Nominet UK Dispute Resolution Service

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URL: http://www.bailii.org/uk/cases/DRS/2004/1380.html
Cite as: [2004] DRS 1380

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DECISION OF INDEPENDENT EXPERT

Nominet Dispute Resolution Service

DRS 01380

Roxio, Inc -v- The Treasury Solicitor

Domain Name napster.co.uk

1. The Parties

The Complainant

1.1 The Complainant is Roxio.

The Respondent

1.2 The Respondent is The Treasury Solicitor.

2. The Domain Name

2.1 The domain name in dispute is napster.co.uk ("the Domain Name").

3. Procedural Background

3.1 This Complaint falls to be determined under the Nominet UK Dispute Resolution Service Procedure ("the Procedure") and the Nominet UK Dispute Resolution Service Policy ("the Policy").

3.2 The Complaint entered Nominet's system on 10th November 2003 and was validated and sent to the Respondent on 12th November. The Respondent replied by a letter dated 1st December 2003, which Nominet treated as a Response under the Procedure and Policy. The Complainant replied by a letter dated 4th December 2003 which Nominet treated as a Reply. Mediation not being possible and the Complainant having paid the relevant fee, the Complaint was referred to me on 19th December 2003 for a Decision. On 22nd December 2003, I confirmed that I was not aware of any reason why I could not act as Independent Expert in this case nor of any matters which ought to be drawn to the attention of the parties which might appear to call my independence or impartiality into question.

4. Outstanding Formal/Procedural Issues

4.1 In this case, the Domain Name passed to the Crown as bona vacantia upon the dissolution on 1st April 2003 of the previous registrant, Napster Limited. In response to the commencement of these proceedings, the Respondent served a notice under section 656 of the Companies Act 1985, disclaiming the Crown's title (if any) in the Domain Name. The implications of that action are considered below.

5. The Facts

5.1 The facts as set out below are not contested.

5.2 A software application named Napster ("the Software") was launched by an individual named Shawn Fleming in May 1999. The Software enabled internet users to share music files and soon gained popularity worldwide. At the height of its popularity, in early 2000, it was used by an estimated 60 million individuals.

5.3 A company, Napster, Inc, was incorporated in May 1999 to exploit the Software. However, in response to numerous copyright infringement claims against the company, the Software was taken off line in December 2001. Napster, Inc filed for bankruptcy in June 2002.

5.4 In November 2002, the Complainant acquired the assets of Napster, Inc, including all of its intellectual property rights. Those rights included such international reputation and goodwill as was associated with the name Napster and numerous trade mark registrations. The trade mark Napster is registered in over 30 countries for a variety of goods and services, the majority of the registrations having been made in 2000.

5.5 In June 2003, the Complainant acquired a company which is now named Napster LLC. The Complainant is in the process of assigning all relevant trade marks to Napster LLC and it relaunched the Napster service through that entity in October 2003.

5.6 The Domain Name was registered by Napster Limited in August 1999. Napster Limited was a company registered in England & Wales with a registered office in Barnard Castle, County Durham. It was incorporated in October 2000, and its apparent registration of the Domain Name some 14 months earlier is unexplained. One of its directors was Mr John Rackham. Napster Limited was unconnected with Mr Fleming or Napster, Inc. It used the Domain Name to advertise and link to a website at URL www.guitarmogul.co.uk, offering guitars for sale. The "guitarmogul" business was connected with Napster Limited and/or Mr Rackham.

5.7 The Complainant was in contact with Mr Rackham in July and August 2003. The Complainant alleged that the Domain Name was being used abusively and sought a transfer. This was initially refused on the grounds that the Domain Name was "a useful advertising tool". However, on 14th August 2003 Mr Rackham wrote to the Complainant's solicitors, Wragge & Co, on Napster Limited company letter paper, agreeing to transfer the Domain Name. At this point, however, it became apparent that Napster Limited had been dissolved on 1st April 2003 and that the ownership of the Domain Name had passed to the Crown as bona vacantia.

5.8 The Respondent is the nominee of the Crown for dealing with assets which vest in the Crown as bona vacantia. It is the Complainant's evidence, which is not challenged by the Respondent, that the following dealings with the Respondent took place:

5.8.1 Wragge & Co telephoned the Respondent (the date of this conversation has not been provided) and spoke to a Mr Knight. Mr Knight stated that domain names that passed as bona vacantia were usually auctioned by the Treasury Solicitor, but if details were provided why the registration was claimed to be abusive, the matter would be given further consideration.

