WIPO Arbitration and Mediation Center

ARBITRATION AWARD

General Cardiac Technologie Inc. v. Exim Holland B.V.

Case No. WIPO2007NL3

In an arbitration
under the Regulations on
.nl Domain Names
between:

General Cardiac Technologie Inc.
147 S. River Street nr. 232
Santa Cruz, CA 98060
United States of America

(Plaintiff)

and

Exim Holland B.V.
Amersfoortsestraat 70 D
3769 AL Soesterberg
The Netherlands

(Defendant)

Arbitration Tribunal:

Mr H.W. Wefers Bettink
Amsterdam

This arbitration award is rendered by me as arbitrator under the Regulations for Arbitration on .nl Domain Names (“the Regulations”) of the Stichting Internet Domeinregistratie Nederland (“SIDN”) , in a dispute between General Cardiac Technologie Inc. (Plaintiff) and Exim Holland B.V. (Defendant) concerning the domain name <hearthugger.nl>.

1. The Parties

Plaintiff, General Cardiac Technologie Inc., is a company incorporated under the laws of the United States of America, with its registered office in Santa Cruz, California, the Unites States of America. Plaintiff is represented by Ms. S. Schalkwijk and Mr. W. Pors, of Bird & Bird in The Hague, The Netherlands.

Defendant, Exim Holland B.V., is a company incorporated under the laws of The Netherlands, with its registered office in Soesterberg, The Netherlands. Defendant is represented by Mr. W. Hoorneman of CMS Derks Star Busmann in Utrecht, The Netherlands.

2. The Domain Name and Participant

The domain name in dispute is <hearthugger.nl> (the “Domain Name”). The participant is Isconnected B.V. with its registered office in Houten, The Netherlands.

3. Procedural History

The Complaint was received by the WIPO Arbitration and Mediation Center (the “Center”) by e-mail on March 2, 2007, and in hardcopy on March 12, 2007. On March 9, 2007, the Center verified that the Complaint met the formal requirements of article 7 of the Regulations. The Tribunal agrees with the Center’s assessment that the Complaint is in compliance with the formal requirements. The Complaint was notified on March 15, 2007 in accordance with the Regulations, articles 5.5 and 7.1.

The Statement of Defence was submitted by Defendant on April 4, 2007, by e-mail.

In accordance with article 10.11 of the Regulations, the Center appointed Wolter Wefers Bettink as sole Arbitrator on April 25, 2007.

On May 4, 2007, Plaintiff filed a supplemental filing. On May 7, 2007, the Tribunal accepted the supplemental filing. On May 30, 2007, Defendant filed a response to Plaintiff’s supplemental filing. On June 5, 2007, the Tribunal rendered a Procedural Order allowing Defendant to re-file its Defence since the original Defence did not meet the requirements of article 9 sub 8 of the Regulations. On June 7, 2007, Defendant filed its amended Defence.

The Tribunal finds that it was properly constituted. The Tribunal has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with article 10.9 of the Regulations.

4. Factual Background

Plaintiff is owner of the following Benelux trademarks (“the Benelux Trademarks”):

- HEART HUGGER, registered on December 29, 2006 for goods in classes 5 (pharmaceutical, veterinary and sanitary preparations, etc) and 10 (medical instruments, etc.) and for services in class 42 (scientific research for medical purposes, etc.)

- HEART HUGGER (device), registered on December 29, 2006 for the same goods and services as mentioned above.

Defendant has filed an opposition against the abovementioned registrations.

Defendant is owner of the Community Trademark HEART HUGGER, which was filed on August 27, 2003 and registered on May 19, 2005 for goods in classes 10 (medical instruments, etc) and services in the classes 35 (advertising, public relations, import and export and trading in medical articles, etc), hereinafter referred to as the “Community Trademark”.

The Domain Name was first registered on August 21, 2000.

Defendant is a former (exclusive) distributor of the Plaintiff’s Heart Hugger product in Europe.

5. The Contentions of the Parties

A. Plaintiff

Plaintiff is an American company which, amongst others, has developed and manufactured a chest band that is used by patients during recovery from open heart surgery. This chest band has been on the market for more than 20 years and is marketed and sold under the name Heart Hugger.

