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WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Chardee, Inc. d/b/A Sea Lake Yacht Sales v. Digicad

Case No. D2007-0505

1. The Parties

The Complainant is Chardee, Inc. d/b/a Sea Lake Yacht Sales, Kemah, Texas, United States of America, represented by Watkins & Watkins, Houston, Texas, United States of America.

The Respondent is Digicad, Xavier Varela, Houston, Texas, United States of America, represented by Leyh & Payne, LLC, Houston, Texas, United States of America.

2. The Domain Name and Registrar

The disputed domain name <sealakeyachts.com> is registered with AAAQ.com, Inc.

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on April 2, 2007. On April 4, 2007, the Center transmitted by email to AAAQ.com, Inc. a request for registrar verification in connection with the domain name at issue. On April 11, 2007, AAAQ.com, 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 April 16, 2007. In accordance with the Rules, paragraph 5(a), the due date for Response was May 6, 2007. The Response was filed with the Center on May 7, 2007.

The Center appointed William R. Towns as the sole panelist in this matter on June 1, 2007. 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.

On June 12, 2007, the Panel issued an Administrative Procedural Order inviting the Complainant to submit further evidence to support its claim of common law trademark rights in Sea Lake Yachts. The Complainant submitted a Supplemental Statement and Annexes on June 19, 2007. The Respondent was afforded an opportunity to submit a supplemental response, but did not do so.

A related lawsuit commenced by the Complainant against the Respondent presently is pending in the 133^rd Judicial District Court of Harris County, Texas, styled Chardee, Inc. d/b/a Sea Lake Yacht Sales v. Digicad and Xavier Varela.

4. Factual Background

The Complainant is in the yacht brokerage business. The Complainant does business as Sea Lake Yacht Sales, and has done so continuously since 1975. The Complainant maintains a commercial website on the Internet to which the disputed domain name <sealakeyachts.com> resolves.

There is no disagreement that the disputed domain name was registered for use with the Complainant’s website. The Respondent developed the Complainant’s website, and subsequently maintained and provided Internet and email services to the Complainant in association with the website for a monthly fee. The disputed domain name has always been used with the Complainant’s website; however, the Respondent registered the disputed domain in its own name.

The business relationship between the Complainant and Respondent has ended. The Complaint was filed after the Respondent sought US$21,600 in consideration for the transfer of the disputed domain name and the Complainant’s website.

5. Parties’ Contentions

A. Complainant

The Complainant contends that is has established common law trademark rights in SEA LAKE YACHTS through its exclusive and continuous use since as early as 1975 as a source identifier for the Complainant’s yacht brokerage services. The Complainant maintains that the Respondent has no rights or legitimate interests in the disputed domain name, which was registered for use with the Complainant’s website and has been used exclusively for that purpose for many years. The Complainant alleges that the Respondent registered the disputed domain name in bad faith in order to sell the domain name to the Complainant or to a competitor of the Complainant at an exorbitant price.

B. Respondent

The Respondent denies that the Complainant has established trademark rights in SEA LAKE YACHTS. The Respondent maintains that it was contracted by the Complainant to build and maintain the website with which the disputed domain name is associated, and that the Complainant no longer wishes to use the Respondent for such services and will not agree to pay the Respondent for the continuing maintenance of the website.

The Respondent denies any bad faith. The Respondent maintains that it is a provider of Internet and similar computer services, and that it registered the disputed domain name in order to provide services to the Complainant on an ongoing contract basis. The Respondent claims it is only seeking to recoup its out of pocket expenses directly related to the domain name, and also argues that the Complainant is attempting to cheat the Respondent out of a reasonable fee for services provided.

Finally, the Respondent requests the Panel to permanently abate this administrative proceeding due to the state court lawsuit commenced by the Complainant.

6. Procedural Issues

As noted above, a related lawsuit has been commenced by the Complainant against the Respondent in the 133^rd Judicial District Court of Harris County, Texas, styled Chardee, Inc. d/b/a Sea Lake Yacht Sales v. Digicad and Xavier Varela (the “state court lawsuit”). The Respondent urges the Panel to permanently abate this administrative proceeding during the pendency of the state court lawsuit, in which the Complainant alleges claims for breach of contract, breach of fiduciary duties, and tortious conduct, and seeks relief well beyond the limited remedies available under the Policy concerning the abusive registration and use of domain names.

Pursuant to paragraph 18(a) of the Rules, when notified of “any legal proceedings initiated prior to or during an administrative proceeding in respect of a domain-name dispute that is the subject of the complaint, the Panel shall have the discretion to decide whether to suspend or terminate the administrative proceeding, or to proceed to a decision.” While this domain name dispute appears to the Panel to be interrelated to the larger dispute framed for resolution in the state court lawsuit, the Policy is restricted to the issue of cybersquatting, and the questions to be addressed by the Panel under the policy are relatively simple and straightforward.

