Caleel+Hayden, L.L.C. v. Jaye Pharmacy

WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Caleel+Hayden L.L.C. v. Jaye Pharmacy

Case No. D2001-1475

1. The Parties

The Complainant is Caleel+Hayden, L.L.C., a Delaware limited liability company,

with place of business in Denver, Colorado, United States of America (USA).

The Respondent is Jaye Pharmacy, with address in Sherman Oaks, California,

USA.

2. The Domain Name(s) and Registrar(s)

The disputed domain name is <cellexc.com>.

The registrar of the disputed domain name is Dotster, Inc., with business address

in Vancouver, Washington, 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 December 21, 2001, and via courier mail received by WIPO on December 27, 2001.

Complainant elected to have this dispute decided by a three-member panel, and

paid the requisite filing fees due in connection with that election. On December

28, 2001, WIPO transmitted a Request for Registrar Verification to the registrar,

Dotster, Inc., with the Registrar’s Response received by WIPO on January 16,

2002.

(b) Based on its initial receipt of the complaint from Complainant, Respondent

transmitted a response to WIPO via e-mail received on January 8, 2002 (and subsequently

received in hardcopy).

(c) On January 18, 2002, WIPO formally transmitted notification of the complaint

and commencement of the proceeding to Respondent via e-mail, telefax and courier

mail. WIPO indicated to Respondent that the date for confirming the entirety

of its response was February 7, 2002.

(d) On February 4, 2002, WIPO received via e-mail a supplemental response

from Respondent, and on February 7, 2002, WIPO received the supplemental response

in hardcopy. Respondent transmitted its response and supplemental response to

Complainant.

(e) On February 8, 2002, WIPO received via e-mail (and subsequently in hardcopy)

a reply of Complainant to Respondent’s supplemental response. WIPO advised Complainant

that the Panel appointed in this matter would have discretion as to whether

the reply would be accepted and considered.

(f) On February 11, 2002, WIPO received via e-mail from Respondent (and

subsequently in hardcopy) an objection to Complainant’s reply. On February 12, 2002,

WIPO received via e-mail from Complainant (and subsequently in hardcopy) a reply

to Respondent’s objection, including a declaration by Simon Rosenfeld on behalf

of Cellex-C International, Inc. On February 19, 2002, WIPO received via e-mail

from Respondent (and subsequently in hardcopy) a further response and objection

to Complainant’s reply.

(g) On March 8, 2002, following receipt of executed Statements of Acceptance

and Declarations of Impartiality and Independence, WIPO appointed Frederick M. Abbott

(presiding), Timothy D. Casey and Thomas D. Halket to serve as the Administrative

Panel (the "Panel") in this matter. WIPO so notified Complainant and

Respondent. WIPO notified the Panel that, absent exceptional circumstances,

it would be required to forward its decision to WIPO by March 22, 2002.

The Panel received electronic and hard copy files from WIPO.

(h) Following notification from the Panel of circumstances requiring an

extension of the date for decision in this matter, WIPO notified the parties

that the projected date for a decision would be extended until March 29, 2002.

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

The trademark as to which Complainant asserts rights in this matter, "CELLEX-C",

is registered by a third party, Cellex-C International, Inc., a Canadian corporation.

Cellex-C International Inc. is assignee of the "CELLEX-C" mark on

the Principal Register at the United States Patent and Trademark Office (USPTO)

(Reg. No. 2092395, dated September 7, 1997, in International Class 05,

covering medicated toilet preparations, as further specified). Cellex-C International

is the holder of a parallel trademark registration for "CELLEX-C"

in Canada. (Complaint, para. 13 and Annex D & E).

Complainant has furnished five redacted pages from a thirty-one page (not including

appendices) Distribution Agreement, dated July 1, 1999, between itself and Cellex-C

International (the "Manufacturer") that purports to appoint Complainant

as exclusive distributor of a list of skin care products (which list was not

included with the contract) in a defined "territory" (which was not

specified in the redacted contract, but which was alleged by Complainant to

cover 15 countries including the USA). Article 4.1 (Trademark) grants distributor

the exclusive right to display the trademark (identified as Cellex-C in Schedule

C) in the territory for the purpose of advertising, marketing and promoting

the sale of the products. The Manufacturer reserved the right to use the mark

in the territory consistent with the terms of the agreement. Article 4.1.1 provides

that "The Manufacturer shall own all websites that include the trademark

… in the website name, including <Cellexcusa.com> and the 800-Cellex-C

toll-free number." Complainant is required to execute all documents necessary

to give the foregoing website-related provision effect. Article 4.2 of the redacted

contract provides, in reference to the Cellex-C trademark, that "The Distributor

acknowledges and agrees that the Manufacturer is the owner of such Trademark

and that the Distributor shall not and will not acquire any right, title or

interest in any of the Trademark."

