WIPO Arbitration and Mediation Center
ADMINISTRATIVE PANEL DECISION
LULU Enterprises Inc. v. The eBrand Factory
Case No. D2006-1253
1. The Parties
The Complainant is LULU Enterprises Inc, Morrisville, North Carolina, United States of America, represented by Abelman Frayne & Schwab, United States of America.
The Respondent is The eBrand Factory, Woodbridge, Ontario, Canada, represented by Muscovitch & Associates, Canada.
2. The Domain Name and Registrar
The disputed domain name <lulutv.com> is registered with Network Solutions, LLC.
3. Procedural History
The Complaint was filed with the WIPO Arbitration and Mediation Center (the ”Center”) on September 28, 2006. On September 29, 2006, the Center transmitted by email to Network Solutions, LLC a request for registrar verification in connection with the domain name at issue. On September 29, 2006, Network Solutions, LLC 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. The Center verified that the Complaint satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (the ”Policy”), the Rules for Uniform Domain Name Dispute Resolution Policy (the ”Rules”), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (the ”Supplemental Rules”).
In accordance with the Rules, paragraphs 2(a) and 4(a), the Center formally notified the Respondent of the Complaint, and the proceedings commenced on October 11, 2006. In accordance with the Rules, paragraph 5(a), the due date for Response was October 31, 2006. In accordance with the Rules, paragraph 5(c), by consent the Center granted an extension of time sought by Respondent’s counsel, to November 7, 2006. The Response was filed with the Center on November 6, 2006.
The Center appointed Alan L. Limbury as the Sole Panelist in this matter on November 15, 2006. 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
Complainant was incorporated in Delaware, United States of America. on February 7, 2002. It provides creators of digital content the means to collaborate on and to distribute their work over the Internet, via the “www.lulu.com” website, the home page of which displays in the top left corner a LULU logo on a yellow background with the initials TM. The predominant colour of the home page is what this panelist would describe as burnt yellow. The site contains material under various headings which include the word “Lulu” (themselves being links), such as “Lulu Blog”, “Lulu Community Forums”, “Lulu Workshops”, “Lulu TV” and “Lulu Radio”. The “Lulu TV” link allows uploading and sharing of “Vlogs, videos, clips and shorts”.
On August 16, 2002, Complainant applied to the USPTO to register the word “LULU” as a service mark in international classes 35, 41 and 42 (Serial No. 78155152), based upon “intent to use”. As at the date of the filing of the Complaint, registration had not been achieved.
On March 27, 2003, an announcement of a business partnership between units within the Learning Division of The Thomson Corporation and “lulu.com” stated: “The Lulu brand is derived from the concept of a “lulu”, which is an old-fashioned term for a remarkable person, object or idea”. The announcement was displayed on the “www.lulu.com” website. There has been much publicity for “lulu.com”.
Respondent was incorporated in Ontario, Canada on November 14, 1997. It is part of The Brand Factory Group of companies engaged in advertising, marketing and web development.
On August 25, 2005, Respondent registered the domain name <luluvision.com>. On September 14, 2005, Respondent incorporated a company called Yoga Drifters Ltd., with Respondent’s lawyer as its first director. On September 20, 2005, Yoga Drifters entered into a written agreement with Lululemon Athletica Inc., a yoga-inspired athletic apparel company founded in Vancouver, Canada in 1998 (“Lululemon”). Under the agreement, Yoga Drifters Ltd would create, produce and finance for Lululemon 39 episodes of a program named “Yoga Drifters” and would be responsible for providing a website to broadcast the program and host a chat room at “www.luluvision.com”. Lululemon would provide a link to “www.luluvision.com” on its own website, “www.lululemon.com”; provide products to be featured in the program; and authorize use by Yoga Drifters Ltd of Lululemon logos and images. Lululemon has a United States registered trademark (No. 2607811) for LULULEMON ATHLETICA (design plus words), filed on February 22, 1999, and registered on August 13, 2002, in respect of clothing.
