ADMINISTRATIVE PANEL DECISION

Under the ICANN Uniform Domain Name Dispute Resolution Policy

1. Parties and Contested Domain Name

The Complainant is Rexair, Inc., a Delaware corporation with its principal place of business in Troy, Michigan. The Respondent is Paul Dressler, an individual d/b/a RainbowVac.com and residing in Edmond, Oklahoma. The contested domain name is "RAINBOWVAC.COM" and was registered by Respondent through Tucows, Inc.

2. Procedural History

The electronic version of the Complaint form was filed on-line through eResolution's Website on August 9, 2001. The hardcopy of the Complaint Form and annexes were received on August 29, 2001. Payment was received on August 15, 2001.

Upon receiving all the required information, eResolution's clerk proceeded to:

- Confirm the identity of the Registrar for the contested Domain Name;
- Verify the Registrar's Whois Database and confirm all the essential contact information for Respondent;
- Verify if the contested Domain Name resolved to an active Web page;
- Verify if the Complaint was administratively compliant.

This inquiry lead the Clerk of eResolution to the following conclusions: the Registrar is TUCOWS, INC., the Whois database contains all the required contact information, the contested Domain Name resolves to an active Web page and the Complaint is administratively compliant.

An email was sent to the Registrar by eResolution Clerk's Office to obtain confirmation and a copy of the Registration Agreement on August 15, 2001. The requested information was received August 21, 2001. 

The Clerk then proceeded to send a copy of the Complaint Form and the required Cover Sheet in accordance with paragraph 2 (a) of the ICANN's Rules for Uniform Domain Name Dispute Resolution Policy. The Clerk's Office fulfilled all its responsibilities under Paragraph 2(a) in forwarding the Complaint to the Respondent, notifying the Complainant, the concerned Registrar and ICANN on August 29, 2001. This date is the official commencement date of the administrative proceeding.

No emails were returned 'undeliverable'. All the faxes were successful. 

The complaint, official notification and all the annexes were sent via registered mail with proof of service, to the respondent. According to the Canada Post tracking system, all were delivered.

On September 18, 2001, the Respondent submitted, via eResolution Internet site, his response. The signed version of the response was received on September 20, 2001. 

On September 21, 2001, the Clerk's Office contacted Michelle Brownlee, and requested that she acts as a panelist in this case.

On September 21, 2001, Michelle Brownlee accepted to act as panelist in this case and filed the necessary Declaration of Independence and Impartiality.

On September 21, 2001, the Clerk's Office contacted David Lametti and requested that he acts as a panelist in this case.

On September 24, 2001, David Lametti accepted to act as panelist in this case and filed the necessary Declaration of Independence and Impartiality.

On September 26, 2001, the Clerk's Office contacted Margaret Chon, and requested that she acts as panelist in this case.

On September 27, 2001, Margaret Chon, accepted to act as the lead panelist in this case and filed the necessary Declaration of Independence and Impartiality.

On September 28, 2001, the Clerk's Office forwarded a user name and a password to the Panelists, allowing them to access the Complaint Form, the Response Form, and the evidence through eResolution's Automated Docket Management System.

On September 28, 2001, the parties were notified that the Panel had been appointed and that a decision was to be, save exceptional circumstances, handed down on October 12, 2001.

3. Factual Background

Complainant Rexair manufactures and sells household vacuum cleaners and related accessories, fragrances and parts under several federally registered trademarks, including but not limited to federally registered trademarks (a) in the word "RAINBOW" for vacuum cleaners, parts, attachments and supplies with a date of first use in 1961; (b) in the letter "R" with a raindrop; (c) in the product configuration of the RAINBOW vacuum cleaner or the product configuration of the RAINBOW vacuum cleaner with attachments, in whole and/or in part; and (d) in various forms of a fanciful arching rainbow. It also manufactures and sells products under various common law trademark, service mark and tradename rights. It operates a website under the domain name "RAINBOWSYSTEM.COM", as well as other domain names. 

Respondent Paul Dressler was an authorized sub-distributor of Complainant between 1988 through 1999. He first registered the domain name "RAINBOWVAC.COM" in 1997, when he was still an authorized sub-distributor. Complainant requested that he take down the website, and he complied. He has since gone into the business of selling used or reconditioned but genuine Rexair goods, as an independent broker. 

