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WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

The Lovesac Company v. PLS Trading Pty Ltd

Case No. DAU2021-0025

1. The Parties

The Complainant is The Lovesac Company, United States of America (“United States”), represented by Spruson & Ferguson Lawyers, Australia.

The Respondent is PLS Trading Pty Ltd, Australia.

2. The Domain Name and Registrar

The disputed domain name <lovesac.com.au> is registered with Web Address Registration Pty Ltd (“the Registrar”).

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on June 18, 2021. On June 18, 2021, the Center transmitted by email to the Registrar a request for registrar verification in connection with the disputed domain name. On June 21, 2021, 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. On June 21, 2021, the Center received an email communication from the Respondent.

The Center verified that the Complaint satisfied the formal requirements of the .au Dispute Resolution Policy (the “Policy”), the Rules for .au Dispute Resolution Policy (the “Rules”), and the WIPO Supplemental Rules for .au 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 proceeding commenced on June 23, 2021. In accordance with the Rules, paragraph 5(a), the due date for Response was July 13, 2021. The Response was filed with the Center on July 12, 2021.

The Center appointed Sebastian M.W. Hughes as the sole panelist in this matter on July 27, 2021. 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

A. Complainant

The Complainant is a retailer of furniture under the trade mark LOVESAC (the “Trade Marks”) founded in the United States in 1995 and listed on the NASDAQ Stock Exchange in June 2018. The Complainant is the owner of four registrations in Australia for the Trade Mark, including registration No. 1033613 for LOVESAC, with a registration date of December 8, 2004.

B. Respondent

The Respondent is a company incorporated in the State of New South Wales, Australia and the former licensee of the Trade Mark in Australia under a Licence Agreement between the Complainant’s predecessor in title and the Respondent dated May 1, 2008 (the “Licence Agreement”). Prior to then, the Respondent was a re-seller in Australia of furniture exported to the Respondent by the Complainant’s predecessor in title, under the Trade Mark.

The Respondent has since September 4, 2009 and August 15, 2013, respectively, been the owner of business name registrations for “Lovesac Australia” and “Lovesac”.

The Respondent’s furniture retail business is presently operated under the trade mark LESAC and via its website at “www.lesac.com.au” (the “Respondent’s Website”).

C. The Disputed Domain Name

The disputed domain name was registered on October 11, 2004.

D. The Websites at the Disputed Domain Name

The disputed domain name was for many years resolved to websites promoting the Respondent’s business of selling furniture in Australia under the Trade Mark pursuant to the Licence Agreement.

Following the Complainant’s termination of the Licence Agreement on May 1, 2019, the disputed domain name was for a period of time resolved to the Respondent’s Website.

As at the date of filing of the Complaint, the disputed domain name did not resolve to any website. At the date of this decision, the disputed domain name redirects to the website at “www.lesac.com.au”.

5. Parties’ Contentions

A. Complainant

The Complainant contends that the disputed domain name is identical or confusingly similar to the Trade Mark, the Respondent has no rights or legitimate interests in respect of the disputed domain name, and the disputed domain name has been registered or subsequently used in bad faith.

B. Respondent

The Respondent does not make any contentions as to whether the disputed domain name is identical or confusingly similar to the Trade Mark. The Respondent contends that it has rights or legitimate interests in respect of the disputed domain name, and that the disputed domain name has not been registered or subsequently used in bad faith. The Respondent also requests a finding of Reverse Domain Name Hijacking (“RDNH”).

6. Discussion and Findings

The Complainant must prove each of the three elements in paragraph 4(a) of the Policy in order to prevail.

A. Identical or Confusingly Similar

The Panel finds that the Complainant has rights in the Trade Mark, acquired through use and registration.

Disregarding the country code Top-Level Domain (“ccTLD”) “.com.au”, the disputed domain name is identical to the Trade Mark.

Accordingly, the Complainant has fulfilled the first condition of paragraph 4(a) of the Policy.

B. Rights or Legitimate Interests

Paragraph 4(c) of the Policy provides a list of non-exhaustive circumstances any of which is sufficient to demonstrate that a respondent has rights or legitimate interests in a disputed domain name:

(i) before any notice to the respondent of the dispute, the respondent’s use of, or demonstrable preparations to use, the disputed domain name or a name corresponding to the disputed domain name in connection with a bona fide offering of goods or services; or

(ii) the respondent (as an individual, business, or other organization) has been commonly known by the disputed domain name even if the respondent has acquired no trade mark or service mark rights; or

(iii) the respondent is making a legitimate non-commercial or fair use of the disputed domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trade mark or service mark at issue.

