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WIPO Arbitration and Mediation Center
ADMINISTRATIVE PANEL DECISION
Kapula Candles (Proprietary) Limited v. Wayne Stuart Dixon
Case No. D2002-0945
1. The Parties
The Complainant is Kapula Candles (Proprietary) Limited, P.O. Box 863, Bredasdorp, 7280, South Africa, represented by Adams & Adams Attorneys of South Africa.
The Respondent is Wayne Stuart Dixon, 9 Fifth Avenue, Britlington, 99 9999, United Kingdom of Great Britain and Northern Ireland.
2. The Domain Name and Registrar
The disputed domain name is <kapula.com>.
The registrar is Network Solutions, Inc.
3. Procedural History
The electronic version of the Complaint was filed on October 16, 2002. The hardcopy of the Complaint was received on October 11, 2002. In response to a notification by the Center that the Complaint was administratively deficient, the Complainant filed an amendment to the Complaint on October 16, 2002.
In accordance with Paragraph 4(a) of the Rules for Uniform Domain Name Dispute Resolution Policy ("ICANN Rules") and Paragraph 5 of the Supplemental Rules for Uniform Domain Name Dispute Resolution Policy ("Supplemental Rules"), the Center verified that the Complaint satisfies the formal requirements of the ICANN Policy, ICANN Rules and Supplemental Rules.
Payment in the required amount was received.
On October 23, 2002, the Center formally notified the Respondent of the Complaint and of the commencement of this administrative proceedings and sent copies to the Complainant, the Registrar and ICANN.
The Respondent failed to file a response. On November 18, 2002, the Center sent a Notification of Respondent Default by email to the Respondent and the Complainant.
The Center contacted John Swinson and requested that he act as Panelist in this case. Mr. Swinson accepted and submitted a Statement of Acceptance and Declaration of Impartiality and Independence.
On November 18, 2002, the parties were notified that Mr. Swinson had been appointed and that a decision was to be, save exceptional circumstances, handed down on December 2, 2002.
The language of the proceeding was English.
The panel is satisfied that the Complaint was filed in accordance with the requirements of the ICANN Rules and Supplemental Rules; payment was properly made; the panel agrees with the Center’s assessment concerning the Complaint’s compliance with the formal requirements; the Complaint was properly notified to the Respondent in accordance with paragraph 2(b) of the ICANN Rules; no Response was filed by the Respondent; the administrative panel was properly constituted.
4. Factual Background
The Complainant designs, produces and sells decorative hand-painted candles.
The Complainant is the owner of a number of registered trademarks that include the word "KAPULA", the oldest of which is a registration for "KAPULA" in South Africa in class 4 for "illuminants, candles and wicks" that was registered in 1997. The Complainant has trademark registrations and applications for marks that include the word "KAPULA" in a number of countries, including Germany, the United States.
The Complainant has registered and is using the domain name <kapulacandles.co.za>.
According to the Complainant, the Complainant’s trading name, Kapula Candles, is an abbreviated version of the phrase "A couple of candles" which was originated by Andrè and Ilse Appelgryn, the co-founders of the Complainant.
The Respondent registered the disputed domain name on October 13, 1999.
On July 30, 2000, the Respondent, as Managing Director of a U.K. company called Kapula Candles - York - Ltd. signed a distribution agreement ("Distribution Agreement") with the Complainant to sell the Complainant’s candles in a shop in York, England.
In 2000 and 2001, the Complainant and the Respondent engaged in detailed discussions concerning the disputed domain name, as discussed in detail below.
At the time of writing this decision, the disputed domain name diverts to a website called "African Images" located at "http://www.african-images.co.uk/index.htm". The wording used on the website includes "Welcome to African Images. Experience The Warm Art of Africa". This website promotes hand painted candles, candleholders and African artifacts made in South Africa, and a shop located at the same address the shop in York specified in the Distribution Agreement.
5. Parties’ Contentions
The Complainant filed a comprehensive Complainant, which is summarized below.
The Complainant has used the KAPULA trademark for over eight years in South Africa and, since 1999 and later, in other countries such as the United Kingdom, Germany, the United States, Canada, Italy, Greece, Spain, Portugal, Holland, Denmark, Australia and Namibia.
Currently, the Complainant’s export activities constitute 80% of its annual gross income. In 1999, the Complainant secured an international partnership which resulted in a branded retail shop in Berlin. More shops have opened in the United Kingdom and Germany.