5.8.2 Wragge & Co wrote to the Respondent on 18th August 2003, providing evidence of its rights, reciting the history of the matter and enclosing copy documentation.

5.8.3 On 29th August 2003, Wragge & Co telephoned the Respondent and asked to speak to the allocated case manager, Mr Hill. He was unavailable, but Wragge & Co were put through to his supervisor, Mrs Sims. She stated that Mr Hill was of the view that the Domain Name should be transferred to the Complainant, but she disagreed, believing the case was not sufficiently exceptional to depart from the usual procedure of auctioning the name. The matter would therefore be reviewed by the head of department, Mr Davies.

5.8.4 On 12th September 2003, the Respondent wrote to Wragge & Co, stating:

"Where it is alleged that a bona vacantia domain name is an abusive registration, the Treasury Solicitor considers the most appropriate way for the matter to be resolved is for the complainant to refer the matter to the Nominet UK Dispute Resolution Service."

5.8.5 Wragge & Co telephoned Mr Hill on 25th September 2003 and informed him that the Complainant would, in the circumstances, initiate the present proceedings. Mr Hill confirmed that the Domain Name would not be auctioned pending the filing of the Complaint. On the same day The Respondent wrote to Wragge & Co stating:

"... I am writing to confirm that the Treasury Solicitor will not place the domain name for auction on our website if you refer the matter to the Nominet UK Dispute Resolution Service by 25th October 2003."

5.9 The Complainant duly commenced the present proceedings, the above time limit having been extended by agreement. The Respondent's response, however, was to serve the notice of disclaimer of the Domain Name referred to above. The notice itself was dated 28th November 2003.

6. The Parties' Contentions

The Complainant

6.1 The Complainant makes the following submissions:

Rights

6.2 By virtue of the matters set out in paragraphs 5.2 to 5.5 above, it has both common law and registered trade mark rights in the name or mark Napster.

6.3 The name or mark Napster is identical to the Domain Name (ignoring the formal suffix).

Abusive Registration

6.4 Napster Limited and its director Mr Rackham had no right or licence to use the Complainant's name or mark. Their use of the Domain Name to connect to a website advertising guitars for sale constituted an impersonation of the Complainant which was intended to mislead internet traffic. The website made no reference to the name Napster nor referred to any legitimate products or services supplied by Napster Limited. There mere incorporation of a company under that name was not sufficient to give rise to a legitimate interest in the Napster name or mark.

6.5 Although the Domain Name passed to the Respondent on 1st April 2003, the title acquired by the Treasury Solicitor can only be as good as the title which it acquired from the dissolved company. Were this not the case, a party who wished to disrupt the business of another could simply register an abusive domain name in the company name and then dissolve the company. This would drive a coach and horses through the Nominet Dispute Resolution Service ("DRS").

6.6 Although it is not suggested that this was the Respondent's intention, the Domain Name continued to be used in the abusive manner referred to above after its acquisition by the Respondent. It was still being used in this way on 25th July 2003.

6.7 The Respondent confirmed that, if this Complaint was not successful, it would auction the Domain Name on its website. The minimum sum payable for a domain name in these circumstances is £500. This would represent pure profit. It is in excess of the Respondent's documented out-of-pocket expenses, since an additional payment of £250 is required for the Respondent's costs. The Respondent intended to profit from the sale of the Domain Name, which would be valuable only by virtue of the goodwill in the name, which is rightfully the Complainant's.

6.8 The validity of the Respondent's notice of disclaimer is disputed. Under section 656(2) of the Companies Act 1985, the Crown's right to disclaim may be waived by taking possession of property or by an act evincing the intention to take possession of property. Here, the confirmation by the Treasury Solicitor that the Domain Name would be sold at auction unless transferred under the DRS, constituted an act of waiver.

6.9 The actions of the Treasury Solicitor in serving notice of disclaimer after the commencement of the Complaint places the Complainant in a difficult position. If the Complaint cannot succeed by virtue of the disclaimer, the Domain Name will be generally released for registration and may then be abused by another party.

Remedy

6.10 The Complainant seeks a transfer of the Domain Name.

The Respondent

6.11 Beyond serving the notice of disclaimer, the Respondent has made no response or other representations in these proceedings.

7. Discussion and Findings

7.1 Under paragraph 2 of the Policy:

"(a) A Respondent must submit to proceedings under the Dispute Resolution Service if a Complainant asserts to [Nominet], according to the Procedure, that:

(i) the Complainant has Rights in respect of a name or mark which is identical or similar to the Domain Name; and

(ii) the Domain Name, in the hands of the Respondent, is an Abusive Registration.

