Source: https://dnattorney.com/dn-resources/geniebooks-com-v-merritt/
Timestamp: 2019-04-22 20:02:00+00:00

Document:
Domain name - Domain name registration - Bad faith - Competitor using domain name - Identical - No legitimate use - No trademark - Common law trademark rights - No intent to use name - No fair use - Application of United States laws - United States trademark law - United States common law - To announce litigation is not legitimate use.
Complainant is an electronic publishing and electronic book distribution company. Since at least as early as December 9, 1999, the geniebooks.com name has been used to refer to the geniebooks.com business in contacts with third persons. By January 7, 2000, a deal was being closed on behalf of geniebooks.com with a major software publisher. On December 8, 1999, Complainant submitted a reservation for the geniebooks.com URL. However, the reservation was not confirmed and Complainant was not aware the reservation had been unsuccessful.
Paragraph 4(a)(i) requires that Respondents domain name is identical or confusingly similar to a trademark or service mark in which Complainant has rights. Respondent contends that Complainant has not met this requirement because Complainant lacks trademark rights in the geniebooks.com mark because Complainant has made no showing as to any trademark registration.
Since all parties are domiciled in the United States, to the extent that it would assist the Panel in determining whether Complainant has met its burden as established by Paragraph 4(a) of the Policy, the Panel will look to the principles of the law of the United States. Under United States law the fact that the Complainant does not have a registered mark does not end the trademark or service mark rights analysis. Actual use in commerce establishes protectable trademark rights under United States common law. The "use in commerce" standard requires (a) a bona fide use of a trademark or service mark in the ordinary course of trade, and (b) not made merely to reserve a right in a mark. The evidence shows that the name used is identical or confusingly similar to Complainants mark.
The evidence presented shows that Respondent never attempted to use the domain name in connection with offering any goods or services, nor any business of any kind. Respondent does not deny this.
Respondent offers two asserted "legitimate" uses. First, he says his ownership interests are superior to Complainants in the geniebooks.com Corporation. Second, he urges that the use of the domain name to advise "John Does" of the litigation is such legitimate use. Neither basis is appropriate.
To allow a dissident shareholder or purported shareholder to appropriate a domain name of an existing corporation is not fair use and is not a noncommercial or fair use without intent for commercial gain. Respondent has other fora for addressing the respective ownership rights to the domain name, such as in the Oregon shareholders action. Judicial procedures and other procedures provide perfectly adequate means to perfect service and to advise interested parties about litigations. Adoption of anothers mark as a domain name in its totality is not appropriate or required to provide such notice.
The evidence presented by the parties demonstrates that the Respondent did both register and use the domain name in bad faith. At the time Respondent registered the domain name, Complainant was using the mark geniebooks.com corporation in direct competition with the RoxyBooks.com corporation. Complainant had used the term geniebooks.com in connection with outside persons since at least as early as December 9, 1999. Respondent was aware of this use.
On January 14, 2000, Respondent was sent a copy of an email from Mr. Van Dyk to RoxyBooks.coms president, together with the draft agreement, using the term geniebooks.com. On that same day, Respondent, in bad faith, registered geniebooks.com with Register.com, Inc. in his own name. Respondent had no intention of using the geniebooks.com name. Rather than any legitimate use of the name for Respondents own business, the use was in bad faith to try to resolve a corporate management dispute at RoxyBooks.com and to keep Complainant from using the name in a competitive company.
William E Merritt v. Geniebooks.com Corporation, RoxyBooks.com Corporation, Christopher R. Van Dyk, Roxann Caraway, Ed Hutson, Jim Tate and John Does 1 through 20.
Walt Disney Productions v. Kusan, Inc., 204 U.S.P.Q. 284, 287 (1979).
Hotel Corp. of America v. Inn America, Inc., 153 U.S.P.Q. 574, 575 (1967).
Campagnie de Saint Gobain v. Com-Union Corp., ICANN Case No. D2000-0020 (WIPO).
Frank Wagner & Son v. Cindy Mahan a/k/a Cindy Maham, an individual, Case No. D2000-0261 (WIPO).
