AHAVA NA, LLC v. Ahava USA, Inc.
Claim Number: FA0504000464505
Complainant is AHAVA NA, LLC (“Complainant”), represented by Sidney D. Bluming, of Bluming Freiman Franco LLP, 140 East 45th Street-19th Floor, New York, NY 10017. Respondent is Ahava USA Inc. (“Respondent”), represented by Carrie Webb Olson, of Edwards & Angell LLP, 301 Tresser Boulevard, Stamford, CT 06901.
REGISTRAR AND DISPUTED DOMAIN NAME
The domain name at issue is <ahava.com>, registered with Network Solutions, Inc.
The undersigned certifies that he has acted independently and impartially and to the best of his knowledge has no known conflict in serving as Panelist in this proceeding.
Houston Putnam Lowry, Chartered Arbitrator, as Panelist.
Complainant submitted a Complaint to the National Arbitration Forum electronically on April 18, 2005; the National Arbitration Forum received a hard copy of the Complaint on April 19, 2005.
On April 20, 2005, Network Solutions, Inc. confirmed by e-mail to the National Arbitration Forum that the domain name <ahava.com> is registered with Network Solutions, Inc. and that the Respondent is the current registrant of the name. Network Solutions, Inc. has verified that Respondent is bound by the Network Solutions, Inc. registration agreement and has thereby agreed to resolve domain-name disputes brought by third parties in accordance with ICANN’s Uniform Domain Name Dispute Resolution Policy (the “Policy”).
On April 21, 2005, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of May 11, 2005 by which Respondent could file a Response to the Complaint, was transmitted to Respondent via e-mail, post and fax, to all entities and persons listed on Respondent’s registration as technical, administrative and billing contacts, and to email@example.com by e-mail.
A timely Response was received and determined to be complete on May 11, 2005.
A timely additional submission was received from the Complainant on May 16, 2005.
On May 18, 2005, pursuant to Complainant’s request to have the dispute decided by a single-member Panel, the National Arbitration Forum appointed Houston Putnam Lowry, Chartered Arbitrator, as Panelist.
Complainant requests that the domain name be transferred from Respondent to Complainant.
The domain name is identical to a registered trademark in which Complainant
has exclusive rights. [ICANN Rule 3(b)(is)(l); 1CANN Policy § 4(a)(i).]
The owner of the subject trademark is Dead Sea Laboratories, Inc. ("DSL,"), an Israeli company. Complainant is the exclusive distributor of DSL effective January 1, 2005, with the exclusive rights to distribute the above described products in the United States and Canada. Respondent's domain name incorporates in its entirety the identical registered trademark under which Complainant has exclusive distribution rights, and features the trademark prominently in its website. In fact, Respondent's website home page seeks to directly circumvent Complainant's rights by falsely creating the impression that it has the right to officially distribute directly from the source of the Products.
It is only on the "about us" page that after again using the registered mark of DSL, that Respondent includes the following statement: "AHAVA.COM is a separate entity from Dead Sea Laboratories, manufacturers of the AHAVA brand." In all other respects, the website has the look and feel of that of an authorized distributor.
There have been numerous decisions, including those by National Arbitration Forum panels, granting relief under similar circumstances. See, e.g., Shabby Chic, Inc. v. Asia Ventures, Inc., FA 335486 (Nat. Arb. Forum Nov. 22, 2004).
Respondent (domain-name holder) has and should be considered as having no rights or legitimate interests in respect of the domain name that is the subject of the Complaint. [ICANN Rule 3(b)(ix)(2); ICANN Policy ¶4(a)(ii).]
Respondent had been the exclusive distributor for DSL under an agreement that expired no later than December 31, 2004. Respondent's rights expired, and, upon information and belief, it is being sued by DSL in the Courts of Israel, for breach of its distribution agreement. See annexed a copy of the Complaint and a Motion for injunction in the case styled Dead Sea Laboratories Ltd., P.C. 51 1334252 v. AHAVA (USA), Inc. et al.
Respondent's use of the domain name is not in connection with a bona fide offering of goods or services, but rather an intentional attempt to attract, for commercial gain, Internet users to its website, by creating a likelihood of confusion with the trademark owner and Complainant's distribution rights as to source, sponsorship, affiliation, or endorsement of its website. Notwithstanding its limited statement of disassociation with DSL on its website, its expansive use of the registered trademark overwhelm such statement, and create the deception that Respondent is an official supplier of the trademarked products. Upon information and belief, Respondent has a significant inventory of trademarked products which were to have been sold back to DSL, but were falsely hidden; and further Respondent is believed to be obtaining additional inventory of trademarked products through gray market sources or other deceptive practices and, upon information and belief, is surreptitiously importing them into the United States. Respondent has no current agreement with or rights through DSL. Respondent was not commonly known by the domain name prior to registering its domain name with ICANN on or about May 5, 1995 (under its then distribution agreement with DSL). While it utilized the trademark with permission prior to December 31, 2004, it now utilizes the subject trademark in violation of the trademark owner's and exclusive distributor's rights, and by infringing those rights.
Respondent has the clear intent of violating the trademark rights for commercial gain, to misleadingly divert consumers or to tarnish the trademark at issue.
The domain name is being used by Respondent in bad faith. [ICANN Rule 3(b)(k)(3); ICANN Policy ¶4(a)(iii)].
No act could be more in bad faith, than the willful continuing breach of a now expired distribution contract with the trademark owner. Simply put, Respondent continues to act as if it had the rights as distributor as evidenced by virtually the entire content on the website (with the sole exception cited above). Respondent is improperly causing prior sales representatives to act in its behalf, rather than on behalf of Complainant, allowing retail customers to continue to believe that it is the rightful distributor for DSL.
Respondent has maintained the domain name primarily for the purpose of disrupting the business of the rightful exclusive distributor under the trademark, and diverting the business and good will of the trademark owner and exclusive distributor.
Response to Statements and Allegations Made in Complaint
(Policy, paras. 4(a), (b), (c); Rules, para. 5)
Respondent hereby responds to the statements and allegations in the Complaint and respectfully requests the Administrative Panel to deny the remedies requested by Complainant.
