Nominet UK Dispute Resolution Service 
DRS 04864
Optek Music Systems, Inc. -v- InnIdeaz 
Decision of Independent Expert 

1.	Parties: 
Complainant:	Optek Music Systems, Inc. 	
Country: 		US

Respondent:	InnIdeaz 	
Country: 
	Norway	

2. Domain Name: fretlight.co.uk (“the Domain Name”). 

3. Procedural Background: 

3.1	The Complaint was lodged with Nominet on 16 July 2007. Nominet validated the Complaint and notified the Respondent of the Complaint on 17 July 2007 and informed the Respondent that he had 15 days within which to lodge a Response. The Respondent responded on 19 July 2007 with a Reply being lodged on 25 July 2007. Mediation of the dispute then occurred with the process concluding on 28 August 2007 with both parties unable to reach a resolution. On 11 September 2007 the Complainant paid Nominet the appropriate fee for a decision of an Expert pursuant to paragraph 7 of the Nominet UK Dispute Resolution Service Policy (“the Policy”) and paragraph 8 of the Nominet UK Dispute Resolution Service Procedure (“the Procedure”). 

3.2	Andrew Murray, the undersigned, (“the Expert”) has confirmed to Nominet that he knew of no reason why he could not properly accept the invitation to act as Expert in this case and further confirmed that he knew of no matters which ought to be drawn to the attention of the parties, which might appear to call into question his independence and/or impartiality. On 18 September 2007, Nominet invited the undersigned, the Expert, to provide a decision on this case. 

4. Outstanding Formal/Procedural Issues (if any): 

4.1	The Respondent made a further representation following the Reply which fell under the classification of a non-standard communication under paragraph 13(b) of the Procedure. In accordance with that procedure Nominet passed on to the Expert the opening paragraph of the communication. The Expert in the interests of equity has since received and read that communication in full. Where relevant it will be referred to as the “Respondent’s Further Communication”.  

5. The Facts 
5.1	The Complainant is a US based Corporation which provides an educational training system using a guitar and associated technology under the trade name Fretlight. The Fretlight system teaches people how to play the guitar by lighting up LED lights on the fret of the guitar indicating where they should place their fingers while learning to play the desired note or chord. 

5.2	The Complainant indicates that they have been in the business of supplying such systems, using the name Fretlight on guitar products for over 18 years. I have no reason to doubt this.

5.3	The Complainant possesses both US and Community Trade Marks in the term “Fretlight”. Its US Trade Mark (2933210) was registered on 15 March 2005, the application having been made on 4 March 2004.  The corresponding CTM (004869574) was registered on 20 March 2007 having been filed on 31 January 2006. 

5.4	The Complainant owns and operates an online business from the domain name fretlight.com. A check of the WHOIS database confirms that they have held the registration for this domain name from 3 October 2003. 

5.5	The Respondent is a Norwegian based corporation which has been an official distributor of the Complainant’s products since 2004. 

5.6	The Respondent registered the Domain Name on 28 February 2006. 

5.7	The Domain Name is used to operate a site which offers for sale in the UK marketplace Fretlight guitars produced by the Complainant. On the site the Respondent designs themselves as an ‘Authorised Fretlight Distributor’.   

6. The Parties’ Contentions 
The Complainant contends that: 
The Complainant has rights in the Domain Name because:
6.1 	The Complainant owns and controls the trademark “Fretlight” both in the US and the EU.
6.2	The Complainant has been conducting business using the “Fretlight” mark on their Fretlight guitar products for over 18 years, providing a patented guitar and associated technology under the trade name Fretlight.
6.3	The Complainant owns the registration of the Domain Name fretlight.com, and has been using this name as part of a genuine e-commerce offering.  
The use of the Domain Name by the Respondent shows that it is an Abusive Registration as:
6.4 	The Registrant has illegally obtained and registered the Domain Name using our registered US and UK trademark “Fretlight”.

6.5	The Registrant did not obtain permission, nor are they willing to relinquish or transfer the Domain Name to the Complainant.