Complainant is geniebooks.com (hereinafter "geniebooks.com") a Washington corporation, with its principal place of business in Seattle, Washington, U.S.A. Respondent is William E. Merritt, 1431 SE Knight Street, Portland, OR 97202, U.S.A. (hereinafter "Merritt").
The domain name at issue is geniebooks.com registered with Register.com, Inc.
The procedural history of this dispute is set forth in the Panels earlier decision allowing Respondent to file a response even though the time to respond had passed. This was because of failure of proper service. The history will not be repeated here. Suffice it to say here only that the matter is now appropriate for the Panel to decide. All necessary formalities and procedures have been accomplished.
geniebooks.com is an electronic publishing and electronic book distribution company headquartered in Seattle, Washington. geniebooks.com was conceived of by Chris Van Dyk, also the companys incorporator. Mr. Van Dyk filed an extensive declaration in this case, affirming most of the facts set forth in this section. Mr. Merritt filed no responsive declaration. He relied only on a brief and his unverified Complaint against Van Dyk, geniebooks.com, Roxybooks.com and others in a shareholders derivative action. Most of the facts asserted by Mr. Van Dyk as to adoption and use of geniebooks.com are uncontested.
Prior to his involvement with geniebooks.com, Van Dyk was President and Chief Administrative Officer of RoxyBooks.com corporation ("Roxy"). Roxy is also in the electronic publishing and electronic book distribution business. On November 11, 1999, by motion presented to the Executive Management Committee of Roxy by Respondent, William E. Merritt, Van Dyk was relieved of his duties as President & CAO of Roxy. In a Board of Directors meeting on November 15, 1999, Van Dyk was nominated to a newly created position of Vice President of Finance, but due to serious differences in opinion with respect to Merritts business plans related to Roxy, Van Dyk declined the nomination and resigned his position as president.
On or about November 20, 1999, Van Dyk met with at least one person who worked directly with him at Roxy about creating a new company. At least as early as November 27, 1999, Van Dyk had developed a preliminary strategy and workplan for the development of the new company, named geniebooks.com Corporation.
The geniebooks.com name was inspired by Van Dyks wife, Jeanne (pronounced like Genie). Van Dyk changed the spelling because "Genie" is an Anglicization of the Arabic jenni and a French word derived from the Latin "genius" which translates roughly to mean the prevailing spirit or guardian knowledge of the place or home. The idea behind the name was that geniebooks.com is the genius domus, engendering and informing the spirit of knowledge through the electronic books that will be delivered to readers from the geniebooks.com website.
Since at least as early as December 9, 1999, Van Dyk has used the geniebooks.com name to refer to the geniebooks.com business in contacts with third persons, e.g., potential investors. Further, by January 7, 2000, Van Dyk had negotiated and was closing a deal on behalf of geniebooks.com with a major software publisher.
On December 8, 1999, Van Dyk submitted a reservation for the geniebooks.com URL to Network Solutions Inc. ("NSI"). However, due to what appears to be a technical problem at NSI, the reservation was not confirmed, nor was Van Dyks credit card charged for a reservation. NSI did not provide Complainant with any notice of a problem. Thus, Complainant was not aware the reservation had been unsuccessful.
On January 13, 2000, Thomas Finnelly, Vice-President of geniebooks.com filed the Articles of Incorporation and a Registered Agent Consent (the "Articles") on behalf of geniebooks.com. He requested and paid for expedited filing. Despite the request for expedited service, geniebooks.com was not incorporated until January 19, 2000, because the Secretary of State wanted to change the corporate address from a P.O. Box to a street address.
From December to mid-January, Jim Tate (CEO of geniebooks.com) and Van Dyk met and worked with website and software developers, developing the organization that would in turn develop and build the software infrastructure for the geniebooks.com website (the "Website"). They planned to launch the Website approximately two months after securing initial capital for the company. Their primary task was creating the legal documents -- the Offering Memorandum -- which would enable them to legally raise said capital. On January 17, 2000, Van Dyk substantially completed the Offering Memorandum.