Paragraph 4(a) of the Policy sets forth three elements that must be established by a complainant to merit a finding that the respondent has engaged in abusive domain name registration and use, and to obtain relief. Complainant must prove of the following elements:
(i) Respondent's domain name is identical or confusingly similar to a trademark or
service mark in which Complainant has rights; and
(ii) Respondent has no rights or legitimate interests in respect of the domain name; and
(iii) Respondent's domain name has been registered and is being used in bad faith.
Complainant cannot establish each of these required elements, as shown below:
1. Whether the domain name is identical or confusingly similar to a trademark or service mark in which the Complainant has rights.
(Policy, para. 4(a)(i))
A. Respondent challenges the trademark rights asserted by Complainant. Complainant is Ahava NA, LLC. However, the U.S. Patent and Trademark Office ("PTO") records show the owner of U.S. Trademark Registration No. 1,790,035 for AHAVA and Design as Dead Sea Laboratories LTD (“DSL”), an Israeli company. Complainant submits an undated Distribution Agreement (the "Agreement") between itself and DSL that purports to appoint Complainant as exclusive distributor of an "AHAVA" line of skin care and beauty products (the "Products") in the United States and Canada.
In Paragraph 10.1 of the Agreement, the parties agree that DSL is the owner of all right title and interest in and to the Intellectual Property. In Paragraph 1 of the Agreement, “Intellectual Property" is defined, in pertinent part, as follows:
"Intellectual Property" shall mean any patent, copyright, industrial design, trademark, tradename or other industrial or intellectual property right (other than the web site under the domain name Ahava.com). . .(Emphasis added).
This definition specifically excludes the web site and domain name at issue in this proceeding. Thus, should the Panelist transfer the <ahava.com> domain name to Complainant in this proceeding, it will be granting Complainant rights in and to a property that was intentionally excluded from the Agreement on which Complainant relies for standing in this case.
In addition, Respondent has a history with DSL and questions its ownership in and to the AHAVA trademark in the United States. It is Respondent's position that it has acquired substantial common law rights in and to the AHAVA trademark throughout the United States by virtue of its use and development of the AHAVA name in connection with skin care and beauty products, since at least as early as 1994. DSL and Respondent entered into a written agreement concerning Respondent's distribution of AHAVA products in 1994. That agreement terminated in 2001 and the parties entered into a second distribution agreement in December 2002.
Although DSL and Respondent entered into a written agreement concerning Respondent's distribution of the AHAVA products in the United States, DSL failed to exercise even a modicum of control over the quality and/or nature of the products sold under the AHAVA name by Respondent.
For at least the past ten (10) years, Respondent has developed advertising and promotional materials, as well as product labeling bearing the AHAVA trademark, in its sole discretion. DSL never exercised any right of approval or otherwise with respect to the product labels developed by Respondent, which were applied to the products prior to insertion into the stream of U.S. commerce. As a result of DSL's failure to exercise quality control over its licensee's use of its asserted trademark, U.S. consumers have come to recognize Respondent as the sole and exclusive source of AHAVA products in the United States.
As Complainant has correctly pointed out, DSL and Respondent are currently engaged in a dispute concerning Respondent's right to use the AHAVA trademark in the United States. The dispute is within the jurisdiction of the Israeli courts. Although DSL has filed a Complaint against Respondent, Respondent has not yet filed its Answer in contravention of the facts presented in DSL's Complaint. Respondent intends to aggressively challenge DSL's asserted "undisputed ownership" in and to the AHAVA mark in the United States.
Under these circumstances, DSL's claim of trademark ownership in the Agreement is tenuous, at best. Further, DSL clearly did not have the right to license Complainant's use of the <ahava.com> domain name. Therefore, Complainant rights in and to the trademark contained in the <ahava.com> domain name are suspect for purposes of its ability to properly bring this UDRP proceeding in its own name.
2. Whether the Respondent has rights or legitimate interests in respect of the domain name.
(Policy, para. 4(a)(ii))
Respondent has rights and a legitimate interest in respect of the <ahava.com> domain name.
A. Before Respondent received any notice of the dispute, Respondent used the domain name in connection with a bona fide offering of goods or services. Paragraph 4(c)(i) of the Policy provides that a use is legitimate if, prior to commencement of the dispute, Respondent used the domain name in connection with a bona fide offering of goods or services. As discussed in Oki Data Americas, Inc. v. ASD, Inc., D2001-0903 (WIPO Nov. 6, 2001), to be “bona fide” the offering must meet the following requirements:
(i) Respondent must actually be offering the goods or services at issue;
(ii) Respondent must use the site to sell only the trademarked goods and not to bait Internet users and then switch them to other goods:
(iii) The site must accurately disclose the registrant's relationship with the trademark owner; and
(iv) Respondent must not try to corner the market in all domain names, thus depriving the trademark owner of reflecting its own mark in a domain name.
In this case, Respondent's conduct meets all these factors. Respondent is selling off its inventory of AHAVA products through the web site; it is selling only the goods manufactured by DSL through the web site - there is no "bait and switch" activity occurring at the site; Respondent's web site prominently displays a statement that "AHAVA.COM is a separate entity from Dead Sea Laboratories, manufacturers of the AHAVA brand"; and Respondent has in no way "cornered the market" for all domain names that containing the term "ahava". A search of the <whois.net> site shows 430 domain name registrations containing the term "ahava." Indeed, the domain name at issue in this proceeding, i.e., <ahava.com>, is the only domain name owned by Respondent that contains the term "ahava."
Long before Complainant acquired its alleged rights in and to the AHAVA trademark, Respondent was doing business through its web site located at <ahava.com>. In fact, the <ahava.com> domain name was registered in May 1995 by Respondent, during which time the Respondent was the record owner of U.S. Trademark Registration No. 1,790,035. As the U.S. trademark owner of record from February 9, 1995 through January 1,1997, Respondent's use of the domain name in connection with the bona fide offering of goods and services cannot be questioned.