The Respondent contends that, for a period of roughly six years from 2012, the Complainant and the Respondent abandoned the Licence Agreement by mutual conduct, alternatively, the Licence Agreement was terminated in July 2018 when the Respondent accepted the Complainant’s repudiatory breach of the Licence Agreement.

The Respondent contends that, following abandonment of the Licence Agreement in 2012 by mutual conduct, it was encouraged by the founder of the Complainant to continue the use of the Trade Mark in Australia, on the basis that the Complainant was working to improve the supply capability and product quality, and that a new arrangement might be offered if the Complainant “became capable”. The Respondent contends that from 2012 it diligently grew a domestic business under the Trade Mark.

In support of its contentions, the Respondent relies on email communications between the Complainant and the Respondent in 2013, 2016, and 2017 regarding negotiations for a new agreement between the parties, including an email from October 2016 in which the Respondent was asked “Can you please update us on the status of your plans for using our trademark in Australia?”.

The Respondent contends that it overpaid royalties to the Complainant under the Licence Agreement in 2011, and that it expected the Complainant to move quickly to acquire trade names and the disputed domain name from the Respondent “for fair compensation and the good name built” whilst the Respondent has transitioned, over the last three years, to its new brand LESAC.

It is not in dispute that, under the Licence Agreement, the Respondent was granted the exclusive right to use the Trade Mark in respect of the “LoveSac Products” – defined as “certain furniture and other products under the name LoveSac®”. Irrespective of whether the Licence Agreement was terminated in 2012 (by mutual conduct), in 2018 (by the Respondent) or in 2019 (by the Complainant), the Respondent’s right to use the Trade Mark in Australia terminated upon termination of the Licence Agreement.

The Panel does not find the evidence relied upon by the Respondent – in particular the series of email communications between the Complainant and the Respondent regarding the Respondent’s use of the Complainant’s Trade Mark in Australia – supportive of its contention that it was encouraged and allowed by the Complainant to develop its own business and goodwill in Australia under the Trade Mark. Indeed, the Respondent’s acknowledged transition, following the Complainant’s notice of termination of the Licence Agreement effective May 1, 2019, to its new business under the trade mark LESAC, suggests its acceptance that it does not possess any rights or legitimate interests in the disputed domain name for the purposes of the Policy.

The Panel finds that the Respondent’s act in resolving the disputed domain name, after the termination of the Licence Agreement by the Complainant, to its website at “www.lesac.com.au” does not give rise to rights or legitimate interests in the disputed domain name. Its rights to use the Trade Mark in Australia terminated upon termination of the Licence Agreement.

There has been no evidence adduced to show that the Respondent has been commonly known by the disputed domain name.

There has been no evidence adduced to show that the Respondent is making a legitimate noncommercial or fair use of the disputed domain name.

In light of the above matters, the Panel finds that the Respondent has failed to establish genuine rights or legitimate interests in the disputed domain name.

Accordingly, the Complainant has fulfilled the second condition of paragraph 4(a) of the Policy.

C. Registered or Used in Bad Faith

In light of the Respondent’s use of the disputed domain name in the manner highlighted in section 6B above, the Panel finds that the Respondent has used in the disputed domain name in bad faith, under paragraph 4(b)(iv) of the Policy.

The Panel also considers the Respondent’s demands for compensation of AUD 75,000 in return for its transfer of the disputed domain name to the Complainant amounts to further evidence of bad faith. The Respondent argues that it subsequently counter-offered the reduced sum of AUD 30,000 on March 11, 2020, to which the Complainant responded with an offer of USD 10,000 on May 5, 2020. However, in light of the clear terms of the Licence Agreement, the Panel finds that there is no evidence to suggest that, in all the circumstances and for the purposes of the Policy, the Respondent was entitled to demand more than its reasonable out-of-pocket expenses incurred in respect of the registration and renewal of the disputed domain name.

Accordingly, the Complainant has fulfilled the third condition of paragraph 4(a) of the Policy.

D. RDNH

As the Complainant has prevailed in this proceeding, there is no need to consider the Respondent’s request for a finding of RDNH.

7. Decision

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

Sebastian M.W. Hughes
Sole Panelist
Dated: August 16, 2021

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