The Complainant contends that on July 30, 2000, the Complainant entered into the Distribution Agreement with Kapula Candles - York - Limited ("York Limited"). The Respondent, in his capacity as managing director of York Limited, signed the Distribution Agreement on behalf of York Limited. A copy of the Distribution Agreement was provided to the panel. Under the Distribution Agreement, York Limited was granted the right to:
(a) act as a dealer and to sell Kapula candles and other related products under the KAPULA trademark in its retail shop in the United Kingdom; and
(b) sell Kapula products via mail-order or the Internet subject to the terms and conditions in the Distribution Agreement.
The right to use the trademark applied only for the duration of the Distribution Agreement and related only to the business conducted "at the specified retail shop address". In exchange for a monthly service fee, the Complainant agreed to include York Limited’s details on a website that the Complainant intended to register called <kapulacandles.com>. This domain name was never registered. Instead, the Complainant registered <kapulacandles.co.za>.
The Complainant formally terminated the Distribution Agreement on June 3, 2002.
Registration of disputed domain name
On October 13, 1999 (some nine months before the Distribution Agreement was entered into), the Respondent registered the disputed domain name without the knowledge or consent of the Complainant. The Complainant conducted a trademark search in the United Kingdom that indicates that on December 18, 1999, the Respondent applied for registration of a trademark in the United Kingdom for "Kapula" in relation to candles. This was done without the knowledge or consent of the Complainant. That trademark was registered on July 7, 2000 (i.e. shortly before the Distribution Agreement was signed).
During September 2000, the Complainant became aware that the Respondent registered the disputed domain name in his personal capacity without Complainant’s knowledge or consent. The Complainant requested that the Respondent stop using the disputed domain name and to remove the website address from the window of the Respondent’s shop. The Complainant contended that this use of the disputed domain name was causing confusion amongst potential clients.
On January 26, 2001, the Complainant wrote to the Respondent claiming that the Respondent was never granted any rights to register the disputed domain name and requested cancellation or transfer of the disputed domain name to the Complainant.
On February 13, 2001, the Respondent, through his attorneys, claimed that Mr. Andre Applegryn from the Complainant was aware of the Respondent’s intention to start an online company as an extension to his existing business. The letter also claimed the Respondent was entitled to register the disputed domain name under the Distribution Agreement under the clause that stated York Limited was permitted to sell products via the Internet. The Respondent sought compensation of moneys allegedly spent developing the website for the disputed domain name and offered to transfer the disputed domain name in exchange for Ј10,000 credit towards stock purchased over the next 12 months. The offer was refused.
It appears that at one stage the parties reached an oral agreement to transfer the disputed domain name to the Complainant in exchange for a consignment of stock that had been withheld. However after the stock had been delivered, the Respondent failed to transfer the domain name.
The relationship between the parties deteriorated significantly. The Complainant stopped supplying stock to York Limited. There was no contact between the parties during the period April 12, 2001, until February 26, 2002, when the Respondent contacted the Complainant offering to transfer the disputed domain name in exchange for payment of Ј2,000. The Respondent’s offer to the Complainant is extracted below:
I am getting an awful lot of enquiries from my website regarding wholesale of your candles. As I am not selling kapula candles anymore these enquiries are not being serviced and are a daily annoyance to me. The majority are from America but a few from Europe and even Chile. Shame to be losing out on potential future business!
As I have no further use for the name kapula.com I will give you first refusal on the domain name. If I receive no further interest from you I will sell the name to an interested party.
I would like Ј2,000 for the domain name kapula.com.
Awaiting your response.
On June 3, 2002, the Complainant terminated the Distribution Agreement.
Allegations by Complainant
The Complainant contends that:
(a) the disputed domain name is identical or confusingly similar to a trademark in which the Complainant has rights;
(b) the Respondent has no rights or legitimate interest in the domain name because:
(i) the Distribution Agreement did not confer any right on York Limited or the Respondent to register and/or use the Complainant’s trademark in a domain name without the Complainant’s explicit consent;
(ii) under the Distribution Agreement, no rights were conferred on the Respondent in his personal capacity therefore he personally has no rights to use the Complainant’s trademarks, whether for registration of the disputed domain name or otherwise; and
(iii) in any event, the Complainant terminated the Distribution Agreement therefore any rights that may have been conferred on the Respondent to use the Complainant’s "KAPULA" mark and to register the disputed domain name (if any) have been revoked;
(c) the domain name was registered and is being used in bad faith as:
(i) the Complainant did not authorise registration and use of the disputed domain name;
(ii) the disputed domain name is not being used in connection with a bona fide offering of goods or services;
(iii) the disputed domain name misleads visitors to the site into believing that the disputed domain name is that of the Complainant, associated with the Complainant, or that the Complainant has approved of the content. The Respondent has admitted that he has received numerous enquiries regarding the Complainant’s products;
(iv) the Respondent has failed to forward to the Complainant any inquiries about its products. In doing so, the Respondent is deliberately disrupting the business of the Complainant and is undermining the relationship between the Complainant and its potential customers;
(v) the Respondent registered the disputed domain name and a trademark in the United Kingdom for "KAPULA" without the knowledge or consent of the Complainant, and that the Respondent knowingly infringed the proprietary rights of the Complainant in its KAPULA trademark. Therefore, registration of the disputed domain name is tainted with bad faith.
