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WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Damon’s Restaurants, Inc. v. JBR Enterprises, Inc.

Case No. D2007-1603

1. The Parties

Complainant is Damon’s Restaurants, Inc., Columbus, Ohio, United States of America, represented by the law firm Buckingham, Doolittle & Burroughs, LLP, United States of America

Respondent is JBR Enterprises, Inc., Mt. Airy, Maryland, United States of America, represented by the law firm Venable, LLP, United States of America.

2. The Domain Names and Registrars

The disputed domain names <damonscatering.com> and <damonsrestaurants.com> are registered with Network Solutions, LLC.

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on October 30, 2007. On October 31, 2007, the Center transmitted by email to Network Solutions, LLC a request for registrar verification in connection with the domain names at issue, and Network Solutions, LLC transmitted by email to the Center its verification response confirming that the Respondent is listed as the registrant and providing the contact details.

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 November 2, 2007. In accordance with the Rules, paragraph 5(a), and two extensions agreed by the parties the due date for Response was January 21, 2008. The Response was filed with the Center on January 18, 2008.

The Center appointed Richard G. Lyon as the sole panelist in this matter on January 31, 2008. The Panel finds that it was properly constituted and has jurisdiction over this proceeding. The Panel has submitted his Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, paragraph 7.

4. Factual Background

Complainant is a franchisor of restaurants throughout the United States of America that operate under the name Damon’s Grill. Complainant has four service marks, each of which has as its principal feature the word DAMON’S, registered on the principal register of the United States Patent and Trademark Office (USPTO) for restaurant services, and an application for a fifth mark, for DAMON’S GRILL, pending in the USPTO. The earliest of these marks claims a first use in commerce of 1982. Complainant’s principal website is located at <damons.com>.

At some time prior to August 2007 Complainant entered into franchise agreements with a third party for operation of six franchised restaurants in Wilmington, Delaware and Baltimore, Maryland. By notice received on August 14, 2007, Complainant declared the third party to be in breach of the franchise agreements. By their terms the agreements terminated ten days later. When the third party did not cease operating the franchised restaurants, Complainant brought suit against it in the United States District Court for the Southern District of Ohio, seeking an injunction against, among other things, further use of Complainant’s marks. This action apparently remains pending.

Respondent provides web designer services to its customers, one of which is the franchisee that Complainant seeks to terminate. In April and June 2007, Respondent registered the disputed domain names for its customer the franchisee. At some point the disputed domain names were used to promote the franchisee’s restaurant. Shortly after receipt of the Complaint Respondent appears to have taken down any active content pending the outcome of the suit in Ohio between Complainant and the franchisees.

5. Parties’ Contentions

A. Complainant

Complainant contends as follows:

The disputed domain names are confusingly similar to Complainant’s federally registered service marks because the principle feature of each is the word DAMON’S.

Any right that Respondent¹ had to the disputed domain names depended on the franchise agreement and terminated when that agreement terminated. Upon termination of that agreement, Respondent was no longer authorized to use the disputed domain names or make any other use of Complainant’s marks.

Respondent’s use of the disputed domain names without authorization is likely to cause confusion in the marketplace and allow Respondent to profit from unauthorized use of Complainant’s marks. As such Respondent intentionally has attempted to attract, for commercial gain, Internet users to the Respondent’s websites by creating a likelihood of confusion with the Complainant’s mark as to the source, sponsorship, affiliation, or endorsement of the Respondent’s websites or of a product or service on the Respondent’s websites, as prohibited under paragraph 4(b)(iv) of the Policy.

B. Respondent

Respondent does not contest Complainant’s trademark rights or similarity of the disputed domain names to them, and does not assert that it today has any rights or legitimate interests in them.

Respondent pitches its defense upon Complainant’s failure to provide any proof that Respondent’s registration of the disputed domain names was in bad faith. Bad faith in registration must be established separately from bad faith in use. Complainant bears the burden of proof under paragraph 4(a)(iii) of the Policy, and Complainant has provided no evidence that registration – which was made prior to the franchise termination – was unauthorized. Respondent submits a Google search that indicates that other franchisees of Complainant own and use domain names that incorporate Complainant’s marks to promote the restaurants that they operate, and whois printouts that demonstrate that these are not owned by Complainant.

By discontinuing any content related to Complainant or Respondent’s client’s restaurant upon notification of the Complaint, Respondent has not used the disputed domain names in bad faith.

6. Discussion and Findings

While panel opinions are normally organized in accordance with the three sub-paragraphs of paragraph 4(a) of the Policy, there are in fact five matters that a complainant must establish:

Paragraph 4(a)(i): [1] Complainant has rights in a mark and [2] the disputed domain name is identical or confusingly similar to that mark; and

Paragraph 4(a)(ii): [3] Respondent lacks rights or a legitimate interests in the disputed domain name; and

Paragraph 4(a)(iii): [4] The disputed domain name has been registered and [5] is being used in bad faith.

