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WIPO Arbitration and Mediation Center
ADMINISTRATIVE PANEL DECISION
The Thread.com, LLC v. Jeffrey S. Poploff
Case No. D2000-1470
1. The Parties
The Complainant is The Thread.com, LLC, a New York limited liability company located at 1450 Broadway, New York, NY 10018, USA, represented by the law offices of Greenberg Traurig, LLP.
The Respondent is Jeffrey S. Poploff, an individual, residing at 15-81 208th Place, Bayside, NY, 11360, USA, represented by the law offices of William C. Ruffer, Esq.
2. The Domain Name and Registrar
The Domain Name at issue is <thethread.com> (the "Domain Name"). The Domain Name registrar is Network Solutions, Inc. ("NSI").
3. Procedural History
The WIPO Arbitration and Mediation Center ("the Center") received the Complaint on October 27, 2000 by e-mail, and on October 31, 2000 in hardcopy. The Center verified that the Complaint satisfies the formal requirements of the ICANN Uniform Domain Name Dispute Resolution Policy (the "Policy"), the Rules for Uniform Domain Name Dispute Resolution Policy (the "Rules"), and the Center’s Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (the "Supplemental Rules"). The Complainant made the required payment to the Center.
On November 8, 2000, the Center sent an e-mail to NSI requesting a registrar verification in connection with this case. On November 9, 2000, NSI sent an e-mail to the Center confirming that the Registrant is the Respondent.
On November 10, 2000, the Center formally commenced this proceeding and set a response date of November 29, 2000. Respondent timely responded on the deadline. Neither party requested a three-member panel.
On December 12, 2000, after clearing for potential conflicts, the Center appointed David H. Bernstein as the Panelist, and set December 25, 2000 as the targeted date for decision.
On December 15, 2000, without seeking permission from the Panel, the Complainant submitted a Reply to the Response . The Panel subsequently issued the following Interim Order:
This is an administrative proceeding under the ICANN Uniform Domain Name Dispute Resolution Policy. This Interim Order is issued in response to Complainant's filing of a Reply with the Center on December 15, 2000. The Panel was informed of Complainant's filing of a reply by e-mail from the Center on December 20, 2000. The Reply (with its supporting affidavits) has not yet been sent to the Panel, and shall be kept by the Center until further order by this Panel.
Rule 12 unambiguously provides that only the Panel may request further submissions. The Panel has not done so. In these circumstances, it generally is inappropriate for a party to file further submissions on its own accord. As this Panel (and others) have repeatedly emphasized, additional submissions may be filed by a party only in very limited circumstances, such as the existence of new, pertinent facts that did not arise until after the submission of the Complaint, or the desire to inform the Panel of new, relevant authority. Pet Warehouse v. Pets.Com, Inc., Case No. D2000-0105 (WIPO, Apr. 13, 2000); Plaza Operating Partners, Ltd. v. Pop Data Technologies, Inc. and Joseph Pillus, Case No. D2000-0166 (WIPO, June 1, 2000); Document Technologies, Inc. v. International Electronic Communications, Inc., Case No. D2000-0270 (WIPO, June 6, 2000); Universal City Studios, Inc. v. G.A.B. Enterprises, Case No. D2000-0416 (WIPO, June 29, 2000); Wal-Mart Stores, Inc. v. Richard MacLeod d/b/a For Sale, Case No. D2000-0662 (WIPO, Sept. 19, 2000); Parfums Christian Dior S.A. v. Jadore, Case No. D2000-0938 (WIPO, Nov. 3, 2000). In addition, as this Panel has made clear, if a party believes that additional submissions are warranted, it should not simply file them with the Center; rather, the better practice is to seek consent from the Panel, with an explanation of why a supplemental submission is warranted.