Between November 1999 and January 2000, Van Dyk was negotiating with Roxy regarding a termination agreement (the "Termination Agreement") so that Van Dyk could pursue geniebooks.com. Specifically, Van Dyk was corresponding with Ricardo Fleischfresser, who until the week of January 17, 1999 1 and subsequent to Van Dyks termination, was the President of Roxy. By Friday January 14, 2000, Van Dyk and Fleischfresser were in the final stages of drafting the Agreement. Van Dyk sent Fleischfresser a copy of the proposed Agreement by email. In the body of the email Van Dyk indicated that geniebooks.com was to be a party to the agreement and commented on other minor changes to the Agreement.
On January 18, 2000, Van Dyk met with Ricardo Fleischfresser of Roxy on behalf of Roxy shareholders, who, together with Van Dyk, owned over 50% of Roxy. Meetings occurred on that and the following day to work out the terms of a tender offer and purchase agreement for Roxy. William Merritt was informed of this proposal, including the involvement of geniebooks.com, on January 19, 2000. The Majority Members, and all other shareholders with the exception of Merritt and two minor shareholders accepted the proposal and geniebooks.com now owns approximately 72% of Roxy common stock. Merritt was and remains hostile to the purchase.
"..., these activities are not effective to divest Respondent of his ownership in the underlying business and, consequently, Respondent is the sole, real owner of Geniebooks. Accordingly, Respondent filed suit in the Circuit Court of the State of Oregon for the County of Multnomah, Case Number 0002 01511, captioned William E Merritt v. Geniebooks.com Corporation, RoxyBooks.com Corporation, Christopher R. Van Dyk, Roxann Caraway, Ed Hutson, Jim Tate and John Does 1 through 20.
That suit was filed in February 2000. Respondent there alleges that all stock in Geniebooks should be held in constructive trust for RoxyBooks and its shareholders.
Respondent Was Adverse to Geniebooks.com and Was Aware of its Activities.
"[s]tarting in late November, 1999, and continuing through the present, Van Dyk set up, owned and ran Geniebooks DBA, a business he established to compete with RoxyBooks. When Geniebooks DBA was incorporated under the name Geniebooks.com Corporation, Van Dyk became president and chairman of the board of directors of Geniebooks."
Respondent was informed of the existence of geniebooks.com and Van Dyks specific plans with respect to geniebooks.com at least as early as January 14, 2000. As noted above, RoxyBooks.com was sent an e-mail and the draft Separation Agreement on January 14, 2000, which showed Van Dyk was using the geniebooks.com name. Although he does not appear as a recipient in the email attached as part of Exhibit E, William Merritt was sent a copy of the email and the attached Agreement at the same time. See Van Dyk Declaration, ¶ 5 and Exhibit F to the Complaint.
(3) the domain name was registered and is being used in bad faith.
(1) Complainant has no trademarks or service marks. At most, Geniebooks.com is only a company name adopted when Van Dyk was approaching potential investors.
(2) Respondent has a legitimate right to the domain name because his ownership interest in the Geniebooks.com company is superior to and displaces the other reputed shareholders. Additionally, since Respondent must serve the "John Does" with his Complaint, the webpage allows the John Does to find out about the lawsuit.
(3) There was no bad faith because Respondent had the right to protect his and RoxyBooks interests by registering this name. He did so before Complainant had established trademark rights. He also alleges he has been using the domain name for the good faith purposes of giving notice to John Doe defendants named in the litigation.
The Policy is addressed to resolving disputes concerning allegations of abusive domain name registration.
(iii) Respondents domain name has been registered and is being used in bad faith.
Paragraph 4(a)(i) requires that Respondents domain name is identical or confusingly similar to a trademark or service mark in which the Complainant has rights. The Respondent contends that Complainant has not met this requirement because the Complainant lacks trademark rights in the geniebooks.com mark, pointing out that Complainant has made no showing as to any trademark registration.
Paragraph 15(a) of the Rules instructs the Panel as to the principles the Panel is to use in determining the dispute: "A Panel shall 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." Since all parties are domiciled in the United States, to the extent that it would assist the Panel in determining whether the Complainant has met its burden as established by Paragraph 4(a) of the Policy, the Panel will look to the principles of the law of the United States. Complainant was requested by the Panel to provide supplemental legal authority showing that its activities meet the requirements of Policy paragraph 4(a)(i). It provided no authority in response to that request.
