WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

APT Advanced Polymer Technology Corp. v. Matt Arnold, Majestic Capital

Case No. D2019-0824

1. The Parties

The Complainant is APT Advanced Polymer Technology Corp. of Harmony, Pennsylvania, United States of America (“United States”), represented by Thompson Hine LLP, United States.

The Respondent is Matt Arnold, Majestic Capital, of Columbia, South Carolina, United States, self-represented.

2. The Domain Name and Registrar

The disputed domain name <synlawnsouthcarolina.com> (the “Domain Name”) is registered with GoDaddy.com, LLC (the “Registrar”).

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on April 10, 2019. On April 11, 2019, the Center transmitted by email to the Registrar a request for registrar verification in connection with the Domain Name. On April 11, 2019, the Registrar transmitted by email to the Center its verification response confirming that the 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 and 4, the Center formally notified the Respondent of the Complaint, and the proceedings commenced on April 15, 2019. In accordance with the Rules, paragraph 5, the due date for Response was May 5, 2019. The Response was filed with the Center on May 1, 2019.

The Center appointed W. Scott Blackmer as the sole panelist in this matter on May 9, 2019. 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

The Complainant is a corporation organized under the laws of Pennsylvania, with a principal place of business in Harmony, Pennsylvania, United States. According to the Declaration of its Executive Vice President, Mr. Neagle, the Complainant and its predecessors have been offering artificial turf and sports surfaces products under the SYNLAWN mark since at least as early as 2003, in the United States and internationally. The Complainant sells Synlawn turf products both directly and through licensed distributors. The Complainant operates a website at “www.synlawn.com”.

The Complainant holds United States trademark registrations for SYNLAWN, Registration Number 3056131 (standard characters, registered January 31, 2006) and Registration Number 5434010 (design and characters, registered March 27, 2018).

Mr. Neagle recounts in his Declaration that a predecessor of the Complainant, UTGH Equipment, LLC, entered into a distributor agreement with SYNLawn South Carolina, LLC (“SSC”) of West Columbia, South Carolina on May 12, 2016. The “Supply Agreement” (attached to the Complaint) was signed on behalf of SSC by Matthew J. Arnold, President. The agreement included a “limited license” to use SYNLAWN marks, “limited to the conduct of business by Distributor pursuant to, and in compliance with, this Agreement and all applicable standards, specifications and operating procedures prescribed from time to time by Manufacturer.” The agreement provided that that the distributor “shall not use any Mark in connection with the sale of any unauthorized product or service or in any manner not expressly authorized in writing by Manufacturer.” Further, the agreement provided that the distributor “shall not contest the validity or ownership of any of the Marks” during the term of the agreement or after its expiration.

According to the Registrar, the Domain Name was created on April 28, 2016 and is registered in the name of the Respondent Matt Arnold of the organization “Majestic Capital”, listing a post office box in Columbia, South Carolina, United States as the postal address. Majestic Capital, LLC is a South Carolina limited liability company established in 2002, according to the online database operated by the South Carolina Secretary of State, which lists “Matthew J. Arnold” as the company’s registered agent, at a West Columbia, South Carolina postal address. Mr. Arnold and Majestic Capital are referred to hereafter as “the Respondent”.

The Respondent registered the Domain Name two weeks before Mr. Arnold executed the Supply Agreement with the Complainant on behalf of SSC, and it is undisputed that SSC did not immediately launch a website associated with the Domain Name. The Declaration of Mr. Neagle states that “neither SSC nor Matthew Arnold had no use of any ‘SYNLawn’ marks prior to the execution of the Agreement,” and the Response indicates that the Complainant criticized the Respondent for not promptly creating an active website to promote sales of the Complainant’s products.

Correspondence attached to the Complaint shows that the Complainant terminated the distributorship effective May 2018. Mr. Naegle’s letter of January 18, 2018 to Mr. Arnold explained that after termination the Complainant would willingly supply the Respondent with “white label turf” that “you can market and sell under your own brand”, but the Respondent would no longer be authorized to represent itself as a Synlawn distributor.

The Declaration of Matthew Ridings, legal counsel to the Complainant, describes how Mr. Ridings communicated with Mr. Arnold in August 2018 after learning that SSC continued to use the Domain Name incorporating the SYNLAWN mark and displaying the SYNLAWN mark on the associated website (the “SSC website”) and on a linked website of another company owned by Mr. Arnold, East Coast Turf Pros, LLC (“ECTP”). Mr. Arnold agreed to take down the SSC website and to cease displaying the Complainant’s marks on the ECTP website, instead displaying the phrase “fka Synlawn South Carolina” for a period of six months while familiarizing customers with the ECTP name.

