Domain Name Systems, Inc. v. TBS Industries Ltd.

WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Domain Name Systems, Inc. v. TBS Industries

Case No. D2001-0871

1. The Parties

The Complainant is Domain Name Systems, Inc., a corporation organized in the

United States of America (USA), with place of business in Englewood, Florida,

USA.

The Respondent is TBS Industries, with address in Newport Beach, California,

USA.

2. The Domain Name and Registrar

The disputed domain name is <dotsex.com>.

The registrar of the disputed domain name is Network Solutions, Inc., with

business address in Herndon, Virginia, USA.

3. Procedural History

The essential procedural history of the administrative proceeding is as follows:

(a) The Complainant initiated the proceeding by the filing of a Complaint via

e-mail, received by the WIPO Arbitration and Mediation Center ("WIPO")

on July 10, 2001, and by courier mail received by WIPO on July 18, 2001. Payment

by Complainant of the requisite filing fees accompanied the courier mailing.

On July 13, 2000, WIPO transmitted a Request for Registrar Verification to the

registrar, Network Solutions, Inc. (with the Registrar’s Response received by

WIPO on July 16, 2001).

(b) On July 19, 2001, WIPO transmitted notification of the Complaint and commencement

of the proceeding to Respondent via e-mail and courier mail. Air courier tracking

records indicate that the Complaint was delivered on July 23, 2001, to

the address of Respondent specified in its registration record. The notification

indicated that the final date for transmission of a Response to WIPO and Complainant

was August 8, 2001.

(c) By e-mail dated August 10, 2001, Respondent’s counsel advised WIPO that

Respondent had discovered the existence of this proceeding on WIPO’s website,

that Respondent had not received notice of the proceeding or the Complaint,

and requested that an extension be granted for the late filing of a Response.

On August 13, 2001, Respondent transmitted to WIPO a formal petition for the

late filing of a Response, claiming failure to receive the initial notification.

(d) By telefax to WIPO dated August 13, 2001, Complainant filed a document

opposing extension of the period for filing a Response, on grounds of evidence

that Respondent had in fact received the initial notification of the Complaint,

and that Respondent had improperly modified its registration record, including

contact information, subsequent to initiation of this proceeding.

(e) On August 13, 2001, WIPO notified Respondent by e-mail that, although WIPO

records indicated that the relevant documents had been properly transmitted

to the contact addresses contained in Respondent’s record of registration, it

would nonetheless grant an extension until August 18, 2001, for the filing of

a Response. WIPO indicated, however, that the panel appointed to decide the

proceeding would make the ultimate determination regarding whether the Response

would be admitted.

(f) On August 18, 2001, Respondent’s Response was received via e-mail by WIPO.

Respondent also transmitted its Response to Complainant. Respondent elected

to have this proceeding decided by a three-member panel.

(g) In e-mail correspondence with WIPO between August 21 and August 27, 2001,

Complainant queried whether it was entitled to file a reply to the Response

submitted by Respondent, and objected to Respondent’s request for a three-member

panel on grounds that Respondent had not replied to the Complaint within the

time limits established by the Policy. WIPO advised Complainant that the Panel

would have discretion whether to accept additional submissions, and proceeded

with the appointment of a three-member panel.

(h) By telefax dated August 28/29, 2001, Complainant transmitted to WIPO its

"Complainant’s Response to late-filed Respondants [sic] Response".

(i) On September 27, 2001, Complainant and Respondent were notified by WIPO

of the appointment of Prof. Frederick M. Abbott (Presiding), Prof. Milton

L. Mueller and Prof. Jeffrey Samuels as the Administrative Panel (the "Panel")

in this matter. Each panelist had previously transmitted to WIPO an executed

Statement of Acceptance and Declaration of Impartiality and Independence ("Statement

and Declaration"). WIPO notified the Panel that, absent exceptional circumstances,

it would be required to forward its decision to WIPO by October 16, 2001. On

September 27, 2001, WIPO transmitted an electronic file containing relevant

documents to each Panel member. Each Panel member subsequently received a hard

copy of the file in this matter by courier from WIPO.

The Panel has not received any requests from Complainant or Respondent regarding

further submissions, waivers or extensions of deadlines, and the Panel has not

found it necessary to request any further information from the parties. The

proceedings have been conducted in English.