On July 18, 2001, Complainant filed an action in federal district court for the Western District of Oklahoma, alleging violations of the Lanham Act, breach of contract and intentional interference with contractual relations. That action is pending.

4. Parties' Contentions

Complainant contends that Respondent advertises and offers to sell Complainant's products via the website "RAINBOWVAC.COM." In addition, it alleges the Respondent is engaging in Lanham Act violations by displaying on its website Complainant's registered trademarks such as "RAINBOW," pictures that are identical to those in Complainant's sales brochures and colors matching those used by Complainant on its products. Complainant further claims that Respondent is violating the terms of his distributor agreement with Complainant, and causing other authorized distributors and/or sub-distributors to violate their contracts, by selling products through its website and outside the authorized sales network. It also contends that Respondent's use of Complainant's federally registered trademark "RAINBOW" in the title of his business in connection with the sale of vacuum cleaners creates confusion in the minds of the public, members of whom believe that they are conducting business with Complainant. Respondent allegedly engages in these activities for the purpose of willfully deceiving the public into believing they are doing business with Complainant. Thus Complainant concludes that Respondent has no legitimate rights or interests in the domain name, and he is acting in bad faith.

Respondent contends that he uses the website to advertise and sell genuine Rexair products, the website features a prominent disclaimer that: "We are an independent broker of the Rainbow Cleaning System, manufactured by Rexair, Inc. We are not affiliated with Rexair, the manufacturer of the Rainbow in any way. We are an independent broker and purchase from suppliers that have overstocks or are going out of business." In the "About Us" section of the website, customers are again informed: "We are an 'Independent Broker' of the Rainbow Cleaning System, manufactured by Rexair, Inc. We are not affiliated with Rexair in any way." The website further states on the homepage that "The word Rainbow and the configuration of the Rainbow vacuum cleaner are registered trademarks of Rexair, Inc., the manufacturer of the Rainbow."

Thus the Respondent denies that the title of his business creates confusion in the minds of the public that they are conducting business with Rexair. Moreover, he claims that his use 
of Complainant's trademarks constitutes a nominative fair use by only using Plaintiff's trademarks in a descriptive manner to refer to the products being sold, not as a source identifier to confuse customers. Thus, Respondent claims he has a legitimate right and interest in the domain name and that he is not acting in bad faith.

5. Discussion and Findings

The Complainant has the burden of proof of meeting each of the three required elements of Paragraph 4(a) of the ICANN Uniform Dispute Resolution Policy (hereinafter UDRP):

(1) Identity or Confusing Similarity of Respondent's Domain Name to Complainant's Registered Mark:

a. Rights in a Mark

ICANN UDRP Paragraph 4(a)(i) requires that the Complainant has a rights in a trademark or service mark. Based on the federal registration of "RAINBOW" as well as other federally registered marks, Complainant has satisfied this sub-element of the UDRP test.

b. Confusing Similarity

The contested domain name is not identical to Complainant's registered marks. Nonetheless, several facts support the inference of confusing similarity.

First, the contested domain name is extremely similar to the registered mark, varying only by the addition of "VAC" at the end. Moreover, Complainant's business involves vacuum cleaners and accessories, so that consumers might expect the addition of "VAC" to the arbitrary mark "RAINBOW." Common sense consideration of the two terms leads to the conclusion that the contested domain name is somewhat similar to the registered mark. Moreover, there is evidence of initial interest consumer confusion, as Complainant has offered evidence of investigators' reports indicating that consumers have contacted Respondent with the impression that he is an authorized dealer of Complainant's products rather than an independent contractor.

Thus, the panel finds confusing similarity between Respondent's domain name and Complainant's mark.

(2) No Rights or Legitimate Interests of the Respondent in Respect of the Domain Name:

Under the UDRP Paragraph 4(a)(ii) and 4(c), Complainant must demonstrate that none of the following three factors demonstrating legitimate rights or interests are present: 

i. before notice to the Respondent of the dispute, it used or prepared to use the domain name in connection with a bona fide offering of goods or services; 
ii. the Respondent has been commonly known by the domain name even if it hasn't
acquired trademark or service mark rights; or 
iii. the Respondent is making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert customers or to tarnish the trademark or service mark at issue.