Complainant has furnished a document headed "Internet and Web Site Management

Policy, Effective August 12, 1998" as "Schedule G" to the aforesaid

redacted contract. According to that policy statement, "Web sites by all

territory distributors, resellers and sub-distributors are to be under their

company name; no right is granted for the use of the Cellex-C name to be included

in any domain name (phonetically or otherwise), other than that owned or controlled

by Cellex-C International". Also, "Each Cellex-C distributor is responsible

for policing its accounts on the internet. It is the responsibility of the Cellex-C

distributor for the territory to: … 4. To prevent the use of Cellex-C in the

domain name (phonetically or otherwise similar) of any web site created by the

reseller or subdistributor. … It is the responsibility of the distributor for

the territory to cause its accounts to abide by the above policy and to take

appropriate action against any account in their territory whenever there is

default discovered by either their company or by Cellex-C International, Inc."

In its supplemental response, Respondent furnished the following allegedly

missing text of the aforementioned contract:

"4.5 Commencing/Defending a Claim. The Manufacturer shall defend

and otherwise respond to any actual or threatened claim that the Distributor’s

use of any of the Trademark infringes the rights of any third party or otherwise

constitutes an act of unfair competition against the third party. The Distributor

shall provide all reasonable assistance to the Manufacturer. During the Term,

the Distributor shall promptly notify the Manufacturer of any activities of

which the Distributor becomes aware, which activities may violate the rights

of the Manufacturer in and to the Trademark. The Manufacturer shall make a claim

or institute proceedings in respect of any suspected, threatened or actual violation

of the rights of the Distributor in the Trademark. The Distributor shall cooperate

with the Manufacturer in any such action or proceeding commenced by the Manufacturer

and shall, at the request of the Manufacturer, join any such proceeding as a

party, execute all documents necessary for such claim, proceedings or settlement

and provide any evidence and available information to the manufacturer, and

the Manufacturer shall reimburse the Distributor for all expenses reasonably

incurred by the Distributor in cooperating as provided herein, including reasonable

attorneys’ fees."

Complainant acknowledged that Article 4.5 was a standard provision in the Manufacturer’s

Distribution Agreement and did not deny the existence of such a provision in

its own contract with the Manufacturer. Rather, Complainant asserted that the

provision had been redacted from the copy of the agreement provided to the Panel

because Complainant viewed the substance of the provision to be irrelevant.

To support this argument, Complainant provided Mr. Rosenfeld’s declaration regarding

Cellex-C International’s position regarding Respondent’s use of the domain name

and the alleged intent of the parties to the Distribution Agreement.

According to the registrar’s (Dotster, Inc.’s) verification response to WIPO,

dated January 16, 2002, "JAYE PHARMACY" is the listed registrant of

the domain name <cellexc.com>. The registrar’s response indicates that

the record of registration was created on May 19, 2000, and was last updated

on April 30, 2001.

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

<www.cellexc.com> where it promotes and offers for sale various Cellex-C

products. Respondent also maintains an active commercial website at <www.1800compound.com>

where it promotes its services as a compounding pharmacy. (Complaint, Annexes

G & I)

Respondent has purchased and apparently continues to purchase substantial quantities

of Cellex-C products directly from Complainant. The most recent invoice submitted

by Complainant shows a shipment of November 8, 2001, in the amount of $1912.08.

(Complaint, Exhibit l)

Complainant, Respondent, and Cellex-C International have for more than a year

exchanged correspondence regarding the disputed domain name and website operated

by Respondent in connection with that name. The Panel does not consider it necessary

to elaborate on that correspondence here. Suffice it to say that the parties

accuse each other of bad faith conduct in connection with this matter.

The Service Agreement in effect between Respondent and Dotster, Inc. subjects

Respondent to Dotster, Inc.’s 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 and use (Policy, paragraph 4(a)).

5. Parties’ Contentions

A. Complainant

Complainant asserts that it has rights in the trademark "CELLEX-C"

by virtue of its appointment as the exclusive distributor by the registered

holder of that mark for a territory including the United States. Complainant

asserts that its contract with the registered holder of the mark gives it the

exclusive right to use the mark in the United States, subject to consistent

use by the registered holder, and that the contract requires it "to bring

actions such as this to counter unauthorized uses of the Trademark in a domain

name, by their customers."

Complainant alleges that the disputed domain name <cellexc.com> is identical

or confusingly similar to the mark in which it has rights.

Complainant refers to a prior WIPO panel report in which a licensee was determined

to have sufficient rights in a trademark to have standing in an administrative

proceeding under the Policy. (Hafele America Co. v. Hafele, LLC,

WIPO Case No. D2000-1839, March 23, 2001).

