WIPO Arbitration and Mediation Center
ADMINISTRATIVE PANEL DECISION
Scholastic Inc. v. Master Games International, Inc.
Case No. D2001-1208
1. The Parties
Complainant is Scholastic Inc., a New York corporation with its principal place of business located at 557 Broadway, New York, NY, 10012-3999.
Respondent is Master Games International, Inc., a Texas corporation with its principal place of business located at 866 River Trail, Pipe Creek, TX, 78063.
2. The Domain Name and Registrar
The domain name at issue is <scholastics.com> (the "Domain Name"). The registrar of the Domain Name is Network Solutions, Inc. ("NSI").
3. Procedural History
On October 4, 2001, Complainant submitted its Complaint under the Uniform Domain Name Dispute Resolution Policy ("UDRP"), and the required filing fee for a three-member Panel, to the World Intellectual Property Organization ("WIPO") Arbitration and Mediation Center.
On October 8, 2001, WIPO sent an Acknowledgment of Receipt to Complainant, and copied Respondent.
On October 9, 2001, WIPO sent a Request for Registrar Verification via email to NSI. On October 10, 2001, NSI confirmed via email to WIPO that the Domain Name is currently registered to Respondent and is in "active" status. NSI also stated that the Domain Name is subject to NSIís Service Agreement Version 5.
On October 24, 2001, WIPO completed a Formal Requirements Compliance Checklist. The Panel has independently determined and agrees with WIPOís assessment that the Complaint is in formal compliance with the requirements of the UDRP, the Rules for Uniform Domain Name Dispute Resolution Policy (the "Rules"), and WIPOís Supplemental Rules for Uniform Domain Name Dispute Resolution Policy.
On October 24, 2001, WIPO issued the Notification of Complaint and Commencement of Administrative Proceeding.
On November 14, 2001, Respondent submitted its Response to the Complaint. Although the deadline for Respondentís Response was November 13, 2001, the Panel has reviewed the hour of Respondentís electronic submission, and considers the Response to be timely.
On November 14, 2001, WIPO sent an Acknowledgement of Receipt of Response to Complainant and Respondent.
On December 20, 2001, WIPO sent to Complainant and Respondent a Notification of Appointment of Panel, appointing David M. Kelly as Presiding Panelist, and Frederick M. Abbott and Tony Willoughby as Panelists. WIPO scheduled January 3, 2001, as the date for issuance for the Panelís decision.
4. Factual Background
Complainant owns the service mark and trademark SCHOLASTIC, as well as a family of SCHOLASTIC-formative service marks and trademarks, including, for example, the marks 1-800-SCHOLASTIC, JUNIOR SCHOLASTIC, and SCHOLASTIC BOOKLINE. Complainant owns more than 100 United States trademark registrations for its SCHOLASTIC and SCHOLASTIC-formative marks (collectively, the "SCHOLASTIC Marks").
Since 1922, Complainant has used its mark SCHOLASTIC to identify its publication and distribution of materials for children, teachers, and parents. Complainant is among the leading publishers and distributors of books for children, classroom and professional magazines, and software and other educational materials and games. Complainantís products and services include the Harry Potter book series; thousands of books and magazines used by children in primary and secondary schools; numerous magazines directed at teachers and education professionals; book clubs; book fairs; the production of television series and feature films; and educational software and multimedia products to school administrators, teachers, parents, and children. Complainantís website is located at the domain name <scholastic.com>.
Respondent was incorporated in 1996 in Texas by William "Bill" Church, founder of the Fortune 500 company Churchís Fried Chicken. Respondentís original intention was to commercialize via the Internet conventional, strategic games such as chess and backgammon.
Although the Panel cannot determine with certainty the registration date of the Domain Name, it appears that the Domain Name was registered by Respondent or its predecessor or associate as least as early as November 1998 when Complainant sent a cease-and-desist letter to John Pajak of Scholastic Networks.
5. Partiesí Contentions
Complainant alleged that the Domain Name is confusingly similar to Complainantís mark SCHOLASTIC, that Respondent has no rights or legitimate interest in the Domain Name, and that Respondent registered and used the Domain Name in bad faith pursuant to paragraph 4(b)(i) of the UDRP.
