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WIPO Arbitration and Mediation Center

 

EXPERT DECISION

Smoby Suisse Sаrl and Smoby S.A. v. Velos Schrade, Inhaber Fredy Zaugg

Case No. DCH2007-0006

 

1. The Parties

The Claimants are Smoby Suisse Sаrl, Geneva, Switzerland, (Claimant 1) and Smoby S.A., Saint-Lupin, France, (Claimant 2), both represented by Gйrald Page, Lalive, Geneva, Switzerland.

The Respondent is Velos Schrade, Inhaber Fredy Zaugg, Therwil, represented by Suzanne Pйriat, Basel, Switzerland.

 

2. Domain Name

The dispute concerns the domain name <smoby.ch>.

 

3. Procedural History

The Request was filed with the WIPO Arbitration and Mediation Center (the “Center”) on May 4, 2007 by email and in hardcopy. On May 8, 2007, the Center transmitted by email to SWITCH, a request for verification in connection with the Domain Name at issue. On May 10, 2007, SWITCH transmitted its verification response by email to the Center, confirming that the Respondent was listed as the holder of the Domain Name, providing the relevant contact details. The Center verified that the Request satisfied the formal requirements of the Rules of procedure for dispute resolution proceedings for .ch and .li domain names (the Rules of Procedure) adopted by SWITCH, the .ch and .li registry, on March 1, 2004.

In accordance with the Rules of Procedure, paragraph 14, the Center formally notified the Respondent of the Request, and the Dispute resolution proceedings commenced on May 25, 2007. In accordance with the Rules of Procedure, paragraph 15(a), the due date for Response was June 14, 2007.

The Respondent filed a Response on June 12, 2007, in which he expressed his readiness to participate in the conciliation. The Center appointed Tobias Zuberbьhler as conciliator in this matter on July 16, 2007.

In accordance with Rules of Procedure, paragraph 17, the Conciliation conference took place by telephone on July 23, 2007. It did not result in a settlement between the parties.

On August 1, 2007, at the request by he Parties, the Center notified the Parties that the proceedings were suspended until September 1, 2007. From September 5, 2007 until October 8, 2007, the Center reminded the Claimants’ representative by email that the continuation or termination of the proceedings had to be requested. On October 8, 2007, the Claimants requested the re-instating of the proceedings.

On October 11, 2007, the Claimants submitted additional Exhibits to their Complaint.

On October 15 and 18, 2007, the Respondent filed an additional submission as well as an Addendum to his Response.

On October 19, 2007, the Center appointed Dr. Bernhard F. Meyer-Hauser as Expert in this case. The Expert finds that he was properly appointed and in accordance with Rules of Procedure, paragraph 4, he declared his independence from the parties.

 

4. Factual Background

Smoby S.A. (Claimant 2) is a French company, incorporated in Saint-Lupicin in France. Smoby Suisse Sаrl (Claimant 1) is a wholly owned subsidiary of Smoby S.A. Both Claimants belong to the Smoby Group, a privately owned family business founded in 1924, which designs, manufactures and distributes toys for children up the age of ten. The Smoby Group represents itself to be one of the top ten companies in Europe and worldwide in the toy sector. In France, it is said to be the number one toy company with 18 subsidiaries worldwide, selling toys in over 90 countries. The company acquired Berchet in July 2005.

The trademark SMOBY was filed by Claimant 2 in several countries for several classes of goods. The following international trademark numbers belong to the Claimant 2 (Exhibits C 4 to 10):

- Nos: 569579 and 566402, registered in 1991;

- Nos: 708749, 709208, 709211, 709205 and 709180 registered in 1998.

All of these registrations extend to Switzerland. Their scope of protection includes (except for the first one) games, toys, gymnastic and sporting goods.