Respondent: 
The Respondent contends that: 
6.6 	They are an official distributor of the Complainant’s products and the Domain Name was registered by them in 2006 for the purpose of selling the product of the Complainant. At the time it was registered the Complaint had no objections to the Registration. 
6.7	In mid 2006 there was a dispute between the parties about the quality of products the Respondent was receiving. The Respondent wished to return sub-standard items but the Complainant refused their return. At this point communication between the parties broke down.
6.8	The Respondent still has a stock of the Complainant’s products which it is continuing to market in the UK. It is the belief of the Respondent that they are entitled to continue to use the Domain Name to sell the remaining stock of Fretlight Products which it possesses. 
6.9	The action of the Respondent in using the Domain Name in this fashion has never been, is not, and will not be detrimental to the Complainant. In fact as they continue to advertise and sell the Complainant’s products on the website in can only be beneficial to them. The Complainant only ever uses the Domain Name to advertise and offer for sale the Complainant’s products. 
Reply: 
In Reply the Complainant contends that: 
6.10 	The Complainant never authorised the Respondent to register the Domain Name. Further, the Respondent never asked for permission to use, let alone register, the Domain Name. Once the Complainant found out that the Respondent had registered the Domain Name, they immediately contacted its corporate law firm, who sent a letter by e-mail to the Respondent demanding that he relinquish the Domain Name immediately. The Respondent never replied.
6.11	The Respondent was granted an official distributorship of the Complainant’s Fretlight guitars, limited only to the countries of Norway, Sweden and Denmark, from 10 December 2004 to 30 December 2005. They are no longer an exclusive distributor of the Complainant’s products and haven’t been since 1 January 2006.
6.12	The Respondent’s issues regarding product quality are in no way relevant to the issue of cybersquatting or unlawful domain name registration and should not be considered as evidence to any right, use, or lawful registration with regards to the Domain Name. 
6.13	The Respondent has not gained any rights to the Domain Name regardless of any product quality dispute they may have with the Complainant. 
6.14	At one point the Complainant may have informed the Respondent that they could sell the Complainant’s product in the UK as the Complainant had ended their relationship with their prior UK distributor, but they did not grant the Respondent an exclusive distributorship in the UK and certainly never granted them the right to register the Domain Name. 
6.15	The Respondent never informed the Complainant of their desire or intention to register the Domain Name. The Complainant only found out about it when they questioned conflicting product listings on the US eBay website which were conflicting with their sales and which were prohibited in the distribution arrangement.
6.16	The Complainant immediately objected to the Respondent’s registration and use of the Domain Name.  When questioned about the registration as well as reminded that they were no longer an official distributor for the Complainant, the Respondent admitted a lack of knowledge of the laws regarding such domains and trademarks.
6.17	The Respondent is wrong that they should be granted the use of the Domain Name in order to sell their remaining stock of product. The Domain Name is not their right to use and can only be used by an express grant from the Complainant, who never granted such permission.
6.18 	The Respondent is wrong that their actions are not detrimental to the Complainant. The UK is a large market for the Complainant and they are being prohibited from marketing and selling to that large customer base, either directly or through an authorised distributor, by the Respondent’s willful and deliberate procurement, registration, and use of the Domain Name. 
In the Respondent’s Further Communication, the Respondent goes on to contend that:
6.19 	The Respondent has never received any previous complaint from the Complainant regarding the use of the Domain Name. 

6.20	The Respondent has never received any notice of our termination as a distributor. 

6.21	It is the Respondent’s intention to continue to use the Domain Name until every last item of the Complainant’s product has been sold. This may take some time. The Complainant is solely responsible for the situation, by supplying substandard goods and refusing to accept them for return and compensation.

6.22	We restate that this process of disposing of our stock could be accelerated by the Complainant accepting responsibility for its actions. 

6.23	The Complainant continues to ignore all attempts at direct contact from the Respondent and other parties, with genuine reason for complaint.

