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WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Divex Limited v. ZJ, Sam Chang and Tim NG

Case No. D2007-0861

 

1. The Parties

Complainant is Divex Limited of Aberdeen, Scotland, United Kingdom of Great Britain and Northern Ireland, represented by Sprecher Grier Halberstam LLP, United Kingdom of Great Britain and Northern Ireland.

Respondent named in the Complaint is ZJ of Shanghai, China. Sam Chang and Tim Ng of Beijing, China, claim to be the real parties in interest. Mr. Chang has submitted a Response.

2. The Domain Name and Registrar

The disputed domain name <divex.com> is registered with Intercosmos Media Group d/b/a directNIC.com (the “Registrar”).

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on June 12, 2007. On June 14, 2007, the Center transmitted by email to the Registrar a request for registrar verification in connection with the disputed domain name. In email correspondence between the Center and the Registrar on June 15 and 26, 2007 (discussed below), the Registrar confirmed that ZJ is listed as the registrant and provided 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 June 27, 2007. In accordance with the Rules, paragraph 5(a), the due date for Response was July 17, 2007. At the request sent from ZJ’s administrative contact and in the absence of any objection from Complainant, the Center granted a time extension for the Response. Chang filed the Response with the Center on August 6, 2007.

The Center appointed Richard G. Lyon as the sole panelist in this matter on August 16, 2007. 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, a Scottish company, provides equipment and services relating to commercial diving. It has done so under the Divex name continuously since 1986, changing its name to Divex Ltd. in 1999, the same year in which registration for a trademark for DIVEX issued from the United Kingdom Trademark Office. Complainant’s principal website is “www.divex.co.uk”. Complainant has spent considerable sums marketing its goods and services under the Divex name.

A Swedish company, Divex AB,¹ previously owned the disputed domain name but its registration lapsed in December 2006. At that time the disputed domain name was put up for auction through “www.SnapNames.com”. The high bidder at the auction was ZJ, the Respondent named in the Complaint and an entity controlled by an individual named John Barry or John Howard. ZJ acquired the disputed domain name in the auction in January 2007 for USD11,450. ZJ/Howard/Barry was acting in the auction as paid agent for Sam Chang and Tim Ng, individuals residing in Beijing, China. Complainant was the next highest bidder in the auction, dropping out after ZJ topped its bid of USD11,200.

Since acquiring the disputed domain name, Chang has used it entirely for click-through revenues. None of the links on Respondent’s site relates to diving. There is a prominent link to “www.divx.com”, a site operated by DivX, Inc., a software maker whose product bears the same name as the company. Although the domain name is currently listed in the Registrar’s WhoIs database as registered in the name of ZJ, there also appears to have been a brief period during the proceedings when it was registered under the name of Chang/Ng.

In April 2007 an employee of Complainant sent an email to ZJ at the email address of the administrative contact for the disputed domain name. Complainant’s representative acknowledged that Complainant was unsuccessful in the SnapNames auction, and, among other things, inquires if “you [ZJ] would be willing to enter into a legally-binding contract allowing us to buy the domain name from you.” Tim Ng, identified in the Response as Chang’s “business partner,” replied on April 19, 2007, stating:

“We have no particular interest in selling the domain. We have already turned down an offer from another company named Divex.

Obviously though, we would have to consider a very serious offer.”

 

5. Parties’ Contentions

A. Complainant

In the Complaint Complainant contends as follows:

The disputed domain name is identical to Complainant’s UK-registered trademark except for the top level domain identifier “.com”.

Respondent has never been known by the disputed domain name and has not used it for any legitimate business; rather he is earning money from the click-through revenues (called “domain monetizing” by Complainant) from the hyperlinks on his web page. Such use is not legitimate or bona fide under the Policy. In fact, Respondent likely selected the name because of its similarity to DivX or Divex and Respondent’s click through use and link to the website of DivX, Inc. violate “the rights of DivX, Inc. as well as the Complainant.”

Registration by Barry/Howard is part of a pattern of registrations found to have been made in bad faith under the Policy by this individual. Complainant provides evidence that Howard and Barry are in fact one and the same person who controls ZJ, and cites sixteen cases in which Barry/Howard have been found and eight cases in which ZJ has been found to have registered domain names in bad faith. Using a domain name identical to Divex and confusingly similar to DivX evidences Respondent’s attempt to take advantage of the goodwill in Complainant’s mark through by confusing Internet users. Respondent’s reply to Complainant’s email inquiry implies a willingness to sell the disputed domain name to Complainant.