(b) The Complainant is required to prove to the Expert that both elements are present on the balance of probabilities."

7.2 Under paragraph 1 of the Policy the term "Rights":

"includes, but is not limited to, rights enforceable under English law. However, a Complainant will be unable to rely on rights in a name or term which is wholly descriptive of the Complainant's business".

7.3 The term "Abusive Registration" is defined in paragraph 1 of the Policy as referring to a Domain Name which either:

"(i) was registered or otherwise acquired in a manner which, at the time when the registration or acquisition took place, took unfair advantage of or was unfairly detrimental to the Complainant's Rights; or

(ii) has been used in a manner which took unfair advantage of or was unfairly detrimental to the Complainant's Rights."

7.4 Paragraph 3 of the Policy sets out a non-exhaustive list of factors that may be evidence that a Domain Name is an Abusive Registration. Paragraph 4 sets out a non-exhaustive list of factors that may be evidence that it is not. However, all these factors are merely indicative of, and subject to, the overriding test of an Abusive Registration as set out above.

7.5 In this case, by virtue of the facts set out in paragraphs 5.2 to 5.5 above, the Complainant has clearly established that it has both registered and common law rights in the name and mark Napster. That name and mark is plainly identical to the Domain Name (but for the formal suffix). The Complainant has therefore made out the first limb of the test under paragraph 2 of the Policy.

7.6 However, the Complainant must also show that the Domain Name is an abusive registration "in the hands of the Respondent". The immediate question, therefore, is whether or not the Domain Name is in the hands of the Respondent. The Respondent would argue not, since it has given notice of disclaimer under section 656 of the Companies Act, 1985. Section 657(1) of the Act provides that:

"Where notice of disclaimer is executed under section 656 as respects any property, that property is deemed not to have vested in the Crown under section 654."

7.7 In this case, however, the Complainant relies on section 656(2) of the Act, which states:

"The right to execute a notice of disclaimer under this section may be waived by or on behalf of the Crown either expressly or by taking possession or other act evincing that intention."

7.8 The Complainant submits that the Respondent did evince an intention to take possession of the Domain Name, by virtue of its conduct between August and October 2003. I agree with that submission. On the evidence, it was made clear by the Respondent that unless the Complainant (i) commenced proceedings under the DRS by a particular date, and (ii) succeeded in those proceedings, the Respondent would sell the Domain Name by auction. I am unable to see how the Respondent could have made these assertions without having taken, or at least evincing an intention to take, possession of the Domain Name. Therefore, I find that the Domain Name remains in the hands of the Respondent for the purposes of this Complaint.

7.9 The next question is whether the Domain Name, in the hands of the Respondent, is an Abusive Registration.

7.10 The Complainant's first submission in this regard is that the registration in the hands of Napster Limited was plainly abusive, and that the title acquired by the Respondent can only be as good as the title which it acquired from the dissolved company.

7.11 The Domain Name is identical to the Complainant's well-known and distinctive name and mark Napster and there is no evidence that Napster Limited had any rights to use the name and mark. I therefore agree that Napster Limited's use of the Domain Name to advertise and link to the "guitarmogul" website was abusive. It represented an impersonation of the Complainant, which was calculated to divert internet traffic intended for the Complainant to a commercial website connected with Napster Limited.

7.12 I am unable to accept, however, that if one owner of a domain name uses it abusively it is automatically an abusive registration in the hands of a subsequent owner. The Complainant's reference to "title" is misconceived, as the Policy is not concerned with the property rights in a domain name, but rather with the manner of its use in the hands of the party complained against. It is perfectly possible for a domain name to be used abusively by one party, against whom a complainant would succeed, but non-abusively by a subsequent owner, against whom a complainant would not succeed.

7.13 The Complainant's next contention is that, although it was not the Respondent's intention, the Domain Name continued to be used in the abusive fashion described above after it passed into the Respondent's hands.

7.14 In considering the relevance of intention, it is appropriate to look at the wording of paragraph 3 of the Policy. A number of the factors listed in paragraph 3 require an element of intention on the part of the respondent, referring as they do to the respondent's "purpose". However, the factor described in sub-paragraph 3(a)(ii) does not depend upon purpose, and relates to:

"Circumstances indicating that the Respondent is using the Domain Name in a way which has confused people or businesses into believing that the Domain Name is registered to, operated or authorised by, or otherwise connected to the Complainant."