Complainant bears the burden of proof on each element. Respondent contests only the two matters under paragraph 4(a)(iii), items [4] and [5] above. As the Policy elements are conjunctive, failure to establish either results in a denial of the Complaint.

The plain language of the Policy and an unbroken line of decisions under the Policy clearly require proof of both registration and use in bad faith. In some circumstances a panel may infer registration in bad faith from subsequent use in bad faith – an attempt to sell the domain name, use of the domain name for a purpose unrelated to it, or extended non-use, for example. Some panels have even made this inference based upon subsequent breach of an express or implied contractual undertaking between the parties.² Those cases still require proof or inference of bad faith at the time of registration. There is no such proof in this proceeding and no basis to make such an inference.

Respondent registered the disputed domain names in April and June 2007, on behalf of its client, which was at that date one of Complainant’s franchisees. Complainant’s termination of the Maryland franchisees occurred several months later, in August 2007, and nothing in the record indicates a dispute prior to that date. The franchisee’s use of Complainant’s marks following termination of the franchise may, as Complainant contends, constitute use in bad faith under the Policy. But Complainant must still prove registration in bad faith to meet the first criterion of paragraph 4(a)(iii), item [4] above.

The Panel might be able to find bad faith at the time of registration if the applicable franchise agreement expressly prohibited the franchisee from incorporating one of Complainant’s marks into a domain name, or restricted uses of Complainant’s marks more generally, such as requiring the mark owner’s consent to any use in advertising. Complainant has not produced an agreement to this effect and indeed has not argued that such a restriction exists or ever existed. If such a restriction did exist it was perforce available to Complainant franchisor, a party to the agreement.

Complainant might also have shown that it pursued other franchisees for unauthorized registration of domain names incorporating Complainant’s marks, if such evidence existed. The available evidence points in the opposite direction; Respondent has shown that other domain names that incorporate Complainant’s marks are regularly being used by other franchisees. Even assuming that a restriction on franchisees vicariously attaches to their agents such as Respondent, on the record there is no evidence from which the Panel can infer that at the time of registration such a restriction existed, or that registration was made for anything other than a permitted purpose and without an objection from Complainant.

The Policy has been in force for nearly a decade. On many subjects there have been sufficient decisions under the Policy to provide relative certainty of application to particular factual circumstances that regularly arise. One such area that is now well settled is that a reseller, such as a distributor or franchisee, may in the absence of contractual restrictions to the contrary use its supplier’s marks in a domain name under certain conditions. See WIPO Overview of WIPO Panel Views on Selected UDRP Questions, paragraph 2.3, and cases there cited. If a mark owner failed to bargain for the necessary contractual restrictions when the relationship began, it may not complain later when their absence prevents recovery of its reseller’s domain name after the business relationship soured.

Post-termination use of Complainant’s marks may state a claim at law for breach of contract or for trademark infringement. Complainant has apparently asserted these charges against the Maryland franchisees (including Respondent’s customer) in its Ohio lawsuit. That lawsuit, not this Policy proceeding, is the place for resolution of those issues and, perhaps, ultimate entitlement to ownership and continued use of the disputed domain names. In this proceeding Complainant bears the burden of proof on each Policy element, yet has offered nothing from which the Panel could base a finding that Respondent registered the disputed domain names in bad faith.

7. Decision

For all the foregoing reasons, the Complaint is denied.

Richard G. Lyon
Sole Panelist

Dated: February 14, 2008

¹ Complainant alleged, upon information and belief, that Respondent was affiliated with one of the terminated franchisees. As will be seen in the Panel’s decision, for purposes of this proceeding the Panel has assumed (without holding) that the same analysis applies to the franchisor’s web designer agent as to the franchisor itself.

² See, e.g., R&M Italia SpA, Tycon Technoglass Srl v. EnQuip Technologies Group, Inc., WIPO Case No. D2007-1477, EDIFIL, S.A. v. Dominguez, WIPO Case No. D2003-0485; Nova Bank v. Iris, WIPO Case No. D2003-0366; Hesco Bastion Ltd. v. The Trading Force Ltd., WIPO Case No. D2002-1038; Primedia Magazine Finance Inc. v. Next Level Productions, WIPO Case No. D2001-0616; Microsoft Corporation v. Cupcake City, WIPO Case No. D2000-0818. As before (see Grayson International, Inc. v. William Loncar, WIPO Case No. D2003-0805) n14, the undersigned Panel expresses considerable doubt about whether these cases or their rationale can be squared with the express language of paragraph 4(a)(iii).