B. Respondent

In the Response Chang contends as follows:

Complainant has no monopoly on the word “Divex”. The Swedish company and many other companies (identities and web addresses provided in the Response) use this term as “generic” to relate to diving and diving-related activities. A simple Google search reveals many companies, in many countries, that use Divex for this purpose. Complainant has been infringing on the trademark of Divex AB, whose trademark registration long predates Complainant’s.

Complainant has no trademark rights in the United States of America or China, the only areas in which Respondent claims to do business. DIVEX is not a famous trademark and no substantial segment of the public automatically identifies it solely with Complainant. The word is “generic” and therefore available on a first come, first served basis.

Respondent denies bad faith in registration or use. He registered the disputed domain name because it was a simple, five-letter word that was easy to pronounce. He describes it as a “good name for a company I would like to start. I think the domain looks and sounds attractive. I just think the domain looks good. It is not something I can really explain because it is subjective.” There is no evidence of any attempt to sell the disputed domain name to Complainant or anyone else. Complainant, not Respondent, initiated the email discussion of a possible sale, and Respondent promptly refused to sell.

 

6. Procedural Matter – Identity of the Respondent

Complainant could not reasonably have anticipated the defense offered in the Response, since the alleged agency relationship between ZJ and Chang/Ng was not disclosed until the Response. In order to allow Complainant a fair opportunity to present its case in light of these circumstances, see the Rules, paragraph 10(b), on August 21, 2007, the Panel issued Procedural Order No. 1, which included the following:

The Panel invites Complainant to make a supplemental submission, limited to the following questions:

1. Who is the proper Respondent in this proceeding, ZJ or Messrs. Chang and Ng?

2. If the Panel considers Messrs. Chang and Ng to be Respondents, either alone or together with ZJ, does Complainant wish to modify or supplement its arguments under Paragraphs 4(a)(ii) and 4(a)(iii) of the Policy? If the answer is in the affirmative Complainant shall include any modified or supplemental argument in its supplemental submission.

At Complainant’s request, the dates for additional submissions by Complainant and Respondent were extended to September 7, 2007 and September 14, 2007, respectively. Complainant submitted an additional submission (the “Reply”) on September 3, 2007. Respondent made no additional submission.

In the Reply, Complainant argues as follows:

In response to the Panel’s first question, Complainant asserts that the correct Respondent is ZJ, or alternatively Mr. Barry. Paragraph 1 of the Rules defines “Respondent” as “the holder of a domain-name registration against which Complaint is initiated.” As the Registrar’s WhoIs database at the date the Complaint was filed identified ZJ as Respondent that is the only party that the Panel should consider. Respondent has produced no evidence of the alleged agreement between Chang/Ng and either ZJ or Mr. Barry. There is similarly no evidence that Ng is an associate of Chang and not of ZJ. Complainant notes that Ng’s email address (the same email address from which Ng replied to Complainant’s email) is listed in the administrative details for the disputed domain name even though the disputed domain name remains registered with ZJ, suggesting that Ng is associated with ZJ or Barry/Howard and not with an independent nominee.

As to the second question, Respondent argues that Respondent has provided no evidence of actual commencement or demonstrable preparations to use the disputed domain name for any other purpose than click-through revenues. Complainant further asserts that it is “highly likely” that Chang made a substantial investment only in anticipation of possible sale of the disputed domain name to a third party. The only actual use shown in the record is click-through revenue (“domain monetization”) and that is evidence of bad faith.

 

7. Discussion and Findings

A. Identical or Confusingly Similar

Except for the top level domain identifier “.com” the disputed domain name is identical to Complainant’s mark. That mark is duly registered by a national registry and the Panel has no authority to set it aside, WIPO Overview of WIPO Panel Views on Selected UDRP Questions (“Overview”), paragraph 1.1, even if it consists of “descriptive” or “generic” words, SurePayroll, Inc. v. Texas International Property Associates, WIPO Case No. D2007-0464. That others employ similar or identical trademarks is irrelevant under Paragraph 4(a)(i) of the Policy.

B. Rights or Legitimate Interests

Complainant has made the required prima facie showing that both possible Respondents, ZJ and Chang/Ng, lack rights or legitimate interests in the disputed domain name. Neither was known by the disputed domain name at any time and neither has been authorized by Complainant, Divex AB, or any other company using the word Divex. The involvement of both ZJ and Chang/Ng with the disputed domain name is commercial.

