WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

North Atlantic Operating Company, Inc. and National Tobacco Company, L.P. v. The Safe Cig

Case No. D2013-0841

1. The Parties

Complainants are North Atlantic Operating Company, Inc. of Louisville, Kentucky, United States of America and National Tobacco Company, L.P. of Louisville, Kentucky, United States of America, represented by Bingham Greenebaum Doll LLP, United States of America.

Respondent is The Safe Cig of Los Angeles, California, United States of America.

2. The Domain Names and Registrar

The disputed domain names <zigzagcigs.com> and <zigzagcigs.net> are registered with GoDaddy.com, LLC (the “Registrar”).

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on May 15, 2013. On May 15, 2013, the Center transmitted by email to the Registrar a request for registrar verification in connection with the disputed domain names. On May 16, 2013, the Registrar transmitted by email to the Center its verification response confirming that Respondent is listed as the registrant and providing the contact details.

The Center verified that the Complaint satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (the “Policy” or “UDRP”), the Rules for Uniform Domain Name Dispute Resolution Policy (the “Rules”), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (the “Supplemental Rules”).

In accordance with the Rules, paragraphs 2(a) and 4(a), the Center formally notified Respondent of the Complaint, and the proceedings commenced on May 23, 2013. On May 23, 2013 and due to technical reasons, the Center re-sent the e-mails regarding the notification of the Complaint and commencement of administrative proceeding to Respondent. In accordance with the Rules, paragraph 5(a), the due date for Response was June 12, 2013. By email dated June 13, 2013, Respondent transmitted to the Center certain information concerning legal proceedings between Respondent and a former employee regarding the disputed domain names, which proceedings had been concluded in favor of Respondent by the entry of a default judgment (see paragraph following). The aforesaid email from Respondent also included certain statements that may be considered an informal Response to the Complaint.

On May 16, 2013 the Center received an e-mail communication from the Registrar regarding the existence of other legal proceedings involving the disputed domain names in a court dispute in the Superior Court of the State of California for the County of Los Angeles. On May 17, 2013 the Center sent an e-mail communication to the Parties requesting the confirmation of the existence of any ongoing, pending or terminated court proceedings which are (or may be) of relevance to the present UDRP dispute. On May 18, 2013 the Center received an e-mail communication from Complainant indicating that it understood there was a dispute involving Respondent and a former employee, Robert Deak, but that Complainant was not party to any legal proceedings regarding the disputed domain names and did not have information regarding how such proceedings might be relevant to the disputed domain names. On May 21, 2013 the Center requested Respondent and the Registrar to clarify this matter, and on May 27, 2013 and June 10, 2013 the Center sent reminders. On June 11, 2013 the Center received an e-mail communication from Robert Deak, a former employee of Respondent and defendant in the subject legal proceedings, providing a comment on the foregoing. On June 13, 2013 the Center received an e-mail communication from Respondent referring to the existence of a legal proceeding, The Safe Cig, LLC v. Robert Deak, et al., Superior Court of the State of California for the County of Los Angeles County, Case No. BC501514, filed February 22, 2013, which appears to have concluded with the entry of a default judgment on April 26, 2013.

The Center appointed Frederick M. Abbott as the sole panelist in this matter on June 19, 2013. The Panel finds that it was properly constituted. The Panel has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, paragraph 7.

4. Factual Background

Complainants are North Atlantic Operating Company, Inc., and its affiliated company, National Tobacco Company, L. P.¹ (referred to herein as Complainant, unless otherwise expressly indicated). North Atlantic Operating Co. Inc., is the owner of registrations for the word, and word and design, trademark ZIG ZAG on the Principal Register of the United States Patent and Trademark Office. These registrations include, but are not limited to, word trademark registration number 1,472,580, registration dated January 12, 1988, in international class (“IC”) 34, covering cigarette tobacco (renewed and incontestable); word trademark registration number 3,867,900, registration dated October 26, 2010, in IC 34, covering cigars (with hyphen as ZIG-ZAG), and word and design trademark registration number 1,775,416, registration dated June 8, 1993, in IC 34, covering “smoking tobacco” (word ZIG-ZAG beneath drawing of bearded man in hood, with leafing and other design elements). Complainant asserts that its ZIG ZAG trademark has been used in commerce since as early as 1971.

