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You are here: BAILII >> Databases >> Nominet UK Dispute Resolution Service >> Manorgate Ltd. (t/a Direct Flooring) v Moffat [2005] DRS 02736 (24 October 2005) URL: http://www.bailii.org/uk/cases/DRS/2005/02736.html Cite as: [2005] DRS 02736, [2005] DRS 2736 |
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Manorgate Ltd. (t/a Direct Flooring) v Moffat [2005] DRS 02736 (24 October 2005)
Complainant
Complainant: Manorgate Ltd. t/a Direct Flooring
Country: GB
Respondent
Respondent: Mr Ian Moffat
Country: GB
directflooring.co.uk, directflooring.me.uk, directflooring.org.uk (the "Domain Names")
The Complaint was lodged with Nominet on the 15th of June 2005, with papers being received and validated by Nominet on the same date. The Respondent was informed of the Complaint by letter on that same day. The Respondent entered a Response which was received by Nominet on the 7th of July 2005. The Complainant was advised by Nominet of this Response on the 8th of July 2005 and on the 18th of July 2005 a Reply was received from the Complainant.
Nominet initiated its mediation procedure on the 21st of July 2005. The mediation procedure proved unsuccessful and on the 8th of August 2005 Nominet wrote to the Complainant informing them that the matter could be referred to an Independent Expert for decision. On the 11th of August 2005, the Complainant paid Nominet the required fees for a decision of an expert in accord with Paragraph 6 of the Nominet (UK) Dispute Resolution Service Policy ("the Policy"). On the same date Nominet contacted myself (Andrew Murray) to inquire whether I might provide an independent decision in this dispute. I formally confirmed to Nominet that I knew of no reason why I could not properly accept the invitation to act as an Expert in this case and further confirmed that I knew of no matters which ought to be drawn to the attention of the parties, which might appear to call into question my independence and/or impartiality. On the 18th of August 2005 I was appointed as Independent Expert for this dispute.
There are no outstanding formal/procedural issues.
The Complainant (Manorgate Limited) is a company, registered in Scotland and incorporated under the Companies Acts with Company Number SC216744 which trades as Direct Flooring. The Complainant was formed in 2001 as a vehicle to purchase the assets and stock of Direct Flooring Ltd. (a company, registered in Scotland and incorporated under the Companies Acts with Company Number SC197937) from the liquidator of that company. The Complainant did not purchase at that time the goodwill of Direct Flooring Ltd. (in liquidation) but has since that time spent a large amount of time and money promoting the name "Direct Flooring" in order to be distinctive to them and to be recognised by consumers as designating their products and services. At the time the Complainant purchased the assets of Direct Flooring Ltd. (in liquidation), an undertaking was secured that neither Direct Flooring Ltd. (in liquidation) or its successors would trade using the name Direct Flooring. This undertaking would appear to extend to John Semple Senior who was the owner of Direct Flooring Ltd. (in liquidation) at the time of this disposal. The Directors of the Complainant are John Semple Junior and Scott Semple, sons of the aforementioned John Semple Senior.
The Respondent is Mr Ian Moffat, who is described by both parties as a personal friend of Mr. John Semple Senior, the original owner of Direct Flooring Ltd. (in liquidation).
The Domain Name directflooring.co.uk was originally registered on 21 April 2004 by Mr Joe Rooney, an individual, who set up an initial webpage containing links to some commercial websites offering flooring and carpentry services. At the same time he instructed the sale of the Domain Name through an online sales agency. The Domain Name was offered for sale to the Complainant for an undisclosed sum, an offer which was refused by the Complainant. In February 2005 the Respondent became aware that Mr. Rooney was offering the Domain Name for sale and offered to purchase said name. Mr. Rooney advised the Respondent of the failure of his earlier attempt to sell the name to the Complainant and then transferred the Domain name to the Respondent upon payment of the requisite fee. The Respondent then, on 10 March 2005, registered the other Domain Names in issue, namely directflooring.me.uk and directflooring.org.uk through Fasthosts Internet Ltd. and on the same date through another agent registered the domain names directflooring.info, directflooring.biz and directflooring.org, which are not subject to the Nominet Dispute Resolution Policy and Procedure.
On 29 March 2005 the Complainant, through their legal representatives Maclay, Murray & Spens, sent a recorded delivery letter to the Respondent informing him of their rights in the Domain Names and asking for him to transfer the names to them. This letter was returned on 5 April 2005 having been "refused". Two further letters sent on 11 April were also returned to the Complainant's legal representatives, the first having been notated "return to sender" and the second "return to sender, signed for by mistake".