On October 3, 2005, Yoga Drifters Ltd. as “Producer” entered into a written production agreement with a named individual as “Host”, for Yoga Drifters Ltd to have access to Grail Springs (a health and wellness spa) in order to shoot the pilot for the show Yoga Drifters over the following days. The Producer agreed to notify the Host if the pilot episode were launched as part of the first series of 13 episodes “to be broadcast on luluvision.com via a link on lululemon.com”.
On the same day as it registered the domain name <luluvision.com>, August 25, 2005, Respondent also registered the disputed domain name <lulutv.com>, giving the same administrative contact in each case. Prior to August 15, 2006, the disputed domain name resolved to an “under construction” placeholder website. On that day it displayed a page coloured burnt yellow with the message “Experience a new concept in video blogging - coming soon”. This remained on display as at the date of the Complaint. As at the date of the Response, both the “www.lulutv.com” and the “www.luluvision.com” websites broadcast the pilot program shot at Grail Springs.
The circumstances that led to the August 15, 2006 web page are as follows. On February 6, 2006, a Mr. Hogan, acting for Complainant but without disclosing that fact, initiated an exchange of email correspondence with Respondent aimed at purchasing the disputed domain name. The correspondence spread over several months and became acrimonious on the part of Mr. Hogan. The price initially nominated by Respondent was $25,000. This subsequently fell to $5,000, then rose to $50,000. A dispute arose as to whether there had been an agreement reached to sell for $5,000. On August 15, 2006, Mr. Hogan made reference to “www.lulu.tv”. This prompted Respondent to email Mr. Hogan later that day: “We have recently made some changes to “www.lulutv.com”. Thought you might be interested to see.” The correspondence ended with Mr. Hogan’s comment: “Looks like you enjoy lulu.tv’s color scheme though, thanks for the compliment”.
It appears that the <lulu.tv> domain name is associated with Complainant.
5. Parties’ Contentions
A. Complainant
Complainant claims rights in the mark LULU flowing from its application to the USPTO and at common law. It says the disputed domain name is identical or confusingly similar to its mark.
Complainant says it did not authorize Respondent to use the LULU trademark nor to register the disputed domain name; that Respondent was not previously known by that name; that it may be inferred that Respondent had notice of the mark when it registered the domain name because of the extensive advertising and use of the mark by Complainant and because Respondent purports to be a sophisticated advertising company with knowledge of online branding; that Respondent also had constructive notice of Complainant’s mark by reason of Complainant’s pending United States trademark application; that because LULU is a distinctive and unusual trademark for Complainant’s services, the domain name would not have been registered but for the renown of the trademark; that the use of the disputed domain name as a “placeholder” did not amount to use that can demonstrate legitimacy and that the use after August 15, 2006 of the color yellow on the revised website was designed to compound confusion and cannot be bona fide use. Accordingly Respondent has no rights or legitimate interest in the disputed domain name.
Complainant says Respondent, a sophisticate in brand development, may reasonably be expected to have performed a trademark search before registering the domain name, in which case it would have discovered Complainant’s application. It may therefore be inferred that Respondent had actual knowledge of Complainant’s rights and that Respondent registered the disputed domain name primarily for the purpose of selling, renting, or otherwise transferring the registration to Complainant or to a competitor of Complainant for valuable consideration in excess of its out of pocket costs directly related to the domain name; that this is evidenced by its initial demand for $25,000, its repudiation of its own offer of $5,000 and the increase of the offer to $50,000 coupled with the mounting of a website on August 15, 2006, intended to confuse Internet users. It may be inferred that Respondent intentionally registered the domain name in order to trade off Complainant’s goodwill or otherwise to create a false association. Registration of a domain name that is identical or confusingly similar to another’s trademark despite actual or constructive knowledge of the holder’s rights is tantamount to bad faith registration and use under the Policy. Respondent should be presumed to have undertaken due diligence and proceeded with actual knowledge of Complainant’s rights in the LULU trademark. Accordingly, Respondent registered and is using the disputed domain name in bad faith.