Claimant 1 is duly registered in the Swiss Commercial Register since January 21, 1999 (Exhibit C 1) and is authorized by Claimant 2 to use the trade names and trademarks SMOBY in Switzerland (Exhibit C 2). According to the Register, the aim of Claimant 1 is to represent Claimant 2 in Switzerland with respect to games and toys and the promotion thereof by any means of advertising.

Claimant 2 is the holder of several SMOBY domain names, such as, for example, <smoby.com>, .fr, .it, .co.uk, .be, .org, .ru.

The Respondent, Velos Schrade, Inhaber Fredy Zaugg, from Therwil, Switzerland, is a privately owned company, first registered in the Commercial Register of Basel in 1986 (Exhibit R 3). Velos Schrade designs, imports, sells and repairs bicycles.

The Respondent developed an unisex bicycle which he called SMOBY. The first bicycle was sold in September 2000. Since then, sales have continued all over Switzerland.

On March 31, 2004, the Respondent filed a trademark registration in the Swiss Trademark Register (Exhibit R 10). He is since then the owner of a trademark SMOBY, No. 520087, for “vehicles, objects for transportation on land, in the air and on water”. The trademark is attributed to the international classification No. 12.

On July 13, 2004, the Claimant 2 filed an opposition against the Respondent’s trademark. The opposition procedure is currently pending.

The website “www.smoby.ch” was registered by the Respondent on September 19, 2000. Since then it has been uninterruptedly used by the Respondent to advertise the bicycles SMOBY.

 

5. Parties’ Contentions

A. Claimant

Claimant 2 owns several international trademarks extending to Switzerland which were registered before the Respondent registered his Domain Name <smoby.ch>. Claimant 2 also owns several domain names containing its company name SMOBY. Claimant 1, incorporated in Switzerland, has a license to use the name SMOBY in Switzerland. It follows that both Claimants have legally protected rights in the mark.

Furthermore, Claimant 1 has been registered in the Commercial Register of Geneva since 1999, i.e. before the Respondent registered the Domain Name <smoby.ch>. In addition, both Claimants conduct all of their business under the corporate name SMOBY.

The Domain Name registered by Respondent is identical to the Claimant’s trademarks and thus creates confusion for the customers in violation of Articles 3 letter d) and 2 of the Swiss Law on Unfair Competition. The Claimants purport that the Respondent registered the Domain Name in bad faith as the Claimants and their trademarks were internationally well-known at the time. According to the Claimants, the Respondent is not known under the name SMOBY. His company’s and shop’s name as well as his main website is “Velos Schrade”. The Claimants accuse the Respondent of intending to take advantage of the Claimant’s high reputation and divert customers looking for a toy in the category of bicycles.

The Claimants also allege a violation of Articles 3 and 13 paragraph 1 of the Swiss Trademark Act as internet users will get confused by Respondent’s website. They allegedly assume a connection with the Claimants’ products. The registered trademarks are duly used by the Claimants in Switzerland and include vehicles for children, ride-on toy vehicles and tricycles. Thus, the use of the Domain Name by the Respondent violates the Claimants’ rights.

In Claimants’ opinion the relevant test for infringement is whether the use of a sign protected by a trademark is likely to cause confusion. The Claimants’ quote a decision of the Swiss Federal Supreme Court and a WIPO case (ATF 128 III 401, “Luzern”; , Zurich Insurance Company, Vita Lebensversicherungs - Gesellschaft v. Roberto Vitalini, WIPO Case No. DCH2005-0012), stating that in relation to the Internet and the registration of domain names, there is a risk of confusion when the use of an identical or similar name for an Internet website causes a risk of incorrect attribution of the site. The test therefore is whether the Internet user would expect to find, under the disputed domain name, the services and products or information pertaining to the trademark holder.

Moreover, the Claimants consider that the Respondent infringes upon their rights in their company names. Whereas SMOBY is not Respondent’s company name, it is both of the Claimants’. In particular, Claimants allege a violation of the protection of their company names under Articles 956 of the Swiss Code of Obligations (hereafter “CO”) and Art. 29 Civil Code.