4. Factual Background

Complainant has filed an application for registration of the stylized word

service mark ".SEX" at the United States Patent and Trademark Office

(USPTO), serial no. 76223416, dated March 12, 2001, in International Class

38, covering "domain name registry". By letter of July 9, 2001, the

USPTO notified Complainant of its initial refusal to register the mark. The

examining attorney stated, inter alia, that a top level domain name "is

merely a portion of a website’s address, not a source indicator of any particular

goods or services", citing In re William H. Eilberg, 49 USPQ 2d

(BNA) 1955 (1998), which, according to the examining attorney, held "that

the mark <eilberg.com> merely indicates an internet address, and is incapable

of functioning as a source indicator." The examiner also indicated that

identification of the service as "domain name registry" was too indefinite,

and that a common commercial name or more complete description should be used.

Also, the specified services would be more properly classified in International

Class 42. The examining attorney indicated that the drawing of the stylized

mark as submitted was not in the proper form. The examining attorney indicated

that Complainant could respond to the refusal by submitting evidence and arguments

in support of registration.

Complainant did not submit to the Panel evidence of use in commerce of the

asserted mark ".SEX". Complainant states that "Domain Name Systems,

Inc. [is] well known throughout the world". It also states "The registrant

registered the domain name on May 10, 2001, several months after it became common

knowledge that Domain Name Systems, Inc. had embarked in this business. Domain

Name Systems, Inc., has been in business for over a year, and currently services

clients around the world".

Although Complainant did not submit printouts of it website pages, the Panel

has determined that Complainant’s active <domainnamesystems.com> website

offers Internet users "alternate registry" services for ".xxx

and .sex", at URL <sexregistry.org> (Panel visit of October 10, 2001).

The alternate registry home page uses the term ".sex" to refer to

its alternate registration services stating, inter alia "[t]here’s

a whole new world out there, that consists of sites that don’t use the current

root server system". It also states ".sex and .xxx are trademarks

of Domain Name Systems". (Id.)

According to the registrar’s verification response to WIPO, dated July 16,

2001, TBS Industries is the listed registrant of the domain name <dotsex.com>.

The Administrative Contact, at the same address, is "TBS Industries Ltd.".

According to an OpenSRS WHOIS database printout submitted by Complainant, the

record of registration for the disputed domain name was created on May 10, 2001,

and was last updated on May 21, 2001 (Complaint, Annex 2).

Respondent asserts that it purchased the disputed domain name from a third

party in May 2001 (Response, Exhibit 4, Affidavit of Thomas Goolnik, president

of TBS Industries Ltd., dated August 17, 2001).

Respondent maintains an active commercial website at Internet address (URL)

<dotsex.com>. At this website, Respondent offers to register domain names

using a ".sex" top level domain (TLD) designation.

In its Response in this proceeding, Respondent indicates that ".sex.com"

is an "alternative" TLD registry, and that "[a]lternative TLDs

are recognized by computers for which users have downloaded and activated special

Internet browsers". Respondent further asserts that "[t]he .SEX TLD

will be active in 2002". (Id., Affidavit of Goolnik)

In their respective pleadings, Complainant and Respondent make various allegations

of improper conduct regarding the other. Because of the grounds upon which this

proceeding is decided, the Panel will not recite or endeavor to sort through

these allegations.

The Service Agreement in effect between Respondent and Network Solutions Inc.

subjects Respondent to Network Solutions’ dispute settlement policy, the Uniform

Domain Name Dispute Resolution Policy, as adopted by ICANN on August 26, 1999,

and with implementing documents approved by ICANN on October 24, 1999. The Uniform

Domain Name Dispute Resolution Policy (the "Policy") requires that

domain name registrants submit to a mandatory administrative proceeding conducted

by an approved dispute resolution service provider, of which WIPO is one, regarding

allegations of abusive domain name registration (Policy, para. 4(a)).

5. Parties’ Contentions

A. Complainant

Complainant first asserted that it had registered the trademark ".sex"

with the USPTO. Complainant subsequently acknowledged that the USPTO had initially

refused registration, but asserts that it intends to respond to the "non-final"

action. It states that "[i]t is the intention of the Complainant to secure

its rights in its intellectual property of ‘.sex’".

Complainant claims that although the disputed domain name <dotsex.com>

is not identical to its trademark ".SEX", that it is confusingly similar

because the <dotsex.com> web site is used to market domain name registrations

under an alternate ".sex" top-level domain. It further asserts that

its mark is used by Respondent throughout its website as a substitute for the

disputed domain name.