As pointed out in the Complaint, there are at least five factual bases for inferring that the Respondent has no rights or legitimate interests in the domain name:

1. Respondent is using a version of Complainant's registered marks for its domain name and using Complainant's registered marks in the body of its website;
2. Respondent is using pictures that are identical to those in Complainant's sales brochures;
3. Respondent is using colors matching those used by Complainant on its products;
4. Respondent is violating the terms of his distributor agreement with Complainant, and causing other authorized distributors and/or sub-distributors to violate their contracts, by selling products outside the authorized sales network; and
5. Respondent is using the term "RAINBOWVAC" in its website metatags.

The panel notes with concern that there is some degree of initial interest confusion by the consumer regarding the source of goods sold via Respondent's website. However, Respondent alleges that Complainant was aware of Respondent's use of the domain name in 1997. Although Complainant asked Respondent to take down its web site at that time, Complainant does not appear to have asked Respondent to transfer the domain name to Respondent or to discontinue its use. Now that the relationship between the parties has terminated, Respondent's current site does not claim to be the site of an official distributor of RAINBOW products. Rather, it clearly states that it has no affiliation with Rexair. Respondent's website has been up for over two years, and the Complainant did not complain to Respondent until July of this year, when it filed the lawsuit in federal court. Moreover, at the time the Respondent registered the domain name, it was an authorized sub-distributor of products and the contract between Complainant and Respondent (entitled Undertaking by User of Rexair Trademarks) does not explicitly prohibit Respondent from using the RAINBOW trademark in an Internet domain name. 

Arguably, the domain is being used with a bona fide offering of goods now, albeit by a non-authorized distributor. See Koninklijke Philips Electronics N.V. v. Cun Siang Wang, WIPO D2000-1778 <http://arbiter.wipo.int/domains/decisions/html/2000/d2000-1778.html> (allowing Indonesian unofficial distributor who registered "philips-indonesia.com" to keep the domain name). 

Also, because the Respondent has been using the domain name for its business for over two years now without disturbance from the Complainant, it is arguable that Respondent is now known by this business name. See Draw-Tite, Inc. v. Plattsburgh Spring Inc., WIPO D2000-0017 <http://arbiter.wipo.int/domains/decisions/html/2000/d2000-0017.html> (allowing former distributor to continue using web site that distributor had been using for at least 2 years to distribute legitimate products of complainant); see also Adaptive Molecular Technologies, Inc. v. Woodward, WIPO D2000-0006 <http://arbiter.wipo.int/domains/decisions/html/2000/d2000-0006.html> (allowing reseller of genuine products to keep domain name because there were significant questions regarding complainant's acquiescence to reseller's use of domain). 

Moreover, the respondent's on-going use of Complainant's marks on the website and in the metatags may be considered to be nominative fair use under the reasoning of Volkswagenwerk Aktiengesellschaft v. Church, 161 U.S.P.Q. 769 (9th Cir. 1969). Finally, under the trademark first sale or exhaustion rule, trademark rights are "exhausted as to a given item upon the first authorized sale of that item." McCarthy on Trademarks � 25:11[1][a].

In conclusion, while this is a close case, the panel finds that Complainant has not met its burden of proof regarding this second UDRP element. The Respondent's website appears to be used for some legitimate business purpose.

(3) Respondent's Bad Faith Registration and Use:

Finally, Complainant must demonstrate bad faith registration and use. This third element can be satisfied, inter alia, by showing that the Respondent "intentionally attempted to attract, for commercial gain, Internet users to [its] website . . . by creating a likelihood of confusion." UDRP Paragraph 4(b)(iv). Thus the analysis of bad faith dovetails with the analysis above regarding legitimate rights and interest. 

It is not clear to the panel that the registration and use of the domain name is bad faith when there was nothing in contractually prohibiting Respondent from registering it in the first place. Cf. Infinity2, Inc. v. Total Health & Wellness, NAF 94867 <http://www.arbforum.com/domains/decisions/94867.htm> (bad faith and no
legitimate interest found where agreement between trademark owner and
distributor specifically prohibited distributor from using trademark as name of web site without trademark owner's permission). 