Plaintiff relies on its rights in the Benelux Trademarks. Plaintiff contends, in summary, that Defendant, by registering and using the Domain Name <hearthugger.nl>, infringes its trademark rights under articles 2.20 (1) sub a, b and d of the Benelux Intellectual Property Treaty (“BIPT”). Plaintiff states that Defendant is a former distributor of Plaintiff, but that – since this relationship has been terminated – Defendant is no longer entitled to use the trademark HEART HUGGER.

Plaintiff furthermore contends that, although Defendant has in the past proposed to register the Community Trademark and the Domain Name, Plaintiff has not given any verbal or written authorization for the registration of the Community Trademark and the Domain Name. As soon as Plaintiff became aware that Defendant had registered the Community Trademark in its own name, it initiated action against Defendant. According to Plaintiff, Defendant abused its position by registering the Domain Name and the Community Trademark. This makes for registration in bad faith.

According to Plaintiff, Defendant registered the Domain Name in bad faith since it has the intention to market a newer version of the Heart Hugger independent from Plaintiff, making Defendant a direct competitor of Plaintiff.

In addition, the bad faith registration of the Community Trademark is underlined by the fact that it was registered for the same goods and services for which Plaintiff uses the name Heart Hugger. Plaintiff is of the opinion that Defendant’s Community Trademark registration is null and void, and will, if Defendant does not cancel its registration, initiate a claim for nullity at the Office of the Harmonization of the Internal Market.

Plaintiff therefore requests the Tribunal to find that:

- Plaintiff shall become the holder of the Domain Name instead of Defendant and that the award shall replace the form required by SIDN for the Change of Domain Name Holder, or alternatively, that the Domain Name is cancelled;

- Defendant shall be prohibited from registering domain names similar to the Domain Name in the future, liable to a penalty of € 5000,--;

- Defendant shall pay the costs of the procedure, including Plaintiff’s cost of legal assistance which at the time of filing the Complaint amount approximately

€ 2500,--; and

- the award, in accordance with Article 23.5 of the Regulations, shall be declared enforceable regardless of whether an appeal against the award is lodged.

B. Defendant

Defendant declares that it has been marketing the Heart Hugger in Europe since 1994 with Plaintiff’s consent, first as a distributor and later Defendant threw its own production of the Heart Hugger on the basis of a patent license agreement.

In defence of its registration of the Domain Name, Defendant states that it registered the Domain Name since Defendant would cover the European market with the Heart Hugger. Since Defendant still markets the Heart Hugger, it has an interest in the Domain Name.

As for the consent to register the Domain Name, Defendant primarily states that it is questionable whether Plaintiff’s consent was required, since Defendant independently produced, marketed and sold the Heart Hugger on the European market through a patent license obtained from Plaintiff. Secondly, Defendant states that it obtained Plaintiff’s verbal consent for the registration of the Domain Name. In addition, Defendant obtained Plaintiff’s implicit consent for the use of the Domain Name since the website “www.hearthugger.nl” and Plaintiff’s website “ www.hearthugger.com” have been reciprocally linked for some time. Moreover, Defendant states that the Domain Name has been registered for seven years, during which period Plaintiff never raised an objection against the registration.

Defendant states that – if Plaintiff can rely on its Benelux Trademarks – it can only base its claim on article 2.20 (1) sub d BIPT, since the domain name <hearthugger.nl> is used by Defendant as a trade name. Defendant’s use of the word Heart Hugger does not constitute trademark infringement since Defendant has a valid reason for this use, namely the fact that it holds an older right.

In defence of its registration of the Community Trademark, Defendant submits several copies of emails. In an email of October 27, 2003, Defendant informed Plaintiff that, since the patent protection of the Heart Hugger would lapse in September 2006, it had instructed a trademark agent to register the Community Trademark in Europe and advised Plaintiff to do the same in the United States of America. Another email shows that on October 5, 2005, Defendant confirmed to Plaintiff that the Community Trademark HEARTHUGGER had been registered. Defendant states that the registration of the Community Trademark was preceded by verbal contact with and consent from Plaintiff. In addition, Plaintiff’s two years’ silence after the registration of the Community Trademark can, according to Defendant, be deemed to constitute consent on the part of Plaintiff as well. Since Defendant owns a valid Community Trademark which is older than Plaintiff’s Benelux Trademarks, Defendant has instituted opposition against the registration of the Benelux Trademarks

Defendant contends that the assessment of the registration of the Community Trademark should be based on article 51(1)(b) Community Trademark Regulation (“CTR”), which does not correspond with the definition of bad faith provided in article 2.4 (f) of the Benelux Intellectual Property Treaty (“BIPT”). According to Defendant bad faith under article 51 (1)(b) means “dishonest intentions”. Defendant claims that it never had any dishonest intentions when registering the Community Trademark.