Complainant asserts that Respondent has used the disputed domain name in bad

faith by intentionally attempting to attract Internet users to its website by

using Complainant’s confusingly similar mark in its domain name. Complainant

also asserts that Respondent has prevented it from registering its mark in a

domain name, and that Respondent is diluting the value of its mark by "selling

registrations of domain names which have a ‘.sex’ extention [sic]."

Complainant states that it attempted to contact Respondent prior to the filing

of its Complaint in this matter, but that its e-mail messages were either returned

or went unanswered.

Complainant asserts that Respondent has intentionally misrepresented its business

activities to the Panel, that Respondent has made claims in this proceeding

that it acts as register of an alternative TLD that is maintained by another

enterprise (i.e., ".GOD), and that Respondent claims on its website to

be the exclusive registry for ".sex" domain names when it has no such

exclusive right.

Complainant requests the Panel to transfer the disputed domain name to it.

B. Respondent

Respondent claimed, in response to Complainant’s initial assertion of USPTO

registration of the service mark ".SEX", that in fact Complainant’s

application had been refused. Respondent noted the grounds for refusal, including

that a TLD does not serve as an indication of source, and does not function

as a trademark.

Respondent asserts that "sex" is a common word, and provides an U.S.

Trademark Electronic Search (TESS) printout showing that there are 365 active

trademark applications and registrations incorporating the word "sex".

Respondent indicates and provides a home page printout showing that there is

a third party also providing ".sex" registry services at URL <dotsexx.com>.

Respondent states that Complainant’s alleged mark is generic "because

it is used to sell .SEX domain names". Respondent indicates that even if

".SEX" is theoretically capable of protection as a mark, that Complainant’s

application for registration is for a stylized mark, and beyond that is completely

different than the disputed domain name <dotsex.com>.

Respondent claims that it has a legitimate interest in the disputed domain

name because it was registered to identify its "<dotsex.com> registry".

It therefore is alleged to be used in connection with a bona fide offering of

services. Moreover, Respondent asserts that since the disputed domain name consists

of two generic terms, it has a legitimate interest "regardless of how it

is using it". Respondent says that it is currently selling ".sex"

domain names, and the fact that they will not be activated until 2002 does not

diminish its assertion of an active use of and interest in the disputed domain

name.

Respondent denies bad faith registration and use of the disputed domain name.

It indicates that there is no evidence that it intended or has offered to sell

the name to Complainant, prevented Complainant from registering its trademark,

disrupted Complainant’s business, or confused consumers. It states that it registered

a common term for use in connection with its registry services.

Respondent asserts that it began selling ".sex" domain names in 1996,

(so that it could not have intended bad faith conduct regarding Complainant’s

alleged markbut offered no evidence for this claim). Moreover, since Complainant

has no rights in the ".SEX" mark, Respondent could not have acted

in bad faith regarding it. Likewise, since the alleged mark is a generic term,

Respondent could not have acted in bad faith. Respondent also indicates that

Complainant cannot register the "dot" character in a domain name,

and thus Respondent has not prevented registration of the asserted mark. Moreover,

there is no evidence of a pattern of registering the marks of others to prevent

their registration as domain names.

Respondent requests the Panel to make a finding of reverse domain name hijacking

against Complainant. Respondent asserts that Complainant had an obligation to

disclose the material fact of the USPTO’s refusal of its service mark application,

and that Complainant should have known it could not assert rights in a generic

term. Respondent asserts that there is no evidence to support other elements

necessary for a finding against it, and that the Panel should condemn Complainant’s

conduct.

6. Discussion and Findings

The Policy is addressed to resolving disputes concerning allegations of abusive

domain name registration and use. The Panel will confine itself to making determinations

necessary to resolve this administrative proceeding.

It is essential to dispute resolution proceedings that fundamental due process

requirements be met. Such requirements include that a Respondent have notice

of proceedings that may substantially affect its rights. The Policy, and the

Rules for Uniform Domain Name Dispute Resolution Policy (the "Rules"),

establish procedures intended to assure that Respondents are given adequate

notice of proceedings commenced against them, and a reasonable opportunity to

respond (see, e.g., paragraph 2(a), Rules).

In this case, the Panel is satisfied that WIPO took all steps reasonably necessary

to notify the Respondent of the filing of the Complaint and initiation of these

proceedings.

Respondent did not respond to the Complaint prior to the deadline established

by the Rules, but two days after the filing deadline requested an extension

for filing a Response. Respondent asserted that it had not received notice of

the initiation of the proceedings and Complaint, and only discovered the proceedings

by viewing the WIPO website.