B. Respondent
Respondent denies all Complainant’s contentions. It says that under the Policy, a Complainant must show that it had trademark rights prior to the registration of the domain name, citing John Ode d/b/a ODE and ODE – Optimum Digital Enterprises v. Intership Limited, WIPO Case No. D2001-0074. At the date of registration of the disputed domain name, August 25, 2005, Complainant’s pending application to the USPTO did not confer any trademark rights nor has Complainant produced sufficient evidence that it then had common law rights. Even if it did have such rights, Complainant has failed to demonstrate that the disputed domain name <lulutv.com> is identical or confusingly similar to the mark LULU, given the generic character of the word Lulu.
Respondent says the first to register a generic word as a domain name has a legitimate interest in it. More importantly, Respondent registered the disputed domain name for the legitimate business purpose of using it in conjunction with a microsite (a small website that is an offshoot of its parent website) featuring its production partner and television sponsor, Lululemon. This alone demonstrates a legitimate interest in the disputed domain name.
The disputed domain name was registered together with <luluvision.com> for the legitimate and good faith purpose of performing the agreement with Lululemon, the discussions which led to that agreement having commenced in August 2005. This is as ‘good faith registration’ as it gets. Whether there was an agreement to sell for $5,000 and whether it was breached are outside the scope of the Policy. Even if there were a breach, it would not constitute bad faith registration. The ill advised creation of a new “coming soon” webpage that arguably infringed Complainant’s purported trademark rights could at most be considered a limited and temporary instance of bad faith use and does not demonstrate bad faith registration.
6. Discussion and Findings
According to paragraph 4(a) of the Policy, for this Complaint to succeed in relation to the domain name Complainant must prove that
(i) the domain name is identical or confusingly similar to a trademark or service mark in which Complainant has rights; and
(ii) the Respondent has no rights or legitimate interest in respect of the domain name; and
(iii) the domain name has been registered in bad faith and is being used in bad faith.
A. Rights in a mark
Despite some early cases to the contrary, including the one cited by Respondent, the prevailing view amongst panelists is that for the purposes of the Policy, paragraph 4(a)(i), the relevant time when a complainant must show that it has trademark rights is not the date of registration of the disputed domain name but the date of the filing of the Complaint. See for example Valve Corp. v. ValveNET, Inc., WIPO Case No. D2005-0038 and the cases there cited.
At the time of the filing of this Complaint, Complainant’s trademark application to the USPTO had not proceeded to registration and accordingly Complainant has not demonstrated that it has any registered trademark rights in the word LULU.
To succeed in a Complaint under the Policy in relation to an unregistered mark, it is necessary for the Complainant to prove that the mark is in fact a trademark. Thus, the Complainant must produce evidence proving that, prior to the filing of the Complaint, it has provided goods or services under the unregistered mark and had thereby acquired a reputation such that members of the public would associate those goods or services with the Complainant and not with others not authorized by the Complainant to use the mark. That is to say, the Complainant must prove that, prior to filing the Complaint, it had acquired a right in the unregistered mark such as would enable it to bring a legal action against a third person using the mark without its consent: British Heart Foundation .v. Harold A Meyer III (eResolution Case No. AF0957).
Having regard to the findings of the Panel on the other issues, the Panel is prepared to proceed on the basis that Complainant has established common law rights in the mark LULU.
B. Identical or Confusingly Similar
Many cases have established that “essential” or “virtual” identity is sufficient for the purposes of the Policy. Likewise, many cases have established that the test of confusing similarity under the Policy is confined to a comparison of the disputed domain name and the trademark alone, independent of the other marketing and use factors, such as the “Sleekcraft factors” – AMF Inc. v. Sleekcraft Boats, 599 F.2d 341,346 (9th Cir. 1979), usually considered in trademark infringement or unfair competition cases.
The Panel finds the disputed domain name <lulutv.com> to be virtually identical and confusingly similar to Complainant’s mark LULU.
Complainant has established this element of its case.
C. Rights or Legitimate Interests
Once a complainant establishes a prima facie case against a respondent, the burden is on the respondent to provide evidence of its right or legitimate interests under paragraph 4(c) of the Policy: see for example Cassava Enterprises Limited, Cassava Enterprises (Gibraltar) Limited v. Victor Chandler International Limited, WIPO Case No. D2004-0753.
