WIPO

 

WIPO Arbitration and Mediation Center

 

ADMINISTRATIVE PANEL DECISION

Cleanfilm, Inc. v. Stephen Van Someren

Case No. D2003-0937

 

1. The Parties

The Complainant is Cleanfilm, Inc. of Austin, Texas, United States of America.

The Respondent is Stephen Van Someren, Van Someren Associates, of Tracy, California, United States of America.

 

2. The Domain Name and Registrar

The disputed domain name <cleanfilm.com> (the "Domain Name") is registered with Go Daddy Software, Inc. (the "Registrar").

 

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the "Center") on November 25, 2003. On November 27, 2003, the Center transmitted by email to the Registrar a request for registrar verification in connection with the Domain Name. On December 1, 2003, the Registrar transmitted by email to the Center its verification response confirming that the Respondent is listed as the registrant and providing the contact details for the administrative, billing, and technical contact. In response to a notification by the Center that the Complaint was administratively deficient, the Complainant filed an amendment to the Complaint on December 5, 2003. The Center verified that the Complaint, together with the amendment to the Complaint, satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (the "Policy"), the Rules for Uniform Domain Name Dispute Resolution Policy (the "Rules"), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (the "Supplemental Rules").

In accordance with the Rules, paragraphs 2(a) and 4(a), the Center formally notified the Respondent of the Complaint, and the proceedings commenced on December 9, 2003. In accordance with the Rules, paragraph 5(a), the due date for a Response was December 29, 2003. The Respondent filed the Response with the Center on December 28, 2003.

The Center appointed Maxim H. Waldbaum as the sole panelist in this matter on January 23, 2004. The Panel finds that it was properly constituted. The Panel has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, paragraph 7.

 

4. Factual Background

The Complainant is engaged in the production and sale of cleanroom packaging materials. The Complainant markets and sells such products under the name and mark CLEANFILM.

According to the Registrar, the Respondent registered the Domain Name on August 21, 1998.

 

5. Partiesí Contentions

A. Complainant

The Complainant produces and sells a variety of packaging products that are made of various pre-cleaned films in an ultra cleanroom environment. The Complainant has used the mark CLEANFILM continuously to market and sell its products throughout the United States of America and in other countries.

On November 1, 1999, the Complainant, whose former corporate name was Cleanfilm of Texas, Inc., purchased all of the assets (the "Asset Purchase") of Cleanfilm, Inc., a Nevada corporation (the "Seller"). Pursuant to the Asset Purchase, the Seller transferred all of its intellectual property and the name Cleanfilm, Inc. to the Complainant. Subsequently, the Complainant changed its name to Cleanfilm, Inc.

The Respondent was employed as Chief Operating Officer of the Seller from October 31, 1996 until October 31, 1999. As an employee of the Seller, the Respondent was expected to develop a website for the Sellerís business. However, unbeknownst to the Seller and without its authorization, the Respondent registered the Domain Name, which was identical to the Sellerís (and now the Complainantís) mark, and named himself and Van Someren Associates as the registrant. Such unauthorized registration of the Domain Name constituted a breach of the Respondentís fiduciary duty as an officer of the Seller.

The website connected to the Domain Name was primarily the work product of the Respondent in his capacity as an employee of the Seller. The Domain Name was exclusively identified with the Seller and was used for the sole purpose of selling the Sellerís Cleanfilm products. Therefore, the Domain Name constituted intellectual property of the Seller and was conveyed to the Complainant pursuant to the Asset Purchase.

Following the Asset Purchase, the Respondent was employed as Vice President and, later, as President of the Complainant. As an employee, the Respondent signed a confidentiality agreement with the Complainant.

The Respondentís son-in-law was hired by the Complainant in August of 2000, to develop the Complainantís website which was connected to the Domain Name. As an employee, the Respondentís son-in-law also signed a confidentiality agreement which provided that the product of his work efforts would be the property of the Complainant.

On October 10, 2000, the Respondent wrote a memorandum to the Chief Executive Officer of the Complainant in which he listed trademarks, including the mark CLEANFILM, which the Respondent felt should be registered by the Complainant. The Complainant, however, did not pursue any of such registrations due to inadequate funding resources.