Even after the January 1, 1997 assignment of U. S. Trademark Registration No. 1,790,03 5 from Respondent to DSL, Respondent continued to operate the web site located at <ahava.com> with the full knowledge and consent of DSL. Indeed, DSL supplied the photographs to the web design firm hired by Respondent to develop and design the <ahava.com> web site. In addition, DSL met with Respondent's web design firm on numerous subsequent occasions and frequently supplied them with new material on behalf of Respondent, in support of Respondent's development of the web site. DSL also placed <ahava.com> on packaging for products manufactured specifically for the U.S. market.
DSL's active support of Respondent's bona fide offering of goods and services at the <ahava.com> web site continued, notwithstanding DSL's assignment of the U.S. Trademark Registration No. 1,790,035 for AHAVA back to Respondent on January 9, 2003. As the owner of the AHAVA registration from January 9, 2003 until November 26, 2003, Respondent continued to make a bona fide offering of goods and services at the <ahava.com> web site.
In its Complaint, Complainant asserts that Respondent's use of the domain name is an "intentional attempt to attract, for commercial gain, Internet users to its web site, by creating a likelihood of confusion with the trademark owner and Complainant's distribution rights as to source, sponsorship, affiliation or endorsement of its web site."
Respondent vehemently denies such allegations, which are made on the basis of Complainant's purported newfound distribution rights for the AHAVA products. Again, Respondent currently disputes DSL's claim of ownership in and to the AHAVA mark, and therefore its ability to lawfully grant Complainant a license to use the AHAVA name in the United States. DSL's claim of U.S. rights is being asserted in the context of a dispute concerning the termination of a distribution agreement between Respondent and DSL, over which Israeli courts currently maintain jurisdiction. Respondent's answer to DSL's Complaint is not yet due and has not been filed to date. A transfer of the <ahava.com> domain name to Complainant at this stage would be premature and could result in Complainant's unjust enrichment.
Complainant also alleges that Respondent "has significant inventory of trademarked products which were to have been sold back to DSL, but were falsely hidden." This statement is completely unsupported by the record. As a preliminary matter, the 2002 agreement between DSL and Respondent provides for DSL's option but not the obligation to purchase Respondent's stock of Products within ninety (90) days of the termination date, which was December 31, 2004 (emphasis added). DSL did not exercise its option to purchase Respondent's entire inventory within the designated time period. Furthermore, Complainant's assertion that "Respondent is believed to be obtaining additional inventory of trademarked products through gray market sources" is without merit and irrelevant for purposes of this proceeding.
B. Respondent has been and is commonly known by the domain name at issue, even if Respondent has acquired no trademark or service mark rights.
Complainant asserts "Respondent was not commonly known by the domain name prior to registering its domain name . . .on May 5, 1995” (emphasis added). This assertion misstates the required element for establishing that Respondent has no rights or legitimate interest in and to the domain name. As the Panelist will certainly confirm, Respondent need only show that it was commonly known by the domain name prior to any notice of the dispute (emphasis added).
Respondent has invested hundreds of thousands of dollars in connection with the development, design and maintenance of the <ahava.com> site. As a result of these expenditures, combined with significant sales - in excess of two million dollars - of products through the <ahava.com> site, and several million dollars in sales of AHAVA products over the past ten years, consumers of AHAVA products came to recognize Respondent as inextricably associated with the <ahava.com> domain name.
3. The domain name was neither registered nor is being used in bad faith.
(Policy, para. 4(a)(iii))
Complainant has offered no evidence or statements in support of the proposition that the domain name was registered in bad faith. As with the misstatement regarding the standard for showing that Respondent is not commonly known by the domain name, i.e., that Respondent was not known by the domain name prior to registering the name versus prior to receiving notice of this dispute, Complainant apparently elected to disregard its burden of showing bad faith registration and bad faith use. Respondent contends that Complainant has shown neither.
Respondent refutes that it is using the domain name in bad faith and denies that it is in breach of a now expired distribution agreement. Respondent contends that it has acquired significant common law rights in and to the AHAVA trademark in the United States, by virtue of DSL's lack of quality control with respect to Respondent's independent use of the AHAVA mark for over ten years. Further, even if Respondent did not challenge DSL's trademark rights in the United States, Respondent is entitled to dispose of inventory that was not purchased by DSL within the proscribed time period.
Regarding Complainant's "evidence of Respondent's bad faith" in the form of an allegation that Respondent is operating through an entity that does not exist, Respondent, at all times, believed that its registration to do business in the state of South Carolina was valid and subsisting. Until its receipt of this Complaint, Respondent was unaware of the expired status of Ahava (USA), Inc. in South Carolina. As evidence of Respondent's good faith belief that it was duly registered in South Carolina, Respondent submits herewith a copy of its South Carolina income tax return for the year 2003.
Immediately upon learning of the lapse in South Carolina, Respondent contacted its attorney, Melvin Williamson, Esq., to inquire as to the current status in this jurisdiction. Mr. Williamson responded on May 9, 2005 letter with enclosure, showing that Ahava (USA) is in the process of being reinstated after dissolution by administration action after proof of its compliance in connection with the payment of tax due to the state. Respondent expects to be reinstated in South Carolina within two days of the filing of this Response. In any event, such an administrative error does not constitute "bad faith" in terms of business activities conducted by Ahava (USA) Inc. during the lapse.
Turning to the substantive issues to be addressed in this proceeding, and contrary to Complainant's assertion, Respondent is not maintaining the domain name "primarily for the purpose of disrupting the business of the rightful exclusive distributor under the trademark . . .” Rather, Respondent maintains the <ahava.com> domain name, as it is legally entitled to do (as further evidenced by DSL’s specific exclusion of this property right in its Agreement with Complainant), because it considers the domain name a valuable corporate asset, in which significant sums have been expended to date. A transfer, without just consideration, to Complainant - or DSL - would be against public policy.
A. The domain name was not registered or acquired primarily for the purpose of selling, renting, or otherwise transferring the registration to Complainant, as the alleged owner of the trademark or service mark, or to a competitor of Complainant, for valuable consideration in excess of Respondent's out-of-pocket costs directly related to the domain name.
As the owner of the U.S. Trademark Registration for AHAVA at the time in which the domain name was registered, Respondent has shown that the domain name was not registered in bad faith.