Defendant furthermore states that it has consistently operated for own account and risk in Europe and that from the beginning there was a territorial division, with Plaintiff serving the American market and Defendant the European Market.

6. Discussion and Findings

Jurisdiction and Applicable Law

The Domain Name registration was transferred to another participant on January 13, 2006. Pursuant to article 21.2 of the Registration Rules of SIDN, Defendant thereby submitted itself to these arbitration proceedings. SIDN has submitted records confirming the applicability of these arbitration proceedings to the Domain Name. Plaintiff’s submission of the Complaint thus constitutes an arbitration agreement between the parties.

This arbitration agreement cannot be deemed to lead to the determination of legal consequences which are not at the free disposal of the parties in the sense of article 1020.3 Dutch Code of Civil Procedure and therefore forms a valid basis for this arbitration. Considering this, as well as the legal basis of the Complaint under inter alia Benelux trademark law, the Tribunal has jurisdiction to render an arbitration award under article 11.2 Regulations.

Language and Place of the Proceedings

In accordance with article 17.1 of the Regulations the language of the proceedings is English. In accordance with article 17.4 Regulations the place of arbitration is Amsterdam, the Netherlands. The domicile of the Tribunal is Amsterdam, the Netherlands.

Substantive Discussion regarding the Dispute

Trademark Law

According to article 2 of the Regulations, the Tribunal shall decide whether the Domain Name, by registration and/or use, infringes Plaintiff’s Benelux and/or Dutch trade name rights.

Article 2.20 (1) of the BTIP contains the conditions for enforcement of a Benelux trademark right. As Defendant uses the Domain Name for a website containing information on and instructions to use the Heart Hugger product, the Domain Name is used for other purposes than to distinguish goods or services. This implies that article 2.20 (1) sub d BTIP applies, which provides that a trademark owner may oppose the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark.

Plaintiff has shown that it has registered the Benelux Trademarks. However,

Defendant submits it has lodged an opposition against this registration, which opposition is currently pending. This opposition is based on Defendant’s identical Community Trademark, which is older than the Benelux Trademarks and has been registered for identical goods. Such opposition will, under normal circumstances, be successful, unless the Community Trademark is invalid or subject to cancellation.

Indeed, Plaintiff submits that the Community Trademark was registered in bad faith, as set out in article 51 (1) sub b of the Community Trademark Regulation (CTR), and is therefore subject to cancellation.

Although Plaintiff apparently has not instituted an action against Defendant on this basis, it has requested Defendant to voluntary cancel the Community Trademark, alleging that the registration was made in bad faith. Defendant has declined to make such a voluntary cancellation. Therefore, the Tribunal will have to form a preliminary opinion of the validity of Plaintiff’s argument that the Community Trademark was registered in bad faith.

Defendant has not contested that Plaintiff has used the trademark HEART HUGGER in the United States of America for more than twenty years. As the United States of America do not have a first to file system of trademark rights – which would imply that a trademark right can only be obtained through registration – and recognize that trademark rights may be obtained through the use of a trademark, it may be assumed (and has not been contested by Defendant) that Plaintiff has obtained unregistered rights to the trademark HEART HUGGER in the United States of America. Such trademark rights not only apply to the word mark HEART HUGGER, but also to the device HEART HUGGER, which until recently was used by Defendant on its website.

Defendant has also not contested that when it concluded a distribution agreement with Plaintiff in 1994, Defendant was aware of these trademark rights or, in any case, of Plaintiff’s prior use of the trademark HEART HUGGER (word mark and device) in the United States of America. After the conclusion of the distribution agreement, Defendant marketed Plaintiff’s product under the same trademark HEART HUGGER.

