do what was necessary to get her web site registered and on line.

The domain was not registered for unlawful purposes. At no time did the Respondent believe that she was infringing upon another company’s rights. PAULE KA is not a common name in the United States. The Respondent did not even know what PAULE KA was, therefore did not believe she was violating anyone’s rights.

The Respondent is a very small business in a competitive market in San Antonio, Texas. The Respondent spent a lot of time, effort and money in the last few years marketing her business as Paule Ka Creations. In the time the Respondent has had this business, PAULE KA CREATIONS has become her own trademark and clients identify her by that name.

The Respondent does not market or sell any type of apparel, hats, handbags, or accessories such as the items sold by PAULE KA. Rather, the Respondent sells only gift baskets.

The Respondent established her business and created the name Paule Ka Creations in good faith and proceeded with securing the domain name through the proper legal channels after her web site was built.

The Respondent does not believe there is any commonality between "Paule Ka Creations" and "PAULE KA" and has not used her company name in any unauthorized manner.

The Respondent cannot imagine how the Complainant can say that they have suffered damages by her use of the domain name. The Respondent has been using the domain name since October 1999. The Respondent only received the first notification three years later, which stated that the Respondent was using an unauthorized name.

The Respondent does not believe it is fair for a small business owner to relinquish a company name/logo and domain name without compensation; the Respondent has spent thousands for web site expenses, advertising and marketing to establish a business presence on the Internet and in the local market.

The Respondent has initiated steps to change her company name. The Respondent has discontinued using Paule Ka Creations in her city and county. The Respondent has also secured another domain name that the Respondent will use for her company name. The reference to PAULE KA in Paris has been removed from the information page on her web site, so as not to further confuse any consumers. These changes were possible because of little cost associated with them.

In accordance with Paragraph 4(a) of the Policy, in order to succeed in this proceeding and obtain the transfer of the domain name, the Complainant must prove that each of the three following elements are satisfied:

1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights (see below, section B);

2. The respondent has no rights or legitimate interests in respect of the domain name (see below, section C); and

3. The domain name has been registered and is being used in bad faith (see below, section D).

Paragraph 4(a) in fine of the Policy clearly states that the burden of proving that all these elements are present lies with the complainant.

Pursuant to Paragraph 15(a) of the Rules, the Panel shall decide the Complaint on the basis of the statements and documents submitted and in accordance with the Policy, the Rules and any rules and principles of law that it deems applicable. Moreover, in accordance with Paragraph 14(b) of the Rules, if a party, in the absence of exceptional circumstances, does not comply with any provision of, or requirement under, the Rules or any request from the Panel, the Panel shall draw such inferences therefrom, as it considers appropriate.

Prior to discussing the above, the Panel will deal with another argument put forward by the Respondent, namely that the Complainant unreasonably delayed bringing this proceeding (section A).

The Response raises an interesting question: whether the fact that approximately three years elapsed between her registration of the domain name and these proceedings should constitute a reason to find in her favor? The Policy does not contain a specific delay or limitation. The Panel thus interprets her defense as relating to the common law defense of estoppel by laches. As explained in The Hebrew University of Jerusalem v. Alberta Hot Rods, WIPO Case No. D2002-0616, "laches is established when two conditions are fulfilled. There must first be unreasonable delay in the commencement of proceedings; second, in all the circumstances, the consequences of delay must render the grant of relief unjust. In respect of the first limb, the point of time as from which the reasonableness of delay is determined is, prima facie, the time at which the plaintiff came to know of the facts that had given rise to the ground of equitable intervention in question. In respect of the second limb, it is necessary that the defendant be prejudiced by the delay." The panelist in that case found that laches were not applicable because the remedy sought in these proceedings is not equitable in nature.

Even then, there is no evidence that the Complainant delayed unreasonably after first becoming aware in or about December 2002, of Respondent’s registration of the domain name, or acquiesced to the Respondent’s use of the domain name. It seems that, on the contrary, the Complainant’s attorneys acted diligently.

This question raises two issues: (1) does the Complainant have rights in a trademark or service mark; and (2) is the domain name identical or confusingly similar to such trademark or service mark?