Complainant asserts that Respondent has no rights or legitimate interests in

the domain name. It alleges that Respondent’s status as a mere reseller of the

trademark holder’s products does not give it the right to use the mark in the

domain name citing, inter alia, The Stanley Works v. Camp Creek Co.,

Inc., WIPO Case No. D2000-0113, April

13, 2000.

Complainant asserts that Respondent registered and is using the disputed domain

name in bad faith. In particular, Complainant alleges that Respondent is using

the mark in the domain name to divert Internet traffic to its website for commercial

gain by creating confusion as to the source of products because Internet users

will mistakenly assume that Respondent is the trademark holder, and will mistakenly

assume that Respondent’s website is operated by the trademark holder. Complainant

notes that Respondent does not include a disclaimer on its website such as to

indicate that it is not the trademark holder or that its website is not "official".

Complainant requests, in its own words:

"that the Administrative Panel appointed in this proceeding issue a decision

directing the Registrar to transfer the domain name CELLEXC.COM to Complainant

Caleel (to hold for the benefit of C-CI per the Distribution Agreement or to

transfer to C-CI, per C-CI’s instructions). Alternatively, Caleel requests that

the Panel issue an order directing the Registrar to cancel Respondent’s registration

of the Domain Name."

B. Respondent

Respondent asserts that Complainant lacks rights in the mark such as to

permit it to pursue these proceedings. Respondent alleges that Complainant has

demonstrated bad faith by purporting to furnish the Panel with a copy of the

relevant contract provisions relating to its rights in respect to Cellex-C International’s

trademark, but in fact omitting directly relevant language that denies it the

rights it asserts.

Respondent states that there are a number of other resellers of Cellex-C products

that use that trademark on their websites and that Complainant’s action against

Respondent is a selective vendetta.

Respondent argues that it is using the disputed domain name in connection with

a commercial website that expressly acknowledges that Cellex-C is the registered

trademark of Cellex-C International, Inc., and that this use of the mark in

the disputed domain name does not violate the Policy.

Respondent asserts that its use of the mark in the disputed domain name does

not confuse consumers as to the source of products because the products it sells

are legitimately purchased from Complainant.

Respondent states that it has been selling Cellex-C products in the United

States since 1993, and that it was the first retailer of such products for Cellex-C

International, Inc. in the United States. Respondent asserts that its use of

the mark in the United States predates its registration by the assignor to Cellex-C

International.

Respondent asserts that it has invested considerable financial resources in

creating and maintaining the <www.cellexc.com> website, that Cellex-C

International, Inc. is aware of the website and does not object to it.

Respondent requests the Panel to reject Complainant’s request to transfer or

cancel the registration of the disputed domain name.

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 ensure 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 has filed a detailed response to the complaint indicating

that it received notice and was afforded an adequate opportunity to respond.

As a preliminary matter, the Panel notes that Respondent filed an initial and

supplementary response prior to the due date for filing a response in this proceeding.

Respondent was advised by WIPO in the notification of the complaint and commencement

of the proceeding that it was entitled to file a supplemental response in addition

to the response filed prior to formal notice of commencement of the proceeding.

The Panel finds that the supplemental response was filed within the time period

allowed by the Rules for filing a response, that WIPO acted in accordance with

the Rules by notifying Respondent that it was entitled to file a supplemental

response, and that no additional action need be taken by the Panel to admit

that submission.

Complainant submitted a reply to Respondent’s supplemental response primarily

directed at explaining its omission of certain contract language alleged by

Respondent to be relevant to the determination in this proceeding. Complainant

added legal argumentation regarding the relationship between the relevant omitted

provision and the portions of the redacted contract it provided, seeking to

explain how a "standardized" provision was modified by an "expressly

negotiated Schedule". Complainant also submits a declaration from a person

said to be counsel for Cellex-C International, Inc., that takes issue with certain

of Respondent’s claims. Respondent has objected to the Panel’s acceptance of

Complainant’s reply, and has sought to cast doubt on the reputation of the party

whose declaration Complainant seeks to introduce.

While Panels have substantial discretion to accept additional submissions in

administrative proceedings under the Policy and Rules, a complainant is ordinarily

expected to anticipate legal arguments and the submission of factual information

by a respondent that is reasonably foreseeable. In this instance, Complainant

redacted the contract on which it relies for rights in a mark so as to eliminate

a provision that was indeed relevant to the proceeding. It was then compelled

to reply regarding that provision by Respondent’s perhaps unanticipated access

to a copy of the provision. Complainant asserts that Respondent’s supplemental

response contains unanticipated argumentation. While the Panel is disinclined

to accept Complainant’s reply because Complainant should have anticipated the

arguments raised by Respondent in response to Complainant’s failure to supply

the Panel with all relevant portions of the contract, it sees no harm in doing

so, especially since Complainant admits that it redacted Article 4.5 because

it considered it to be "irrelevant to the proceeding." Complainant

should not have withheld this information, and if anything, should have provided

the information in its complaint and explained why the provision was not relevant

with respect to its enforcement rights under the contract.

