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WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Costco Wholesale Corporation and Costco Wholesale Membership Inc. v. Yezican Industries and Domains By Proxy, Inc.

Case No. D2007-0638

 

1. The Parties

The Complainants are (1) Costco Wholesale Corporation and (2) Costco Wholesale Membership, Inc., both of Issaquah, Washington, United States of America, represented by the Law Office of Mark J. Nielsen, United States of America.

The Respondents are (1) Yezican Industries of Freedom, California, United States of America and (2) Domains By Proxy, Inc. of Scottsdale, Arizona, United States of America.

2. The Domain Name and Registrar

The disputed Domain Name <mycostcobook.com> is registered with GoDaddy.com, Inc.

3. Procedural History

The Complaint (naming as Respondent “Domains By Proxy, Inc”) was filed with the WIPO Arbitration and Mediation Center (the “Center”) on April 26, 2007. On May 1, 2007, the Center transmitted by email to the Registrar a request for registrar verification in connection with the Domain Name. On May 2, 2007, the Registrar transmitted by email to the Center its verification response indicating that the Respondent Domains By Proxy, Inc. is not the current registrant of the Domain Name. The Registrar identified the Respondent Yezican Industries as the current registrant, providing the contact details for the administrative and technical contact. In response to a notification by the Center convening the registrant information provided by the registrar, the Complainant filed an amendment to the Complaint on May 7, 2007, adding Yezican Industries as a Respondent. The Center verified that the Complaint, together with the amendment to 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 May 8, 2007. In accordance with the Rules, paragraph 5(a), the due date for Response was May 28, 2007. The Respondent did not submit any response. Accordingly, the Center notified the Respondent’s default on May 30, 2007.

The Center appointed W. Scott Blackmer as the sole panelist in this matter on June 6, 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.

 

4. Factual Background

The Complainant Costco Wholesale Corporation is a Washington corporation listed on the NASDAQ stock exchange since 1985. The Complainant Costco Wholesale Membership, Inc. is a subsidiary, a California corporation headquartered in Issaquah, Washington. Costco Wholesale Membership, Inc. is listed as the registrant of the <costco.com> domain name and appears to be the legal entity that manages many of the corporate group’s day-to-day operations.

The Complainants (collectively, “Costco”) operate more than 500 membership warehouse stores worldwide, approximately 370 of which are located in the United States of America and Puerto Rico. The stores sell a wide variety of products including food, clothing, household products, appliances, electronics, furniture, garden supplies, automotive products, and sports equipment. In addition, a variety of services are offered by Costco or selected third parties, including delivery services, photo processing, optical and hearing aid examinations, insurance and real estate brokerage, business equipment leasing, and travel services. These products and services are provided or advertised in the Costco stores, and they are promoted via a monthly publication, The Costco Connection (with a circulation in excess of six million), as well as online at “www.costco.com.”

Costco currently claims more than 50 million cardholding members worldwide, of whom 36 million are located in the United States. The Complainants assert that Costco is one of the largest retailers in the United States, publicly reporting over USD 58 billion in sales in fiscal year 2006.

“Costco” is a coined name used in commerce since 1983. Dozens of marks consisting of the name “Costco” (some rendered in standard characters and some in stylized characters or accompanied by other design elements) have been registered in the United States and other countries, as well as <costco.com> and numerous marks adding descriptive words to the “costco” name, such as COSTCO BUSINESS CENTER, COSTCO WHOLESALE CONCIERGE SERVICES, and THE COSTCO CONNECTION”. The earliest registration appears to be for COSTCO as a standard character mark, United States Registration Number 447916, registered on February 5, 1985. It appears from the online database maintained by the United States Patent and Trademark Office (USPTO) that while many of the marks were originally registered to the Complainant Costco Wholesale Corporation, ownership has been transferred to the Complainant Costco Wholesale Membership, Inc.

The COSTCO mark has appeared in numerous media articles since 1983, as well as online and in advertising, labeling, signage, and Costco’s monthly print publication.