The Complainant has provided the Panel with sufficient evidence that it has rights in the PAULE KA mark, in France and the United States (in classes 3, 9, 14, 18 and 25) predating the Respondent’s registration of the domain name. Ownership of a trademark registration is prima facie evidence of the validity of the mark.

As to confusing similarity, the only difference (apart from the ".com," which does not form part of the similarity equation) between the domain name and the Complainant’s mark is the addition of the word "creations." While this word may be too general to be considered fully descriptive in a trademark sense, it is reasonable to assume that it may be understood by Internet users as referring to fashion and thereby is only likely to add to the confusion created by the use of the Complainant’s mark. See Caterpillar Inc. v. Roam the Planet, Ltd., WIPO Case No. D2000-0275 (adding the word "machines" after the trademark "CAT").

According to paragraph 4(c) of the Policy, a Respondent may establish its rights or legitimate interests in the domain name, among other circumstances, by showing any of the following elements:

(i) before any notice to you [respondent] of the dispute, your use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or

(ii) you [respondent] (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or

(iii) you [respondent] are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.

It is averred that the Respondent is not a licensee of the Complainant’s United States or other registered trademarks.

While it is true that the Respondent did offer goods under the domain name and may have become known by that name, the use cannot be bona fide if infringing a valid trademark under (i) above.

As to (ii), the Panel notes that "KA" is not the Respondent’s surname, nor the first two letters of her surname. Use of the Respondent’s own name could have led to a different decision (see, e.g., Billerbeck Schweiz AG v. Peter Billerbeck, WIPO Case No. D2001-0825). Here, however, she only became known as "Paule Ka" (as a nickname) after her trip to Paris, during which she "picked" the name under which she would launch her business. The adoption of the nickname coincided with the launch of the business and registration of the domain name. Perhaps because her surname and "ka" begin with the letter "K" or for some other reason, including her 1998 trip and its follow up, according to the Respondent, her family and friends started calling her Paule Ka and encouraged her to use it as a business name/domain name (starting in 1999–the domain name was registered in October 1999). What paragraph 4(c)(ii) envisages is a situation where a person or business is commonly known (not just as a nickname used by some family members or friends, which may not even have been the case here) prior to registration of the disputed domain name.

Here, the Respondent argued that some (mostly local) goodwill has been generated because of her use of the domain name. That is unfortunate, but if all a Respondent had to show was that some goodwill had been generated between the date of registration of the domain name and the commencement of proceedings, then the purpose of the Policy would be easily defeated. See J. García Carrión, S.A. v. MЄ José Catalán Frías, WIPO Case No. D2000-0239. In other words, what paragraph (ii) requires is evidence that the Respondent has rights prior to and not only following from use of the domain name. In addition, because the Respondent knew she was adopting someone else’s mark, there is a question as to whether her business became known under the domain name in good faith. See Palm, Inc. v. South China House of Technology Consultants Ltd., WIPO Case No. D2000-1492 ("While the words bona fide do not feature in this sub-paragraph, the Panel takes the view that they should be read into it and that a Respondent known by a name corresponding to the domain name should not be able to take advantage of this sub-paragraph if the name was adopted with mala fide intent."). See also Kraft Foods North America Inc. v. The Pez Kiosk, WIPO Case No. D2001-1191.

In sum, while there is some evidence that the Respondent has become known by the domain name, that evidence is insufficient for a finding under paragraph 4(c)(ii) of the Policy. The Panel thus finds that the Respondent has not demonstrated a right or legitimate interest in the domain name, because her adoption of "Paule Ka Creations" as a business name coincided with her registration and use of the domain name.

Paragraph 4(b) of the Policy sets out four circumstances which, without limitation, shall be evidence of the registration and use of a domain name in bad faith, namely:

(i) Circumstances indicating that the respondent has registered or acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of the respondent’s documented out-of-pocket costs directly related to the domain name; or

(ii) The respondent has registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that respondent has engaged in a pattern of such conduct; or

(iii) The respondent has registered the domain name primarily for the purpose of disrupting the business of a competitor; or

(iv) By using the domain name, the respondent has intentionally attempted to attract, for commercial gain, Internet users to the respondent’s 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 the respondent’s web site or location or of a product on the respondent’s web site or location.