Moreover, for the reasons stated above, it appears that Respondent did not intend to create any more confusion than was necessary to bring customers to the site. After any initial confusion created by the similarity of its domain name to Complainant's registered "RAINBOW" mark, the Respondent was careful to notify consumers that he was not an authorized distributor of Complainant's products. Complainant's supplemental reply has appendices consisting of transcripts of investigators' conversations with Respondent. These transcripts make very clear that Respondent did not try to confuse consumers as to the source or origin of goods. Indeed, Respondent attempted to steer certain customers (e.g., those who desired in home demonstrations) to Complainant.

6. Conclusions

As stated above, Complainant has filed an action in federal district court in Oklahoma, alleging, inter alia, violations of the Lanham Act, breach of contract and intentional interference with contractual relations. While the court ultimately may find legal merit in these claims, our jurisdiction as an arbitral panel is limited to considering whether, under the UDRP, Respondent has a legitimate right or interest to the domain name and, if not, whether there is bad faith. In other words, we are to evaluate the actions of Respondent regarding the domain name itself, not every aspect of unfair competition that may exist between Complainant and Respondent. Moreover, Complainant's trademark rights are limited by the fair use doctrine, which allows the use of its trademarks in connection with the sale of genuine goods under certain circumstances by parties other than authorized distributors or dealer, so long as consumers are not likely to be confused.

While this is a very close case, particularly because of the evidence of initial interest confusion, Complainant has not met its burden of proof of demonstrating either of the two required elements: the absence of a legitimate right/interest or the presence of bad faith. 

The panel orders that the Complaint be rejected and the domain name registration remain with the Respondent.

7. Signatures

Dissenting Opinion of David Lametti, Panelist

1. Discussion and Findings

(1) Identity or Confusing Similarity

I agree with the majority of the Panel in finding that there is enough objective similarity to find that the domain name and the Complainant's registered marks are confusingly similar.

(2) No Rights or Legitimate Interests of the Respondent in Respect of the Domain Name

I differ with the majority of the Panel in finding that the Complainant has not shown that the Respondent has no legitimate interest in the domain name. The critical point of difference is that the UDRP, in my understanding of it, requires one to base a finding on the legitimate right or interest of the Respondent in the domain name and not merely the legitimate activity of the Respondent.

The criterion of illegitimacy - or framed in terms of the Respondent, of the determination of the Respondent's legitimate right or interest - focuses in my view on the objective or relatively objective links that the Respondent has to the domain name in question. These connections might arise either at the outset through a natural or visible connection of the Respondent's business name, trademark, bona fide offering of goods and services, or bona fide non-commercial use to the domain name. These connections might also develop over time through the nature of the Respondent's bona fide activities as they relate to the domain name. These connections might be obvious given current uses or practices in the instances just mentioned, or they might be demonstrable, as in the case of planned connections to a domain name for these various bona fide activities in the future. 

The question is whether the Respondent, on the evidence, can be shown to have no such connection to - and hence no such legitimate interest or right in - the domain name. Paragraph 4(c) of the UDRP gives three examples of circumstances where the Respondent has a legitimate interest. As stated by the majority decision, the Complainant must demonstrate that none of the following possible three factors demonstrating legitimate rights or interests in the domain name are present are present:

 i. before notice to the Respondent of the dispute, it used or prepared to use the domain name in connection with a bona fide offering of goods or services; 
ii. the Respondent has been commonly known by the domain name even if it hasn't acquired trademark or service mark rights; or 
iii. the Respondent is making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert customers or to tarnish the trademark or service mark at issue.

 In this case, the Respondent is attempting to be known by the domain name "RAINBOWVAC.COM." There has been no direct argument on this point by either side, but the Complainant in effect acknowledges that the Respondent is doing business under that name. What is being challenged is precisely the legitimacy of the use of that domain name as a business name. As such, that the Respondent is purporting to be known by a disputed domain name does not resolve the issue or in any way establish a legitimate right or interest. Moreover, it is my view that that "commonly known" implies some sort of objective connection to the domain name that is acquired over time and in a bona fide manner. To hold otherwise would render futile any attempt to challenge a domain name registration where the registrant purports to be known by the registered domain name, and would circumvent the determination of legitimate issues under the UDRP and the general goals of the UDRP.