However, Mr. Arnold declined to transfer the Domain Name unless the Complainant purchased it from him, and he parked the Domain Name with the Registrar. Mr. Arnold explained his position in an August 15, 2018 email to Mr. Ridings:

“The domain name ownership will remain an issue. I set up a corporation in SC, with among other
things a domain and web page per SYNLawn corporate instructions. This was done at my
company expense and with the understanding between my company and SYNLawn that I would
be a distributor going forward. I had the distributorship for 2 years, no contract violations, and
exceeded the corporate goal set for my distributorship for year 2 by 10%. With no explanation, I
was informed by letter they would not be renewing my companies contract. When I initiated
contact about this subject I was told they were going in a different direction in SC.

If they do not want purchase the domain from me I will have my attorney handle, and will move
forward with arbitration.”

At the time of this Decision, the Domain Name still resolves to a landing page “parked for free” by the Registrar, which advertises the Domain Name for sale and features pay-per-click (“PPC”) third-party advertising links, mostly for artificial “grass” or “turf” and “synthetic lawn” offered by a variety of suppliers, at least some of which appear to compete with the Complainant.

5. Parties’ Contentions

A. Complainant

The Complainant asserts that the Domain Name is identical or confusingly similar to its SYNLAWN mark. The Complainant contends that the Respondent has no rights or legitimate interests in the mark because its rights to use the mark were entirely based on the limited license in the distribution agreement with the Complainant. The Respondent (a) registered the Domain Name before signing the distribution agreement and then (b) subsequently retained the Domain Name after the termination of the distribution agreement, displaying the mark on the SSC website and the linked ECTP websites and then allowing the Domain Name to be used to misdirect Internet users for commercial gain through PPC advertising. Thus, the Respondent cannot be said to be making use of the Domain Name in connection with a bona fide commercial offering.

The Complainant infers bad faith as well from the Respondent’s conduct following termination of the distribution agreement, arguing that the Respondent registered and used the Domain Name to disrupt the Complainant’s business and mislead consumers for commercial gain.

B. Respondent

The Respondent does not challenge the Complainant’s trademark rights or the first element of the Complaint.

The Respondent claims it had a right to use the Complainant’s mark in the Domain Name based on its former relationship as a distributor of the Complainant’s Synlawn products. The Respondent observes that the distributorship agreement it entered into gave the Respondent a limited license to use the Complainant’s SYNLAWN mark and asserts that the Complainant’s instructions to distributors required them to maintain a relevant domain name and website. The Response attaches evidence that the Complainant’s current South Carolina distributor uses the domain name <southcarolinasynlaw.com> and that other distributors similarly use geographic indicators with the mark, such as <synlawntexas.com>, <synlawnms.com>, <synlawnchesapeakebay.com>, <synlawnofreno.com>, and <synlawnstlouis.com>. The Respondent contends that it registered the Domain Name with the Complainant’s knowledge and approval and used the website in connection with selling and installing the Complainant’s products.

The Respondent argues that it registered and used the Domain Name in good faith in connection with its business as an authorized distributor of the Complainant’s products in South Carolina. The Respondent denies registering the Domain Name to disrupt the Complainant’s business or mislead Internet users. The Respondent indicates that it declined to transfer the Domain Name after the Complainant terminated the distributorship in connection with “an invitation to engage in settlement negotiations”, referring elsewhere to the Respondent’s investment in building the distributorship and disappointment over the Complainant’s decision to terminate.

6. Discussion and Findings

Paragraph 4(a) of the Policy provides that in order to divest a respondent of a disputed domain name, a complainant must demonstrate each of the following:

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

(ii) the 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.

Under paragraph 15(a) of the Rules, “a Panel shall decide a complaint on the basis of the statements and documents submitted and in accordance with the Policy, these Rules and any rules and principles of law that it deems applicable”.