As regards the opposition procedure against the Respondent’s registration of the trademark SMOBY, the Claimants maintain that they will win and that the Respondent’s registration will be cancelled.

Finally, the Claimants state that they face considerable disadvantages by not being able to use the Domain Name <smoby.ch> in relation to their business activities in Switzerland.

B. Respondent

The Respondent states that he and his family created the name SMOBY in summer 1998 as an abbreviation of “Schraders Mobility” for their new bicycle project.

The Respondent does not contest, in principle, the fact that the Claimants own several trademarks SMOBY. However, he contends that the Claimants cannot claim protection for sporting or gymnastic goods for any of their listed trademarks registered in class 28 as the 5-year grace period to establish an actual use of such items has elapsed. The Claimants are only active in the game and toy sector. Furthermore, their collection of wheeled items can by no means be considered as sporting goods because they are all toys for babies and children. Therefore, the Respondent is not infringing upon the Claimants’ trademark rights.

The Respondent further alleges that SMOBY cannot be considered a well-known trademark in Switzerland.

The Respondent contests that the Claimants benefit from the protection of their company name. The Respondent challenges the Claimants’ business activity in Switzerland and alleges that Claimant 1 is a mere “letterbox” of Claimant 2, without having any commercial activity in the country. In addition, the Respondent contests that the Domain Name creates a risk of confusion with Claimants’ trademarks due to the fact that the parties operate in completely different sectors with different suppliers, distributors and customers.

The Respondent emphasizes that his right in the Domain Name results from his Swiss trademark No. 520 087 SMOBY for “apparatus for locomotion by land, air or water”. Claimants’ opposition against this registration does not suspend the validity of the disputed trademark which remains a valid intellectual property right as long as it is not finally refused by opposition authorities. Because both Parties have equal rights to use the Domain Name, the party who registered the domain first is entitled to keep it.

Furthermore, the Respondent states that – despite the absence of evidence – the first use of the name SMOBY was in 1998. Since 1999 it has been used uninterruptedly.

The Respondent is making a bona fide offering of goods and services on the website and has no intention to misleadingly divert customers or tarnish the Claimants’ trademarks. When he registered the domain name, he was aware that the Claimants’ trademarks were nine years old, protecting products that have nothing to do with his sporting goods. Respondent assumed that the Claimants were not interested in holding the website.

Moreover, the Respondent points out that the Claimants do not own cc TLD’s in many countries such as Germany, the Netherlands, Spain, Austria, the Czech Republic and Poland. Where the Claimants have local national domains, the website show no nationality specific content. The content is either identical to the “smoby.com” website or the Internet user is immediately redirected to the said website. This shows that the Claimants do not depend on the local domain name in a foreign country. For the Respondent however, the Domain Name <smoby.ch> is vital in order to advertise its SMOBY bicycle business nationwide and to differ it from other bicycle shops.

Finally, the Respondent requests to be reimbursed for his defence costs and to obtain an indemnification in case the domain name is to be transferred.

Respondent requests the rejection of the claim.

 

6. Discussion and Findings

Procedural Matters

The Expert notes that the Center received further submissions by both Parties as stated above. These submissions were not requested by the Expert pursuant to paragraph 21 (c) of the Rules of Procedure.

Regarding supplemental submissions, the rules provide that the Expert may request at his discretion further statements or documents or accept further statements or documents on justified application by one party.

After consideration of and since both Parties made supplemental submissions, the Expert decides to accept all of them since they address relevant issues of this case.

Substantive Matters

According to paragraph 24 of the Rules of Procedure:

(a) The Expert shall decide on the request on the basis of the pleadings of both parties and the submitted documents in conformity with these Rules of Procedure.

(b) The Expert may only order the deletion or transfer of the domain name, depending on the remedy requested in the request, or reject the request.

(c) The Expert shall grant the request if the registration or use of the domain name constitutes a clear infringement of a right in a distinctive sign which the Claimant owns under the law of Switzerland or Liechtenstein.