In 2003, Defendant decided to apply for the HEART HUGGER Community Trademark. Defendant submits that Plaintiff consented to such registration, which Plaintiff disputes. The correspondence which Defendant has submitted as evidence of Plaintiff’s consent shows that it informed Plaintiff of the application and the registration of the Community Trademark, but not that it requested or obtained express consent from Plaintiff. In the absence of such express consent, the fact that Plaintiff waited for almost eighteen months after the registration of the HEART HUGGER Community Trademark before instituting these proceedings, does not imply that it has tacitly and unconditionally consented to the registration of the Community Trademark in the name of Defendant.

Therefore, the Tribunal concludes that the Community Trademark was registered without the consent of Plaintiff.

In the absence of consent, according to the OHIM Guidelines on article 51 (1) sub b CTR “There is bad faith when the CTM applicant intends through registration to lay claim to a trademark of a third party with which it had contractual or pre-contractual relations”. ¹

Defendant has submitted that in the context of article 51 (1) sub b CTR, trademark rights outside the European Union should not be taken into account, so that in its opinion Plaintiff cannot rely on any trademark rights it may have obtained in the United States.

The Tribunal agrees with Defendant that the sole fact that a registrant of a Community trademark is aware of the existence of a similar trademark used by a third party outside the European Union does not automatically constitute bad faith in relation to its subsequent registration of that trademark. However, that is an entirely different situation from that of a Community trademark registration by an agent, distributor or licensee of its principal’s trademark, as in the case at hand.

The Tribunal has not found (and in fact, Defendant has not pointed out) any particular provision in the CTR supporting the position that territoriality should be taken into account when assessing bad faith in that situation.

Moreover, in relation to the opposition which a trademark proprietor can lodge against its agent or representative applying for the registration of the trademark in its own name without the proprietor’s consent (article 8 (3) CTR) the OHIM Guidelines quoted above expressly state that it is immaterial whether proprietor’s earlier trademark rights reside in the Community or not.

Based on the above, the Tribunal is of the opinion that it is likely that Defendant’s opposition against the Benelux Trademarks will not be successful, on the ground that the Community Trademark, on which the opposition is based, appears to have been registered by Defendant in bad faith. Therefore, the Tribunal finds that, in light of the particular circumstances of this proceeding, Plaintiff can rely on the Benelux Trademarks for its claims against Defendant.

Furthermore, Defendant has not contested that the Domain Name is similar to the Benelux Trademarks.

Defendant has submitted that it has due cause to use the Domain Name which would prevent Plaintiff from exercising its trademark rights under article 2.20 (1) sub d BIPT. In particular, Defendant has stated that in 2000 it received the verbal and tacit consent from Plaintiff to register the Domain Name in its name and for its own benefit. Plaintiff has contested that it has given such consent.

On this point the Tribunal notes that Plaintiff has not disputed that it was aware of the registration of the Domain Name, nor that it allowed and construed reciprocal links between its website under “www.hearthugger.com” and that of Defendant under “www.hearthugger.nl”. Therefore, the Tribunal assumes that Plaintiff was not only aware of but also – at least tacitly – consented to Defendant’s registration of the Domain Name.

However, this is not yet sufficient for assuming that Plaintiff consented to registration of the Domain Name in the name and for the benefit of Defendant. Although Defendant submits that there has been verbal consent to this effect, no evidence thereof has been submitted.

In case of such tacit consent, the scope and conditions of the consent may be derived from the circumstances of the case. The relevant circumstances here are that the parties had concluded a distribution agreement in 1994, which later was converted into a patent license agreement allowing Defendant to manufacture the product under license in Europe, while Defendant was distributing and marketing Plaintiff’s patented product in Europe under the HEART HUGGER trademarks, which it knew Plaintiff had been using for its product in the United States of America for some time already when it entered into the contractual relationship with Plaintiff.

From these circumstances the Tribunal derives that the tacit consent from Plaintiff to the registration of the Domain Name in 2003 was conditional upon or was part of the contractual relationship between the parties. This implies that, as soon as the contractual relationship would have terminated, the legal basis for the tacit consent would also terminate.

Therefore, since the agreement between the parties was terminated some time ago, Defendant can no longer rely on the tacit consent it obtained from Plaintiff as the basis for due cause under article 2.20 (1) sub d BIPT.

Defendant has also put forward that its right to the Community Trademark provides a due cause under article 2.20 (1) sub d. Indeed, having right to a trademark or tradename which is identical or similar to the Domain Name may provide such a valid reason. However, as set out above, the Tribunal in this case is of the opinion that it is likely that the Community Trademark has been registered in bad faith and, as a consequence, is subject to cancellation. Presumably therefore, the Community Trademark cannot constitute due cause either.