On November 13, 1998, Complainant sent a cease-and-desist letter to John Pajak of Scholastic Networks, objecting to the use of the Domain Name in connection with chess tournaments. Complainant demanded, among other things, that Mr. Pajak and/or Scholastic Networks cease using the Domain Name and transfer the Domain Name to Complainant. Mr. Pajak and/or Scholastic Networks did not respond to Complainantís letter. However, on February 5, 1999, Respondent replied to Complainant, stating: "We are using the name because it is easily recognizable and makes good business sense for our objectives on the Internet. To abandon the name at this point represents a commercial sacrifice which we can only rationalize if compensated."
Complainant alleged in its Complaint that Respondent has made no preparations to use the Domain Name in connection with the provision of any goods or services, and that the Domain Name is not and has not resolved to an active website in the almost three years since the Domain Name was registered.
Complainant alleged that Respondent demanded $10,000 for the Domain Name during a conversation with Complainantís inside counsel. Complainant stated that the parties subsequently reached an agreement whereby Respondent would transfer the Domain Name for $1,500, and alleged that Respondent has since refused to honor that agreement. Complainant explained that certain terms of the agreement could not be reached to Respondentís satisfaction, and provided an unexecuted draft of the agreement as an Exhibit to its Complaint.
Complainant alleged that Respondent listed the Domain Name for sale at an auction website, GreatDomains.com, and attempted to renegotiate the amount of money to be paid by Complainant for the transfer of the Domain Name.
Respondent stated that it registered the Domain Name for "use in the development of a comprehensive project to serve all members of the chess-playing public. Among them is a specific category of chess player - children of school age or 'Scholastics' as they are widely-known to the chess-playing public." The Domain Name was originally registered in the name of John Pajak, who was then employed as MGIís Directory of Technology.
Respondent stated that its intention was to develop two chess-related websites, one for school-aged children and another for users across all categories of chess players. Respondent stated it that began extensive preparations for its website as early as 1997, and produced emails dated August 18, 1997, and June 2, 1998, discussing its plans for two websites devoted to chess that were to be called "World Chess Network" and "World Scholastics Chess Network". MGIís planned online activities included television broadcasts of matches; providing membership services allowing interactive play between members; merchandising; providing qualification services for players to compete on the various circuits and at various events; and hosting an annual event to be called the World Scholastic Chess Championship.
Respondentís August 18, 1997 and June 2, 1998 emails did not specifically mention the Domain Name or any other domain name. However, Respondent provided an affidavit of its former President, Robert Hamilton, who stated that the Domain Name was "registered with the intent to use it in relation to scholastic chess tournaments and online playing activities for school age participants and, in particular, the development of the World Scholastic Chess Championship by [Respondent]."
Respondent also stated that "the driving forces behind the registration of the [Domain Name], William Church and Robert Hamilton, were unaware of Scholastic Inc. or its trademarks."
Respondentís plans for its website, which critically depended upon access to chess clubs in schools, were delayed due to technical problems with firewalls installed on many schools' networks. Respondentís other website, located at the domain name <worldchessnetwork.com>, is currently fully operational, and has over 100,000 registered users.
Respondent acknowledged that it engaged in negotiation for compensation after first being contacted by Complainant, but denied Complainantís allegation that it demanded $10,000 for the Domain Name. Respondent decided to not sell the Domain Name to Complainant "[f]ollowing the rejection of the first agreement by the Respondent and prior to delivery of the second agreement" and after "additional investment had been made in the Scholastics project". Further, Respondent denied that there was an agreement between the parties, stating that it had only agreed in principle to transfer the Domain Name without the other stipulations subsequently imposed by Complainant in the draft agreements.
Respondent admitted that it did post the Domain Name for sale at GreatDomains.com, but stated that it has not pursued the sale of the Domain Name and that it does not intend to sell the Domain Name at this time. Respondent explained that it listed the Domain Name at GreatDomains.com to receive an objective assessment of its fair market value, as was advised by Respondentís investment consultants and business valuators to establish the value of Respondentís intellectual property.
Respondent provided copies of cancelled checks totaling approximately $42,000 for advertising expenses related to the promotion of Respondentís World Scholastic Chess Championship, but did not provide copies of the advertisements.