Complainant markets and sells tobacco products, including tobacco and cigars, as well as cigarette papers and accessories, under its ZIG ZAG trademark. Complainant operates a commercial website at <zigzag.com>.²

According to the Registrar’s verification, Respondent is registrant of the disputed domain names. According to that verification, the records of registration for the disputed domain names were each created on May 2, 2012, and were last updated on February 4, 2013. The Registrar’s verification reports that each of the disputed domain names was registered to Respondent on February 4, 2013.

Complainant has provided a screenshot printouts of the home pages addressed by the disputed domain names. The printout for the homepage addressed by <zigzagcigs.com> is dated March 18, 2013. The printout for the homepage addressed by <zigzagcigs.net> is dated May 2, 2013. Each of the home pages is a GoDaddy.com advertising link parking page. Each of the home pages includes a number of links to tobacco related products and/or accessories.

The registration agreement in effect between Respondent and the Registrar subjects Respondent to dispute settlement under the Policy. The Policy requires that domain name registrants submit to a mandatory administrative proceeding conducted by an approved dispute resolution service provider, of which the Center is one, regarding allegations of abusive domain name registration and use (Policy, paragraph 4(a)).

5. Parties’ Contentions

A. Complainant

Complainant alleges that it has rights in the trademark ZIG ZAG as evidenced by a number of registrations at the USPTO. Complainant contends that its trademark is distinctive and well-known.

Complainant contends that the disputed domain names are confusingly similar to its trademark, adding only the term “cigs”, which Internet users would understand as slang for cigarettes or cigars. As such products are associated with Complainant’s product line, the addition of the term “cigs” would not reduce Internet user confusion with its trademark, and might add to the likelihood of confusion.

Complainant argues that Respondent lacks rights or legitimate interests in the disputed domain names. Complainant contends that: (1) Respondent has not been known by the disputed domain names; (2) Respondent does not have any trademark rights in the terms used in the disputed domain names; (3) Respondent has not been authorized by Complainant to use or register any of its trademarks as domain names; (4) Respondent admitted in an email to Complainant on June 5, 2012, that Respondent registered the domain names “with intention to of course give ownership of such to you”, indicating that Respondent recognized that rights in the disputed domain names belong to Complainant; (5) Respondent has used the disputed domain names in connection with parking pages that incorporate pay-per-click click advertisements, and that such use generally generates click-through revenues that are split between the parking service provider and the owner of the domain names; (6) several of the links on the parking pages direct consumers to websites that are related to and may compete with the products of Complainant; (7) Respondent has declared that it purchased the disputed domain names without the authorization of Complainant in order to pursue an impending commercial opportunity between Respondent and Complainant.

Complainant contends that Respondent registered and used the disputed domain names in bad faith because: (1) although Respondent and Complainant were in discussion concerning a potential business opportunity, Respondent was never authorized to register domain names on behalf of Complainant or otherwise; (2) Respondent may have registered the disputed domain names to obtain unfair leverage over Complainant with respect to their potential business opportunity; (3) although it is been nearly a year since the disputed domain names were purchased by Respondent, Respondent has failed to transfer them to Complainant despite repeated requests for transfer; (4) although Respondent’s employee who had previously controlled the disputed domain names was terminated, and although another of Respondent’s employees is listed as the administrative contact for the disputed domain names, Respondent still has not transferred the disputed domain names; (5) Respondent’s use of pay-per-click parking services for the disputed domain names take unfair advantage of Complainant’s rights of its trademark; (6) the disputed domain names take unfair advantage of Complainant’s distinctive and well-known trademark by creating a likelihood of confusion.

Complainant requests that the Panel direct the Registrar to transfer the disputed domain names to Complainant.