(d) In particular, a clear infringement of an intellectual property right exists when:

(i) both the existence and the infringement of the claimed right in a distinctive sign clearly result from the wording of the law or from an acknowledged interpretation of the law and from the presented facts and are proven by the evidence submitted; and

(ii) the respondent has not conclusively pleaded and proven any relevant grounds for defence; and

(iii) the infringement of the right justifies the transfer or deletion of the domain name, depending on the remedy requested in the request.

As a result of the repeated reference to “clarity” in the above-mentioned provision, the rights invoked by Claimants must be unequivocal and the evidence of a confusion or other infringement must be obvious to order a transfer or a deletion of the disputed Domain Name. Doubts benefit Respondent.

(i) Is there an infringement of a distinctive sign?

The Claimants have established that both of them have rights in the trademarks SMOBY Nos. 569579 and 566402, registered in 1991; and Nos. 708749, 709208, 709211, 709205 and 709180 registered in 1998. Furthermore, Claimant 1 is registered in the Commercial Register of Geneva and, therefore, has rights in the Company name Smoby Suisse Sаrl. The business name of Claimant 2, although not registered in a Swiss Commercial Register, is protected under Swiss law according to Article 8 of the Paris Convention on the Protection of Commercial Property, revised in Stockholm on July 14, 1967. Thus, the requirement of Claimants’ distinctive signs is fulfilled.

The next question is that of an infringement:

(a) Trademark infringement?

According to Article 3 combined with Article 13 paragraph 1 of the Swiss Trademark Act, a Swiss trademark affords its owner the exclusive right to use it in relation to the goods and services for which it is registered.

Because domain names identify persons, products, or services through the respective websites, the Swiss Federal Supreme Court repeatedly held that domain names are comparable to personal names, business names and trademarks and may be regarded as distinctive signs (ATF 126 III 239, 244 <berneroberland.ch>).

The Domain Name <smoby.ch> is identical to the Claimants’ trademarks.

- Infringement of a well-known Trademark?

The Swiss Federal Supreme Court considered that in the case of a conflict between a well-known trademark (Article 15 Swiss Trademark Act) and a domain name, the mere registration of the domain name may be sufficient to establish a violation of trademark rights (4C.31/2004 = sic! 2005, 200 - <riesen.ch>).

The question of whether or not a trademark has reached the status of a “well-known trademark” in the sense of the Swiss Trademark Act is a question of fact. It is to be evidenced by the party alleging it and depends on various factors such as the strength of the trademark in advertising, its important financial value, its high level of recognition in the public and its uniqueness (ATF 124 III 277, The Procter & Gamble Company and Procter & Gamble Service GmbH v. Ariel Hauser, WIPO Case No. DCH2006-0012,). As long as a trademark is only known to a small product-related public, the holder of the mark does not benefit from the Swiss Trademark Act’s broader protection (4C.31/2004 = sic! 2005, 200 <riesen.ch>).

The Expert concludes from the submissions and his own knowledge that Claimants’ trademark SMOBY is known to people with young children or in contact with young children, mainly in countries where Claimants are active. In other words, recognition of the trademark is limited to a certain segment of the public and to a certain geographical area only. The general public does not unequivocally recognize SMOBY as a trademark and, more particularly, as Claimants’ trademark. Claimants failed to prove that SMOBY has acquired a similar level of significance and recognition in Switzerland as well-known trademarks such as NIKE, ARIEL or MAGGI (ATF 124 III 277; The Procter & Gamble Company and Procter & Gamble Service GmbH v. Ariel Hauser; WIPO Case No. DCH2006-0012 ; 4C.376/2004).

Under these circumstances, the trademark SMOBY can not benefit from the higher scope of protection afforded to well-known trademarks in Switzerland.

- Infringement of an ordinary trademark?