6. Discussion and Findings
Paragraph 4(a) of the UDRP directs that the complainant must prove each of the following: (1) that the domain name registered by the respondent is identical or confusingly similar to a trademark or service mark in which the complainant has rights; (2) that the respondent has no rights or legitimate interests in respect of the domain name; and (3) the domain name has been registered and used in bad faith.
First, the Panel finds that the Domain Name is confusingly similar to Complainantís SCHOLASTIC mark. The addition of the letter "s" in the Domain Name does not sufficiently distinguish it from Complainantís SCHOLASTIC mark. See PlayNetwork, Inc. v. Play Industries (NAF FA0003000094232) (finding the domain name <playnetworks.com> confusingly similar to the mark PLAYNETWORK); see also MatchNet plc. v. MAC Trading (WIPO D2000-0205) (finding the domain name <americansingle.com> confusingly similar to the mark AMERICANSINGLES).
Second, under the UDRP, the respondentís rights or legitimate interests to a domain name are established by demonstrating any of the following three conditions: "(i) before any notice to you of the dispute, your use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or (ii) you (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or (iii) you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue."
The Panel finds that Respondent has demonstrated its rights in the Domain Name pursuant to paragraph 4(c)(i) of the UDRP. Specifically, Respondent produced evidence of its plans to use the Domain Name, which corresponds to a term of art in the chess field, for a chess-related website. The Panel has independently verified that the terms "scholastic" and "scholastics" are used to describe young chess players of school age and/or chess-related services for players of school age, and that those two terms are used interchangeably by a variety of online chess organizations. Respondentís preparations to use the Domain Name for a chess-related website occurred prior to notice of the dispute, as shown by Respondentís August 18, 1997 and June 2, 1998 emails and the affidavit of Respondentís former President. In addition, Complainantís November 13, 1998 letter stated that the Domain Name was being used at that time for a website regarding chess tournaments. Accordingly, the Panel finds that Respondent made preparations to use (and used) the Domain Name in connection with a bona fide offering of goods or services, in particular because the Domain Name appropriately describes both the target users of Respondentís services and the nature of Respondentís services. See Scholastic Inc. v. ScholasticAdvising.com and Ramit Sethi (WIPO D2001-0946) (holding that the respondent had a legitimate interest in the domain name <scholasticadvising.com> because it described the nature of the respondentís services, namely, providing advice to college-bound students regarding scholarship searches, financial aid assistance, and college recommendations).
Third, Complainant alleged that Respondent acted in bad faith pursuant to Section Paragraph 4(b)(i) of the UDRP, which provides that "the following circumstances . . . shall be evidence of the registration and use of a domain name in bad faith: . . . circumstances indicating that you have registered or you have acquired the domain name primarily for the purpose of selling, renting or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark . . . for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name."
The Panel finds that Respondent did not register the Domain Name primarily for the purpose of selling it to Complainant, because Respondent has proved that its purpose in registering the Domain Name was to use it for Respondentís chess website. See Scholastic Inc. v. ScholasticAdvising.com and Ramit Sethi (finding that the respondentís offer to sell the disputed domain name to Scholastic Inc. for $8,000 did not constitute bad faith because "the evidence does not support a finding that [the respondent] registered the domain name primarily for the purpose of selling it to [Scholastic Inc.]"). Such is the case here. Accordingly, Respondent did not register the Domain Name in bad faith.
Further, the Panel finds that Respondent did not subsequently use the Domain Name in bad faith by offering to sell the Domain Name to Complainant or by listing the Domain Name for sale at the auction website, GreatDomains.com. Respondent has established its legitimate interest in the Domain Name, and Respondent, as with any other business, has the right to value its assets by listing them for sale and the right to sell its assets if it chooses to do so. For that reason, this case is distinguishable from Scholastic Inc. v. 366 Publications (WIPO D2000-1627), which held that the respondentís offer to sell four SCHOLASTIC-formative domain names to Complainant was in bad faith. In that case, the respondent was a domain name speculator who admitted that Complainant was the intended buyer for at least one of the domain names at issue.
In conclusion, the Panel finds that Complainant has failed to prove that Respondent registered and used the Domain Name in bad faith.
The Panel denies Complainantís request that the domain name <scholastics.com> be transferred to Complainant.
David M. Kelly
Dated: January 3, 2002