The Respondent Domains By Proxy, Inc. is an affiliate of the Registrar, GoDaddy.com, Inc., providing a “private” or anonymous domain registration service. The Domain Name was registered using that service on December 14, 2006, so that Domains By Proxy appeared as the registrant in the Registrar’s WHOIS database. However, the service agreement apparently provided for the registration to revert to the real party in interest in the event of a dispute. In response to the Center’s request for registrar verification, the Registrar informed the Center that the registrant of the Domain Name is actually Yezican Industries, with a post office box in Freedom, California, listing Peter Klein as the administrative and technical contact at the same address. This is the information that is now displayed in the Registrar’s WHOIS database.

The Domain Name resolves to a website headed, “Greetings......Welcome to My Costco Book!” Subsequent pages advertise a self-published book by “Pete Klein” entitled COSTCO’S DIRTY LITTLE SECRETS, which purports to reveal “The Truth About Costco Wholesale.” The website displays links to five websites where the book can be purchased as a downloadable “e-book” in PDF format.

The first such link is to “www.yezican.com,” which displays the name of the Respondent Yezican Industries, Inc. According to the online business entities database maintained by the California Department of State, Yezican Industries, Inc. is an active California corporation. Peter Klein’s Costco book can be purchased for downloading from Yezican’s website for USD $18.90. The Yezican website also includes links to other retail sources for the book, including an eBay “community.”

The website to which the Domain Name resolves also includes an advertisement for commercial consulting services offered by author Peter Klein, who is identified as a “professional food processing consultant”:

“If you have a food project that needs help, or a new project that you want to get off the ground, I CAN HELP!

Before you spend another dime, or roll the dice with Costco, Sam’s Club or any other retailer, please give me a call or send an email. I will guide you through the maze and ensure that you do not make the very common mistakes that may cost your company thousands of dollars, or worse!

I have worked as a Food Processing Consultant for the last 6-years, and have worked in the food processing field for over 13-years. I have helped a variety of food companies both large multi-million dollar corporations, and small startups.

My initial consultation is FREE and completely confidential, so you have nothing to lose, and everything to gain.”

No Response was submitted to the Center in reply to the Complaint in this proceeding.

5. Parties’ Contentions

A. Complainants

The Complainants state that their interests in the COSTCO marks are “co-extensive” for purposes of this proceeding. They argue that the Domain Name is confusingly similar to the COSTCO marks, and that while the Respondents may exercise their free-speech rights to disparage Costco, they have no rights or legitimate interests in using the COSTCO marks in a Domain Name, particularly since the website to which the Domain Name resolves is used for multiple commercial purposes. The Complainants conclude that the Domain Name was registered and used in bad faith, in an attempt to mislead Internet users for commercial gain.

B. Respondents

The Respondents did not reply to the Complainant’s contentions.

 

6. Discussion and Findings

Paragraph 4(a) of the Policy provides that in order to divest a Respondent of a disputed domain name, a Complainant must demonstrate each of the following:

(i) the Domain Name 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.

Under paragraph 15(a) of the Rules,

“A Panel shall decide a complaint on the basis of the statements and documents submitted and in accordance with the Policy, these Rules and any rules and principles of law that it deems applicable.”

A. Multiple Complainants

Neither the Policy nor the Rules expressly contemplates multiple complainants, and some panels have rejected complaints filed in the name of more than one complainant on the ground that they have not sufficiently identified their respective ownership rights and requested remedies. See, e.g., Ken Done, Ken Done & Associates Pty Limited, and Ken Done Down Under Pty Limited v. Ted Gibson, eResolution Case No. AF-0638. In other cases, panels have accepted complaints by multiple complainants based on agency, licensing, or affiliate relationships. See, e.g., Staples, Inc., Staples The Office Superstore, Inc., and Staples Contract and Commercial, Inc. v. SkyLabs Corporation and DL Enterprises, WIPO Case No. D2004-0220.