The fact remains that also an ordinary trademark is protected under the Swiss Trademark Act. If a domain name collides with a protected trademark, the owner of the trademark may, under certain circumstances, be entitled to prohibit the use of the domain name (ATF 126 III 244-245).

Claimants’ contention that their rights are infringed as soon as the use of a domain name creates the risk of a wrong association of the website, can not be followed. The quoted decision of the Swiss Federal Supreme Court is not prejudicial as it relates to the name rights of a Swiss town (ATF 128 III 401, “luzern”). In a more recent decision, the Swiss Federal Supreme Court held that content of a website operated under a domain name must be taken into account when examining the likelihood of confusion (see sic! 2005, p. 283 <riesen.ch>). It follows that, in an assessment of the risks of confusion under the Swiss Trademark Act, both the degree of similarity of the signs as well as the similarity of the respective goods and/or services are be taken into account. The two elements are interrelated, i.e., the more similar the goods and/or services are, the more distinguishable the respective signs must be, and vice versa (Unigestion Holding S.A. v. ITCG s.c. W. Drewniak, M. Olczykowski, WIPO Case No. DCH2005-0013). A similarity between goods and services is only to be assumed with reluctance (see sic! 2002 Seite 687, “eMarket.ch”, Obergericht Thurgau, 6. Juni 2002).

In the case at issue, the identity of the trademark SMOBY and the Domain Name <smoby.ch> is undisputed. However, when comparing the goods and services offered by the Parties, a somewhat different picture appears: contrary to Respondent’s allegations, the Expert does not doubt Claimants’ presence and business activity on the Swiss market. The Smoby group is an international player in the sector of children goods and toys. Claimants have shown that they use the trademark – inter alia – for toy vehicles, ride-on devices and tricycles for children. In Claimants’ opinion, the similarity between Respondent’s bicycles and their products is thereby established. The Expert disagrees. The goods offered by the Claimants are not sporting goods for physical or recreational purposes but very different children’s toys (as evidenced by Claimants’ Exhibit 16). While Respondent’s bicycles are made from metal, Claimants’ toy vehicles are made mainly of plastic. Appearance, purpose, target group and use are completely different.

Claimants’ trademarks include the protection of sports and gymnastic products. However, Claimants have not provided conclusive evidence that they actually used SMOBY in the past to identify gymnastic products or sporting goods. It is thus, uncertain, if the protection in this class of goods is still valid (Art. 12 Swiss Trademark Act). Be it as it is, the goods and services offered by the Parties are not comparable with each other, they cater to different customers, and they may not be confused. Respondent’s bicycle SMOBY is a solid vehicle for adults, weighting 14 kg. It is highly unlikely that anybody interested in a SMOBY children’s vehicles would be confused by the website and enter Respondent’s bicycle shop, or would believe that the Respondent’s business in any manner was connected with Claimants’ business.

As set out above, within the framework of the Rules of Procedure, Claimants’ must prove that there is a clear infringement. The circumstances and the evidence submitted must leave no doubt in the Expert’s mind that a trademark infringement has occurred. In the present case, due to the lack of similarity of the goods offered, the potential non-use of Claimants’ trademarks in the relevant class of goods, and the obviously different customer segments to which the goods of the two parties are marketed, the Expert is not fully convinced that the Claimants’ trademark rights are infringed. With the limited means of evidence available under the present Rules of Procedure and in the absence of a final decision by the competent state authorities which ultimately will have to decide the issue of trademark infringement, the remaining doubt in the Expert’s mind is working in Respondent’s favour. A clear infringement of Claimants trademark rights is not established at this stage.

In spite of this, it is fair to say that the Expert’s doubt could be reinforced or reduced depending on the final determination of the competent trademark authorities in the opposition case before them.

(b) Company name infringement?

The Claimants cumulatively allege a violation of the provisions protecting their company name under Article 956 CO and 29 CC.