A. Identical or Confusingly Similar

The first element of a UDRP complaint “functions primarily as a standing requirement” and entails “a straightforward comparison between the complainant’s trademark and the disputed domain name”. WIPO Overview of WIPO Panel Views on Selected UDRP Questions, Third Edition (“WIPO Overview 3.0”), section 1.7. The Complainant indisputably holds a registered trademark for SYNLAWN as a standard character mark and for a design mark prominently featuring the coined term “synlawn” (from “synthetic” and “lawn”). The Domain Name incorporates this mark in its entirety and adds the geographic designation “southcarolina”, which does not avoid confusing similarity, especially as the Complainant’s products are distributed nationally. As in most cases, the generic Top-Level Domain (“gTLD”) “.com” is not a distinguishing feature. Id. The Panel finds, therefore, that the Domain Name is confusingly similar to the Complainant’s SYNLAWN mark for purposes of the Policy, paragraph 4(a)(i).

The Panel concludes that the Complainant has established the first element of the Complaint.

B. Rights or Legitimate Interests

Paragraph 4(c) of the Policy gives non-exclusive examples of instances in which the Respondent may establish rights or legitimate interests in the Domain Name, including the following:

“(i) before any notice to it of the dispute, the Respondent’s 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 …”

Since a respondent in a UDRP proceeding is in the best position to assert rights or legitimate interests in a disputed domain name, it is well established that after a complainant makes a prima facie case, the burden of production on this element shifts to the respondent to come forward with relevant evidence of its rights or legitimate interests in the domain name. See WIPO Overview 3.0, section 2.1. Here, the Complainant has grounded its prima facie case by establishing its trademark rights, confusing similarity, a lack of permissive use after termination of the distribution agreement, and the subsequent use the Domain Name to advertise the Respondent’s and third parties’ goods and services. This shifts the burden to the Respondent.

Paragraph 4(a)(ii) is formulated in the present tense: The inquiry concerns whether the Respondent “has” rights or legitimate interests “in respect of the Domain Name”. The distribution agreement included a limited license to use the Complainant’s mark, with no specific guidance concerning domain names and websites. The Response demonstrates that other distributors are clearly using the Complainant’s mark in their domain names and on their websites in a manner similar to the Respondent’s former SSC website. But the Respondent lost any right to do so once the distributor agreement was terminated, and the agreement itself precluded the assertion of rights on any other basis. Subsequently, the Respondent has used the Complainant’s mark without permission, first to sell SSC and ECTP products and services, and then allowing the Registrar to post PPC links to competitors and others. These cannot be considered uses in connection with a bona fide offering of goods or services within the meaning of the Policy, paragraph 4(c)(i). See WIPO Overview 3.0, section 2.8.1 (distributors and resellers using the manufacturer’s mark in a domain name must use the associated website only in connection with the trademarked products); Oki Data Americas, Inc. v. ASD, Inc., WIPO Case No. D2001-0903.

The Panel concludes that the Complainant prevails on the second element of the Complaint.

C. Registered and Used in Bad Faith

The Policy, paragraph 4(b), furnishes a non-exhaustive list of circumstances that “shall be evidence of the registration and use of a domain name in bad faith”, including the following on which the Complainant relies (in which “you” refers to the registrant of the domain name):

“(iii) you have registered the domain name primarily for the purpose of disrupting the business of a competitor; or

(iv) by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your 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 your web site or location or of a product or service on your web site or location.”

The Complainant concludes that both examples apply in this case because of the Respondent’s conduct after termination in refusing to transfer the Domain Name, using it to advertise the business of SSC and ECTP (which presumably compete with the Complainant’s ongoing business in South Carolina), and then allowing the Domain Name to be parked for PPC advertising for the benefit of the Registrar and third parties, including other competitors of the Complainant. The Respondent denies any such intent without elaboration. The Panel could find bad faith use within the meaning of the Policy based on the Respondent’s post-termination conduct, because the Respondent simply had no legitimate ground for exploiting the Complainant’s trademark once the distribution agreement was terminated. The terms of the agreement are plain enough in that respect, and so are UDRP precedents regarding the legitimate interests of distributors and resellers to make fair use of a manufacturer’s trademark in a domain name, as discussed above.

However, paragraph 4(b)(iii) is stated in the conjunctive and requires that the Complainant establish that “the disputed domain name has been registered and is being used in bad faith.” This means that the Complainant must demonstrate the likelihood that the Respondent meant to disrupt the Complainant’s business and misdirect Internet users for commercial gain, not only in 2018 but on April 28, 2016, when the Respondent registered the Domain Name. It is undisputed that this was done in contemplation of entering into the distribution agreement with the Complainant’s predecessor that became effective two weeks later, on May 12, 2016. It is also undisputed that the Complainant and its predecessor desired and expected the Respondent to register a relevant Domain Name, as other distributors did, and use it for the business of distributing the Complainant’s products.