B. Respondent

The informal response transmitted by Respondent, following a brief discussion of the litigation referred to in the Procedural History, above, states in its entirety:

“Like other domain names purchased by Mr. Deak which are the subject of current litigation, Mr. Deak was authorized to purchase Zigzagcigs.com and Zigzagcigs.net on behalf of The Safe Cig, LLC and only in his former capacity as Co-Managing Member of The Safe Cig, LLC. The Safe Cig, LLC and National Tobacco were in the last stages of a business deal that had taken nearly 10 months to close whereby The Safe Cig, LLC offered to purchase the domain names Zigzagcigs.com andZigzagcigs.net. These domains were to be used by National Tobacco and The Safe Cig, LLC in their joint effort to sell cobranded, electronic cigarettes together on line.

However, as a result of Mr. Deak's malfeasance, misappropriation and tortious conduct which crippled The Safe Cig, LLC and forced the company to cease operating, the deal was unable to reach fruition.

Secondly, National Tobacco, only owns a license to the rights of use to the ZigZag name for tobacco products in the USA and we wish to pursue opportunities to use the domains on a global basis in partnership with the other licensors of the ZigZag trade name: [references to enterprises redacted]

I trust that this should be sufficient information to close this matter.”

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 Policy 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 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., Rules, paragraph 2(a)).

The Center notified the Complaint to Respondent. Respondent has responded to the Complaint, albeit informally. The Panel is satisfied that Respondent was afforded a reasonable opportunity to respond to the Complaint.

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) the disputed domain name is identical or confusingly similar to a trademark or service mark in which complainant has rights; and

(ii) respondent has no rights or legitimate interests in respect of the disputed domain name; and

(iii) the disputed 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.

A. Identical or Confusingly Similar

Complainant has provided evidence of rights in the trademark ZIG ZAG based on registration at the USPTO and use in commerce in the United States (see Factual Background, supra). Respondent has not challenged Complainant’s ownership of trademark rights in the United States. The Panel determines that Complainant has rights in the trademark ZIG ZAG.

The disputed domain names each directly incorporate Complainant’s trademark (eliminating the space between the terms), and add the term “cigs”. The term “cig” is a short form slang expression for cigarette,³ and “cigs” would be understood as a plural slang term. The addition of a slang form for cigarettes to the distinctive trademark ZIG ZAG does not reduce the potential for Internet user confusion between the disputed domain names and Complainant’s trademark. Internet users would expect Complainant’s distinctive trademark to be used in association with a term connected with tobacco products. The addition of the generic top-level domain (gTLD) identifiers is not a factor in determining confusing similarity in circumstances such as those present here. The Panel determines that the disputed domain names are confusingly similar to Complainant’s trademark.

The Panel has determined that Complainant has rights in the ZIG ZAG trademark, and that the disputed domain names are confusingly similar to that trademark.

B. Rights or Legitimate Interests

The second element of a claim of abusive domain name registration and use is that the respondent has no rights or legitimate interests in respect of the domain name (Policy, paragraph 4(a)(ii)). The Policy enumerates several ways in which a respondent may demonstrate rights or legitimate interests:

“Any of the following circumstances, in particular but without limitation, if found by the Panel to be proved based on its evaluation of all evidence presented, shall demonstrate your rights or legitimate interests to the domain name for purposes of paragraph 4(a)(ii):

(i) before any notice to you of the dispute, your use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or

(ii) you (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or

(iii) you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.” (Policy, paragraph 4(c))

Complainant has alleged that Respondent lacks rights or legitimate interests in the disputed domain names because: (1) Respondent has not been known by the disputed domain names; (2) Respondent does not have any trademark rights in the terms used in the disputed domain names; (3) Respondent has not been authorized by Complainant to use or register any of its trademarks as domain names; (4) Respondent admitted in an email to Complainant on June 5, 2012, that Respondent registered the domain names “with intention to of course give ownership of such to you”, indicating that Respondent recognized that rights in the disputed domain names belong to Complainant; (5) Respondent has used the disputed domain names in connection with parking pages that incorporate pay-per-click advertisements, and that such use generally generates click-through revenues that are split between the parking service provider and the owner of the domain names; (6) several of the links on the parking pages direct consumers to websites that are related to and may compete with the products of Complainant; (7) Respondent has declared that it purchased the disputed domain names without the authorization of Complainant in order to pursue an impending commercial opportunity between Respondent and Complainant. Complainant has made a prima facie showing that Respondent lacks rights or legitimate interests in the disputed domain names.