Neither ZJ nor Chang/Ng has countered this showing with evidence of a right or legitimate interest. ZJ has stood silent. Chang’s only argument is that simply because the word is either “generic” or in relatively wide use that he is free to register and use it as his domain name. Almost all panels have rejected that argument. See Overview, paragraph 2.2 and cases there cited; see also McMullen Argus Publishing Inc. v. Moniker Privacy Services/Jay Bean, MDNH, Inc., WIPO Case No. D2007-0676 (“The Panel does not subscribe to Respondent’s arguments that ‘common words’ are always fair game for domain names, even if the words are ‘descriptive’ under trademark law.”). Complainant has established this Policy element as to either putative Respondent.

C. Registered and Used in Bad Faith.

As registrars and others offer services including proxy registration and increasingly privacy ‘shields’ under which a domain name registrant may own a domain name through a nominee, rather than in the name of the principal, a number of panels have recently considered whether under the Policy and the Rules it is the “nominee” (here ZJ or Howard/Barry) or the “principal” (here Chang/Ng) who engaged the nominee is the “real party in interest” (to borrow a phrase from United States of America civil procedure). Some of these decisions are set out in the margin.² In reviewing these and other decisions, the Panel notes that in almost every case the panel at least considered the arguments (whether actually advanced or not) applicable to the principal rather than or in addition to the nominee. Indeed, a different approach could be said to jeopardize any privacy-shielded domain name in dispute. This is true of default cases as well as those, such as the present proceeding, in which the alleged principal has appeared and submitted a response.

At least as far as privacy services are concerned, these cases are relatively recent, and the Panel looked at any articulation of the reasons for doing so. Among the reasons either stated or implicit in the cases are the panels’ desire to permit full consideration of all relevant issues, implicit acceptance of nominee or proxy registration, recognition of the real party in interest, and acceptance of the principals’ evidence that they are the real parties in interest. This Panel finds it noteworthy that the Center’s practice in cases in which the record reflects a nominee is to add any such parties to the caption of the case and send them notice of the complaint if their addresses are provided or otherwise in the record.³ Presumably this practice is motivated to allow full panel consideration of these identity issues, which, as is evident from the present case, may entail substantive consequences. Not wishing to presume any jurisdictional practices, the Center followed that practice in this proceeding.

Complainant in this proceeding identifies perhaps the best reason why the nominee rather than the principal should be considered as the respondent: the definition of Respondent in Paragraph 1 of the Rules.⁴ Another panelist has identified a second reason, though in a case in which she did in fact consider the principal’s defenses: “it may simply be that one of the disadvantages of using a privacy service – to be weighed against the advantages of using such a service – are [sic] delays or lack of notice of proceedings that rely on the information contained in the registration record to provide notice. By this the Panel does not intend to suggest that such a delay or lack of notice is insignificant, but that they may simply be one of the consequences of the choice to use such a service, particularly where proceedings under the Policy look to and rely on information in the registration record maintained by the registrar.” Ohio Savings Bank v. 1&1 Internet, Inc. and David Rosenbaum, WIPO Case No. D2006-0881. The Panel in TDS Telecommunications Corporation v. Registrant [20758] Nevis Domains and Registrant [117460] Moniker Privacy Services, WIPO Case No. D2006-1620, identified a third reason, that a registrant might choose to use a privacy service to frustrate a Policy proceeding or hide from the mark owner whose trademark he or she has appropriated.

On the other hand, there are sound reasons for anyone, and particularly a person or entity whose business involves multiple domain names, to make use of a proxy or privacy service. Ease of account management, ease of re-registration, avoiding identity theft, and evasion of spam have all been cited in articles or by the privacy providers as legitimate benefits. In the Response in this matter Chang claims that because he became interested in the disputed domain name after the auction had begun he was required to use an entity already in the auction rather than bid directly. While it is probably not unreasonable to presume as some panels⁵ have noted that use of privacy services may aid cybersquatters by facilitating delays, cyberflight, domain tasting, and hiding from mark owners, the practice is legal. There is no proof that the practice is illegal or tortious in China, the home jurisdiction of Chang and Ng. The Panel adds that the practices described are adding considerably to the burden of parties, providers, and panelists; in the context of what is meant to be an expeditious process, the need increasingly may present itself to apply straightforward approaches to the evolving complexity of the domain name system.

Certainly it is within the principal’s control to require, by contract or direction, that the nominee transfer the domain name to the principal’s ownership. In this proceeding the disputed domain name was transferred between ZJ and Howard/Barry, following the auction, and there was ample time to transfer the disputed domain name to Chang/Ng before commencement of the proceeding placed a lock on ownership. Chang has offered no proof of ZJ’s nominee status beyond his own statement to that effect in the Response.