As such, the question turns on whether there is (i) a use of the domain name with respect to a bona fide offering of goods or services or (ii) whether the Respondent is engaged in a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to divert misleadingly customers or to tarnish the trademark or service mark at issue.

At the outset, I share the majority view that the Respondent's use of the trade-marks in meta-tags may be considered to be nominative fair use; in any event the UDRP is about domain names and not meta-tags. 

Regarding the question of legitimate non-commercial or fair use, there is no question that the Respondent had set up a website and used the domain name in issue with intent of making a profit. 

It is equally clear that the Respondent has the clear intent to divert consumers to his website using a confusingly similar domain name. It seems to me that it is also not a fair use under paragraph 4(c)(iii) because the diversion to his website is being done precisely for profit with intent to mislead.

So the matter ultimately boils down boils down to whether the Respondent has used the domain name in connection with a bona fide activity, as per paragraph 4(c)(i). On its face, the Respondent has every right to sell Rainbow vacuum cleaners over the Internet, though he cannot claim to be an authorized dealer. There is no question that the Respondent's website and oral disclaimers in the phone conversations were clear and reasonably clear respectively on this point; in any event, I also share the view that Internet users and consumers are a relatively sophisticated bunch. Moreover, there is no question that the Respondent's line of business is in and of itself legitimate. However, the gist of the UDRP requires a focus on the use of the domain name itself. In this case, it is the initial diversion that is illegitimate, effectively bringing the user to a competing website in a deceptive manner. The initial diversion, using a confusingly similar domain name for economic gain, occurs at the direct expense of the Complainant. This is not a fair or bona fide use of the domain name, even if there is no continued confusion or even if the business itself is otherwise legitimate; as such, the deliberate use of the confusing domain name taints the whole activity of the Respondent, making it in bad faith. To hold otherwise would allow for the calculated and deliberate misuse or appropriation of domain names simply to get a market advantage; this is clearly contrary to the spirit of the UDRP, as demonstrated in the other criteria. If the Respondent had registered "DRESSLER'SRAINBOWVAC.COM" or "ALTERNATIVESOURCE-RAINBOWVAC.COM," or some similar domain name, I would have found for the Respondent. 

Some initial diversions using a confusing domain name might be legitimate. On my view, fan sites, information sites, etc. while initially confusing, might very well represent a legitimate right or interest in the domain name since they do not use the domain name to not compete with the trademark holder and are bona fide, legitimate activities. But cases where the initial interest confusion leads to direct competition are examples of what the UDRP is meant to prevent. Thus I am inclined to hold that the Respondent's activity as a whole is not bona fide, as I understand the terms of the UDRP, and cannot ground a legitimate interest in the domain name.

Moreover, it is implausible in these circumstances that the Respondent has gained a legitimate interest or right through acquiescence. The Complainant has shown that it asked the Respondent to take down the website in 1997. The Complainant has launched actions against the Respondent. There is also evidence that the Complainant has asked other distributors to comply with the strictures of the distribution contracts. Under these circumstances, I cannot find that there is acquiescence such that a legitimate interest has been created.

Finally, in my view, there is compelling (and uncontested) evidence that the Respondent knew, during the time he was an authorized Rexair dealer, that he was not allowed to set up a website to sell Rexair Products. The Complainant has produced evidence of the distributor agreement that specified that sales were only to take place "in home" and in a certain geographical area. [Annex 14]. This effectively precludes Internet sales. It is equally clear that the Respondent knew of and understood the Rexair policy. Dressler says as much in one of the telephone conversations with the private investigators, when discussing Rexair's "funny attitude" towards website, when he states "You can't have a website if you are a distributor." [Annex 9, p 8] Moreover, the Respondent was bound by a trade-mark licensing agreement, which prevented him from incorporating any Rexair mark into his business name [Annex 5, para 6]. Finally, the Complainant asked Dressler to take down his website in 1997. Therefore I would hold that while a distributor, the Respondent was precluded by contract from selling the Complainant's products on the Internet and registering the domain name. A breach of contract might lead to various legal consequences outside the scope of this proceeding; however, for the purposes of the UDRP, the breach at the very least amounts to an act of bad faith. It is impossible for me to find that an act in bad faith can subsequently somehow justify a legitimate interest or right. Given the breach of contract, I have trouble finding that even while an authorized Rexair distributor, the Respondent was making a bona fide offering of goods and services. His offering of goods and services was precluded by a contract that he had signed and understood, which in my view is not bona fide. The Complainant has thus shown on balance that the Respondent cannot cloak himself with the legitimate interest outlined in paragraph 4(c)(i).