The Complainant cites Albino Vargas Ozuna v. Francisco Javier Gomez Vasquez, WIPO Case No. D2017-1328 (“Ozuna”), suggesting that the Respondent acted in bad faith because it registered the Domain Name with prior knowledge of the Complainant’s mark and before it executed the distribution agreement. The facts in that proceeding were quite different, however, and strongly suggested bad faith in the registration as well as the use of the disputed domain name. The respondent (who filed no response) first registered the exact string of the trademark as the domain name and then tried to use it as negotiating leverage to obtain a distribution agreement with the complainant, which the complainant refused. The respondent never became a distributor or created an active website. In the present case, the Complainant does not allege that the Domain Name registration was a negotiating tactic or deny that it was done with the Complainant’s knowledge and for its benefit. The Domain Name included a geographic designation as did those of other distributors. The Respondent used it in its business and acted in the capacity of a distributor with a license to use the Complainant’s mark for two years.

The Complainant also cites two decisions involving terminated distributors, where the panels ordered the transfer of the disputed domain names: SPECS GmbH v. SPECS Scientific Instruments, Inc. d/b/a SPECS Technologies Corporation, WIPO Case No. D2009-0308 (“SPECS”); Village Candle, Inc. v. Paul Dupre, Dupre, Inc., WIPO Case No. D2018-0834 (“Village Candle”). The post-termination conduct of the respondents in those cases might be considered particularly egregious. In SPECS a long-time employee became a distributor, registered one disputed domain name in that capacity and acquired the other, previously held by the complainant, and then refused to transfer either after termination of the distributorship while continuing to represent himself as associated with the complainant. No response was submitted, and the panel considered that the respondent did not have a license to use the complainant’s trademark in any manner. In Village Candle the respondent retained the domain name after its distribution agreement was terminated, even though the agreement expressly required transfer of the domain name (which the agreement in the present case does not). No response was filed, and the panel said that it accepted the complainant’s claims.

This Panel concurs with the reasoning of other UDRP panels that have closely examined the conjunctive requirement in the context of terminated distributors and have concluded that a complainant must establish bad faith at the time of registration as well in the later use of the domain name. Post-termination conduct may in some instances reflect on the respondent’s original intent, as in other contexts, but the complaint cannot succeed simply because a previously circumspect distributor behaved badly after termination. The logic is expressed well in Danshar (1963) Ltd. v. Joey Gilbert/ Daisy Li, WIPO Case No. D2011-2304:

“What must be tested, however, is the Respondent’s motivations at the time of registration. It must also be borne in mind that the dual requirement of both registration and use in bad faith was very sharply debated in the lead up to the adoption of the Policy and an alternative proposal that only registration or use in bad faith would suffice was rejected. Accordingly, the preponderant and preferable view is that it is impermissible to use subsequent conduct to override actual intentions at the relevant time rather than providing an inference for what those intentions were. See, e.g., The Proprietors of Strata Plan No. 36, A Turks and Caicos Corporation v. Gift2Gift Corp. WIPO Case No. D2010-2180 and SPECS Surface Nano Analysis GmbH v. Rickmer Kose / Domain Name Administrator, PrivacyProtect.org, WIPO Case No. D2010-1173.”

Here, the Complainant does not dispute that the Respondent registered the Domain Name in contemplation of a distributorship that was formally executed two weeks later and then used the Domain Name appropriately and with permission during the term of the distributorship agreement. The Respondent acted as a distributor for two years, built two local companies around the Complainant’s products, and expressed surprise and distress at being terminated as a distributor. The Complainant’s argument for bad faith requires an inference that the Respondent harbored a malign intent from the outset around the time of the registration of the Domain Name to violate its limited license, retain the Domain Name, and then use it in bad faith, to disrupt the Complainant’s business and mislead Internet users for commercial gain or otherwise. The Panel finds no persuasive evidence to make such a leap of inference and accordingly does not find bad faith in the registration of the Domain Name.

The Panel concludes that the Complainant has not established the third element of the Complaint.

7. Decision

For the foregoing reasons, the Complaint is denied.

W. Scott Blackmer
Sole Panelist
Date: May 17, 2019