B. The domain name was not registered in order to prevent Complainant from reflecting the mark in a corresponding domain name and, in connection therewith, Respondent has not engaged in a pattern of such conduct.
As previously stated, and supported by sworn Declaration, Respondent is the owner of only one domain name containing the term "ahava" - the domain name at issue in this proceeding. It cannot be shown that Respondent either:
( i) knew about Complainant and its purported interest in the AHAVA trademark at the time of registration or
(ii) engaged in a pattern of "cybersquatting" as contemplated by this section.
C. The domain name was not registered by Respondent primarily to disrupt Complainant's business.
Again, Respondent was not even aware of Complainant at the time the domain name was registered, over ten years ago. Further, the registration - and use - of the domain name was approved and sponsored by the purported trademark owner, DSL, who has not objected to Respondent's ownership of the domain name to date.
D. The domain name was not registered by Respondent in an intentional attempt to attract for commercial gain, Internet users to Respondent's web site or other on-line location, by creating a likelihood of confusion with Complainant's mark as to the source, sponsorship, affiliation, or endorsement of Respondent's web site or location or of a product or service on Respondent's web site or location.
The domain name was registered prior to the date on which Complainant acquired its
purported rights in and to the AHAVA trademark.
C. Additional Submissions
This Additional Written Statement is necessitated by the gross distortions, misstatements and unsupported and unsupportable contentions contained in the Response which seek to obfuscate these proceedings. Respondent seeks to have the Panel look past the fundamental truths. Respondent had a series of distribution agreements (the latest being embodied is referred to herein as the “Respondent’s Agreement” with the trademark owner, Dead Sea Laboratories, Ltd. of Israel (“DSL”), which granted it the contractual right to use the AHAVA mark (the “Mark”) for limited purposes, for a limited time, under certain conditions. Respondent’s Agreement expired, yet Respondent wrongfully continues to include the Mark in the disputed domain name. The only rights Respondent ever possessed relating to the Mark derived from Respondent’s Agreement, and that agreement expired. All of the contrivances, concocted arguments and bald assertions in the Response seek to divert attention from this basic and unavoidable fact.
1. Respondent has no independent rights; rather Respondent asserts rights derived only under Respondent’s Agreement, which is now ended. All assertions by Respondent regarding its creation and operation of its website in the U.S., and the claimed creation of goodwill ignore the fact that it did and only could do so only with contractual permission, and subject to all of the conditions and limitations contained in Respondent’s Agreement. In Section 10.2 of the Respondent’s Agreement it undertakes: “not to make any use, directly or indirectly, of said Intellectual Property items [including the Mark] . . . for any activities whatsoever other than those required for the implementation of this Agreement, and after the expiry of this Agreement for whatever reason, not to make any use whatsoever of same.” Yet Respondent wants the Panel to view its actions in isolation, pretending that it was “commonly known by the domain name” and that the good will generated from its contractual efforts as DSL’s exclusive distributor should somehow inure to it rather than to DSL. Respondent, simply put, is arguing for permission to divert the good will and effectively seize the Mark itself – not just the disputed domain name. Respondent does not – and can not – contend that it would have had any rights to utilize the Mark or register the domain name were it not for Respondent’s Agreement, which it now wants the Panel to ignore. Respondent’s Agreement, by admission, expired by its terms on December 31, 2004 (Section 2.1). The continuation of the registration of the disputed domain name after the rights to the Mark expired is the functional and legal equivalent of registering the same in bad faith. To find that the disputed domain name has been used in bad faith since such expiration, one need only look at the Response.
2. Respondent has no right to dispose of inventory under the Mark or continue to use the disputed domain name. Respondent claims “even if Respondent did not challenge DSL’s trademark rights in the United States, Respondent is entitled to dispose of inventory that was not purchased by DSL within the proscribed [sic] time period.” Typical of the unfounded and patently erroneous assertions in the Response, this is contrary to Respondent’s Agreement and the facts. There is no sell-off right. In fact, in Section 9.3 Respondent agreed not to sell any “products containing minerals or any other elements from the dead sea [the essence of the Ahava products], for the term of this Agreement and for a period of 2 (two) years afterwards.” Clearly during the existence of Respondent’s Agreement, DSL’s products were expressly approved for sale as the premise thereof, but thereafter Respondent was not to be a competitor with DSL or its new distributor. Therefore selling any such products irrespective of the brand or domain name used is contrary to the contractual restrictions. Further, Respondent should have no inventory to sell. The Response makes the false statement that DSL failed to effectively exercise its option to repurchase Respondent’s inventory. However, as set forth in the letter to Mr. Steven A. Certilman, Esq., then counsel to Respondent, from Fischer Behar Chen & Co., counsel to DSL, the option to purchase all inventory was in fact exercised (in addition to Respondent being told to cease all further use of the Mark). Declaration from Michael Etedgi, Manager of Complainant, including a Packing List showing Respondent as shipper, DSL as buyer and shipment to “I. Shalom,” an affiliate of Complainant. Mr. Etedgi states that DSL and Complainant had acquired Respondent’s entire inventory. Respondent should have had no remaining inventory; it misled Complainant and DSL, and now is not giving accurate information to the Panel.
3. Complainant has the unfettered right to enforce the Mark for itself and for DSL irrespective of its rights vis-à-vis DSL. As to the contention in Response Section 1A, Complainant’s rights do not have to include <ahava.com> in order to allow it to enforce the rights in trademark as authorized under Section 10.6 of Complainant’s distribution agreement (“Complainant’s Agreement”), which states that Complainant is authorized:
“. . . to institute and conduct legal action . . . against unauthorized distributors offering the Products for sale in the Territory or infringers utilizing any of the trademarks associated with All Products.” Respondent is both, and the issue of entitlement to the disputed domain name as between Complainant and DSL is irrelevant. In fact, if Respondent is concerned with Complainant being “unjustly enriched,” Section 10.1 of Complainant’s Agreement provides, in pertinent part: “All right, title and interest in and to any rights as may be acquired by Distributor. . . during the Term . . . in . . . any other Intellectual Property are, by this Agreement, without further request by DSL, properly and completely conveyed to DSL.” Note that the definition of Intellectual Property in Section 1 includes, inter alia, the Mark and “any other items which are, directly or indirectly, associated with the same. . .” Separately, Respondent seems to argue that it has independent trademark rights in the domain name <ahava.com> but clearly it does not, nor does it assert any registration or attempted registration thereof – nor could it.