During his tenure as President of the Complainant, the Respondent became associated with the company AeroPackaging, a direct competitor of the Complainant, and registered the domain name <aeropackaging.com>.

On December 6, 2002, the Respondent resigned his position with the Complainant. Subsequently, the Complainant learned that the Respondent, prior to his resignation, had caused the Domain Name to point to a website named American Clean Film and, later, to the AeroPackaging website, both of which websites were used to compete with the Complainantís business. The Respondentís redirection of the Domain Name caused the Complainantís customers to mistakenly believe that they were dealing with the Complainant. In addition, the Complainant also discovered that the Respondent solicited and accepted orders from Complainantís confused customers on behalf of AeroPackaging.

In February of 2003, the Complainant demanded that the Respondent return the Domain Name to it. In response, the Respondent stated that the Domain Name never belonged to the Complainant and that he had merely loaned the Domain Name to the Seller and the Complainant. Neither the Seller nor the Complainant was aware that the Domain Name was on loan to it from the Respondent.

The redirection of the Domain Name resulted in a costly disruption of the Complainantís business and caused significant harm to the Complainant. It was a major factor in causing the Complainant to discontinue its manufacturing operations on April 18, 2003.

The Respondentís actions were clearly undertaken in bad faith. Such bad faith has been demonstrated by, among other things, the Respondentís registration of the Domain Name without the Sellerís authorization, the Respondentís current use of the Domain Name for his affiliated companies which compete with the Complainantís business, the Respondentís solicitation and fulfillment of orders from the Complainantís customers, and the fact that the Respondent was a trusted officer and employee of the Seller and the Complainant.

B. Respondent

Although the Respondent was employed by the Seller at the time the Domain Name was registered, the development of the Domain Name and its corresponding website was part of the business plan of the Seller which was written by the Respondent and Carolle Van Someren. When asked by the Respondent about funding the development of the Domain Name, the Seller refused to allocate financial support for the project.

Instead of the Seller, Van Someren Associates funded the development of the Domain Name. However, in spite of the Sellerís unwillingness to support the Domain Name financially, the Respondentís investment in the Domain Name was made in good faith for the purpose of using it for the growth of sales of the Seller.

Although the Respondent operated the Domain Name as an unofficial website for the Seller, it was known by the management of the Seller and the Complainant that the Domain Name was owned by the Respondent and his affiliated company. In fact, all pages of the website were clearly marked as property of Van Someren Associates at all times since the launch of the site.

Although the Domain Name was registered and funded by the Respondent and Van Someren Associates, all of the sales generated by the Domain Name, which were in excess of $3,000,000, went to the benefit of the Seller and the Complainant. Except for maintenance costs paid by the Complainant for the last two years, all costs for the Domain Name and its content, including advertising fees, were paid for by Van Someren Associates. In addition, the Respondent had no work product on the website connected to the Domain Name and had no intellectual property in the content.

The Domain Name was not included as an asset transferred from the Seller to the Complainant pursuant to the Asset Purchase because it was known by all parties that the Domain Name was not an asset of the Seller. The ownership of the Domain Name was never hidden from the Seller or the Complainant; in fact, it was clearly displayed at the bottom of each page on the website. In addition, although the Respondentís son-in-law designed the content posted on the Domain Name, the Domain Name was and remained a solely-owned asset of the Respondent and Van Someren Associates.

The Complainant has no trademark rights in the name CLEANFILM. The Complainant submitted trademark registration applications for several marks, including CLEANFILM, but all such applications were rejected on the grounds that a large number of other companies use similar names and that the name had become generic in the public use. Thus, the mark CLEANFILM is a generic term and has no trademark protection.

All officers of the Complainant had outside interests in several companies. In fact, the largest stockholder of the Complainant actively pursued and encouraged the sale of products that competed with those of the Complainant. This activity brought great financial hardship to the Complainant and also to the Respondent, who is a minority stockholder of the Complainant.