The Respondent failed to file a Response within the time limit set by the Clerk’s office.
In accordance with Rule 5(e) of the ICANN Rules, this dispute shall be decided on the basis of the Complaint alone.
6. Discussion and Findings
In order to qualify for a remedy, the Complainant has the onus of proving each of the three elements set out in Paragraph 4(a) of the ICANN Uniform Domain Name Dispute Resolution Policy, as approved by ICANN on October 24, 1999 ("ICANN Policy"), namely:
(a) the disputed domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and
(b) the Respondent has no rights or legitimate interests in the disputed domain name; and
(c) the disputed domain name has been registered and is being used in bad faith.
The Respondent chose not to respond despite having the opportunity to do so. The Complainant is not entitled to relief simply by default, but the panel can and does draw evidentiary inferences from the failure to respond.
6.1 Identical or confusingly similar to a trademark or service mark
The panel finds that the Complainant is the owner of the registered trademark "KAPULA" in South Africa. The panel does not need to make any findings as to any common law trademark rights that the Complainant may have.
The panel finds that the disputed domain name is identical to the KAPULA trademark owned by the Complainant.
The Respondent has not filed a response, and so does not assert that he has a legitimate interest in the disputed domain name.
Paragraph 4(c) of the ICANN Policy sets out three elements, any of which shall demonstrate the Respondent’s legitimate rights in the disputed domain name. The Respondent does not meet any of the three elements set out in this paragraph.
The correspondence provided to the panel indicates that the parties disagreed as to whether the Respondent had the right under the Distribution Agreement to register the disputed domain name.
The Distribution was signed after the Respondent registered the disputed domain name.
The Distribution Agreement appoints York Limited, not the Respondent, as the distributor, and grants limited license rights to York Limited in relation to use of the trademark "KAPULA CANDLES".
Although the Distribution Agreement permits York Limited to sell Kapula products via the Internet, the Distribution Agreement does not permit York Limited to register the disputed domain name. (Even if such a right was implied, at best it would be the right for York Limited to register the domain name <kapulacandles.com>).
Panelists have previously held that a right to use a trademark for the purpose of selling the goods or services of a complainant is not enough to confer the right to use the trademark as a domain name. In The Stanley Works and Stanley Logistics, Inc. v Camp Creek co., Inc., WIPO Case No. D2000-0113 (April 13, 2000), it was held:
"...even if the Respondent is a retail seller of the Complainant’s products, the collateral trademark use necessary to allow resell of Complainant’s products is not enough to give Respondent proprietary rights in Complainant’s trademarks, and certainly not enough to confer the right to use these trademarks as domain names....without something more such as authorization in a licensing agreement or other special circumstances, does not give the retail sellers rights of domain name magnitude over the manufacturer’s trademarks. "
The decision of Nokia Corporation v Nokia Ringtones & Logos Hotline, WIPO Case No. D2001-1101 (October 18, 2001) also confirms the principle that a licensee or a dealer, agent or distributor of products of the trademark proprietor or of compatible products does not per se have a right to a domain name which includes that trademark.
Accordingly, the Respondent cannot rely upon the Distribution Agreement to demonstrate any legitimate rights in the disputed domain name.