7.15 In my view, this sub-paragraph is directed to the objective question of the existence of confusion, rather than the subjective question of the respondent's purpose. The use of the Domain Name to link to the "guitarmogul" website clearly gave rise to "initial interest confusion", because internet users would be likely to access it in the expectation of accessing a website which belonged to, or was connected with, the Complainant. That confusion was unfairly detrimental to the Complainant.

7.16 However, the sub-paragraph quoted above refers to the manner in which the Respondent "is using" the Domain Name. In this case, although the relevant use of the Domain Name continued for almost four months after the date of its acquisition by the Respondent, there is no evidence that it was continuing at the date of the Complaint, or that it is current now. Further, there is no suggestion that the Respondent intends to use the Domain Name in this manner in future. Therefore, I do not consider that the Complainant can succeed on this ground.

7.17 The Complainant also relies on the Respondent's intention to sell the Domain Name by auction, for a minimum sum of £500 plus £250 for costs. It relies on sub-paragraph 3(a)(i)(A) of the Policy, which relates to:

"Circumstances indicating that the Respondent has registered or otherwise acquired the Domain Name... primarily for the purpose of selling, renting or otherwise transferring the Domain Name to the Complainant or to a competitor of the Complainant, for valuable consideration in excess of the Respondent's documented out-of-pocket costs directly associated with acquiring or using the Domain Name".

7.18 The Respondent's use of the Domain Name does not fall directly within this provision. Clearly, the Respondent did intend to sell the Domain Name, by auction, for a sum in excess of its costs. However, sub-paragraph 3(a)(i)(A), refers specifically to a sale to "the Complainant or a competitor of the Complainant". In my view, this provision is directed more to the mischief of "cybersquatting", namely, a domain name being held hostage by a respondent in the hope that its legitimate claimant will pay a substantial sum to obtain it, or to prevent it from falling into the hands of a competitor. That was clearly not the Respondent's intention in this case. The Respondent's intention was to sell the Domain Name in the open market for the best price available.

7.19 However, it does not follow that the open market sale contemplated by the Respondent is automatically not abusive. Each case must depend on its own facts. As I have observed above, this case concerns a domain name that is identical to the unadorned, distinctive and well-known name and mark of the Complainant. There is no evidence that any party other than the Complainant is entitled to use the name or mark. In those circumstances, it is difficult to see that any party other than the Complainant could realistically make use of the mark without such use amounting to passing off, or at least an impersonation of the Complainant.

7.20 It is clear that the Respondent is under a duty to dispose of the assets that it acquires as bona vacantia and to maximise its revenue from such disposals. However, as the Respondent confirms on its website, it conducts these functions "within legislative and other legal constraints" and "in a business-like manner consistent with the public interest". In circumstances where the Complainant is the only party likely to be able to make lawful use of the Domain Name, I do not consider that the Respondent's open sale of the Domain Name, to the highest bidder, could be consistent with this policy. On the specific facts of this case, therefore, I consider the threatened offer for sale by auction to have been abusive. I also accept the Complainant's submission that the value inherent in the Domain Name results from the reputation and goodwill that that is rightfully the Complainant's, not that of the dissolved company, Napster Limited.

7.21 The Respondent informed the Complainant that it would not place the Domain Name on its auction site providing the Complainant instituted a complaint under the Policy within a given time. However, I do not believe that requiring the Complainant to go to the expense of filing a complaint under the Policy, under threat that the Domain Name will be openly sold if it does not, is curative of the matters referred to above. Further, this position appears to assume that only the use of the Domain Name prior to its acquisition by the Respondent will be considered. That is not, of course, the case, as the Policy requires consideration of the use of the Domain Name "in the hands of the Respondent". Nor would disclaimer improve the position, because the dissolved company has ceased to exist and there would consequently be no Respondent.

7.22 The Complainant has also highlighted the Respondent's actions in requiring it to commence a complaint under the DRS, but then disclaiming the Domain Name in an apparent attempt to avoid those proceedings. The Respondent has not explained its actions in this regard. In the absence of any explanation, these actions do not support a conclusion that the Respondent dealt equitably with the Domain Name.

7.23 For the above reasons, I consider that the Domain Name was an abusive registration in the hands of the Respondent. The Complainant has therefore made out the second limb of the test under paragraph 2 of the policy.

8. Decision

8.1 The Complainant has demonstrated on the balance of probabilities (i) that it has Rights in respect of a name or mark which is identical or similar to the Domain Name and (ii) that the Domain Name, in the hands of the Respondent, is an abusive registration. I therefore direct that the Domain Name be transferred to the Complainant.

______________________

Steven A. Maier
12th January 2004