Source: https://dnattorney.com/dn-resources/drew-kaplan-agency-v-dak-com/
Timestamp: 2019-06-17 20:54:17
Document Index: 402013407

Matched Legal Cases: ['§ 101', '§ 362', '§ 1127', '§ 17', '§ 17', '§ 17', '§ 17']

Drew Kaplan Agency v. DAK.COM – DNattorney
Drew Kaplan Agency, Inc. v. DAK.COM
[Indexed as: Drew Kaplan Agency v. DAK.COM]
[Indexed as: DAK.COM]
Forum File No.: FA94328
Judgment: 16 May, 2000.
Presiding Panelists: Howard C. Buschman III (Chair),
Carol Anne Been and G. Gervaise Davis III
Domain name - Domain name registration policy - U.S. Trademark - Identical - Cybersquatting - Bad faith registration - No website established. Trademarks - Abandonment - Mark not abandoned - Question of intent - Common words - Hindu.
The DAK mark was used as early as 1967 by DAK Industries. The mark was assigned as collateral to Tokai Bank Ltd which subsequently foreclosed forcing DAK Industries into bankruptcy. A receiver was appointed, who attempted to sell the mark, and filed a Declaration of Non-use which was accepted by the U.S. Patent and Trademark Office in 1996. On or about March 26, 1999, the marks were sole to the Complainant. In February, 2000, the Complainant offered to purchase the domain name DAK.COM, which offer the Respondent accepted, and then subsequently revoked.
The Respondent alleges that the Complainant abandoned its mark. Furthermore, the Respondent claims that it registered the domain name as a generic name (as dak means mail in Hindu) with the intention to use the name or sell it in the future. The Respondent has registered other generic names, some of which are Indian based names.
There was no intention to abandon the mark, as the receiver filed a declaration of non-use and attempted to sell the marks. The period of time between the foreclosure and the sale of the marks was not unreasonable. Therefore, the Complainant, by assignment, has rights in the trademark, and the registered domain name is identical to that trademark.
Bare registration does not prove that the Respondent has rights or a legitimate interest in the domain name. A right in the domain name means some kind of legal entitlement such as a mark, and an interest is something less, such as an established use of the term prior to registration or significant promotional expenses with respect to a generic name. The Respondent has only shown evidence of registration with the intent to sell or use the domain name in the future, and therefore has no rights or legitimate interests in the domain name.
Registration of a domain name replicating an existing trademark is not conclusive evidence of bad faith, and the Panel must look to section 4(b) of the Uniform Domain Name Dispute Resolution Policy. Here, the exact replication of the existing trademark, the acceptance, later revoked, of the Complainants offer to purchase within six months of registration indicate the classic cybersquatter bad faith registration and use.
Evidence that the domain name was generic, dak meaning mail in Hindu, was rejected on the basis that there was a lack of promotional expenses and an initial willingness to sell the domain name soon after its registration for valuable consideration in excess of any out of pocket expenses. Evidence of when the domain name was registered, and which party initiated discussions to purchase the domain name is irrelevant. Bad faith registration has been demonstrated by the Respondent.
Network Solutions Service Agreement Version 5.0.
Complainant seeks transfer of the domain name "dak.com" pursuant to the Rules for Uniform Domain Name Dispute Resolution Policy and Uniform Domain Name Dispute Resolution Policy as adopted and approved by the Internet Corporation for Assigned Names and Numbers ("ICANN") as supplemented by the National Arbitration Forums Supplemental Rules to ICANNs Uniform Domain Resolution Policy. "Dak.com" is registered with Network Solutions. By registering its domain name with Network Solutions, Respondent agreed to resolve any dispute regarding its domain name through ICANNs Rules for Uniform Domain Name Dispute Resolution Policy, and the Uniform Domain Name Dispute Resolution Policy, pursuant to Network Solutions Service Agreement Version 5.0.
Before the panel are the Complaint and Complainants Additional Response filed by Complainant and a Response to Domain Complaint and Amended Response filed by Respondent. Neither party requested an oral hearing.