Complainant did not authorize Respondent to use the LULU trademark nor to register the disputed domain name. There is no evidence before the Panel that Respondent was or is known by that name. These circumstances are here sufficient to constitute a prima facie showing by Complainant of absence of rights or legitimate interest in the disputed domain name on the part of Respondent.
Paragraph 4(c) of the Policy sets out, without limitation, circumstances which, if proved, establish the registrant’s rights or legitimate interests to the disputed domain name. As that paragraph makes clear, circumstances other than those there specified are capable of establishing the registrant’s rights or legitimate interests to the disputed domain name. The Panel accepts that the proposed arrangements with Lululemon were under discussion in August 2005 before the domain name <luluvision.com> was registered. The documentary evidence is compelling that <luluvision.com> was registered and has been used for the purpose of a legitimate business arrangement. The Panel finds that the domain name <luluvision.com> was clearly registered for a legitimate purpose and cannot accept that the disputed domain name <lulutv.com>, registered on the very same day as <luluvision.com>, would have been registered with Complainant and its LULU mark in mind and for the illegitimate purpose of trading on Complainant’s goodwill or generating confusion with Complainant’s mark or website. Rather, the Panel finds on the evidence before it that the disputed domain name was more likely to have been registered by the Respondent as an alternative for possible use as a microsite pursuant to the anticipated Lululemon agreement, and that Respondent has accordingly demonstrated that it has rights or legitimate interests in the disputed domain name.
Complainant has failed to establish this element of its case.
D. Registered and Used in Bad Faith
Given the Panel’s finding under the second element of the Policy, it is not necessary for the Panel to conclude on the question of registration and use in bad faith. However, for completeness, the Panel makes the following findings.
As to Complainant’s reliance on Respondent’s alleged constructive knowledge of the LULU mark, this Panelist accepts the view expressed in The Way International Inc. v. Diamond Peters, WIPO Case No. D2003-0264 and adopted in Asset Marketing Systems, LLC v. Silver Lining, WIPO Case No. D2005-0560:
“As to constructive knowledge, the Panel takes the view that there is no place for such a concept under the Policy. The essence of the Complaint is an allegation of bad faith, bad faith targeted at the Complainant. For that bad faith to be present the cybersquatter must have actual knowledge of the existence of the trademark owner. If the registrant is unaware of the existence of the trademark owner, how can he sensibly be regarded as having any bad faith intentions directed at the Complainant? If the existence of a trademark registration was sufficient to give the Respondent knowledge, thousands of innocent domain name registrants would, in the view of the Panel, be brought into the frame quite wrongly”.
The mere offering of a domain name for sale for more than the out-of pocket costs directly related to the domain name does not of itself constitute evidence of bad faith registration and use for the purpose of paragraph 4(b)(i) of the Policy. That subparagraph of the Policy also requires a showing that the respondent registered or acquired the disputed domain name primarily for the purpose of selling it to the complainant or to a competitor of the complainant for a price exceeding those costs: The World Phone Company (Pty) Ltd v. Telaccount Inc. WIPO Case No. D2000-1163.
As is clear from what is said under the previous heading, Respondent has demonstrated that it registered the disputed domain name for the purpose of the anticipated Lululemon arrangement, and not for any purpose connected with Complainant or its mark. The Panel finds this to constitute registration in good faith. Accordingly, the correspondence in which Respondent, having decided that the primary website to be associated with the Lululemon venture would be <luluvision.com>, contemplated the possible sale of the disputed domain name to a person purporting to have no connection with Complainant does not establish that the primary purpose of registration was sale to Complainant or a competitor of Complainant.