There is substantial evidence in the record that notice of the initiation of

the proceedings and the Complaint were transmitted to and received at the contact

addresses indicated by Respondent in its record of registration for the disputed

domain name. Nonetheless, whether or not Respondent’s assertion of lack of notice

is credible, the objective of the Policy and Rules is to afford each party an

adequate opportunity to present its evidence and arguments to the Panel established

to decide the proceeding. There is no reason to believe that in the circumstances

of this proceeding a brief delay in the submission of a Response prejudiced

an interest of Complainant. Moreover, Complainant asserted in its initial filing

that it had registered a service mark with the USPTO. The fact that this assertion

was untrue was brought to the Panel’s attention in Respondent’s Response. There

would be material prejudice to the Panel’s determination in this case if it

did not accept Respondent’s Response. There being no appreciable harm to Complainant

from the brief delay caused by the late filing of the Response, and there being

potentially substantial prejudice to Respondent based upon Complainant’s misrepresentation

in the Complaint, the balance of considerations clearly favors the Panel’s acceptance

of the late-filed Response. The late-filed Response is accepted.

Complainant submitted a reply to Respondent’s Response. This reply addresses

facts asserted by Respondent that may not reasonably have been anticipated or

discovered by Complainant in its preparation of its initial Complaint. For this

reason, the Panel also accepts Complainant’s reply.

Paragraph 4(a) of the Policy sets forth three elements that must be established

by a Complainant to merit a finding that a Respondent has engaged in abusive

domain name registration and use, and to obtain relief. These elements are that:

(i) Respondent’s domain name is identical or confusingly similar to a trademark

or service mark in which the 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.

Each of the aforesaid three elements must be proved by a Complainant to warrant

relief.

Complainant asserts rights in the service mark ".SEX". Complainant

has failed to establish such rights.

First, the mark is not registered at the USPTO. As a consequence, there is

no presumption of rights in the mark under federal law [1].

Second, the USPTO has initially refused to register the mark. The examining

attorney stated, among the reasons for refusal, that a top level domain (TLD)

designation does not identify a particular source of services, and therefore

is incapable of functioning as a mark. In support of this proposition, the examining

attorney cited In re William H Eilberg, 49 USPQ 2d (BNA)

1955 (1998). The USPTO Trademark Trial and Appeal Board (TTAB) determined in

In re Eilberg that the URL <eilberg.com> did not in the circumstances

of that case serve as a service mark. The URL was used by an attorney offering

his services as an indicator of an address on the Internet, and evidence of

use as an identifier in commerce consisted of office stationary on which the

URL appeared as part of the business address. The TTAB concluded:

"Upon careful review of this record and the arguments of the attorneys,

we agree with the Examining Attorney that the asserted mark, as displayed on

applicant's letterhead, does not function as a service mark identifying and

distinguishing applicant's legal services and, as presented, is not capable

of doing so. As shown, the asserted mark identifies applicant's Internet domain

name, by use of which one can access applicant's Web site. In other words, the

asserted mark <eilberg.com> merely indicates the location on the Internet

where applicant's Web site appears. It does not separately identify applicant's

legal services as such. Cf. In re The Signal Companies, Inc., 228 USPQ 956 (TTAB

1986).

This is not to say that, if used appropriately, the asserted mark or portions

thereof may not be trademarks or services mark. For example, if applicant's

law firm name were, say, <eilberg.com> and were presented prominently

on applicant's letterheads and business cards as the name under which applicant

was rendering its legal services, then that mark may well be registrable. However,

this is not the case before us."

The Panel does not understand the TTAB in In re Eilberg to have decided

that a TLD identifier may not under any circumstances serve as a trademark or

service mark. For purposes of this proceeding, the Panel need not determine

whether a TLD or an alternate TLD, standing alone, may serve as a trademark

or service mark. It notes that this may depend on the context in which the TLD

is used.

Although Complainant has not registered ".SEX" as a service mark,

rights in a mark may be established under common law [2].

Numerous decisions under the Policy have recognized rights in marks established

under the common law [3]. Establishing common

law rights in a mark entails demonstrating that the mark is used in commerce

and is distinctive.

Although Complainant has used the term ".SEX" in commerce on the

Internet, it has not demonstrated that the mark is distinctive. In order to

make such a showing, Complainant would need to prove that the mark was arbitrary

or suggestive, or that, if descriptive, had acquired adequate secondary meaning.