4. Attacks on DSL’s ownership of the Mark have no place in this proceeding, are disingenuous and in any event are fatally flawed. Respondent’s sudden effort to attack DSL’s rights in the Mark has no place within the proceeding, though they are striking evidence of its bad faith. Even if the Panel were to consider these naked assertions, they are at best disingenuous. Respondent operated, by its own admission, since 1994 under grant of rights from DSL. Respondent had at least two exclusive agreements, and entered into Respondent’s Agreement as late as December 2002, accepting all of its premises, obligations, conditions, restrictions and limitations. Had Respondent believed, for reasons other than to obfuscate these proceedings, that DSL did not have enforceable rights in the Mark, it never before made those beliefs known. It is certainly precluded from raising the same now on numerous legal theories, including waiver, estoppel, acquiescence and laches; and even were it allowed to do so, it does not overcome its contractual constraints. Moreover, Respondent boasts of its efforts in its lawsuit against J.W.G. In that case Respondent relied upon and espoused the strength of the Mark, which was apparently assigned to it only temporarily in 2003, to enable the prosecution of that action. If Respondent now seeks to assert DSL’s lack of oversight of the Mark – again it is believed such assertions to be irrelevant herein and improperly raised – it is in fact Respondent that was responsible for the market as exclusive distributor and cannot derive a windfall from its own failures. As to oversight of advertising and promotion, Respondent’s Agreement required it to provide marketing and sales materials to DSL. See, e.g., Sections 3.1, 9.2(a) and 9.2 (d). Respondent’s contention, at pg. 4, that “DSL failed to exercise even a modicum of control over the quality and/or nature of the products sold under the AHAVA name by Respondent,” is patently absurd. DSL was itself the manufacturer of the products. In fact in Section 10.2 of Respondent’s Agreement, Respondent was precluded from dealing in any other similar products – clearly for the very purpose of controlling those products associated with the Mark. Moreover, Respondent is obviously seeking to contrive an abandonment argument; but it is not only completely misplaced and unsupported, but also fatally deficient. In the first instance, unless proven to have been abandoned, the Mark registrant is the prima facie owner until its Mark is cancelled. Beyond that, the test of abandonment based on failure to provide quality control is severe; there must be an extraordinary lack of attention, which Respondent cannot begin to demonstrate herein. See, e.g., Ky. Fried Chicken Corp. v. Diversified Packaging Corp., 549 F. 2d 368 (5th Cir. 1977).
5. Respondent has no independent rights and its website promotes confusion with DSL. Respondent contends baldly that it has a “legitimate interest in respect to” the disputed domain name, but can show no rights except those that derived solely from, and ended upon the expiry of, Respondent’s Agreement. To assert after the fact that all of its activities under that Respondent’s Agreement inured to its own benefit is to simply deny the existence of Respondent’s Agreement as well as logic and rationality. See infra, at point 8. In an effort to justify its independent rights, and achieve some pretense at separation from DSL, Respondent points to a reference on its website (certainly not prominently, but rather on a linked page – “About us” – which is found only after linking to the “contact us” page) that “AHAVA.COM is a separate entity” from DSL. This is meaningless to any consumer, as well as misleading. “Ahava.com” is not an entity at all – nor in its papers does Respondent make any legal assertion it is. In Ahava (USA), Inc. v. J.W.G., Ltd., 250 F. Supp. 2d 366 (SDNY 2003) it states that Mr. Goldberg had been an authorized distributor under the Mark since as early as 1991. That it is. There is no legal use of a fictitious name; merely a presumptuous and wrongful purloining of the Mark, with innocuous allusions to some ephemeral existence. There is no meaningful disclosure statement to avoid confusing the market (not that it would alter the rights of the parties herein) that it is not an authorized distributor of DSL’s, or that its rights to distribute under the Mark are being contested by DSL. Quite to the contrary, merely click onto the website’s links on the top of that page to “The Lab” and “Factory.”
These pages exacerbate the ready impression that the website owner is the manufacturer of the AHAVA products –totally in violation of the premises of trademark law and promoting the precise kind of confusion that trademark laws decry. Further, Respondent even misuses the Mark by promoting independent books, one, Psalm In Jenin, authored by Mr. Brett Goldberg who is described as “formerly President of AHAVA USA.” Respondent offers another misleading element, reference to the “whois” database. Apart from the fact that the conduct of others bears no relevance herein, Respondent does not and cannot know which, if any, of these domain names are actually authorized by DSL (the list includes, of course, DSL’s own site as well as that of Complainant) or which are being attacked for misappropriation and infringement. Of the first 40 domain names, many have shut down after demands by Complainant, and many others have no active website. See, e.g., the home page of <1stahavaclub.com> (which also diverts from several of the other listed domain names), and that of <ahava.us> which is offered for sale. For Respondent to cite those domain names is both ironic and disingenuous since virtually all of them were registered while Respondent was the custodian of the Mark in the United States under Respondent’s Agreement and had the obligation (Section 10.2(c)) to notify DSL of infringements, with the right to prosecute them. Respondent cannot be heard to argue its own failure to act as a basis to attack the owner’s rights in the Mark or to bolster its own specious claim of right.
6. Respondent was never the beneficial owner of the Mark. Respondent claims that it was the record owner of the Mark and therefore had some inherent right to use it in its domain name that continues in perpetuity. It fails to note, however, that the original Assignment of Trademark was “for a period not to exceed the term of the March 1, 1993 Distribution Agreement between Assignor and Assignee. . .” It is also irrelevant for Respondent to assert that it continued to use the domain name during the time that Respondent’s Agreement was in effect as if the act of doing so created rights beyond the agreement or some acquiescence on DSL’s part separate from that agreement. Again, the only relevant rights Respondent had to use the Mark in any way, including in the disputed domain name, derived from Respondent’s Agreement and the earlier referenced distribution agreement which has not been provided by Respondent in this proceeding.