In light of the Rules and the above-cited decisions, the Complainant shall submit, within 2 business days of its receipt of this Order, a statement, not exceeding 3 double-spaced pages, explaining why its proposed Reply is appropriate and why it waited until December 15 (more than 2 weeks after the filing of the Reply, and just 10 days before the anticipated date for decision) to alert the Center and the Panel that it wished to file a Reply. Furthermore, Complainant shall address whether, in the event the Reply is accepted in whole or in part by the Panel, to permit Respondent the right to respond (and a proposed date for the deadline for submission of a Sur-Reply). See Unibanco - União de Bancos Brasileiros S.A. v. Vendo Domain Sale, Case No. D2000-0671 (WIPO, Aug. 31, 2000). Thereafter, the Respondent may (but is not obligated to) submit within two business days of its receipt of Complainant's submission its own statement, not exceeding 3 double-spaced pages, concerning whether the Panel should accept the Reply and, if so, whether Respondent should be given a right to respond (including a proposed date for the submission of any Sur-Reply).
On December 22, 2000, Complainant submitted the requested statement. Complainant argued that a Reply was appropriate in this case to inform the Panel of "new and significant" evidence of Respondent’s bad faith that Complainant had uncovered "just days before" Complainant filed the Reply. This evidence consisted of:
(1) a series of conversations between Complainant and Respondent throughout the week ending December 8, 2000 in which Complainant sought Respondent’s consent to change web hosting providers for the Domain Name, which request was denied by Respondent; and
(2) further allegations that Respondent admitted that he does not have rights to the Domain Name and is holding the Domain Name only to force Complainant to acquiesce to his severance demands.
Complainant also argued that a Reply was appropriate to respond to Respondent’s evidentiary objections and acquiescence defense.
Respondent submitted its statement on December 27, 2000, opposing the request that the Panel accept the Reply, Respondent argued that the Complainant contrived this "new evidence" by calling Respondent’s counsel to ask Respondent to change the Administrative Contact of the Domain Name. Respondent alleges that, during this conversation, Complainant said nothing about gaining consent to change web-hosting providers. Further Respondent denies the allegation that he ever admitted that he had no rights to the Domain Name.
Based on the Panel’s review of these submissions, the Panel denies the Complainant’s request that the Panel consider the Reply. As the cases cited in the Interim Order make clear, both the Policy and the Rules demonstrate a strong preference for single submissions by parties. This truncated process, specifically adopted by ICANN notwithstanding the availability of other litigation models, helps promote rapid, cost effective dispute resolution. CRS Technology Corp. v. CondeNet, Inc., File No. FA0002000093547 (NAF, Mar. 27, 2000).
Despite this strong preference for single submissions and the many Panel decisions that have derided and rejected uninvited replies, see cases cited in the Interim Order, Complainants routinely submit replies without any regard to whether they are justified under the narrow exceptions articulated by previous panel decisions. This not only delays the final adjudication, but also is usually a waste of party resources and is burdensome on the Center and panelists. Goldline International, Inc. v. Gold Line, No. D2000-1151 (WIPO Jan. 4, 2001).
The reasons Complainant articulated in its statement do not justify the acceptance of a reply in this case. First, as explained below, neither the "new" evidence concerning Complainant’s request to change web hosting providers, nor any of Complainant’s other evidence, is relevant to the determination of "bad faith" as that concept is used in the Policy. Second, Complainant’s allegation of Respondent’s admission is not new but rather is cumulative of evidence already in the record. Third, Complainant’s desire to comment on elements of the Response (the evidentiary objections and acquiescence defense) is not a sufficient basis to permit a reply. If it were, replies would be routine because complainants always would seek to provide some additional commentary, which is inconsistent with the procedures devised by ICANN. Further, to the extent the parties have different interpretations of the law regarding acquiescence or the admission of evidence, the Panel is fully capable of reading the relevant authorities and drawing its own conclusions as to the proper interpretation or, when necessary, specifically requesting additional submissions under Rule 12. Plaza Operating Partners, Ltd. Accordingly, the Panel declines to accept Complainant’s Reply and directs the Center not to send the Reply to the Panel.
4. Factual Background
The Complainant was founded in 1999 as @Source, LLC, a limited liability company. It is a privately-held company that advertises itself as e-business solution "to facilitate all facets of the procurement process" in apparel and footwear manufacturing.
The Complainant filed an intent to use application with the U.S. Patent and Trademark Office on April 17, 2000 for THE THREAD in connection with "communication services", and use-based applications on May 4 and May 18, 2000 to register the trademark THE THREAD for "insurance and financial services" and "transportation and storage services." Complainant claimed first use and first use in commerce of the trademark on May 2, 2000.