The Respondent applied for a U.K. trademark in 1999, and registered the disputed domain name at about the same time. Does the U.K. trademark registration give the Respondent any legitimate rights in the disputed domain name? The panel finds that it does not. This registration was not use or preparations for use of a name corresponding to the domain name in connection with a bona fide offering of goods or services. Although the evidence is not entirely clear, the Respondent’s solicitor’s correspondence indicates that the Respondent was in discussions with the Complainant in 1999, regarding establishing an online business for selling the Complainant’s candles. At about this time, without knowledge of the Complainant, the Respondent registered the disputed domain name and the U.K trademark. The panel finds that the Respondent did so in 1999, with full knowledge of the Complainant’s trademark rights in South Africa (and possibly the Complainant’s then common law trademark rights in England.) The Respondent cannot rely upon the U.K. registration to demonstrate any legitimate rights in the disputed domain name.
The Respondent and York Limited no longer sell the Complainants products. By the Respondent’s own admission, he has "no further use for the name <kapula.com>".
Accordingly, the panel finds that the Respondent has no rights or legitimate interests in respect of the disputed domain name.
6.3 Bad Faith
The Complainant contends that the Respondent registered and is using the domain name in bad faith. The Panel agrees with the Complainant’s assertions for the reasons outlined below.
Based upon the panels review of the Respondent’s current use of the disputed domain name, the panel finds that by using the domain name, the Respondent is intentionally attempting to attract, for commercial gain, Internet users to the Respondent’s web site, by creating a likelihood of confusion with the Complainant’s mark as to the source of a product.
The correspondence from the Respondent of February 26, 2002, quoted above, confirms this view. This correspondence is an admission by the Respondent that:
(a) the disputed domain is causing confusion to visitors of the web site that the web site is related to the Complainant’s business; and
(b) registration of the disputed domain name is disrupting the business of the Complainant.
(c) Furthermore, it is reasonable to imply that this is intentional on the part of the Respondent, particularly by use of the words "Shame to be losing out on potential future business", in the context of the rest of that email.
In addition, the Respondent appears to have breached an oral contract (confirmed in subsequent emails) to transfer the disputed domain name to the Complainant.
The UDRP is not the correct forum to bring a breach of contract claim. As stated in Tableland Economic Development Corporation v. Tablelands Online, Fast Internet and Sean Mullen, WIPO Case No. D2000-0744 (December 2, 2000):
"The complainant submits that a trademark alone cannot define ownership to a name. Beyond the scope of the Policy, this is true: contractual, fiduciary or confidential relationships between parties may define or determine rights to a name as between those parties. However, the Policy and the Rules provide a strictly limited procedure designed solely to resolve certain specific disputes between the owners of trademark rights and the registrants of domain names, subject to any independent resolution by court decision – Policy paragraphs 4(a) and 4(k). Disputes raising issues falling outside the Policy (such as breach of contract, trust or confidence) may be resolved in any available court, arbitration or other proceeding – Policy paragraph 5."
In certain instances, where there is a breach of contract to sell a domain name to the Complainant, this may be evidence of bad faith. See e.g., John Argento v. Futureconsulting, WIPO Case No. D2001-1030 (January 26, 2001); and ITH GmbH v. First American, claim number: FA0008000095346 ("The Respondent’s failure to transfer the domain name after receiving the money is further evidence of bad faith registration and use of a domain name.") Although this Panelist does not agree with all statements made in the ITH decision, the ITH decision does show that a breach of contract may, in certain cases, be evidence of other bad faith.
As discussed above, before the parties entered into the Distribution Agreement (i.e. before the Respondent was granted any rights to use the Complainant’s trademark), the Respondent registered:
(a) the disputed domain name; and
(b) the "KAPULA" trademark in the United Kingdom.
Both registration of the disputed domain name and the application and registration of the UK trademark were without the knowledge and consent of the Complainant (while the Respondent was in discussions with the Complainant and knowing of the Complainant’s trademark rights.) This too is evidence of bad faith by the Respondent.
The circumstances listed in Paragraph 4(b) of the ICANN Policy are examples of registration and use of a domain name in bad faith. Paragraph 4(a)(iii) of the ICANN Policy is not limited to these examples. Here, the panel considers that using a domain name that is identical to the Complainant’s registered trademark to redirect Internet users to a website of the Respondent’s which sells goods which compete with those manufactured and sold by the Complainant is strong evidence that the domain name has been registered and is being used in bad faith.
Additionally, the panel finds that the Complainant has provided sufficient evidence to satisfy Paragraphs 4(b)(iv) of the ICANN Policy. The panel finds that the Complainant has established the element set out in Paragraph 4(a)(iii) of the ICANN Policy.
For the reasons set forth above and pursuant to Paragraphs 4(i) of the Policy and 15 of the Rules, the Panel orders that the disputed domain name be transferred to the Complainant.
Dated: December 2, 2002