While acknowledging no clear consensus among UDRP panelists in the application of paragraph 18(a)¹ of the Rules, the Panel believes it is appropriate in the circumstances of this case for it to proceed to a decision.

7. Discussion and Findings

A. Scope of the Policy

The Policy is addressed to resolving disputes concerning allegations of abusive domain name registration and use. Milwaukee Electric Tool Corporation v. Bay Verte Machinery, Inc. d/b/a The Power Tool Store, WIPO Case No. D2002-0774. Accordingly, the jurisdiction of this Panel is limited to providing a remedy in cases of “the abusive registration of domain names”, also known as “cyber squatting”. Weber-Stephen Products Co. v. Arbitrage Hardware, WIPO Case No. D2000-0187. See Report of the WIPO Internet Domain Name Process, paragraphs 169 and 170. Paragraph 15(a) of the Rules provides that the Panel shall decide a complaint on the basis of statements and documents submitted and in accordance with the Policy, the Rules and any other rules or principles of law that the Panel deems applicable.

Paragraph 4(a) of the Policy requires that the Complainant prove each of the following three elements to obtain a decision that a domain name should be either cancelled or transferred:

(I) The domain name registered by the Respondent is identical or confusingly similar to a trademark or service mark in which the Complainant has rights; and

(ii) The Respondent has no rights or legitimate interests in respect of the domain name; and

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

Cancellation or transfer of a domain name are the sole remedies provided to a complainant under the Policy, as set forth in paragraph 4(I).

Paragraph 4(b) of the Policy sets forth four situations under which the registration and use of a domain name is deemed to be in bad faith, but does not limit a finding of bad faith to only these situations.

Paragraph 4(c) of the Policy in turn identifies three means through which a respondent may establish rights or legitimate interests in a domain name. Although the complainant bears the ultimate burden of establishing all three elements of paragraph 4(a) of the Policy, panels have recognized that this could result in the often impossible task of proving a negative, requiring information that is primarily if not exclusively within the knowledge of the respondent. Thus, the consensus view is that paragraph 4(c) of the Policy shifts the burden to the respondent to come forward with evidence of a right or legitimate interest in the domain name, once the complainant has made a prima facie showing. See, e.g., Document Technologies, Inc. v. International Electronic Communications Inc., WIPO Case No. D2000-0270.

B. Identical or Confusingly Similar

The Complainant must demonstrate that the disputed domain name is identical or confusingly similar to a trademark or service mark in which the Complainant has established rights. The Complainant has not registered SEA LAKE YACHTS as a trademark, but it is well settled that the term “trademark or service mark” as used in paragraph 4(a)(I) of the Policy encompasses both registered marks and common law marks. See, e.g., The British Broadcasting Corporation v. Jaime Renter, WIPO Case No. D2000-0050; United Artists Theatre Circuit, Inc. v. Domains for Sale Inc. WIPO Case No. D2002-0005, The Professional Golfers’ Association of America v. Golf Fitness Inc., a/k/a Golf Fitness Association, WIPO Case No. D2001-0218.

Under United States trademark law, common law rights in a trademark or service mark may be established by extensive or continuous use sufficient to identify particular goods or services as those of the trademark owner. See United Drug Co. v. Theodore Reactants Co., 248 U.S. 90 (1918). The extensive or continuous use of a designation in advertising may establish its significance as an identifier of the user’s goods or services, particularly where the designation is not merely descriptive of the goods or services. See Restatement (Third) of Unfair Competition § 18 (1995). Ultimately, common law rights in a trademark depend on the actual use of the mark in commerce sufficient to distinguish the trademark owners’ goods or services from those of its competitors. See T.A.B. Systems v. Pastel Telstra, 77 F.3d 1372 (Fed.Cir. 1996).

Applying these legal principles to the circumstances of this case, the Panel concludes that the Complainant has established common law trademark or service mark rights in SEA LAKE YACHTS. The Panel’s conclusion is based on the Complainant’s extensive, continuous and exclusive use of SEA LAKE YACHTS since the mid-1970s in relation to its yacht dealership and brokerage services, coupled with evidence of the Complainant’s sales and its competitive position in the market it serves, and the extensive use of SEA LAKE YACHTS by the Complainant in advertising and marketing.

The disputed domain name is identical to the Complainant’s mark. Accordingly, the Panel finds that the Complainant has satisfied the requirements of paragraph 4(a)(i) of the Policy.