Complainant changed its name to The Thread Net LLC on April 14, 2000, and subsequently changed its name to TheThread.com, LLC on June 1, 2000.
Respondent is a co-founder of Complainant and acted as Complainant’s President from January 2000 to October 2000. In April 2000, Respondent agreed to attempt to purchase the Domain Name on the Complainant’s behalf. At the time, the Domain Name was available for purchase through the GreatDomains website, and Complainant did not want to try to purchase it directly for fear that, if its identity were known, it would have to pay more to acquire the name. Accordingly, Respondent contacted GreatDomains through his personal e-mail account and relayed an offer to buy the Domain Name for the asking price of $5,000. This offer was conveyed to the seller, who accepted it. The confirmation of the transaction was sent to Respondent on April 28, 2000, who forwarded it to the Complainant; the confirmation identified Respondent as the prospective registrant. GreatDomains also sent Respondent, who was listed as the "buyer", an invoice for the Domain Name, which he forwarded to Complainant. Complainant paid the purchase price for the Domain Name as well as all the registration fees and, after Respondent executed the NSI Registrant Name Change Agreement on May 27, 2000, the Domain Name was transferred to Respondent. Throughout this transaction, Respondent never once revealed Complainant’s interest to the seller or to GreatDomains.
In October 2000, Respondent resigned from the Complainant. Meanwhile, a due diligence review by Complainant in early October 2000 showed that Respondent had registered the Domain Name in his own name, at which time the Complainant asked Respondent to transfer the Domain Name. Respondent refused on the grounds that he is a co-founder of Complainant, is entitled to a share of the Complainant’s profits, and, therefore, has legitimate rights to the Domain Name.
5. Parties’ Contentions
Complainant avers that it is entitled to transfer of the Domain Name because Respondent breached his fiduciary duty to the Complainant. Complainant argues that Respondent purchased the Domain Name as Complainant’s agent, and was obligated to transfer the Domain Name after the transaction was complete. Further, Complainant asserts that it told Respondent that he was supposed to register the Domain Name under Complainant’s name and was unaware that he had not until the October due diligence review revealed otherwise.
With reference to the Policy, Complainant asserts that the Domain Name is identical or confusingly similar to its trademark for the following reasons:
- The Domain Name is identical to its trademark, THE THREAD, because it simply adds ".com" to the trademark.
- The commercial impression conveyed by the Domain Name and the trademark is identical; therefore, the Domain Name conveys a false designation of origin or sponsorship.
- Complainant asserts that the Respondent has no legitimate interests in the Domain Name for the following reasons:
- Respondent is not using or planning to use the Domain Name for a bona fide commercial purpose.
- Respondent is not using or planning to use the Domain Name in a noncommercial or other fair use manner.
- Respondent is not commonly known by the Domain Name.
- Respondent has never asserted any rights to the Domain Name.
Complainant asserts that Respondent registered and used the Domain Name in bad faith for the following reasons:
- When Respondent registered the Domain Name he knew that the Complainant was the rightful owner of the Domain Name.
- Respondent has no legitimate business purpose for the Domain Name.
- Respondent is using the Domain Name to extort a severance payment from the Complainant.
Respondent denies that the Complainant can satisfy any of the three criteria set out in paragraph 4(a) of the Policy. First, Respondent argues that the Domain Name is not identical to a mark in which Complainant has rights because Complainant has yet to use the mark in a way that creates trademark rights.
Second, Respondent asserts that he has legitimate rights in the domain name because he is a founder of Complainant. Moreover, he vigorously disputes Complainant’s allegation that he is holding the Domain Name hostage to use as leverage during their severance discussions.
Third, Respondent denies registering or using the Domain Name in bad faith. In support of this allegation, Respondent avers:
- He did not conceal his registration of the Domain Name from the Complainant.
- He did not register the Domain Name primarily to sell, rent or transfer it to Complainant for profit.
- He registered only one Domain Name (that is, there is no pattern of cybersquatting registrations) and he did not register the Domain Name to disrupt the business of a competitor.