7. Expenditures on marketing, not relevant in any event to the within dispute, were contractually required under the agreement Respondent seeks to ignore. Respondent further distorts the facts in Response. It again seeks to bootstrap its rights on those it derived contractually. Its investment in promotion was a requisite under Section 3 of Respondent’s Agreement. As with any selling, marketing is a necessary expenditure (and by its own admission, it reaped significant financial return on its marketing investment). However, it was only able to and did only market its rights as they existed under Respondent’s Agreement. Once that agreement ended, Respondent cannot be permitted to simply convert to its own benefit the rights it had derived thereunder while abrogating all conditions, limitations, restrictions and obligations.
8. No common law rights accrued: Respondent operated under contract, and expressly agreed it would not acquire any rights independently. Respondent’s bald assertions in the Response have no basis, are provided with no support and are contrary to Respondent’s Agreement. Respondent contends, on some inexplicable theory, that it acquired “common law rights in and to the AHAVA trademark.” Clearly this is absurd as a matter of law when operating under DSL’s registered trademark, and pursuant to a contract it never challenged (until December 15, 2004, two weeks before its scheduled expiry). Yet Respondent asserts common law rights and the entitlement to dispose of inventory in direct contravention of the provisions of Respondent’s Agreement. Respondent merely ignores the fact that it contractually agreed that under no circumstances would it acquire any rights in the Mark. Section 10.2 of Respondent’s Agreement provides, inter alia, that Respondent undertakes “(d) not to acquire any right for itself in the Intellectual Property, or any item thereof or any goodwill or other rights related thereto, by any act or omission” (emphasis added).
9. Respondent’s conduct constitutes bad faith as expressly proscribed under the UDRP Policy. Respondent seeks to rely on a technical argument that a complainant must separately show that the registration of the domain name was effected in bad faith, this is belied by the UDRP Policy. If technical arguments are to prevail, it is noted that no rights existed in Mr. Goldberg personally or in any South Carolina corporation. As shown in the Response, even the assignment (for convenience of the JWG Litigation) made in January 2003 was made to Ahava (USA), Inc., a Delaware corporation. Consequently, any putative South Carolina corporation was never a registrant of this domain name and any registration thereof by it, or the maintenance of any such registration, is without technical premise. In fact UDRP Policy Paragraph 4(b)(iv) provides prima facie examples of evidence to support the complete bad faith element in both registration and use contained in Paragraph 4(a)(iii):
“b. Evidence of Registration and Use in Bad Faith. For the purposes of Paragraph 4(a)(iii), the following circumstances. . . shall be evidence of the registration and use of a domain name in bad faith: . . .(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 . . .”
Respondent’s bad faith registration and use is exacerbated by its unabated use of the Mark in abject disregard of the prohibition contained in Respondent’s Agreement and in the face of express objection from DSL and Complainant, and in direct conflict with the rights of Complainant as its replacement as exclusive distributor. The lawsuit against Respondent in Israel by DSL demonstrates (irrespective of Respondent’s gratuitous, completely unsupported and misplaced assertions in this proceeding) that Respondent is acting in contravention of its once existing rights. Respondent’s reference to isolated historical events provides it with little comfort, especially as the perversion of those events underscores Respondent’s bad faith.
By way of example only, Respondent asserts in its Declaration, in paragraph 4, that “as owner of the AHAVA trademark and corresponding U.S. Trademark Registration, Ahava USA registered the ahava.com domain name.” The Delaware corporation was merged out of existence in 2000, into a South Carolina corporation. No assignment was ever displayed (and it is believed none was ever approved by DSL or executed in fact). Consequently, transfer of the Mark in 2003 to a Delaware corporation was technically improper.
Renewal of the registration was last effected July 10, 2004. Such act, without notice to and approval by DSL, therefore constituted a bad faith renewal/registration.
Respondent’s rights as “owner” of the Mark were merely temporary and for convenience. Respondent never had any actual ownership rights in the Mark lest it would not have needed Respondent’s Agreement and it would have had no reason to reassign the Mark. In fact, if Respondent’s assertion is taken at face value, the logical conclusion is that because ownership of the domain name follows ownership (or custodianship as exclusive distributor) of the Mark, then Respondent’s rights have necessarily lapsed and those rights should inure to Complainant, or at least to DSL.
As shown in detail in the Complaint, Section (c), and as amplified herein, Respondent’s use, including, inter alia, its “Steals & Deals” page, is designed and utilized for the indisputable objective of attracting, for commercial gain, Internet users to its website by creating a likelihood of confusion. It can be for no other reason that, among other things: the Mark is used lavishly throughout the site, sometimes with the “®” symbol and sometimes not, and with and without other words; the colors, look and feel of the website closely resembles those of Complainant and of DSL; there is no effective disclaimer; by its own admission herein the products sold in the United States by Complainant are the sole products offered on the website; statements in and full pages of the website are designed to induce consumers to believe that Respondent is the manufacturer or has a tie in to the manufacturer of the products under the Mark; and nowhere within the website is Respondent identified other than by use of the Mark and the non-entities “Ahava” and “Ahava.com.” See the WIPO Administrative Panel Decision in Süd-Chemie AG v. tonsil.com, D2000-0376 (WIPO July 3, 2000), a case in which the respondent therein identified itself on its website only as <tonsil.com>. The Panel in that case said: “The Respondent has not asserted that tonsil.com is a person, or is incorporated or registered as a legal entity in any jurisdiction. Therefore, the Panel is not in a position to ascertain whether or not the Respondent exists.” The same is true here; and the consuming public is even more confused. The confusion over the status of Respondent is compounded by its corporate shell game. By contrast, in the Customer Service page of Complainant’s website readily and clearly identifies Ahava NA, LLC as the owner of <ahavaus.com>. This transparency was implemented even though Complainant is the legitimate distributor of Ahava products.