In this proceeding the Respondent’s identity may be outcome determinative. Complainant has presented unrebutted evidence that ZJ and Howard/Barry have frequently been found to have registered in bad faith domain names incorporating marks of third parties, thereby establishing the “pattern” required by Paragraph 4(b)(ii) of the Policy as bad faith in both registration and use. As discussed below, the issue is by no means so clear as to Chang and Ng.

The Panel has determined to follow the apparent prevailing practice described above and to consider both ZJ/Barry and Chang/Ng as Respondents in this proceeding. Chang/Ng have submitted a Response and have therefore “appeared” in this proceeding, rather than defaulting, thus eliminating (albeit late in the day) the most loudly spoken reason against use of a privacy service, hiding from a mark owner. And there is no dispute that Chang/Ng paid a considerable sum to acquire the disputed domain name, a fact that weighs in favor of accepting them as the real parties in interest. Unless the Panel is prepared to ignore the line of cases set out in note 2, Paragraph 10(b) of the Rules requires that the Response be considered. Uncertainty as to the facts, and the Panel’s inability to probe each party’s submissions through discovery, a hearing, or cross-examination make this much less than the ideal case for the Panel to depart from this informal precedent, or to attempt to set out a sweeping ruling applicable to most or all cases involving a respondent’s use of a privacy or nominee service.⁶

Turning to the merits of the defense offered by Respondents Chang and Ng, the Panel now considers whether Complainant has established registration and use of the disputed domain name in bad faith as required by Paragraph 4(a)(iii) of the Policy.⁷ Chang asserts that he was unaware of Complainant’s existence or the existence of Complainant’s mark at the time he acquired the disputed domain name in the SnapNames auction. None of the evidence in the record indicates a compelling reason why Chang should have known of the Complainant or its mark. The mark is not famous in the trademark sense, it is not registered in China where Chang and Ng reside or the United States of America where they claim to do business, and it consists of a word commonly used in connection with the sport and business of diving, as illustrated by the Google printout submitted with the Response. No party is a citizen of the United States of America, so there is no basis for application of the doctrine of constructive notice. See Overview, paragraph 3.4. Without knowledge of the Complainant or the Complainant’s mark, Respondent’s registration of the disputed domain name was not in bad faith. E.g., Carbon Footprint Ltd. v. Adrian Fuller, WIPO Case No. D2007-0642.

While Chang has admitted knowledge of the Swedish Divex’s existence and mark, he offers a plausible explanation for his stated assumption that that company had no further interest in the disputed domain name because it allowed its registration of it to lapse.⁸

While the Panel does not rule out the possibility of a relationship between ZJ and Chang/Ng, nor indeed does it entirely exclude the possibility that Chang/Ng may in some way have come to an awareness of Complainant at the time of registration of the disputed domain name, the Policy and the Rules place the burden on Complainant to provide proof of such matters. Particularly is that so in light of the statements made by Chang/Ng in the Response.

For the Panel to adopt the inferences proposed by Complainant it would be necessary to discount entirely the statements made by Chang in the Response. A court or jury might be able to do that upon a fully-developed record and its assessment of the parties’ credibility. But the Panel has only the record submitted by the parties. Without objective proof of connivance or connection between Chang/Ng and ZJ the Panel cannot say that the defense is fraudulent or that Chang has submitted false testimony. Compare Your Golf Travel Limited v. Hardelot Holidays Limited, WIPO Case No. D2007-1058.⁹

As occasionally occurs in Policy proceedings in which the parties offer different explanations for factual matters and request the Panel to draw conclusions by inference, the Panel retains some disquiet¹⁰ over the complete state of affairs with respect to what has actually occurred. It is certainly possible, as Complainant argues, that Chang and Ng are in fact affiliated with the ZJ and not, as Chang asserts, operating independently. The expedited procedures under the Policy, however, do not allow the Panel the same opportunity to view a record fully fleshed out through discovery and oral testimony, and the undersigned Panel does not consider it appropriate in these circumstances to base a decision on which proposed story he considers the more likely when both parties’ versions have some support in the undisputed facts.

The Panel finds no other basis for a finding of registration in bad faith. Using a domain name for click-through revenues is not unlawful or by itself bad faith activity. Terana, S.A. v. RareNames, WebReg, WIPO Case No. D2007-0489. As noted, Complainant has not proven that Chang/Ng registered the disputed domain name to take advantage of Complainant’s mark for this purpose.

There is no evidence that Chang or Ng has ever been a party to a Policy proceeding,¹¹ and the Panel’s own search found no such case. The same cannot be said with regard to ZJ which as noted in the record has been found repeatedly to have engaged in cybersquatting. However, for the reasons mentioned above, that is not necessarily fatal here to Chang/Ng.