6. Discussion and Findings
As the above factual recitation should make clear, this is not a garden-variety cybersquatting case. In fact, it is not a cybersquatting case at all. Rather, this appears to be a breach of contract and breach of fiduciary duty dispute between former partners. The only arguable reason that Complainant is seeking relief in this forum is that the property at issue is a domain name.
This Panel is not a general domain name court, and the Policy is not designed to adjudicate all disputes of any kind that relate in any way to domain names. Rather, the Policy is narrowly crafted to apply to a particular type of abusive cybersquatting. To invoke the Policy, a Complainant must show that the domain name at issue is identical or confusingly similar to a mark in which the Complainant has rights, that the Respondent lacks rights or a legitimate interest in the domain name, and that the Respondent registered and used the name in bad faith. Policy ¶ 4(a). To attempt to shoehorn what is essentially a business dispute between former partners into a proceeding to adjudicate cybersquatting is, at its core, misguided, if not a misuse of the Policy. Latent Technology Group, Inc. v. Bryan Fitchie, File No. FA0007000095285 (NAF Sept. 1, 2000) (dispute concerning employee’s registration of domain name in his own name and subsequent refusal to transfer it to employer raises issues of breach of contract and breach of fiduciary duty that are more appropriately decided in court, not before a UDRP panel).
This alone is enough to justify denial of the Complaint. That Complainant has failed to satisfy the requirements of the Policy is all the more apparent when one dissects the Complainant’s attempt to characterize Respondent’s registration and use of the domain name as having been in "bad faith," as that term is used in Paragraph 4(a)(iii) of the Policy.
It is true, of course, that the four examples of bad faith listed in the Policy are not exhaustive; other types of bad faith cybersquatting also are properly actionable under the Policy. Respondent’s alleged bad faith, though, is not as a cybersquatter, but rather, through his alleged breach of contract and fiduciary duties. In this sense, Respondent’s actions are quite different from those in the two cases cited by Complainant, PairGain Technologies, Inc. v. Michael Centrella, File No. FA0003000094292 (NAF Apr. 19, 2000), and Hankison International v. Hankisoninternational.com, File No. FA0004000094393 (NAF May 3, 2000). In both of those cases, a former employee registered a domain name that squatted on his former employer’s rights. Here, Respondent was happily employed at the time he registered the Domain Name, and he registered the Domain Name with the full consent and knowledge of Complainant. (In that connection, Complainant’s assertion that it did not know that Respondent was registering the Domain Name in his personal name is not credible.) Thus, he did not have the requisite bad faith when he registered the Domain Name, which is an express requirement of the Policy.
Also inapposite is Westfield Corp. v. Graeme Michael Hobbs, Case No. D2000-0227 (WIPO May 18, 2000), which Complainant cites as support for its argument that Respondent’s alleged use of the Domain Name as leverage in his severance negotiations constitutes bad faith. In that case, the Respondent had no prior business relationship with the Complainant; rather, he was using the domain name to try to force Complainant to use his independent web-hosting service – a classic form of cybersquatting except that he sought work rather than cash.
This decision should not be read as a vindication of Respondent’s conduct, or that Respondent has not acted in "bad faith" under a broader interpretation of that phrase. His argument that he has a legitimate interest in the domain name because he is a co-founder of, or shareholder in, Complainant ignores the black letter law that a corporation (or, here, a limited liability company) is a separate legal entity that can itself own property. Indeed, Respondent has conceded that he registered the Domain Name as agent for Complainant, his principal, which undermines any argument that Respondent personally has a legitimate ownership interest in the Domain Name. In these circumstances, Respondent’s refusal to transfer the Domain Name is inexplicable, unless Respondent has some sort of "set off" theory that entitles him to keep the Domain Name because of a dispute with Complainant over the terms of his employment or termination thereof. If that is the case, though, it strains credibility for Respondent to argue that he is holding the Domain Name for any purpose other than as "leverage" in his negotiations with Complainant.
Complainant has failed to establish that Respondent registered and used the domain name thethread.com in bad faith. The Panel therefore denies the Complainant’s request that the domain name be transferred from Respondent to Complainant.
David H. Bernstein
Dated: January 5, 2001