Under United States law the fact that the Complainant does not have a registered mark does not end the trademark or service mark rights analysis. Actual use in commerce, without more, establishes protectable trademark rights under United States common law 3. The "use in commerce" standard requires (a) a bona fide use of a trademark or service mark in the ordinary course of trade, and (b) not made merely to reserve a right in a mark 4.
"Starting in late November 1999, and continuing through the present, Van Dyk and Geniebooks have directly competed with RoxyBooks in the business of posting and selling electronic copies of books on the World Wide Web."
Geniebooks.com has also offered a signed declaration showing uses of the mark geniebooks.com in the ordinary course of trade. Complainant has had business contacts with investors and secured financing for the company using the mark geniebooks.com; has incorporated under the name geniebooks.com in Washington State; has worked with website and software developers using the mark geniebooks.com; and has entered into a signed agreement with Online Web Ventures to provide web hosting for geniebooks.com. There is no need for evidence of an actual sale to establish trademark rights, as long as the company is not merely trying to reserve a right in a mark 5. Here it is clear that geniebooks.com is not merely trying to reserve a mark, but has used and intends to continuously use the mark in the ordinary course of its trade as an electronic book publisher.
Respondent contends that Complainants assertion is simply that Respondent has registered Complainants business name (not a trade or service mark) as a domain name, and cites to Frank Wagner & Son v. Cindy Mahan for authority that this is insufficient 6. However, it is established that the name of a company may also be a trademark 7. In Frank Wagner & Son, the Complainant presented no evidence of the establishment of common law trademark rights to the panel. Hence, the panel had no choice but to rely on the fact that the mark was not registered and reject the notion that the Complainant in that case had established rights in the mark. Here that is not the case. The Respondents Complaint admits trade or service mark use and Complainants declaration presents activities sufficient to establish common law trademark or service mark rights.
The evidence presented demonstrates that the domain name geniebooks.com is identical or confusingly similar to Complainants geniebooks.com mark. Therefore, the requirement of Paragraph 4(a)(i) is met.
Paragraph 4(c) of the Policy enumerates how a respondent may establish rights to and legitimate interests in a domain name. The evidence presented shows that Respondent never attempted to use the domain name in connection with offering any goods or services, nor any business of any kind. Respondent does not deny this. Therefore, subparagraphs (i) and (ii) of Para. 4(c) are inapplicable. Paragraph 4(c)(iii) does describe a circumstance under which a Respondent can demonstrate such rights and interests even without a commercial use. This is where "you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleading divert consumers or to tarnish the trademark or service mark at issue."
This section is meant to cover such "fair uses" as have long been recognized under the law, e.g., use of descriptive words in a descriptive sense, use of a geographic mark to tell customers of location, use of a personal name, etc. To allow a dissident shareholder or purported shareholder to appropriate a domain name of an existing corporation is not such a use and certainly is not a noncommercial or fair use without intent for commercial gain. Additionally, Respondent has other, more appropriate fora for addressing the respective ownership rights to the domain name, such as in the Oregon shareholders action. If Respondent is correct, that Court can address relief as to ownership of the domain name.
Likewise, and for the same reasons, the purported use of the domain name for advising John Does in the existing litigation is insufficient. Judicial procedures and other procedures provide perfectly adequate means to perfect service and to advise interested parties about litigations. Adoption of anothers mark as a domain name in its totality is not appropriate or required to provide such notice. Arbitrators applying the ICANN Policy have recognized this principle in analogous contexts. As the arbitrator said in Campagnie de Saint Gobain v. Com-Union Corp., ICANN Case No. D2000-0020.
"[i]t goes without saying that shareholders or other interested parties have the right to voice opinions, concerns and criticism with respect to a listed company and that the Internet constitutes an ideal vehicle for such activities. The issue at hand is however not as a Respondent seems to contend, the freedom of speech and expression but the mere choice of the domain name used to exercise this inalienable freedom of speech and expression. When registering the Domain Name, Respondent knowingly chose a name which is identical and limited to the trademark of Complainant. . . . Respondent could have chosen a domain name adequately reflecting both the object and independent nature of its site, as evidenced today in thousands of domain names. By failing to do so, and by knowingly choosing a domain name which solely consists of Complainants trademark, Respondent has intentionally created a situation which is at odds with the legal rights and obligations of the parties."