Companies may seek protection against the use of their company name under Article 956 CO. This also applies to the use by another company of a company name as a domain name. According to a decision of the Swiss Federal Supreme Court (ATF 131 III 572, 575), quoted by the Claimants, Exhibit 27, the protection extends to an abuse of a company name through a commercial activity, e.g. by using it as a label, on business documents, in catalogues, price lists, brochures, addresses or telephone books. The protection under Article 956 CO does, however, require “use”.

Furthermore, by registering its business name SMOBY SUISSE SАRL with the Register of Commerce of Geneva, Claimant 1 also acquired a right to protect that name according to Article 29 of the Swiss Civil Code (“CC”). In addition, Claimant 2 may seek protection of its business name under Article 8 of the Paris Convention on the Protection of Commercial Property revised in Stockholm on July 14, 1967. The Swiss Federal Supreme Court has held that a company registered in a member state of the Paris Convention obtains the same protection for its business name as a non registered Swiss company, i.e. the protection under Article 29 CC and under the Law against Unfair Competition (ATF 90 II 315; 79 II 305).

The Claimants do not allege, even less provide evidence, that the Respondent is in fact using or referring to Claimants’ company names in his business activities. To the contrary, the evidence provided by both Parties shows that the website contains solely information about the Respondent’s products, the bicycle SMOBY. It makes no reference to Claimants products, company name or the like. In the Expert’s opinion, Respondent’s Domain Name, considering the website’s content, does not constitute a “use” of the Claimants’ company name or a “clear” infringement of Articles 956 CO and Article 29 CC.

(c) Unfair Competition?

The Claimants also invoke an infringement of Claimants’ rights under Swiss Law against Unfair Competition.

The Expert can not follow this argumentation either. First, the Parties are not engaged in the same market and, thus, are not competitors. Second, the Claimants’ have been and are able to reflect their toy business on the Internet under their TLD “smoby.com” and previously registered ccTLDs. Third, it is questionable whether the Respondent could in any way profit from the reputation of a toy company for his own bicycle business.

There are no circumstances indicating that the Respondent actually tried to obstruct or profit from Claimants’ business by registering the Domain Name. His explanation that his trademark and product name SMOBY stands for “Schrader Mobility” is not totally incredible, even though it is somewhat disturbing that Respondent knew about Claimants’ trademarks at the time of registration and unilaterally concluded that his own mark was in no way colliding with Claimants’ interests. But, again, a clear violation of Claimants rights under the Swiss Law of Unfair Competition is not evidenced in this proceeding with its limited means of proof.

In conclusion, Claimants’ intellectual property rights are not clearly infringed by Respondent’s website and Claimants’ request fails at this stage. Nevertheless, for the sake of completeness, the Expert will shortly address also the question if Respondent advanced valid grounds for defence in this proceeding.

(ii) Relevant grounds for defence?

It is uncontested that Respondent is the owner of the registered (though opposed) Swiss trademark SMOBY, No. 520087, for “vehicles, objects for transportation on land, in the air and on water” since March 31, 2004.

It is correct, as Respondent states, that an opposed trademark remains valid and protected under Swiss Law unless and until the opposition authority cancels it. The Expert refrains from making any predictions in this respect, but for the time being, and from a formal point of view, both parties seem to have equal rights in the distinctive sign reflected in Respondent’s Domain Name. At this stage, Respondent’s registration of his SMOBY trademark, in the Expert’s mind, is a valid ground for defence under the Procedural Rules.

(iii) Other requests

Considering the outcome of this case, Respondent’s request for indemnification in the event of a transfer becomes moot. But even in the alternative, if a transfer was ordered, Respondent’s indemnification request could not be addressed. According to paragraph 24 (b) of the Rules of Procedure, the Expert may only order the deletion or transfer of a domain name, depending on the remedy requested, or reject the request altogether. He has no authority to decide on legal charges or indemnities whatsoever to be paid by and to either side.

 

7. Expert Decision

For reasons stated above, the Request is rejected.

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Dr. Bernhard F. Meyer-Hauser
Expert

Dated: November 2, 2007