7. Discussion and Findings 
7.1	General
7.1.1	I am compelled to make the unusual move of making a preliminary ruling on the admissibility of evidence in this dispute. It is clear from the submissions of both parties that a pre-existing commercial arrangement broke down during 2006. The root of this dispute is to be found in this breakdown. The Nominet DRS is not the place to discuss issues arising in relation to product quality, failure to supply warranties, supply problems or any other cause of that breakdown. Equally I am not in a position to analyse the details of the distribution agreement reached between the Complainant and the Respondent. This procedure is only to determine whether the use the Respondent makes of the Domain Name is abusive as defined in paragraph 1 of the Policy, as further detailed in paragraph 3 of the Policy. I will therefore restrict the following analysis to evidence and submissions which prosecute this agenda and to no others.   
7.1.2 	According to paragraph 2 of the Policy, in order to succeed in this complaint, the Complainant has to prove to the Expert that, on the balance of probabilities that:
i.	the Complainant has Rights in respect of a name or mark which is identical or similar to the Domain Name; and 
ii.	the Domain Name, in the hands of the Respondent, is an Abusive Registration.
7.2		Complainant’s Rights
7.2.1 	Rights are defined in the Policy as including, but not limited to, rights enforceable under English law. This is usually demonstrated by reference to a trade mark registration or evidence of active trading using the name or mark in question. 
7.2.2 	In this case, the Complainant relies upon their registered rights in the mark “Fretlight” and in their domain name fretlight.com. 
7.2.3	The Complainant has demonstrated that they hold a US Trade Mark registration in the name ‘Fretlight’ and have held this from 15 March 2003 (para. 5.3) and a corresponding registration at the EU Office for Harmonisation, filed on 31 January 2006 (para. 5.3). The Complainant has failed to produce any evidence of a claimed UK Trade Mark and I must therefore assume no such registration exists. 
7.2.4 	Both the US and EU Trade Marks predate the registration of the Domain Name by the Respondent (para. 5.6).
7.2.5	The Respondent also refers the Expert to their registration, and operation, of the fretlight.com domain name, first registered on 3 October 2003 (para.5.4). This registration also predates the registration of the Domain Name by the Respondent.
7.2.6	The Expert notes however that the Complainant provides no specific evidence of any rights or registrations in the UK. The Expert though further notes that the definition of “Rights” in paragraph 1 of the Policy defines rights as “including but not limited to rights enforceable under English Law. It is well established that both US Registered Trade Marks and Community Trade Marks are acceptable substitutes for a UK Registered Trade Mark and as such, on the basis of the evidence presented the Expert is satisfied that the Complainant has rights in respect of the mark “Fretlight” which is sufficiently similar to the Domain Name in question. Consequently, the Expert finds that, for purposes of the Policy, the Complainant has rights in respect of a name or mark, which is identical or similar to the Domain Name.

7.3	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. 
7.3.1 	The Complainant is not terribly clear on which heads of claim they are relying upon, claiming baldly “The Registrant has illegally obtained and registered the Domain Name using our registered US and UK trademark “Fretlight”” (para. 6.4) and “The Registrant did not obtain permission, nor are they willing to relinquish or transfer the Domain Name to the Complainant” (para 6.5). In their Reply this was extended somewhat by claiming “The Respondent is wrong that their actions are not detrimental to the Complainant. The UK is a large market for the Complainant and they are being prohibited from marketing and selling to that large customer base, either directly or through an authorised distributor, by the Respondent’s willful and deliberate procurement, registration, and use of the Domain Name” (para. 6.18). 
7.3.2	It seems the Complainant is making two separate claims: firstly, under paragraph 3(a)(1)(C) the Respondent has registered or otherwise acquired the Domain Name primarily for the purpose of unfairly disrupting the business of the Complainant; secondly, under paragraph 3(a)(1)(B) 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. There may be a further claim under paragraph 3(a)(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. This though is not made explicit by the Complainant and as such will not be examined.  
7.3.3. Paragraph 3(a)(i)(B)  

7.3.3.1	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 Complainants have Rights.” 

7.3.3.2	The burden of proof thus rests initially with the Complainant and this burden requires them to discharge not simply that the Domain Name may act as a blocking registration, but that this was the primary intent of the Respondent at the time the registration was made. 

7.3.3.3	This issue was discussed in the Appeal decision Viking Office Products Inc. v Wenda Sparey [2005] 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. 

7.3.3.4	This case appears to be a perfect case in point. Although there is no doubt that the fact that the Respondent is using the Domain Name means that the “Complainant is being prohibited from marketing and selling to that large customer base, either directly or through an authorised distributor, by the Respondent’s willful and deliberate procurement, registration, and use of the Domain Name” (para. 6.18), this is true of any domain name registration made by anyone other than the Complainant. The Complainant has not established the Respondent meant for this to be primarily a blocking registration. The evidence in fact rather points to the contrary with the site being used to offer for sale the Complainant’s product and with the Complainant at one point in an e-mail to the Respondent stating “we may allow you to continue to use this domain name only if you are active distributor of the product”. Further the registration of the Domain Name in no way prevents the Complainant from marketing to the UK through its fretlight.com site or though a variety of alternate UK addresses such as fretlight-guitars.co.uk. 