The Respondent has incorporated two new companies Direct Flooring (Scotland) Ltd. (a company, registered in Scotland and incorporated under the Companies Acts with Company Number SC282200), registered on 29 March 2005 and Direct Flooring Ltd. (a company, registered in Scotland and incorporated under the Companies Acts with Company Number SC283567), registered on 21 April 2005. The reason for separate registrations may be explained by the fact that Direct Flooring Ltd. (in liquidation) (SC197937), the original owner of the assets and stock of the Complainant, was only finally dissolved on 13 April 2005, preventing registration of the name Direct Flooring Ltd. until that time. At this date there is no evidence that either of these new companies have begun trading.
Complainant:
The Complainant contends that:
Respondent:
The Respondent contends that:
Reply:
The Complainant was offered the opportunity to reply to the response and on the 7th of July 2005 these further replies were entered on behalf of the Complainant:
General
The Complainant has to establish under paragraph 2(a)(i) of the Policy that it has Rights as defined in paragraph 1 of the Policy in respect of a name or mark identical or similar to the Domain Name and under paragraph 2(a)(ii) of the Policy that the Domain Name, in the hands of the Respondent, is an Abusive Registration, again as defined in paragraph 1 of the Policy. The Complainant has the burden to prove on the balance of probabilities both that it has such rights and also that the Domain Name, in the hands of the Respondent, is an Abusive Registration.
7.1 Rights in the Domain Name
The Complainant relies upon the goodwill they have established in the trading name "Direct Flooring". The definition of "Rights" for the purposes of the UDRP Procedure and Policy is contained in Paragraph 1 of both the DRS Policy Version 2, "the Policy". and the DRS Procedure Version 2, "the Procedure" and is "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". In this complaint both arms of this definition are in dispute and therefore I will deal with each in turn.
7.1.1 Rights
It is clear that if the Complainant can establish goodwill in the name "Direct Flooring" it will fulfil the first arm of the definition. This has been established in several DRS decisions, including The Rug Company v Wonderland Rug Company DRS 00370; Chris Dellar Ltd. v Jonathan Hunt DRS 02459 and T.C. Hayes Limited v Jason Green DRS 01180. The Respondent challenges the assumption of that the Complainant holds such goodwill on the basis that "The goodwill in the Direct Flooring name was not purchased by the Complainant in 2001, so any goodwill in that name must have been accrued by the Complainant since 2001 and not before." (Response, Paragraph 7). The Complainant replies that "Goodwill is essentially a connection formed in the mind of the public with a business based on the name of the business and its reputation. There is continuing use of the Name from 1999 (the year of incorporation of the earlier Direct Flooring Limited) until today. Even on the basis that goodwill has only been accruing to the Name since 2001 then that goodwill must attach to the Complainant as it has been exclusively and continuously trading under the Name, and has spent a great deal of time and effort promoting it since that time." (Reply, Paragraph 6). It is my view that it is irrelevant whether the Complainant's goodwill has accrued from 1999 or from 2001. Both parties seem to be in agreement that at least since 2001 the complainant has traded under the name "Direct Flooring" and the Respondent does not challenge that goodwill may have accrued in that name from that date. In the decision Chris Dellar Ltd. v Jonathan Hunt DRS 02459, the Expert assumed "that the Complainant here has begun to develop some reputation and goodwill, which over time will have given rise to common law rights that may well entitle it to restrain others from passing off their business as that of the Complainant by using the name Chris Dellar" and found that "the Complainant has Rights in respect of the name Chris Dellar" even though the Complainant had only been trading under that name for a period of four months at the time the Complaint was made. Thus the standard applied under Paragraph 1 of the Policy and Procedure is not particularly high and I am satisfied that the Complaint who has traded under the name "Direct Flooring" since 2001 through ten retail outlets across Scotland, fulfils this requirement.