10. Respondent’s bad faith intentions are clear from its conduct. The Response, after much effort to obfuscate the substance and nature of its wrongful conduct, seeks to address the “substantive issues,” and denies that Respondent is seeking to divert business from the rightful distributor, supporting this with more raw hyperbole. One needs only check Respondent’s website, which continues unabated (but for the ambiguous reference to DSL) and goes to great lengths to appear to be an official AHAVA site – and has not changed from that used by Respondent before the expiration of Respondent’s Agreement. But worse, it perverts the Mark. See <ahava.com/channels/shop_page.asp?ctg=6&subCtg=all>, captioned “Steals & Deals,” seeking to undermine Complainant’s prices and devalue the Mark. Also, at the top of the page it says “AHAVA®Shop.” This further misuse of the Mark prominently on the website alone rebuts Respondent’s contentions of innocence and good faith. It is further noted that Respondent’s Agreement was with Ahava (USA), Inc., a Delaware corporation. Thus a restoration of a South Carolina corporation to existence does not correct the defect; and evidences that the grantee of any rights no longer exists. Unless there was a written approval, assignment of rights from the distributor under Respondent’s Agreement, or under the trademark assignments, were assigned in violation of Section 14 of Respondent’s Agreement. Respondent has played fast and loose with DSL’s rights and interests in every way. See Kapula Candles (Proprietary) Ltd. v. Dixon, D2002-0945 (WIPO Dec 2, 2002). See also on that page the unchanged and clearly erroneous copyright notice. This is a new page which could not have been first published in 2002, but more importantly again misuses the Mark by showing AHAVA alone as if it were an entity which is the operator of the website, as the claimer of the copyright.
11. Complainant has satisfied its burden of showing that (1) the domain name is identical to the Mark in which Complainant has rights; (2) Respondent should be considered as having no rights or legitimate interests in respect of the domain name in dispute as any such rights expired on December 31, 2004; and (3) the disputed domain name should be considered as having been registered and being used in bad faith as the rights to continue the registration had expired, and in any event Respondent has intentionally attempted to attract, for commercial gain, Internet users to its web site by creating a likelihood of confusion with the Mark. As a result, the relief requested herein should be granted. If the Panel believes that transferring ownership to Complainant would somehow grant rights to it which are beyond those contained in Complainant’s Agreement (Attachment B) and chooses not to rely on Section 10.1 thereof, it would be appropriate then to transfer ownership directly to DSL, for which owner Complainant also acts herein, or to cancel the domain name. The only unacceptable outcome is for Respondent to reap benefits from its wrongful taking of the trademark rights of another.
After reviewing the documentary evidence, I make the following findings:
the domain name registered by Respondent is identical or confusingly similar to a trademark or service mark in which Complainant has rights;
Respondent has rights or legitimate interests in respect of the domain name; and
the domain name was not registered in bad faith.
Paragraph 15(a) of the Rules for Uniform Domain Name Dispute Resolution Policy (the “Rules”) instructs this Panel to “decide a complaint on the basis of the statements and documents submitted in accordance with the Policy, these Rules and any rules and principles of law that it deems applicable.”
Paragraph 4(a) of the Policy requires that the Complainant must prove each of the following three elements to obtain an order that a domain name should be cancelled or transferred:
the domain name registered by the Respondent is identical or confusingly similar to a trademark or service mark in which the Complainant has rights;
the Respondent has no rights or legitimate interests in respect of the domain name; and
the domain name has been registered and is being used in bad faith [emphasis added.
Complainant is the exclusive distributor in the United States for Dead Sea Laboratories, Inc., an Israeli company that presently holds a trademark registration on the Principal Register of the United States Patent and Trademark Office (“USPTO”) for the AHAVA mark (Reg. No. 1,790,035; issued August 31, 1993) for total body products. This registration with the USPTO and Complainant’s exclusive distributorship agreement (particularly §10.6 in the present Distributorship Agreement) with the trademark owner demonstrate Complainant’s rights in the AHAVA mark for purposes of Policy ¶ 4(a)(i). See Janus Int’l Holding Co. v. Rademacher, D2002-0201 (WIPO Mar. 5, 2002) (finding that panel decisions have held that registration of a mark is prima facie evidence of validity, which creates a rebuttable presumption that the mark is inherently distinctive, and that a respondent has the burden of refuting this assumption); see also Men’s Wearhouse, Inc. v. Wick, FA 117861 (Nat. Arb. Forum Sept. 16, 2002) (“Under U.S. trademark law, registered marks hold a presumption that they are inherently distinctive and have acquired secondary meaning.”).
The <ahava.com> domain name is identical to Complainant’s AHAVA mark. The domain name fully incorporates Complainant’s mark and adds the “.com” generic top-level domain. The addition of a generic top-level domain does not distinguish the domain name from Complainant’s mark. Thus, the domain name is confusingly similar to the mark under Policy ¶ 4(a)(i). See Rollerblade, Inc. v. McCrady, D2000-0429 (WIPO June 25, 2000) (finding that the top level of the domain name such as “.net” or “.com” does not affect the domain name for the purpose of determining whether it is identical or confusingly similar); see also Pomellato S.p.A v. Tonetti, D2000-0493 (WIPO July 7, 2000) (finding <pomellato.com> identical to the complainant’s mark because the generic top-level domain (gTLD) “.com” after the name POMELLATO is not relevant).
Respondent’s use of the domain name to direct Internet users to its skin products website is a use in connection with a bona fide offering of goods or services. Goods were actually advertised and sold, over a period of years. This means Respondent has rights and legitimate interests in the domain name under Policy ¶4(c)(i). See Scholastic Inc. v. Master Games Int’l, Inc., D2001-1208 (WIPO Jan. 3, 2002) (finding that the respondent’s use of the disputed domain name for a website regarding chess tournaments, particularly because the domain name appropriately described both the target users of the respondent’s services and the nature of the respondent’s services, was a bona fide use of the domain name); see also SFX Entm’t, Inc. v. Cushway, D2000-0356 (WIPO July 10, 2000) (finding that the respondent had rights and legitimate interests in the domain name where the respondent began demonstrable preparations to use the domain name in connection with a bona fide offering of goods or services).
The chronology of relevant events is as follows:
February 17, 1995: The document assigning Respondent the registration of the AHAVA trademark was filed with the USPTO.