I would thus conclude that the Complainant has met the requirements of UDRP paragraph 4(a)(ii), and has shown that the Respondent has no legitimate right or interest in the domain name.

(3) Respondent's Bad Faith Registration and Use

Unlike illegitimacy, the criterion of bad faith goes to the circumstances surrounding the registration or use of the domain name by the Respondent, and focuses on the Respondent's intentions, either as they are stated explicitly or as can be inferred from the Respondent's actions and the facts of the matter. A list of partial criteria is articulated at paragraph 4(b) of the UDRP, and the burden of proving bad faith falls on the Complainant.

It bears repeating that the enunciated examples of bad faith are not exhaustive. The indicia listed in paragraph 4(b) are not complete, and a clear and conscious breach of contract does qualify as registration in bad faith in my view.

As seen above, there is compelling (and uncontested) evidence that the Respondent knew, during the time he was an authorized Rexair dealer, that he was not allowed to set up a website to sell Rexair Products. The Complainant has produced evidence of the distributor agreement that specified that sales were only to take place "in home" and in a certain geographical area. [Annex 14]. This effectively precludes Internet sales. It is equally clear that the Respondent knew of and understood the Rexair policy. Dressler says as much in one of the telephone conversations with the private investigators, when discussing Rexair's "funny attitude" towards website, when he states "You can't have a website if you are a distributor." [Annex 9, p. 8] Moreover, the Respondent was bound by a trademark licensing agreement, which prevented him from incorporating any Rexair mark into his business name [Annex 5, para 6]. Finally, the Complainant asked Dressler to take down his website in 1997. Therefore I would hold that while a distributor, the Respondent was precluded by contract from selling the Complainant's products on the Internet and registering the domain name. A breach of contract might lead to various legal consequences outside the scope of this proceeding; however, for the purposes of the UDRP, the breach at the very least amounts to an act of bad faith at the time of registration.

Moreover, if I am wrong on bad faith registration, I am of the view that the Respondent's continued use of the domain name after the termination of his distribution rights with Rexair is a bad faith attempt to divert traffic to a competing site. Numerous UDRP cases have held that mere registration without use is sufficient for the purposes of paragraph 4(b). If the "and" in "registration and use" is thus disjunctive, it ought to be equally true as a practical possibility that use itself might be indicative of bad faith, even where registration might have initially been done in good faith.

In this case, the only possible way for the Respondent to claim both good faith registration and a legitimate interest is to point to his status as a registered dealer at the time of registration in order to claim some sort of implied license to use the domain name. If accepted as true, it is then logically flawed to maintain that the good faith (or legitimate interest) continues after the implied license has clearly been revoked or otherwise terminated. In my view, these facts advanced by the Complainant bring the case squarely within the ambit of bad faith, and the reasons stated in the supporting decision cited by the majority of the Panel: Infinity2, Inc. v. Total Health & Wellness, NAF 94867 (bad faith and no legitimate interest were found where agreement between trademark owner and distributor specifically prohibited distributor from using trademark as name of web site without trademark owner's permission). 

I would thus conclude that the Complainant has met the criterion of UDRP paragraph 4(b) and thus the requirements of UDRP paragraph 4(a)(iii). Both the Respondent's registration and use of "RAINBOWVAC.COM" was done in bad faith.

2. Conclusions

I would conclude:

1. That the domain name "RAINBOWVAC.COM" is identical or confusingly similar to a trademark or service mark in which the Complainant has rights;
2. That the Respondent has no rights or legitimate interests in the domain name; and
3. That the Respondent has registered and used the domain name in bad faith.

Therefore, pursuant to paragraphs 4(i) of the UDRP and the section 15 of the Rules, I would have ordered that the domain name "RAINBOWVAC.COM" be transferred to the Complainant.

3. Signature