Finally, Defendant has submitted that its use of the Domain Name constitutes use of a tradename and that the tradename rights this has yielded provide a due cause. It is correct that a domain name may also be a tradename if it is used by a company as the name under which it trades, as set out in the Handelsnaamwet (Tradename Act). However, Defendant has consistently used and is using the tradename Exim Holland to denote its company and has used and is using the Domain Name to provide information on and demonstrate its product. Therefore, Defendant has not proven that it has obtained tradename rights in the Domain Name.

In conclusion, Defendant does not have a due cause for the registration and use of the Domain Name. In addition, the other requirements for a successful action on the basis of article 2.20 (1) sub d have been fulfilled.

As the Domain Name is identical to Plaintiff’s Benelux Trademarks and is apparently being used to promote products competing with Plaintiff’s products, it is clear that Defendant’s use of the Domain Name may take unfair advantage of or be detrimental to the distinctive character or the repute of Plaintiff’s Benelux Trademarks.

The Tribunal shall therefore award the requested remedy that Plaintiff shall become holder of the domain name <hearthugger.nl> instead of Defendant and that this award shall replace the form required by the SIDN on the basis of article 24.3 of the Regulations for the change of domain name holder.

In accordance with article 3 of the Regulations, Plaintiff has requested “a prohibition for the Domain Name Holder to register similar domain names in the future”. It has been well established in previous .nl awards that a general order to prohibit a defendant from registering domain names similar to the contested domain name is not admissible. See for instance Loadit B.V. v. Xiro Unlimited Entertainment B.V., Case No. WIPO2006NL3 and Volkswagen AG v. Prince B.V., Case No. WIPO2006NL10. The Tribunal understands however that Plaintiff’s remedy concerns domain names that are confusingly similar to its Benelux Trademarks, which claim will be granted.

Since the claim of Plaintiff is awarded, and Defendant has not provided any arguments against Plaintiff’s claim for procedural costs, the Tribunal will award the procedural costs, including the claimed costs of legal assistance to the amount of € 2,500,-- , which appear reasonable, on the basis of article 28.8 of the Regulations.

In accordance with article 23.5 of the Regulations, Plaintiff has demanded that this award be rendered enforceable regardless of whether an appeal against the award is lodged. However, Plaintiff has not provided arguments for this demand. Other Tribunals have decided that, if such arguments are lacking, this in itself is sufficient reason to deny such a demand (see WIPO2006NL8, in translation: “The demand to render the decision enforceable, regardless of whether an appeal against the award is lodged, is denied. Plaintiff must have serious grounds for such a demand to be awarded. No such grounds have been put forward by Plaintiff”. See also WIPO2003NL2, WIPO2006NL10, WIPO2006NL14 and WIPO2006NL16).

There is more reason to deny that demand in this case, since Plaintiff has for a considerable period not taken action against Defendant’s registration of the Domain Name. Also relevant in light of the reasons given for the Tribunal’s award is the fact that, while Plaintiff has indicated that it plans to institute proceedings to obtain cancellation of the Defendant’s trademark if necessary, Plaintiff has not provided evidence that it has already done so.

For the foregoing reasons, the demand to render the Domain Name enforceable is denied.

7. Decision

With reference to article 3 Regulations and the facts and findings set out above, the Tribunal decides as follows:

1. Plaintiff shall become the holder of the Domain Name <hearthugger.nl> instead of Defendant;

2. With respect to the deed required by SIDN for the change of the Domain Name Holder the Tribunal declares that, to the extent necessary, this award shall replace this deed;

3. Defendant shall be prohibited from registering domain names similar to Plaintiff's trademark HEART HUGGER as far as valid for the Benelux in the future, and shall be liable to a penalty of € 5,000,-- for each violation;

4. Defendant shall pay to Plaintiff a total amount of € 4,750,-- for procedural costs, which includes € 2,500,-- as reasonable costs of Plaintiff’s legal representation;

5. Dismisses all other claims.

Wolter Wefers Bettink
Sole Arbitrator

Amsterdam

June 12, 2007

¹ Guidelines concerning proceedings before the Office of Harmonization in the Internal Market, para 4.3.3.