7.1.2 Descriptive or Generic Terms
The Respondent further challenges the Complaint's ability to possess Rights in the name on the basis that "The name Direct Flooring is wholly descriptive of the Complainant's business." (Response, Paragraph 10). To assist in my deliberations the Respondent directs my attention to the decision of the House of Lords in Cellular Clothing Co Ltd v Maxton & Murray (1899) A.G. 326 where their Lordships held that the appellants, The Cellular Clothing Co Ltd, had failed to establish rights to the term "cellular cloth" which they had used for some ten years on the basis that "the words 'cellular' was an ordinary English word which appropriately and conveniently described the cloth…and that the term had not been proved to have acquired a secondary or special meaning so as only to denote the goods of the appellants." The Complainant challenges the applicability of the Cellular Clothing decision on two grounds. Firstly on the basis that it does not suggest an absolute bar on descriptive terms becoming part of a name in which a party may have rights. The Complainant asserts that "'Direct Flooring' does not amount to a mere description of the Complainant's business but is a unique name the Complainant has made distinctive to its business. This is demonstrated by the expenditure incurred on advertising and the increased turnover. The Complainant also has rights in the Name as an unregistered trade mark which would be enforceable under English and Scottish law. As stated in Nominet decision DRS 02543 (Dawkes Music v Musical Instrument Megastore Limited) at paragraph 7.4, 'The Policy defines Rights as including but not being limited to...rights enforceable under English law...This has always been treated in decisions under Nominet's DRS as a test with a low threshold to overcome and I think that must be the correct approach.' In the English case of Robin Smith and others v Beds Direct Nationwide Limited [2001] WL 1479773 (Ch D) the judge held that the claimant's passing off claim succeeded in relation to the name 'Beds Direct' which it had traded under for 6 years. In so doing the judge held that 'Beds Direct' was not wholly descriptive and less descriptive than, for example, 'Office Cleaning Services'" (Reply, Paragraph 8). The Complainant also challenges the length of time which is required to establish Rights in a name, suggesting the Courts have lowered expectations since the Cellular Clothing decision. "More recent case law than the Cellular Clothing case of 1899 has shown that it is possible for advertising to render a name or mark distinctive through use over a short period of time. In Penney v Penneys [1975] FSR 367 four years was considered sufficient to establish reputation and goodwill in a name. In Stannard v Reay [1967] RPC 589 three weeks was sufficient time to build up goodwill in the name "Mr. Chippy". Finally in Robert Smith & Others v Beds Direct Nationwide Limited [2001] WL 1479773 (Ch D) the English High Court decided that six year's use of the name was sufficient to succeed in a case of passing off." (Reply, Paragraph 9).
The question of whether a name is wholly descriptive of the Complainant's business has been examined several times under the Nominet DRS. In The Rug Company v Wonderland Rug Company DRS 00370, the Expert found: "The business of the Complainant is the retail of rugs and therefore the term 'The Rug Company' may be seen as descriptive of their business. It is certainly true that this is a generic term, but in this case the Complainant has used this term as a badge of trade for their particular business. Although generic, I do not believe this term to be 'wholly descriptive', an example of such a term would be 'rugs for sale' etc. I think the particular identifier 'The Rug Company' makes this the definite article rather than a descriptive term. I believe the Complainant has established a right in the name 'The Rug Company' in terms of paragraph 1 of the Policy." In Flowers Direct Online Ltd v Peter Calvert DRS 00610, the Expert found, in circumstances similar to this Complaint, that "the business of the Complainants is described as selling flowers and gifts to customers over the Internet. It follows that the Expert finds that 'flowersdirectuk' is not wholly descriptive of the Complainant's business."
In examining all the relevant materials, I find that it is quite common for generic terms to take on a secondary meaning when associated with a single company or individual. I find the case law cited by the Complainant to be more helpful in this regard than the decision in the Cellular Clothing case, which appears to have been overtaken in recent years. Having taken account of the decision in Robert Smith & Others v Beds Direct Nationwide Limited, and the DRS decisions DRS 00370, DRS 00610 and DRS 01528 (Exeter Airport Direct v Clint Thrower), I believe that the term "Flooring Direct" is capable of a secondary meaning and is not wholly descriptive of the Complainant's business. Therefore applying the standard set out in Dawkes Music v Musical Instrument Megastore Limited DRS 02543 that the definition of 'rights' "has always been treated in decisions under Nominet's DRS as a test with a low threshold to overcome" I find that that the Complaint has established that they have rights in respect of a name (Flooring Direct) which is identical or similar to the Domain Names.
7.2 Abusive Registration
To be an Abusive Registration the Domain Name must be one which either "...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 has been used in a manner which took unfair advantage of or was unfairly detrimental to the Complainant's Rights" (Paragraph 1 of the Policy)
Paragraph 3(a) of the Policy contains a non-exhaustive list of factors which may be evidence that the Domain Name is an Abusive Registration. These are as follows:
"Evidence of Abusive Registration
i. Circumstances indicating that the Respondent has registered or otherwise acquired the Domain Name primarily;
A. for the purposes 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;
B. as a blocking registration against a name or mark in which the Complainant has Rights; or
C. for the purpose of unfairly disrupting the business of the Complainant.
ii. 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 with the Complainant;
iii. The Complainant can demonstrate that the Respondent is engaged in a pattern registrations where the Respondent is the registrant of domain names (under .uk or otherwise) which correspond to well known names or trade marks in which the Respondent has no apparent rights, and the Domain Name is part of that pattern;
iv. It is independently verified that the Respondent has given false contact details to us; or
v. The Domain Name was registered as a result of a relationship between the Complainant and the Respondent, and the Complainant:
A. Has been using the Domain Name registration exclusively, and
B. Paid for the registration and/or renewal of the Domain Name Registration.
In their complaint, the Complainant relies upon paragraphs 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)ii, and 3(a)iii.