The Respondent knew she was using a commercial name (protected as a trademark) because she copied it from a Parisian boutique. That knowledge is sufficient to constitute bad faith registration under the Policy, even if the Respondent asserts that she did not think she was infringing any rights. Ignorance of the law is no excuse. Additionally, as a United States resident, she would most likely be found to have constructive knowledge of the Complainant’s registered mark. Perhaps she hoped the store had gone out of business, but she could easily have checked the trademark registry in her own country to realize she was using a protected mark. The Panel understands that there are many regulations that small businesses must abide by and the burden may at times appear heavy. However, that is not a situation that this Panel can change. Our legal system is predicated on the fact that citizens and businesses are supposed to know (and apply) the law.

That being said, the Complainant must prove both bad faith registration and use, unless it can prove that a situation mentioned in one of paragraphs 4(b)(i) to (iv) exists. As noted by the distinguished panelist in Telstra Corporation Limited v. Nuclear Marshmallows, WIPO Case No. D2000-0003: "From the fact that the ICANN Board accepted the approach recommended in the Second Staff Report, and thus adopted the Uniform Policy in the form originally proposed, it is clear that ICANN intended that bad faith registration alone not give rise to a remedy under the Uniform Policy. For a remedy to be available, the complainant must prove both that the domain was registered in bad faith and that it is being used in bad faith. This interpretation is confirmed, and clarified, by the use of both the past and present tenses in paragraph 4 (a)(iii) of the Uniform Policy. The use of both tenses draws attention to the fact that, in determining whether there is bad faith on the part of the respondent, consideration must be given to the circumstances applying both at the time of registration and thereafter. So understood, it can be seen that the requirement in paragraph 4(a)(iii) that the domain name ‘has been registered and is being used in bad faith’ will be satisfied only if the complainant proves that the registration was undertaken in bad faith and that the circumstances of the case are such that respondent is continuing to act in bad faith."

In this case, there is no evidence of any of the situations described in paragraphs (i) to (iii) above. The negotiations for the transfer of the domain name suggest that the parties were trying to avoid legal action and the Respondent’s insistence on receiving adequate payment was most likely not motivated by the desire to make a profit, but to recoup the costs related to the transition to a different business name and web site. Further, no intention to sell was demonstrated or even alleged (before an offer to purchase was received). The Panel thus turns to paragraph (iv) and other possible signs of bad faith.

The Complainant’s contentions on this point are essentially that:

- The Respondent "voluntarily refused" to transfer the contested domain name even if she had received several cease and desist letters;

- It is not possible to conceive plausible circumstances in which the Respondent uses the domain name in good faith. Reference was made to RRI Financial, Inc. v. Ray Chen, WIPO Case No. D2001-1242 (December 11, 2001);

- The Respondent uses the domain name to intentionally attract, for commercial gain, Internet users to her web site by creating a likelihood of confusion with the Complainant’s marks as to the source, the origin, the affiliation of the Respondent’s products and web site;

- Bad faith under the Policy is not limited to the four situations described in paragraph 4(b).

Starting with the last point mentioned by the Complainant, of course the four factors are not limitative. The chapeau of paragraph 4(b) says it explicitly: "…circumstances which, without limitation…". But that does not mean that when "less than" one situation described in paragraphs (i) to (iv) is present and no other element is shown, that these four situations can be diluted. In other words, if less than what is described in paragraphs (i) to (iv) is present, but other relevant factors are demonstrated, a finding of bad faith may be warranted. Examples include inactive sites (as in the above-mentioned Nuclear Marshmallows case); or bad faith registration coupled with an offer to sell and absent a showing of a legitimate interest (EFG Bank European Financial Group SA v. Jacob Foundation, WIPO Case No. D2000-0036; and ThyssenKrupp USA, Inc. v. Richard Giardini, WIPO Case No. D2001-1425).