C. Rights or Legitimate Interests

As noted above, the Complainant is required to make a prima facie showing under paragraph 4(a)(ii) of the Policy in order to shift the burden to the Respondent to come forward with evidence of rights or legitimate interests in the disputed domain name under paragraph 4(c) of the Policy. The Complainant did not license the Respondent to use the Complainant’s mark or to register and claim ownership of a domain name appropriating the Complainant’s mark. The Panel is persuaded from its overall review of the record of this case that a prima facie showing under paragraph 4(a)(ii) of the Policy has been made. See, e.g., Document Technologies, Inc. v. International Electronic Communications Inc., WIPO Case No. D2000-0270; Compagnie de Saint Gobain v. Com-Union Corp., WIPO Case No. D2000-0020.

Pursuant to paragraph 4(c) of the Policy, the Respondent may establish rights to or legitimate interests in the disputed domain name by demonstrating any of the following:

(i) before any notice to it of the dispute, the respondent’s 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) the respondent has been commonly known by the domain name, even if it has acquired no trademark or service mark rights; or

(iii) the respondent is 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.

The Respondent has offered no evidence of any legitimate use of the disputed domain name that might fall within the safe harbor provisions of paragraph 4(c) of the Policy. While the domain name has been used to resolve to the Complainant’s website, the Respondent can make no claim to be using the domain name in connection with a bona fide offering of goods or services on that website. The Respondent by its own admission “is not in the business of selling sailboats”, but instead is a “provider of internet and similar computer based services.”

As a provider of Internet services, the Respondent’s registration of a domain name incorporating the Complainant’s mark does not of itself bestow upon the Respondent any rights or legitimate interests in the domain name. Mobile Data Testing Services, Inc. d/b/a HealthTrac v. Tim Synor, WIPO Case No. D2004-0889. To the contrary, the Respondent’s decision to appropriate a customer’s trademark for its own use belies any plausible claim of legitimacy. See Primedia Magazine Finance Inc. v. Next Level Productions, WIPO Case No. D2001-0616; NIKE Inc. v. Granger and Associates, WIPO No. D2000-0108.

Accordingly, the Panel finds that the Respondent has failed to meet its burden under paragraph 4(c) of establishing rights or legitimate interests in the disputed domain name. The Panel deems that the Complainant has satisfied the requirements of paragraph 4(a)(ii) of the Policy

D. Registered and Used in Bad Faith

Paragraph 4(b) of the Policy states that any of the following circumstances, in particular but without limitation, shall be considered evidence of the registration or use of a domain name in bad faith:

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

(ii) circumstances indicating that the respondent 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 the respondent has engaged in a pattern of such conduct;

(iii) circumstances indicating that the respondent registered the domain name primarily for the purpose of disrupting the business of a competitor; or

(iv) circumstances indicating that the respondent intentionally is using the domain name in an attempt to attract, for commercial gain, Internet users to its website 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 website or location or of a product or service on its website or location.

The examples of bad faith registration and use set forth in paragraph 4(b) of the Policy are not meant to be exhaustive of all circumstances from which such bad faith may be found. See Telstra Corporation Limited v. Nuclear Marshmallows, WIPO Case No. D2000-0003. The overriding objective of the Policy is to curb the abusive registration of domain names in circumstances where the registrant is seeking to profit from and exploit the trademark of another. Match.com, LP v. Bill Zag and NWLAWS.ORG, WIPO Case No. D2004-0230.

In this case, the Respondent, as a provider of Internet services, registered a domain name appropriating the trademark of its customer. The Respondent acquired no rights or legitimate interests in the domain name by so doing. Nor, under the circumstances of this case, can the Panel conceive of any plausible actual or contemplated active use of the disputed domain name by the Respondent that could be considered legitimate. It is a fair inference from the record that the Respondent was aware of the Complainant’s rights in the SEA LAKE YACHTS mark when it registered the disputed domain name. Nevertheless, the Respondent has refused to transfer the disputed domain name to the Complainant unless paid the sum of US$21,600, an amount that the Panel has no doubt greatly exceeds the Respondent’s out-of-pocket costs directly related to the domain name.

The circumstances of this case in this Panel’s judgment establish the Respondent’s bad faith registration and use of the disputed domain name. Accordingly, the Panel finds that the Complainant has satisfied the requirements of paragraph 4(a)(iii) of the Policy

8. Decision

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 <sealakeyachts.com> be transferred to the Complainant.

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William R. Towns
Sole Panelist

Dated: July 3, 2007

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¹ Compare Weber-Stephen Products Co. v. Armitage Hardware, WIPO Case No. D2000-0187, with Jason Crouch and Virginia McNeill v. Clement Stein, WIPO Case No. D2005-1201. The Panel further notes that the decision in this administrative proceeding carries no precedential weight and is not binding on the state court, although the Panel hopes that its decision may prove helpful to the court in its deliberations. See Report of the WIPO Internet Domain Name Process, paragraph 169(ii).