The domain name "dak.com" was registered by Respondent on November 14, 1998. Complainant Drew A. Kaplan Agency, Inc. ("Kaplan Agency") owns a trademark, DAK, for use in electronic goods catalogue services and for magnetic recording tape, inter alia, and accessories thereto. The DAK mark was first used by DAK Industries, Inc. in 1967. The mark was registered by Registration No. 1,148,203 in 1981 and Registration No. 1,570,338 in 1989 (the "Marks"). DAK Industries assigned the Marks to Tokai Bank Ltd. ("Tokai Bank") as collateral for a loan. In 1992, DAK Industries filed a petition seeking relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. Pursuant to Sections 1107 and 1108 of the Code, it continued in business until the case was converted to Chapter 7 in December 1994. Prior to the conversion, DAK Industries had issued its Winter 1994 catalogue for the sale of electronic goods. It appears that the automatic stay codified in 11 U.S.C. § 362(a) was modified in November or early December 1994 to permit Tokai Bank to foreclose on its collateral. On December 6, 1994, a receiver was appointed in a state court proceeding to liquidate the collateral, including inventory. On or about November 20, 1995, the receiver filed with the United States Assistant Commissioner of Trademarks a Declaration of Non-use for U.S. Registration No. 1,570,388. The purpose of filing a declaration of non-use is to show the lack of intent to abandon a mark. The declaration of non-use was accepted on or about October 8, 1996 by the Patent and Trademark office of the Department of Commerce as fulfilling statutory requirements.
On or about March 26, 1999, Tokai Bank sold the Marks to Kaplan Agency, the principal of which is Drew A. Kaplan ("Kaplan"). Kaplan was also the principal of DAK Industries and it bore his initials.
In February 2,000, Kaplan inquired of Respondents administrative contact if he could purchase the domain name "dak.com". By e-mail, Kaplan was told that the administrator would consider selling the domain name for $20,000. Kaplan then offered $5,000, to which the owner replied "I will accept your offer" and directed Kaplan to her attorney. The attorney requested information from Kaplan, who sent it to him. The attorney then sent a sale agreement to Kaplan and subsequently informed Kaplan that the owner "revokes his acceptance of your offer" due to a mistake. Kaplans attorney asserts that the attorney told him that the owner had received a better offer. Respondent denies that there was a better offer. Respondent registered "dak.com" in November 1998. It allegedly registered a generic name "dak" which assertedly means "mail" in Hindu. It has registered other Indian based names, such as "calcutta.com" and "rupee.com".
Respondent does not contend that it has employed the domain name since it was registered or made any preparations to do so. It asserts that it registered several allegedly generic names, some of which are Indian based names which it registered with the intention of using them or selling them in connection with an unspecified India related business.
Section 4(a) of the ICANN Uniform Domain Name Dispute Policy (the "Rules") requires the Complainant to prove each of the following three elements in order to sustain a claim that a domain name should be cancelled or transferred:
(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 or service on [the Respondents] web site or location. The Complainant bears the burden of proof on these issues.1
1 The facts before us may present other issues in addition to issues under the Rules. An arbitration panel under the Rules is not empowered to decide such issues. In particular, we do not decide whether the statements and actions in February 2000 resulted in an enforceable contract to sell the domain name.
The Respondent does not dispute the first of these issues. Even so, in its Amended Response it contends that the Marks were abandoned through non-use for more than three years.
Section 45 of the Lanham Act, 11 U.S.C. § 1127, provides that non-use for three consecutive years is prima facie evidence of abandonment of a mark. The presumption is easily rebuttable. T. McCarthy, 2 McCarthy on Trademarks and Unfair Competition, § 17:21 (4th Ed. 1999). Under the statute, the question is one of intent. Id. at § 17.20. Abandonment is established, under the majority rule, only by clear and convincing evidence. Id., § 17:12. Moreover, "[a]bandonment does not result from a temporary forced withdrawal from the market due to causes such as ... bankruptcy .... However, as soon as the external cause has passed, the user must resume use within a reasonable time." Id. at § 17:16.
Here, there was use up to December 1994, when Tokai Bank foreclosed and the bankruptcy case was converted to Chapter 7. The receiver attempted to sell the Marks and filed a declaration of non-use for one of the Marks, which was accepted in October 1996. Kaplan Agency purchased the Marks in March 1999. Since then it has used a domain name "dak2000.com" and intends to resume catalogue publication in the summer of 2000.