Paragraph 3(a)(i)(A)
This claim is made only in respect of one of the Domain Names, the directflooring.co.uk name. The Complainant bases their claim under this sub-paragraph on their assertion that "by a telephone call received by John Semple Junior, on or around 22 March 2005 at which time the Respondent offered to sell to the Complainant the Domain Name directflooring.co.uk for the exaggerated and unsubstantiated price of £50,000." (Complaint, Paragraph 1) The Respondent rejects this assertion denying "that he ever had a telephone call with John Semple Junior on or around 22 March 2005 to offer the Domain Names for sale for any sum." (Response, Paragraph 3). The Complaint re-asserts this assertion in their Reply, and provides letters of corroboration from Scott Semple and Richard Beattie (Accountant to the Complainant) but there is no written record of the offer, and no independent corroboration of the discussion which took place. Although the Complainant only requires to prove the "elements are present on the balance of probabilities" (Policy, paragraph 2(b)), the Complainant has not established to my satisfaction that such a conversation took place on or about 22 March 2005. The Complainant further asserts that "The Respondent did also offer the domain name directflooring.co.uk for sale to the public by virtue of the fact that the website to which this domain name resolved displayed a banner reading 'this domain is for sale'. (Reply, Paragraph 5). The Respondent denies any intent saying that the Content [of the website] was put in place by the original owner of the directflooring.co.uk domain name, Mr. Rooney, and that the respondent removed this content from the website once the Complaint brought it to his attention. The policy requires that the Respondent has "registered or otherwise acquired the Domain Name; primarily for the purposes of selling, renting or otherwise transferring the Domain Name." In this case the Complainant has not rebutted the Respondent's explanation. The Respondent bought the Domain Name and website as a package, with the advertisement in place. Once the advertisement was challenged it was removed from the website. There is no evidence that the Respondent registered the Domain Name primarily with a view to profiting from the name in breach of the conditions of paragraph 3(a)(i)(A). I therefore reject this part of the Complainant's claim.
Paragraph 3(a)(i)(B)
The Complaint contends that "There is a history of dispute (dating from before the registration of the Domain Names) between the Complainant and Respondent stemming from litigation between John Semple Junior and John Semple Senior, with whom the Respondent is engaged in various business partnerships. It is believed the Respondent, knowing of the Complainant's business and use of the Name, registered the Domain Names with the intent of blocking the Complainant's registration of the Domain Names in which the Complainant has rights." (Complaint, paragraph 2). The Respondent rejects this contention, noting that "The Respondent registered the Domain Names in consideration of a new business endeavour manufacturing and selling flooring to customers via the Internet. To this end the Respondent has incorporated the new Direct Flooring Ltd. and Direct Flooring (Scotland) Ltd. The Respondent may use these companies as vehicles for an Internet flooring business." (Response, paragraph 2), and "The Respondent denies that he has engaged a pattern of registrations to block the Complainant's registration of domain names under the Direct Flooring name. As explained above the Respondent is currently developing the Direct Flooring name for an Internet based flooring business." (Response, paragraph 4). In Reply, the Complainant notes, "The Respondent has not shown that he is engaged in, or will be engaged in a new business manufacturing and selling flooring to customers via the Internet and has made no appreciable use of the Domain Names since they were registered or acquired." (Reply, paragraph 3) and "The Respondent incorporated the relevant companies (the new Direct Flooring Ltd. and Direct Flooring (Scotland) Ltd.) after he offered the domain name directflooring.co.uk for sale to the Complainant and after correspondence from their legal representatives regarding the Complainant's rights with regard to this domain name was sent to the Respondent's home and work addresses." (Reply, paragraph 4).