To establish secondary meaning, Complainant would need to prove that consumers

exclusively identified ".SEX" with its services, or that ".SEX"

distinguished the services of Complainant in the minds of consumers from that

of other service providers.

There is no doubt that "sex" is a generic or commonly descriptive

word in the English language. No person or enterprise can establish an exclusive

right in the word [4]. Adding a dot (".")

before the word differentiates or distinguishes it from the word standing alone,

but does not make it arbitrary or suggestive. In theory, the new term ".sex"

might be identified by consumers exclusively with the services of a particular

firm or enterprise. However, the terms ".sex" and "sex"

are similar in visual impression and intended meaning. In order to establish

that the new term is sufficiently distinctive, a Complainant would need to offer

very substantial evidence that consumers in fact identified the new term exclusively

with it services.

Complainant in this proceeding has not made such eithera showing. Its website

offers to register ".sex" alternate registry domain names. There is

no evidence provided that Complainant is the exclusive provider of ".sex"

registry names [5]. The record rather reveals

that several enterprises, including Respondent, are offering such alternate

registry names or have applied to register trademarks incorporating ".sex".

Moreover, the Panel notes that during ICANN’s recent consideration of adoption

of new generic TLDs, the establishment of a ".sex" gTLD was proposed

and discussed by a number of parties [6].

Complainant has not presented evidence of exclusive rights in ".SEX",

and there is substantial evidence to the contrary. In a case in which Complainant’s

claim involves a slight variation on a generic term, there is simply no reasonable

basis for concluding that it has rights in ".SEX" as a service mark.

The Panel determines that Complainant has failed to establish rights in the

service mark ".SEX". Since it has not satisfied the first element

of Paragraph 4(a) of the Policy, Complainant cannot succeed on a claim of abusive

domain name registration and use against Respondent. The Panel need not make

further determinations regarding allegations made by Complainant.

The Panel admonishes Complainant for its failure to disclose the USPTO’s initial

refusal of its service mark application, and for instead asserting that it had

registered its mark. One member of the Panel considers that Complainant is not

sophisticated regarding legal matters, and concludes that Complainant’s misrepresentation

was probably inadvertent. Nonetheless, it is difficult for the Panel to excuse

a failure to disclose what must have seemed an obvious lack of service mark

registration even to a comparatively unsophisticated party.

The Panel rejects Respondent’s request for a finding of reverse domain name

hijacking. There is substantial evidence in the record of this proceeding to

put in issue Respondent’s business practices. The Panel does not think it productive

to lay out the evidence of those practices as a counterweight to Complainant’s

lack of full disclosure.

7. Decision

Complainant, Domain Name Systems, Inc., has failed to establish rights in the

service mark ".SEX" for the purposes of satisfying Paragraph 4(a)(i)

of the Policy. The Panel therefore rejects its claim of abusive domain name

registration and use against Respondent, TBS Industries, and denies its request

that the Panel ask the registrar to transfer the domain name <dotsex.com>

from Respondent to it.

The Panel rejects Respondent’s request for a finding of reverse domain name

hijacking on the part of Complainant.

Frederick M. Abbott

Presiding Panelist

Milton L. Mueller

Panelist

Jeffrey M. Samuels

Panelist

Dated: October 16, 2001

Footnotes:

1. See 15 USCS § 1057(b) (establishing

presumption of exclusive right to use based on registration).

2. See, e.g., Century 21 Real Estate v.

Billy Sandlin, 846 F.2d 1175 (9th Cir. 1988).

3. See, e.g., Adobe Systems Incorporated

v. Domain OZ, WIPO Case No. D2000-0057,

decided March 22, 2000, and; Desert Schools Federal Credit Union v. Symlink

Communications, llc, WIPO Case No. D2001-0528,

decided July 4, 2001.

4. See generally, Mil-Mar Shoe v. Shonac,

75 F. 3d 1153 (7th Cir. 1996).

5. One member of this Panel suggests that

a showing by Complainant that it had received an assignment of the top level

domain label ".sex" from ICANN, and/or that it was the exclusive occupant of

that top-level domain in the registry services market, might serve to distinguish

Complainant's registry services in the marketplace and create secondary meaning.

6. See, e.g., http://www.icann.org/tlds/tld-applications-lodged-02oct00.htm,

including ".sex" registry proposals from Name.Space Incorporated and

Rathbawn Computers Limited, et al.