The Respondent registered the domain name <aeropackaging.com> after it was clear from the Complainantís decreased sales and statements made by the directors of the Complainant that the Complainant would shortly close or declare bankruptcy. AeroPackaging was created to sell non-competing materials to customers with whom the Respondent had a long-term relationship before the Complainant was formed.

Upon his resignation from the Complainant, the Respondent discontinued the content posted at the Domain Name and directed the customers to different web domains. This was not done as a secret, but as a way to continue the business that the Respondent had started and to bring pressure upon the Complainant to pay wages and moneys owed to the Respondent. The Respondent did accept an order from a customer of the Complainant prior to the Respondentís resignation, but it was done so that the customer would not suffer from the shutdown of the Complainantís business.

The Domain Name is currently being used in the family video marketplace.

 

6. Discussion and Findings

According to paragraph 4(a) of the Policy, the Complainant must prove that:

(i) The domain name is identical or confusingly similar to a trademark or service mark in which the Complainant has rights;

(ii) The Respondent has no rights or legitimate interests in respect of the domain name; and

(iii) The domain name has been registered and is being used in bad faith.

A. Identical or Confusingly Similar

The Complainant does not allege that its mark CLEANFILM is a federally registered mark in the United States. The Panelís search of the records of the United States Patent and Trademark Office has revealed that an application for registration of the mark CLEANFILM was submitted by the Complainant but was abandoned nine months later.

The Complainantís evidence does show, however, that the mark has been used continuously since at least as early as 1996, first by the Seller and then by the Complainant. In addition, the Complainant has sold millions of dollars worth of products under the mark CLEANFILM. Accordingly, the Panel finds that the mark is protected by a common law trademark.

The Panel finds further that the domain name <cleanfilm.com> is confusingly similar to the Complainantís mark CLEANFILM as the second level domain of the Domain Name is identical to the Complainantís mark.

B. Rights or Legitimate Interests

The Respondent and his affiliated companies are not commonly known by the Domain Name and are not licensees of the Complainant or otherwise authorized to use any of the Complainantís marks. The Complainant has thus made a prima facie claim that the Respondent has no rights or legitimate interests in the Domain Name.

The Respondentís use of the Domain Name to divert the Complainantís customers to websites that compete with the Complainantís business does not reflect a bona fide offering of goods or services. In addition, soliciting and accepting orders from the Complainantís customers after misdirecting them to the Respondentís competing website does not constitute a bona fide offering of goods or services. In fact, the Respondent himself submitted a January 8, 2003, printout from the Domain Name showing that the Domain Name resolved to the website of American Clean Film, a direct competitor of the Complainant. The record shows that even as late as December 9, 2003, the Domain Name still resolved to the American Clean Film website. In addition, the Respondent admits accepting and satisfying an order from the Complainantís customers. Such acts do not qualify as a bona fide offering of goods or services.

The Panel finds that the Respondent has no legitimate interests or rights in the Domain Name.

C. Registered and Used in Bad Faith

The Respondent has not demonstrated a good faith use of the Domain Name. Instead, the Respondent caused the Domain Name to resolve to websites which divert Internet users to the Complainantís competitors. The record shows that the Domain Name resolved to such competing websites for approximately an entire year after the Respondentís resignation of his position with the Complainant. In addition, the Complainant has shown, and the Respondent has admitted, that the Respondent accepted orders from the Complainantís customers on behalf of his competing company AeroPackaging.

In essence, the Respondent has traded on the goodwill of the Complainantís mark, for his own commercial gain, by creating a likelihood of confusion with the Complainantís mark as to the source of the Domain Name. The Respondentís use of the Domain Name for his competing businesses, especially in light of the fact that the Respondent was a former employee of the Complainant with intimate knowledge of the Complainantís business, clearly demonstrates bad faith.

Accordingly, the Panel finds that the Respondentís registration and use of the Domain Name was in bad faith.

 

7. Decision

For all the foregoing reasons, in accordance with Paragraphs 4(i) of the Policy and 15 of the Rules, the Panel orders that the domain name <cleanfilm.com> be transferred to the Complainant.

 


 

Maxim H. Waldbaum
Sole Panelist

Dated: February 3, 2004