Neither spending a substantial sum to purchase the disputed domain name nor Ng’s guarded response to the inquiry about a possible sale establishes registration in bad faith. Popular domain names are frequently sold for sums equal to or in excess of what Chang/Ng paid here. Complainant, not Respondent, initiated this correspondence and Ng’s indefinite reply cannot be deemed an unqualified offer to sell. Most things are for sale at some price, and a willingness to consider a sale at some indeterminate price in response to Complainant’s inquiry is insufficient to infer registration of the disputed domain name solely or primarily for resale.

The Panel has one final matter to consider, whether Respondent’s use of the disputed domain name actively to link to “www.divx.com” can constitute bad faith in this proceeding. Had DivX, Inc., owner of both a trademark and product with that name, brought this proceeding, the answer to this question might be yes. Chang has admitted knowledge of both the company and the mark, so his use of a domain name that incorporates the mark without the owner’s consent would constitute intentionally trading off the goodwill of that mark. Paragraph 4(b)(iv) of the Policy cites such conduct as indicative of bad faith.

Taking such advantage of a third party’s mark, however, does not alone make out bad faith in registration as to Complainant. To borrow another phrase from United States civil procedure, Complainant lacks standing vicariously to assert DivX’s rights. To allow it to do so would lead to unnecessary complication of Policy proceedings, which are intended as an expedited means of allowing in proper circumstances a mark owner to recover a domain name incorporating its mark. More importantly, the Panel lacks jurisdiction to award any relief other than cancellation of a domain name or transfer of it to the complainant. Complainant in this proceeding should not reap a windfall based solely upon harm to an unrelated third party.¹²

 

7. Decision

For all the foregoing reasons, the Complaint is denied.

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Richard G. Lyon
Sole Panelist

Dated: September 21, 2007

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¹ Complainant’s and Divex AB’s names are identical except for the standard English and Swedish designations for limited liability company. Divex AB is not affiliated with Complainant.

² WWF-World Wide Fund for Nature aka WWF International v. Moniker Online Services LLC and Gregory Ricks, WIPO Case No. D2006-0975; Ohio Savings Bank v. 1&1 Internet, Inc. and David Rosenbaum, WIPO Case No. D2006-0881; Fifth Third Bancorp v. Secure Whois Information Service, WIPO Case No. D2006-0696; Boehringer Ingelheim Pharma GmbH & Co. KG v. Domains by Proxy, Inc / Pradeep Dadha / Jonathan Valicenti, WIPO Case No. D2006-0465; Building Trade 1868 Kft. v. RegisterFly.com, WIPO Case No. D2006-0396; Microsoft Corporation v. Whois Privacy Protection Service / Lee Xongwei, WIPO Case No. D2005-0642.

³ E.g., HSBC Finance Corporation v. Clear Blue Sky Inc. and Domain Manager, WIPO Case No. D2007-0062.

⁴ At least one panel found this reason to be conclusive, without further discussion. The Lords Commissioners of Her Majesty’s Treasury v. ITIL International, WIPO Case No. D2005-0230.

⁵ E.g., HSBC Finance Corporation v. Clear Blue Sky Inc. and Domain Manager, supra n3.

⁶ The Panel does believe that if the principal’s identity appears for the first time in the Response, Paragraph 10(b) of the Rules requires the Panel to give the complainant an opportunity to address arguments applicable to the principal, as was done here.

⁷ Bad faith in both registration and use must be proven. E.g., Guildline Instruments Limited v. Anthony Anderson, WIPO Case No. D2006-0157.

⁸ For reasons similar to those in the last two paragraphs of text, regarding DivX, Inc., had Divex AB brought this proceeding the result might well have been different, given Respondent's knowledge of that company and its ownership of the disputed domain name prior to the SnapNames auction.

⁹ This is not to say that a Panel may never conclude that testimony or other evidence is false. See Edward G. Linskey Jr. v. Brian Valentine, WIPO Case No. D2006-0706 (concurring opinions).

¹⁰ The recent decision in NVT Birmingham, LLC d/b/a CBS 42 WIAT-TV v. ZJ, WIPO Case No. D2007-1079, in which a Mr. Sam Chang apparently acted on ZJ's behalf, adds to this disquiet.

¹¹ Chang was not a party to the NVT Birmingham case cited in the preceding footnote.

¹² A respondent’s treading on third party trademark rights might be relevant when shown to demonstrate a pattern of conduct under Paragraph 4(b)(ii) of the Policy, or to demonstrate registration or use in bad faith, when such conduct is in addition to conduct directed at the complainant or its mark. Neither of these circumstances is present here.