A UDRP proceeding must be predicated on a trademark or service mark in which a complainant has rights pursuant to paragraph 4(a)(i) of the Policy. The Complainant Costco Wholesale Corporation registered trademarks that underlie the Complaint and continues to use those trademarks in its business. COSTCO marks are also used by its subsidiary, the Complainant Costco Wholesale Membership, Inc., which is the current owner of at least some of the registered COSTCO marks. Thus, both corporations evidently have rights in the COSTCO marks.

Allowing both companies to appear as Complainants is unlikely to result in prejudice to the Respondents. Therefore, the Panel accepts the Amended Complaint as submitted. However, any order directed to the Registrar will, in the interest of avoiding confusion, refer only to the Complainant Costco Wholesale Membership, Inc., the current owner of record of United States trademark registrations on which the Complaint is grounded.

B. Multiple Respondents

Once the registration of the Domain Name reverted to the beneficial owner or real party in interest, the Respondent Yezican Industries -- as reflected in the Registrar’s updated WHOIS database -- that party became the proper Respondent in this proceeding. There is no evidence in the record that Domains By Proxy, Inc. had any role in selecting or using the Domain Name, or that it colluded with the Respondent Yezican Industries to engage in cyberflying or other deceptive practices to confuse the Complainants and avoid or delay this proceeding. The Registrar promptly notified the Center of the change in registration when the Center first requested registrar verification. Unlike a situation in which the provider of a “private” or “anonymous” registration service fails to identify the real party in interest (see, e.g., Fifth Third Bancorp v. Secure Whois Information Service, WIPO Case No. D2006-0696), there is no reason here to include Domains By Proxy, Inc. as a Respondent. All that is essential to afford the remedies available in a UDRP proceeding is to name the current registrant of the Domain Name.

Thus, the Complaint is properly directed only to the Respondent Yezican Industries, and the elements of the Complaint can be evaluated with reference to that Respondent alone.

C. Identical or Confusingly Similar

The Complainants unquestionably have rights in numerous COSTCO trademarks and service marks. COSTCO is a legally protected mark, both alone and combined with relevant descriptive words as in COSTCO BUSINESS CENTER. COSTCO itself is a distinctive, coined name, and the evidence indicates that it has become a famous mark known to tens of millions of consumers.

Adding the common English words “my” and “book” in the Domain Name does not avoid confusing similarity with the COSTCO mark. See, e.g., Costco Wholesale Membership, Inc., Costco Wholesale Corporation v. Yong Li, WIPO Case No. D2004-0296 (the addition of a generic term in the domain name <costcotires.com> “is descriptive and does not mitigate the phonetical and visual confusing similarity”).

The Panel concludes that the Complainants have satisfied the first element of the UDRP Complaint.

D. Rights or Legitimate Interests

The Policy, paragraph 4(c), provides a non-exhaustive list of circumstances in which a respondent could demonstrate rights or legitimate interests in a contested domain name:

“(i) before any notice to you of the dispute, your 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) you (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or

(iii) you are 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 Complainants state, without contradiction, that they never licensed or otherwise authorized the Respondent to use their COSTCO mark in the Domain Name. The Respondent Yezican Industries has not replied to the Complaint by asserting any rights or legitimate interests in the Domain Name.

There is no evidence in the record that the Respondent is known by the name “Costco” or offers goods and services branded with that name. The Respondent sells a book critical of Costco that includes the name of the company in the title, and the Domain Name indeed refers to a “book” about “Costco.” This use of the Domain Name cannot be considered use in connection with a “bona fide” offering of goods or services, however, if the Domain Name itself is likely to mislead consumers, at least initially, as to the source of the “book” mentioned in the Domain Name. See, e.g., Sanrio Co., Ltd. and Sanrio, Inc. v. Neric Lau, WIPO Case No. D2000-0172 (inferring that the respondent sought, with its choice of the domain name <sanriosurprises.com>, to “create an impression of an association with Complainants;” this could not constitute a legitimate interest in the domain name).