For several reasons we find no intent to abandon the Marks on this record. First, the bankruptcy of DAK Industries is not an intention to abandon the Marks where, as here (i) they were foreclosed on, (ii) the receiver filed a declaration of non-use for one of the Marks and continued to market both of the Marks, and (iii) the bank ultimately sold the Marks. The 4 _ year period between foreclosure and sale does not appear to be unreasonable. Marks can be significant collateral for lenders who would loan funds to companies whose trademarks may be their chief asset. To permit only a three year or four period in which trademarks must be foreclosed and sold could deprive trademarks of significant value as collateral for such lenders and discourage such financing. Nor would it be unreasonable for a purchaser at foreclosure to require a year or two to obtain capital.
In addition, the evidence of sale attempts and the filing of a declaration of non-use belie an intention by Tokai Bank to abandon the Marks. Instead, Tokai Bank was obviously attempting to preserve their value so that it could realize that value.
We thus find that the first element of Section 4(a) is satisfied. The Marks and domain name are identical and the Complainant, by assignment, has rights in the Marks.
As to the second element of Section 4(a), Respondents registration of the domain name could be said to afford it rights in the name. But it appears that the second element requires more than just registration. If the second element were to be deemed satisfied by mere registration, a complainant could never show that a respondent had no rights or legitimate interests in the domain name for all are registered. More, therefore, must be required. A "right" bespeaks of a legal entitlement such as a mark. For example, the term "united" might be embraced in several marks with another term such as "movers", "airlines" or "technologies", held by different owners. An "interest" is something less. It could be found in use of a generic term as a link to another web site, significant promotional expenses with respect to a generic name or an established use of the term prior to registration.
Here, the evidence is merely of registration with an alleged intention to sell or use in the future. There is no evidence of linkage to another web site, promotional development or prior established use of the term. We, therefore, hold that the second element has been satisfied.
Thus, we turn to the third element of Section 4(a), bad faith registration and use. We do not agree that registration of a domain name replicating an existing trademark is conclusive evidence of bad faith. Were the Rules to be interpreted to permit an inference or presumption of wrongful motive from solely registration of a domain name that is similar or identical to a mark, such an interpretation would swallow up the non-exclusive instances of prima facie evidence of bad faith listed in Section 4(b).
Here, there is no evidence that the Complainant and Respondent are competitors, there is no evidence of any attempt by Respondent to attract Internet users to a web site through confusion with the Marks, and there is no evidence of a pattern of registering domain names in order to prevent an owner of a mark from reflecting the mark in a domain name. Thus, Sections 4(b)(ii), (iii) and (iv) of the Rules are inapplicable.
Section 4(b)(i) of the Rules addresses the so-called "classic cybersquatter" case where one registers a domain name with the intention to arbitrage it. See, Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 880 (9th Cir. 1999). Proof of intention is almost always based on circumstantial evidence. Here, there is such evidence in exact replication of the Marks in the domain name, the absence of promotional development of the domain name, the offer to sell the domain name for $20,000 and the willingness, later revoked, to sell the domain name to the trademark owner for $5,000 within six months of its registration. Together, these indicate an intention to register the domain name primarily for purposes of selling it in excess of out-of-pocket costs. Section 4(b) of the Rules provides that such evidence is evidence of both bad faith registration and use.
Against this evidence lie principally (i) Respondents contention that the domain name was chosen because "dak" is a generic word meaning "mail" in Hindi and was to be used in developing business in India, (ii) that it registered the domain name prior to Kaplan Agencys acquisition of the Marks, and (iii) that Kaplan initiated the conversations regarding sale of the domain name. We find these contentions unpersuasive. The notion that "dak.com" was registered as a generic name in Hindi for use in developing Indian business or for sale in connection with Indian business is controverted, if not belied, by the lack of promotional expenses and the initial willingness to sell the domain name soon after its registration. Moreover, from Respondents Response to the Complaint, it appears that the translation of "dak" in Hindi to "mail" was more of an afterthought than an original intention. Whether domain name registration occurred before or after Kaplan Agency acquired the Marks is irrelevant: the Marks had been previously registered and belonged to Tokai Bank. Whether Kaplan or Respondent initiated sale negotiations is of little consequence. One can register a domain name with the intention to sell it at an excess cost and wait for the mark owner to call to ask if the domain name is for sale. Thus, after weighing the evidence, we conclude, on balance, that Section 4(b)(i) of the Rules has been satisfied.
Accordingly, it is decided that Network Solutions shall transfer the domain name "dak.com" to Complainant.