The evidence shows that Respondent merely registered this domain name as a tactical move in the struggle between Complainant and Respondent for control of RoxyBooks.com and/or to preclude the competitor or potential competitor geniebooks.com from using the name on the Internet. For example, Respondents letter of March 4, 2000 demanding an immediate cessation of the use of the Geniebooks.com name makes no reference whatsoever to any right or legitimate interest of Respondent with respect to use of the domain name. Rather, Respondent speaks about reservation of the domain name only in the context of the ongoing business struggle for control of the RoxyBooks.com corporation.
Therefore, the requirement of paragraph 4(a)(ii) has been proved by Complainant.
The third element Complainant must prove is in the conjunctive: the domain name "has been registered" and "is being used in bad faith." The evidence presented by the parties demonstrates that the Respondent did both register and use the domain name in bad faith.
As to the original registration, Respondents Complaint admits that, at the time Respondent registered the domain name, Complainant was using the mark geniebooks.com corporation in direct competition with the RoxyBooks.com corporation. The evidence also shows that Complainant had used the term geniebooks.com in connection with outside persons since at least as early as December 9, 1999, and had submitted a reservation for the geniebooks.com URL with Networks Solutions prior to Respondents registration. Furthermore, Respondent was aware of this use. During the negotiations of Mr. Van Dyks Termination Agreement with Roxy, on January 14, 2000, Respondent was sent a copy of an email from Mr. Van Dyk to RoxyBooks.coms president, together with the draft agreement, using the term geniebooks.com. On that same day, Respondent, in bad faith, registered geniebooks.com with Register.com, Inc. in his own name. No lawsuit was pending then, so notification of John Does could hot have been a basis for the initial registration.
Likewise, considering all of the evidence, I find that Complainant has shown that Respondent is using the domain name in bad faith. As noted, at the time of registration Respondent had no intention of using the geniebooks.com name. Rather than any legitimate use of the name for Respondents own business, the use was in bad faith to try to resolve a corporate management dispute at RoxyBooks.com and to keep Van Dyke from using the name in a competitive company.
The letter of March 4, 2000, on the letterhead of RoxyBooks.com and signed "William E. Merritt, Chairman, RoxyBooks.com Corporation," says that "Ive reserved the Genie.com URL on 14 Jan. 00. Since genieBooks.com Corporation was not even formed until 19 Jan. 00-in obvious response to my having already registered the name-its clear that you people are trying to pirate a business name that belongs to me." He goes on to demand immediate cessation of the use of the geniebooks.com name. It is apparent that the registration by the chairman of one competitor of his competitors business name and use of that name is done in bad faith. See the Policy, para. 4(b)(iii) providing that registration and use of a domain name primarily for the purpose of disrupting the business of a competitor is evidence of bad faith.
Therefore, the requirement of paragraph 4(a)(iii) has been proved by Complainant.
Claimant has proved the necessary elements that the names are identical or confusingly similar to its trade or service marks, that Respondent has no rights or legitimate interests in the domain name and that Respondent registered the domain name in bad faith and is using it in bad faith. Therefore, the remedy requested by Complainant is granted. Respondent is required to transfer the domain name geniebooks.com to Complainant.
1. Sic. See Van Dyk Declaration of March 20, 2000, ¶ 5.
2. Respondent has described himself as "Chairman, RoxyBooks.com Corporation."
3. Jerome Gilson, Trademark Protection and Practice, §3.02.
4. Gilson, supra note 1.
5. See Walt Disney Productions v. Kusan, Inc., 204 U.S.P.Q. 284, 287 (1979).
6. Frank Wagner & Son v. Cindy Mahan a/k/a Cindy Maham, an individual, Case No. D2000-0261.
7. See Hotel Corp. of America v. Inn America, Inc., 153 U.S.P.Q. 574, 575 (1967).

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