May 5, 1995: Respondent registered the <ahava.com> domain name. Shortly after this, Dead Sea Laboratories, Inc. provided technical support and content to help Respondent to establish its web site.
October 28, 1997: Respondent’s assignment of the AHAVA trademark was filed with the USPTO.
Neither Dead Sea Laboratories, Inc. nor any person claiming rights from it, such as Complainant, objected to Respondent’s registration of the <ahava.com> domain name until December 16, 2004 (the date of Attorney Reuven Behar’s letter to Attorney Steven Certilman). This amounts to 3,543 days. The reason for this delay is not explained.
During all of this time, Respondent was using the domain name to sell products. Dead Sea Laboratories, Inc. actually helped Respondent to establish the web site. Under similar circumstances in the past, this Panel has held that the respondent acquires some right under the UDRP, even though respondent may not have acquired any trademark rights (an issue which is beyond the scope of this Panel’s jurisdiction). See Gap (Apparel) Inc. v. Republic Jewelry & Collectibles, FA 347795 (Nat. Arb. Forum, Dec. 11, 2004)
Respondent registered the domain name in connection with its previous distributorship relationship with Dead Sea Laboratories, Inc., meaning Respondent had rights or legitimate interests in the disputed domain name at the time of registration pursuant to Policy ¶ 4(a)(ii). See Mark Travel Corp. v. ATHS, FA 154644 (Nat. Arb. Forum May 29, 2003) (“[W]ithout a specific demarcation of how far the trademark is used [where the respondent was an authorized distributor of the complainant]. . . it is clear the trademark may be used in advertisements for the trademarked service” in holding that the respondent was able to avail itself of the safe harbors of Policy ¶¶ 4(c)(i) and (iii)); see also Grobet File Co. of Am., Inc. v. Exch. Jewelry Supply, FA 94960 (Nat. Arb. Forum July 14, 2000) (“Within its rights as a distributor, therefore, Respondent registered the domain name and sold Complainant’s legitimate goods online. In sum, Respondent has successfully shown that it was using the <grobet.com> domain name and web site in connection with the bona fide offering of goods and services, before any notice of the dispute.”).
Respondent’s argument that it is known by the AHAVA name is convincing because of the October 21, 2004 South Carolina corporate tax return showing that name on it. The fact Respondent’s corporate existence was terminated by the South Carolina Secretary of State does not affect the outcome of this case. The corporation really existed. Such dissolutions are common within the United States. Upon learning it was forfeited, Respondent immediately began steps to be reinstated (which usually has a retroactive effect under local law).
In order to prevail on this element, the domain name must be registered and used in bad faith. See Agent Host Co. v. Host Dot Com Invs., AF-0343 (eResolution Oct. 16, 2000). It is important to note this element requires the conjunctive rather than the disjunctive.
Bad faith upon registration is determined at the time the domain name was initially registered. The renewal of a domain name is not a “registration” of the domain name under the UDRP. See Substance Abuse Mgmt., Inc. v. Screen Actors Modesl [sic] Int’l, Inc.(SAMI), D2001-0782 (WIPO Aug. 14, 2001); see also PAA Labs. GmbH v. Printing Arts Am., D2004-0338 (WIPO July 13, 2004). The fact this domain name may have been renewed is immaterial.
Respondent had rights or legitimate interests in the disputed domain name at the time of registration because it owned the registered trademark, meaning Respondent did not register the domain name in bad faith pursuant to Policy ¶ 4(a)(iii). See Schering AG v. Metagen GmbH, D2000-0728 (WIPO Sept. 11, 2000) (finding that the respondent did not register or use the domain name <metagen.com> in bad faith where the respondent registered the domain name in connection with a fair business interest and no likelihood of confusion was created); see also DJF Assocs., Inc. v. AIB Communications, FA 95612 (Nat. Arb. Forum Nov. 1, 2000) (finding the respondent has shown that it has a legitimate interest in the domain name because the respondent selected the name in good faith for its website, and was offering services under the domain name prior to the initiation of the dispute); see also MatchMaker Int’l Dev. Corp. v. Kaiser Dev. Corp., FA 146933 (Nat. Arb. Forum May 9, 2003) (Panelist David Sorkin, dissenting) (finding that the respondent’s reasonable belief in its legitimate right to register the disputed domain name precluded a finding of bad faith registration).
It is very common for someone who has rights to register a domain name to subsequently lose those rights. Simply put, the ICANN UDRP is not designed to address such circumstances. See Agent Host Co. v. Host Dot Com Investments, AF-0343, October 16, 2000, Gap (Apparel) Inc. v. Republic Jewelry & Collectibles, FA0410000347795 (12/11/2005), Urbani Tartufi s.n.c. v. Urbani U.S.A., D2003-0090 (WIPO April 7, 2003) (finding that the disputed domain name was not registered in bad faith where the original registration occurred in the context of a healthy distributor relationship between the parties which was subsequently revoked by the complainant); see also Gorstew Ltd., Jamaica & Unique Vacations v. Twinsburg Travel, No. FA 94944 (Nat. Arb. Forum July 7, 2000) (finding no bad faith where the respondent used <sandalsoutlet.com> and other domain names incorporating the SANDALS mark, as an agent, in good faith, on behalf of Sandals Resorts).
UDRP proceedings are summary, documents-only proceedings. Panels do not examine witnesses. Legal issues are usually not fully briefed because we are concerned with the UDRP and not the entire majesty of the law. Counsel does not make oral argument to the Panel. Panels do not normally ask questions of the parties, meaning factual issues are not as fully developed as they might be in normal court proceedings.
All of this goes to the one virtue of these proceedings: UDRP proceedings are fast. The need for speed in determining who owns a domain name is obvious in the electronic commerce world. UDRP proceedings take months, while court proceedings often take years. In exchange for a fast proceeding, the designers of the process made these proceedings “non-binding” – meaning they have no res judicata effect. When it comes to determining the nature and scope of the parties’ relationship, that is up to a court to determine after hearing all of the facts and arguments of counsel.
Having failed to establish all three elements required under the ICANN Policy, the Panel concludes that relief shall be DENIED.
Houston Putnam Lowry, Chartered
Dated: May 31, 2005