Once Mr. Hogan made reference to <lulu.tv>, it would have been apparent to Respondent that Mr. Hogan was associated with Complainant. By this time Mr. Hogan’s communications with Respondent were acrimonious. Respondent reacted by placing the burnt yellow coloured ‘coming soon’ page at the website. It is unnecessary to determine whether this amounted to bad faith use because bad faith use cannot turn established good faith registration into bad: Passion Group Inc. v. Usearch, Inc., eResolution Case No. AF-0250, followed in Viz Communications, Inc., v. Redsun dba www.animerica.com and David Penava, WIPO Case No. D2000-0905:
“Panelist Sorkin addressed the relationship between paragraphs 4(a)(iii) and 4(b)(iv) in Shirmax Retail Ltd./D′etaillants Shirmax Lt′ee v. CES Marketing Group Inc., eResolution Case No AF-0104 as follows:
“The requirement of bad faith registration and use in paragraph 4(a)(iii) is stated in the conjunctive. Registration in bad faith is insufficient if the respondent does not use the domain name in bad faith, and conversely, use in bad faith is insufficient if the respondent originally registered the domain name for a permissible purpose. The first three examples in paragraph 4(b) all refer to registration for various illegitimate purposes as evidence of registration and use in bad faith; but in each instance bad faith use may well be implicit in the act of registering a domain name, since all the improper purposes mentioned can be accomplished merely by passively holding a domain name.
“The fourth example (paragraph 4(b)(iv)), however, refers only to improper use, and does not appear to require that the domain name also have been registered in bad faith. This example thus appears to conflict with the rule set forth in paragraph 4(a)(iii). The language of paragraph 4(a)(iii) is clear, and the only reasonable interpretations are to regard the fourth example as a narrow exception to the preceding sub-paragraph’s conjunctive rule, or to apply the conjunctive rule as it is written and disregard the example entirely.
“The panel is assisted in forming a view as to how to interpret paragraphs 4(a)(iii) and 4(b)(iv) by the contrast between the introductory words of paragraph 4(c): “any of the following circumstances …shall demonstrate your rights or legitimate interests” and the introductory words of paragraph 4(b): “the following circumstances…shall be evidence of the registration and use of a domain name in bad faith.
“This contrasting language indicates that use of the kind described in 4(b)(iv) is to be taken as evidence of bad faith registration as well as evidence of bad faith use. But this evidence is not necessarily conclusive. Furthermore, the panel is not required to assign substantial weight to evidence of constructive bad faith registration furnished by paragraph 4(b)(iv), and the panel may have regard to other evidence in determining whether the requirements of 4(a)(iii) have been proved.”
“This approach accords with the Policy by enabling a finding of bad faith registration to be made where bad faith use within 4(b)(iv) is the only evidence tending to show the purpose for which the domain name was registered. Where, however, there is other relevant evidence, such as evidence that the domain name was registered for a permissible purpose, it must be weighed against any evidence of bad faith registration constituted by evidence of bad faith use within 4(b)(iv). It is difficult to imagine circumstances in which, under this approach, subsequent bad faith use within 4(b)(iv) would suffice to prove that a domain name was originally registered in bad faith.”
See also Yoomedia Dating Limited v. Cynthia Newcomer / Dateline BBS, WIPO Case No. D2004-1085:
“Previous decisions have considered the matter of good faith registration followed by bad faith use. The prevailing view is that the Policy was not designed to prevent such situations. In Substance Abuse Management, Inc. v. Screen Actors Modesl [sic] International, Inc. (SAMI), WIPO Case No. D2001-0782, the panel stated that “If a domain name was registered in good faith, it cannot, by changed circumstances, the passage of years, or intervening events, later be deemed to have been registered in bad faith”. In Teradyne Inc.Teradyne, Inc. [sic] v. 4tel Technology, WIPO Case No. D2000-0026, the respondent registered a domain name to reflect its own business name but subsequently sought to sell the name for profit when its business dissolved. The panel found that to decide the case on the subsequent bad faith action would “extend the Policy to cover cases clearly intended to be outside its scope.” Similarly, in Telaxis Communications Corp. v. William E. Minkle, WIPO Case No. D2000-0005, the respondent registered the disputed domain name in good faith but subsequently began to use it in bad faith. It was held that because the registration was made in good faith the requirement of Paragraph 4(a)(iii) was not met.”
Complainant has failed to establish this element of its case.
7. Decision
For all the foregoing reasons, the Complaint is denied.
Alan L. Limbury
Sole Panelist
Dated: November 29, 2006