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March 18, 2017 / Robert Lichter

The Candy Man Can’t

Summary of Clasen Quality Chocolate, Inc. v. Earthlink, Inc.
(WIPO Case No. D2017-0129)
Filed: January 23, 2017; Decided: March 1, 2017 (Panelist: Robert A. Badgley)
Disputed domain name: <cqc.com>

Summary

A network service provider became the owner of the domain <cqc.com> through a business acquisition.  After a confectionery product and chocolate manufacturer, which uses the mark CQC, unsuccessfully attempted to negotiate for the purchase of the domain from the network service provider, the manufacturer filed an unsuccessful complaint to transfer the domain.

The Parties

The Complainant is Clasen Quality Chocolate, Inc. of Madison, Wisconsin, USA.  The Complainant manufactures and sells confectionery coating products and chocolate products under the trademark CQC (registered in the U.S. on December 27, 2016) on its domain <clasen.us>.  (From http://www.clasen.us: “In 1959, recent German immigrants the Clasen brothers opened a European bakery in Madison, Wisconsin and marketed on a small scale to friends and local neighbors.  The business expanded and became the Clasen Candy Company in 1966.  Four years later, the brothers began to produce and market their own confectioner’s coating and changed the name to Clasen Quality Coatings, Inc. to reflect the company’s new focus.  In 1998, Ralph Clasen sold the company to a private entrepreneur and current owner with the intent of maintaining the philosophy and tradition that made Clasen successful. Since this transfer of ownership, CQC has transitioned from a small, regional compound coating manufacturer to a major supplier of both standard and customized formulations and value-added, confectionery ingredients across North America.”)

The Respondent is Earthlink, Inc. of Atlanta, Georgia, USA, a network services provider that acquired the domain <cqc.com> through an asset purchase.  The domain name <cqc.com> was first registered in 1997 by ComQuest, whose operations were taken over in 2003 by LINC Internet holdings, Inc., which then sold part of its internet service provider business to the Respondent in 2008.  According to the Respondent, none of the Respondent’s customers used <cqc.com> in 2016 when the Complainant approached the Respondent in 2016 to purchase the domain.

Negotiations between the Complainant and Respondent did not materialize into a sale of the domain.  Although the Respondent told the Complainant that the Respondent had never sold a domain for less than $100,000, the Respondent stated that it was “willing to consider any reasonable offer.”  In response, the Complainant appears to have suggested it would offer around $10,000.  A few months later, the Complainant emailed the Respondent, alleging that the Respondent “indicated that it would not sell the domain name for less than $100,000,” and threatening to file a complaint with the WIPO Arbitration and Mediation Center unless the Respondent sold the domain for $1,500.  (What happened to an offer around $10,000?)  A few weeks later, the Respondent emailed the Complainant that the Respondent’s use of the domain does not amount to trademark infringement, and that the domain was not acquired in bad faith by the Respondent.  The Respondent reiterated, “we are willing to consider a reasonable offer for the domain name.”

The Complainant requests transfer of the domain; the Respondent asks the Panel to find reverse domain name hijacking.  The Respondent states that it has not used the domain in a way that would infringe Complainant’s trademark rights for chocolates and confectionery products.  Noting that Complainant had no registered trademark until 2016, and that the Complainant is not one of the top internet search results of the many companies that market goods or services under a CQC mark, the Respondent denies that it was aware of the Complainant when the Respondent acquired the domain.

Identical or Confusingly Similar

The domain name is identical to the Complainant’s registered trademark.

Rights or Legitimate Interests

Citing the analysis under the bad faith prong (below), the Panelist declined to address the rights or legitimate interests.

Registered and Used in Bad Faith

The Panelist finds no evidence that the Respondent “was aware of and targeted Complainant’s CQC mark when it acquired the Domain Name in 2008.”  The Panelist continues, “As Respondent notes, numerous entities use the CQC mark to identify and distinguish their goods and services, and Complainant has done nothing to demonstrate that Respondent could have been aware of, let alone targeting the then unregistered CQC mark when acquiring the Domain Name – along with a number of other domain names – as part of a business acquisition in 2008.”

There is no finding of registration or use in bad faith.

Reverse Domain Name Hijacking

The Panelist believes “this Complaint should not have been brought, at least not without evidence to suggest even the inference that Complainant had any reason to know about the common law trademark rights of a chocolate maker halfway across the United States when it acquired the Domain Name.”  According to the Panelist, the Complainant “mischaracterized” the correspondence from the Respondent by “wrongly assert[ing] that Respondent refused to accept an offer less than USD 100,000.  That assertion is at odds with Respondent’s actual statements, as well as the repeated comment that Respondent was willing to entertain a reasonable offer.”

Nevertheless, the Panelist declined to find reverse domain name hijacking “because this Complaint appears, on balance, to be more misconceived than malicious in nature.”

Decision

The Panelist denies the complaint, and declines to find reverse domain name hijacking.

Commentary

If the evidence regarding the Respondent’s willingness to consider reasonable offers is accurate, this complaint seems to have been filed prematurely.  The Respondent presented evidence of other entities that use the CQC mark, asserting “that a Google search of ‘CQC’ does not yield a single reference to Complainant for the first ten pages of results.” Presumably, at least one other CQC entity may now or at some point in time be interested in using the domain <cqc.com>.  Why should this CQC mark owner get to name the price for this domain rather than negotiate with the current Registrant?

Under the UDRP Rules, reverse domain name hijacking is “using the UDRP in bad faith to attempt to deprive a registered domain-name holder of a domain name.”  Generally, an unsuccessful complaint alone is insufficient to amount to reverse domain name hijacking.  This Panelist “refrain[s] from finding Reverse Domain Name Hijacking in this instance because this Complaint appears, on balance, to be more misconceived than malicious in nature.”  While the Panelist does not do a clear balancing, factors on the “misconceived” side could be the Complainant’s overestimation of its fame and the Complainant’s misunderstanding of the $100,000 sales figure — it appears that the Respondent was merely posturing when citing a $100,000 minimum price for other domains it sold.  On the “malicious” side might be the Complainant’s negotiation tactics.  While the Respondent may have been open to drawn out negotiations, the Complainant appeared to be proceeding with more urgency, making a take-it-or-leave-it offer of: transfer your domain name for $1,500 or we’ll file a UDRP complaint.

Side note from Nathan Harris: This is another instance in which Panelist Badgely relies on a “more misconceived than malicious” standard.  (Reread “Band derailed in bid to recover domains from its former manager,” by Nathan Harris.)

 

 

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