This claim seems to be the central claim in this dispute. It is the only claim which applies equally to all three Domain Names. The Respondent has made no use, or preparation to use, the directflooring.me.uk and the directflooring.org.uk Domain Names which means that the Complainant is unlikely to succeed in a claim with regard to these names under Paragraphs 3(a)(i)(C) or 3(a)ii. As with the claim, above, under Paragraph 3(a)(i)(A), the Complainant is required to establish that the Respondent has "registered or otherwise acquired the Domain Name; primarily as a blocking registration against a name or mark in which the Complainant has Rights." The burden of proof thus rests initially with the Complainant and this burden requires them to discharge not simply that the Domain Names may act as a blocking registration, but that this was the primary intent of the Respondent at the time the registrations were made. This issue was discussed in the recent DRS Appeal decision Viking Office Products, Inc. v Wenda Sparey DRS 02201, where the majority panelists noted that "It is for the Complainant to prove on the balance of probabilities that the Domain Name, in the hands of the Respondent, is an Abusive Registration, that is that the Respondent is taking unfair advantage of, or is unfairly detrimental to the Complainant's rights". In that decision, the majority panelists noted that such decisions were often difficult to reach because of a lack of available evidence presented by the Complainant. This case is one such case where the Expert finds that he is being called upon to weigh two quite different explanations of events from the two parties.
Taking them in turn, does the Complainant discharge their burden of proof? The Complainant notes that the Domain Names form part of a wider pattern of registrations by the Respondent which also includes the domain names directflooring.biz, directflooring.info and directflooring.org. In addition, the Complainant relies in part upon the prior relationship between the Respondent and John Semple Senior to suggest that the Respondent's actions are part of a wider pattern of disruptive behavior on the part of the Respondent. Further evidence of this may be adduced from the recent company registrations made by the Respondent. The Complainant suggests that they do not believe that the Respondent is genuine in his claims to be developing new businesses in this field and that the registration of the Domain Names are blocking registrations and are part of this wider pattern of behavior suggesting the Respondent is seeking to disrupt the Complainant's business. The Respondent has registered six domain names and two company names in short order, and has to date taken no action to develop a trading presence using any of them. This evidence, when taken alongside his prior relationship with the Complainant and Mr. John Semple Senior, is, I believe, sufficiently compelling to discharge the burden of proof which falls on the Complainant.
Under paragraph 4(a)(i) of the Policy a non-exhaustive list of factors which may be evidence that the Domain Name is not an Abusive Registration is provided. These are:
i. Before being aware of the Complainant's cause for complaint (not necessarily the 'complaint' under the DRS), the Respondent has:
A. used or made demonstrable preparations to use the Domain Name or a Domain Name which is similar to the Domain Name in connection with a genuine offering of goods or services;
B. been commonly known by the name or legitimately connected with a mark which is identical or similar to the Domain Name; or
C. made legitimate non-commercial or fair use of the Domain Name
In response, the Respondent claims that he registered the Domain Names in consideration of a new business endeavour manufacturing and selling flooring to customers via the Internet. This appears to be a claim under paragraph 4(a)(i)(A). Crucially, though, the Respondent provides no evidence in support of this assertion apart from the fact that he contemporaneously registered two new company names. These registrations though may equally be evidence in support of the assertions of both parties, and do not indicate any preparation to undertake such new business endeavors as he claims. As was noted by the majority panelists in Viking Office Products, Inc. v Wenda Sparey, "where a domain name is used as the URL for a website pertaining to a fictitious or non-genuine business this would be a factor which would very much lead to negation of the test in paragraph 4(a)(i)(A) of the Policy." The Respondent does not appear to rely upon Paragraph 4(a)(i)(B), except in relation to the new companies he registered this year, and which all sides are agreed were only registered on or after the date the Complainant's legal advisors sought to contact the Respondent, while no claim is made at all under Paragraph 4(a)(i)(C). On the basis of the foregoing analysis it is my opinion that with the evidence available to me the Respondent, does not discharge the burden of proof that falls upon him once the Complainant has made a prima facia case that, on the balance of probabilities, the Domain Name, in the hands of the Respondent, is not an Abusive Registration.
Having examined all the materials available to me, I find that the Complainant has rights in terms of paragraph 1 of the Policy and Procedure and that on the balance of probabilities I find that the Complainant has proven their claim under paragraph 3(a)(i)(B) of the Policy. Further I find that the Respondent has failed to satisfactorily rebut the claim that the registrations in the hands of the Respondent are Abusive Registrations. Finally, as the Complainant has successfully discharged their claim under paragraph 3(a)(i)(B) here is therefore no need to examine the Complainant's other claims.
For the reasons set out above, namely that the Complainant has Rights in respect of a name or mark which is similar or identical to the Domain Names, and that the Domain Names, in the hands of the Respondent, are Abusive Registrations, the Expert directs that the Domain Names directflooring.co.uk, directflooring.me.uk, directflooring.org.uk be transferred to the Complainant.
Andrew D. Murray
24 October 2005