The phrase “my costco book” comprising the Domain Name creates just such a likelihood of confusion, initially giving the impression of an association with Costco. This is heightened by the fact that Costco is a membership-based retailer. It provides cards and coupons to members and sends them newsletters and special offers; it also offers a degree of personalization and account self-management on the “My Account” page of its website. The Domain Name may easily be taken as a reference to some such customer facility, or perhaps to a website facilitating vendor contacts with Costco.

This by no means suggests that the author or the Respondent cannot legitimately use the company name “Costco” in a book title, merely that some care must be taken in selecting a Domain Name that does not create initial interest confusion and attempt to trade on the reputation of the Complainants by falsely suggesting an association with them. In fact, the book title itself is not likely to engender such confusion: “COSTCO’s Dirty Little Secrets” would be an unlikely name for Costco to choose. A domain name based on that title would be less likely to engender confusion as to source, as compared to the Domain Name selected by the Respondent.

A closely related issue is whether 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.” Selling a book is not noncommercial use of the Domain Name, however, and the Domain Name is also used to sell the consulting services of Peter Klein and to link to the websites of several commercial booksellers that offer a wide variety of books and media. Again, it appears that the Domain Name includes a famous mark to misleadingly divert consumers in an effort to sell goods and services from other sources to a large audience familiar with the COSTCO mark.

This analysis of “legitimate interests” finds support in United States trademark law, which is relevant because both the Complainants and the Respondent Yezican Industries are based in the United States. The Complainants cite the influential treatise McCarthy on Trademarks and Unfair Competition (4^th ed. 2006):

“Most cases have held that regardless of free speech principles, a web site containing criticism of a company or an organization cannot be identified by a domain name confusingly similar to the name or trademark of the target group. The right to disseminate criticism on the Internet cannot trump the public’s right not to be deceived by a confusingly similar domain name.” (§ 31.148.50, p. 31-251)

Further:

“[U]se of the trademark of a company in the domain of a site that is devoted to criticizing or complaining about that company will constitute infringement if there is some commercial aspect. * * * Initial interest confusion obviously plays a role in such cases.” (§25:76, pp. 25-326 – 25-327)

The latter point is routinely made in UDRP proceedings where a website criticizing a brand or company is also used for commercial purposes. See, e.g., Wal-Mart Stores, Inc. v. Walsucks and Walmarket Puerto Rico, WIPO Case No. D2000-0477. While some UDRP decisions countenance using trademarks under certain conditions in domain names associated with “protest” or “criticism” websites (see, e.g., Covance, Inc. and Covance Laboratories Ltd. v. The Covance Campaign, WIPO Case No. D2004-0206), the use of a trademark in a confusingly similar domain name for commercial purposes does not benefit from the same presumption of legitimate fair use.

The Panel concludes, therefore, that the Respondent has no rights or legitimate interests in the Domain Name.

E. Registered and Used in Bad Faith

The Complainant cites one of the instances of bad faith described (without limitation) in the Policy, paragraph 4(b):

“(iv) by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your 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 your web site or location or of a product or service on your web site or location.”

As discussed above, in connection with the second element of the UDRP Complaint, the Respondent’s website is commercial, advertising both goods and services for sale. The Respondent is obviously well aware of the Complainants’ famous COSTCO marks, which are distinctive and which were established in the marketplace more than twenty years before the Domain Name was registered. The advertised book is about Costco, and the website to which the Domain Name resolves declares that the book is a “‘must’ read for Costco’s 47 million cardholding members.”

Especially since the Respondent chose to use a Domain Name likely to cause confusion, rather than a name that would be less likely to mislead consumers as to source -- such as the title of the book itself -- it is fair to infer an intent to attract Internet users for commercial gain by using the Complainants’ famous mark in the Domain Name. The Respondent has not come forward with an alternative explanation for its choice of the Domain Name, and the Panel is entitled to draw a negative inference from that silence as to the Respondent’s intentions (see Rules, paragraph 14(b)).

The Panel concludes that the Complainant has established the third element of the UDRP Complaint.

7. 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 <mycostcobook.com> be transferred to the Complainant Costco Wholesale Membership, Inc.

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W. Scott Blackmer
Sole Panelist

Date: June 20, 2007