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.

Paragraph 4(a) (i) of the Policy requires that a Complainant establish "rights"

in a trademark or service mark on which it is basing a claim of abusive domain

name registration and use.

Complainant in this proceeding is not the holder of registrations in the United

States and Canada of the trademark in which it asserts rights. It is a distributor

of the trademark holder authorized to display the trademark for the purpose

of advertising, marketing and promoting the sale of skin care products in the

United States. The contract between Complainant and Cellex-C International,

Inc. (the holder of the trademark registrations) only grants Complainant a limited

exclusive license to the trademark and expressly provides at Article 4.2:

"The Distributor [Complainant] acknowledges and agrees that the Manufacturer

[Cellex International] is the owner of such Trademark and that the Distributor

shall not and will not acquire any right, title or interest in any of the Trademark."

The contract also expressly provides, in Article 4.5, the provision furnished

to the Panel by Respondent, that the trademark holder is responsible for bringing

any legal actions to enforce rights in the trademark. The trademark holder may

require Complainant to join in such proceedings, but Complainant is not entitled

to initiate them.

Complainant asserts that Schedule G to the contract requires it to initiate

this proceeding. The Panel does not agree. What Schedule G requires of Complainant

is:

"4. To prevent the use of Cellex-C in the domain name (phonetically or

otherwise similar) of any web site created by the reseller or subdistributor.

… It is the responsibility of the distributor for the territory to cause its

accounts to abide by the above policy and to take appropriate action against

any account in their territory whenever there is default discovered by either

their company or by Cellex-C International Inc."

Complainant supplies substantial quantities of Cellex-C products to Respondent.

Appropriate action to cause Respondent (the "account") to act in accordance

with the trademark holder’s policy might well be to cease supplying it with

products, but does not expressly include the right to enforce the trademark

in legal or quasi-legal proceedings.

The present facts appear to be in contrast to the facts discussed by the Panel

in Hafele America Co. v. Hafele, LLC, WIPO Case No. D2000-1839,

March 23, 2001, which was cited by Complainant in support of its claim to standing

in this Complaint. In Hafele America, as in this case, the complainant

was also a distributor of the trademark owner, but unlike the present case,

the complainant and the distributor were related parties and the complainant

had acquired common law rights in the trademark. Hence, the complainant in Hafele

America did not need to rely on its contract with the trademark holder to

support its standing in the complaint. In the present situation, the contract

between Complainant and the registered trademark holder indicates that the trademark

holder has reserved all rights in the trademark to itself, which would presumably

include any common law rights that could have accrued to Complainant by virtue

of its use of the trademark (such as for other goods or services outside the

scope of the license), and the trademark holder alone has reserved the right

to initiate a claim based on infringement of those rights. The language in Article

4.5 omitted by Complainant was directly relevant to the enforcement rights expressly

retained by the trademark holder and superceded any implied rights that could

have been granted to Complainant by virtue of the language in Schedule G. As

noted above, Complainant could have complied with its obligations under Schedule

F of the contract without resorting to the filing of this Complaint.

Although the Panel has admitted Complainant’s Reply to Respondent’s Supplemental

Response and objections, it need not rely on the statements provided in Mr.

Rosenfeld’s declaration because the language of the Distribution Agreement is

clear on its face and requires no interpretation based on the alleged intent

of the parties at the time of its drafting.

The Panel does not intend to suggest that a trademark licensee may not have

the right to initiate a claim under the Policy. It need not address the issue

in the abstract. In this proceeding, Complainant has failed to establish rights

in the subject trademark because its contract with the licensor expressly denies

it the relevant rights. Having failed to meet its burden of proof on the first

element of Paragraph 4(a) of the Policy, the Panel sees no reason to proceed

any further with additional facts or arguments presented in this matter and

therefore rejects Complainant’s request to transfer the disputed domain name

to it, or to cancel the disputed domain name.

By this determination, the Panel does not make any suggestion as to the merits

of any potential dispute between the trademark holder and Respondent.

7. Decision

The Panel determines that Complainant, Caleel+Hayden, L.L.C., has failed to

establish rights in a trademark within the meaning of paragraph 4(a) (i) of

the Policy. The Panel therefore rejects Complainant’s request to order the registrar

to transfer the disputed domain name from the Respondent, Jaye Pharmacy, to

Complainant, or to cancel the disputed domain name.

Frederick M. Abbott

Presiding Panelist

Timothy D. Casey

Panelist

Thomas D. Halket

Panelist

Dated: March 29, 2002

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