On the first point, namely the Respondent’s refusal to transfer the domain name at issue, though it may have been mentioned as a bad faith factor in some panel decisions under the Policy, refusing to transfer a domain name after receiving a cease-and-desist letter is not, in this Panel’s view, a clear sign of bad faith for a Respondent who believes she is entitled to the domain name in question.

On the second point, namely the circumstances surrounding the registration, the Panel noted the explanation provided by the Respondent for her registration and use of the domain name. "Paule Ka" became her "nickname" after her 1998 trip to Paris. She adopted it as a business name at the suggestion of family and friends. The facts thus differ substantially from the RRI Financial case, in that here the Respondent did not register the domain nme with the specific intention of trading on the goodwill of the Complainant. However, the fact remains that there is a likelihood of confusion with the Complainant’s marks, the Respondent has no legitimate interest in the domain name, and the practical effect of her registering the domain name is that she is likely to benefit from the Complainant’s goodwill.

The Panel agrees with the Complainant that, in cases of a very strong or notorious mark when competitive products or services are concerned, or when a redirect towards a pornographic or similar type of site is concerned, a finding of good faith use may be precluded. Also, as noted in Research In Motion Limited v. Dustin Picov, WIPO Case No. D2001-0492, when the domain name is "so obviously connected with the Complainant and its services that its very use by someone with no connection to the Complainant suggests ‘opportunistic bad faith’" (See also Parfums Christian Dior v. Javier Garcia Quintas and Christiandior.net, WIPO Case No. D2000-0226; Veuve Clicquot Ponsardin, Maison Fondée en 1772 v. The Polygenix Group Co., WIPO Case No. D2000-0163; SSL International v. Mark Freeman, WIPO Case No. D2000-1080; Monty and Pat Roberts, Inc. v. J. Bartell, WIPO Case No. D2000-0300; Busy Body, Inc. v. Fitness Outlet Inc., WIPO Case No. D2000-0127; and Altavista Company v. Grandtotal Finances Limited, WIPO Case No. D2000-0848.) That is not the case here, however: the products are not competitive, nor has the Complainant offered any evidence of particular notoriety.

There is, in this case, as noted under 6(A) above, a likelihood of confusion, and possibly also a trademark infringement under Section 43(a) of the Lanham Act (15 USC §1125(a)), although this is not for this Panel to decide. Under the Policy, the question then is whether the Respondent "has intentionally attempted to attract, for commercial gain, Internet users to the Respondent’s web site." In other words, did she intend to divert Internet users (see International Business Publishers, Inc. v. The Center for Business Intelligence, LLC, WIPO Case No. D2001-0181)?

To put the question differently, how is the "intentional" element required under paragraph 4(b)(iv) to be defined? The Panel is guided in its consideration of the issue by the fact that a subjective test of intent (thus considered more or less as a mens rea element) would be difficult if not impossible to apply given that credibility must be assessed only on the basis of documentary evidence. It is difficult to enter the minds of the parties to determine their subjective intent. The proper test in this Panel’s view is whether the objective consequence or effect of the Respondent’s conduct is to free-ride on the Complainant’s goodwill, whether or not that was the primary (subjective) intent of the Respondent.

In light of the above, the Panel concludes that knowledge of the mark at the time of registration followed by use in commerce without a legitimate interest and likely to create confusion (and thus allow the Respondent to free-ride on the Complainant’s goodwill), is the proper test and that the Respondent has, in fact, "intentionally attempted to attract, for commercial gain, Internet users to the Respondent’s web site or other on-line location, by creating a likelihood of confusion with the Complainant’s mark." See Bodegas Vega Sicilia, S.A. v. Serafín Rodrígues Rodrígues, WIPO Case No. D2001-1183; The Channel Tunnel Group Ltd. v. John Powell, WIPO Case No. D2000-0038; eBay Inc. v. Sunho Hong, WIPO Case D2000-1633; and, Document Technologies, Inc. v. International Electronic Communications Inc., WIPO Case No. D2000-0270. The Respondent has thus registered and is using the domain name in bad faith as defined in the Policy.

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