Respondent has contended that National Tobacco Company “only owns a license to the rights of use to the ZigZag name for tobacco products in the USA and we wish to pursue opportunities to use the domains on a global basis in partnership with the other licensors of the ZigZag trade name”. Respondent might be understood to be arguing that it has rights or legitimate interests in the disputed domain names because of an intention to enter into business arrangements with licensees of Complainant’s trademark outside the United States. This would presumably be argued to fall in the category of demonstrable preparations to use the disputed domain names in connection with a bona fide offering of goods or services prior to notice of a dispute.

A stated but unsubstantiated future intention of a domain name registrant to enter into a valid license agreement conferring rights to use a trademark does not form the basis for a finding of rights or legitimate interests. The merely stated intention does not constitute “demonstrable preparations” (see, e.g., Helen Fielding v. Anthony Corbert aka Anthony Corbett, WIPO Case No. D2000-1000). A finding of rights or legitimate interests in the present dispute would be predicated on the future grant of a license or authorization to Respondent for which no substantiation is before the Panel. Were it possible to establish rights or legitimate interests merely by asserting that, at some point in the future, a disputed domain name registrant intends to obtain a license or authorization from the trademark owner, virtually any third party domain name registration would be justifiable notwithstanding a direct conflict with the rights of the trademark owner.

The Panel rejects the argument by Respondent that it should be permitted to maintain the registrations of the disputed domain names (i.e. that it has rights or legitimate interests) because of its asserted unsubstantiated and contingent future expectations.

Respondent has asserted no other basis for rights or legitimate interests in the disputed domain name, and no such rights or legitimate interests are manifest from the evidence before the Panel.

The Panel determines that Complainant has established that Respondent lacks rights or legitimate interests in the disputed domain names.

C. Registered and Used in Bad Faith

In order to prevail under the Policy, Complainant must demonstrate that the disputed domain name “has been registered and is being used in bad faith” (Policy, paragraph 4(a)(iii)). Paragraph 4(b) of the Policy states that “for the purposes of Paragraph 4(a)(iii), the following circumstances, in particular but without limitation, if found by the Panel to be present, shall be evidence of the registration and use of a domain name in bad faith.” Among those circumstances are: (iv) by using the domain name, [respondent has] intentionally attempted to attract, for commercial gain, Internet users to [respondent’s] web site or other on-line location, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of [respondent’s] web site or location or of a product or service on [respondent’s] web site or location.”

Respondent registered the disputed domain names without Complainant’s authorization incorporating Complainant’s distinctive trademark, and has used those disputed domain names for the purpose of directing Internet users to parking pages with advertising links, including to third parties offering goods competitive with those of Complainant. It is reasonable to infer that Respondent is earning pay-per-click revenues from these link farm parking pages, in whatever form those revenues may take. It appears to the Panel that Respondent is using the disputed domain names to attract for commercial gain Internet users to Respondent’s websites by creating a likelihood of confusion as to Complainant acting as source, sponsor, affiliate or endorser of Respondent’s websites.

The Panel determines that Respondent registered and is using the disputed domain names in bad faith within the meaning of paragraph 4(b)(iv) of the Policy.

D. Related Litigation

The Panel notes that there is evidence of litigation between Respondent and a former employee involving rights in the disputed domain names (see Procedural History, supra). The Panel has not elaborated on the substance of the “other legal proceedings” in this decision because it does not appear material to its determination. The disputed domain names may have initially been registered by an employee of Respondent who was subsequently terminated, but Respondent has been the registered owner of registrations of the disputed domain names at times material to the determination in this proceeding.

7. Decision

For the foregoing reasons, in accordance with paragraphs 4(i) of the Policy and 15 of the Rules, the Panel orders that the disputed domain names <zigzagcigs.com> and <zigzagcigs.net> be transferred to Complainant.

Frederick M. Abbott
Sole Panelist
Date: July 3, 2013

¹ Complainant has provided evidence in the form of records from the Kentucky Secretary of State regarding the affiliation between the two companies.

² National Tobacco Company is registrant of the <zigzag.com> domain name.

³ See Miriam-Webster Online Dictionary, at http://www.merriam-webster.com/dictionary/cig, Panel visit of July 2, 2013.