7.3.3.5	On the basis of the above I find the Domain Name is not a blocking registration under paragraph 3(a)(1)(B) of the policy.
7.3.4 Paragraph 3(a)(i)(C)  
7.3.4.1	The Complainant is required to establish that the Respondent has “registered or otherwise acquired the Domain Name; primarily for the purpose of unfairly disrupting the business of the Complainant.” 

7.3.3.2	Again the burden of proof thus rests initially with the Complainant and this burden requires them to discharge not simply that the Domain Name may be used for the purpose of disrupting their business, but that this was the primary intent of the Respondent at the time the registration was made. 

7.3.3.3	The evidence clearly indicates that the primary intention of the Respondent was to register this Domain Name for the purpose of marketing the Complainant’s products in the United Kingdom. Was this an unfair disruption of the Complainant’s business?

7.3.3.4	Some evidence in favour of this position is supplied by the Complainant. 

7.3.3.4.1	“The Respondent was granted an official distributorship of the Complainant’s Fretlight guitars, limited only to the countries of Norway, Sweden and Denmark, from10 December 2004 to 30 December 2005. They are no longer an exclusive distributor of the Complainant’s products and haven’t been since 1 January 2006” (para. 6.11).
7.3.3.4.2	“The Complainant immediately objected to the Respondent’s registration and use of the Domain Name. When questioned about the registration as well as reminded that they were no longer an official distributor for the Complainant, the Respondent admitted a lack of knowledge of the laws regarding such domains and trademarks” (para. 6.16).
7.3.3.4.3	“The Respondent is wrong that they should be granted the use of the Domain Name in order to sell their remaining stock of product. The Domain Name is not their right to use and can only be used by an express grant from the Complainant, who never granted such permission” (para. 6.17).

7.3.3.5	In their Further Communication the Respondent states:

7.3.3.5.1	“The Respondent has never received any previous complaint from the Complainant regarding the use of the Domain Name” (para 6.19)
7.3.3.5.2	“The Respondent has never received any notice of our termination as a distributor” (para. 6.20)

7.3.3.6	If the Complainant establishes that the Respondent’s use of the Domain Name was never authorised by them then it appears to the Expert that as the Respondent were only authorised to conduct business using the “Fretlight” mark in the Scandinavian territories, the registration of the Domain Name would be in breach of the legitimate business interests of the Complainant who is entitled to authorise another party with an exclusive distribution agreement for the UK. The decision therefore turns on the evidence of the communications between the parties laid before the Expert.
 
7.3.3.7	Having examined the communications between the parties I find that two key passages of communication.

7.3.3.7.1	Firstly in an e-mail from Rusty Shaffer, Chief Executive Officer of the Complainant, to Joe Hannan, owner of the Respondent, dated 20 June 2006 he states: “we noticed that you have registered www.fretlight.co.uk. I assume you are aware that this is reserved for Optek’s use under the international cybersquatting laws? We may allow you to continue to use this domain name only if you are active distributor of the product and meet our sales needs in your territory” (emphasis added). 
7.3.3.7.2	Secondly in an e-mail from Allan L. Schare of McDermott, Will & Emery LLP (the Complainant’s legal advisors) again to Mr. Hannan dated 29 November 2006 it is stated: “Optek encourages you to sell your remaining inventory of Fretlight products so that you can cease doing business in this product line, cease all other use of Optek’s registered tradenames and trademarks, videos, copyrighted advertising material etc., and relinquish the www.fretlight.co.uk web domain that you have never been authorised to use. Please immediately respond and advise me of your current level of Fretlight inventories and estimated time for completing the liquidation of your inventory so that this can be accomplished.”
7.3.3.8	At this point the communications I have been furnished with cease but the Respondent claims that “The Complainant continues to ignore all attempts at direct contact from the Respondent and other parties, with genuine reason for complaint” (para 6.23).

7.3.3.9	On the basis of the communications supplied to me I find that despite the claim of Mr. Schare that the Respondent was never authorised to use the Domain Name, they had been implicitly authorised by Mr. Shaffer’s e-mail of 20 June 2006 where he gave them authorisation to use the name should they continue to meet sales targets for the Scandinavian territories. This authorisation is then implicitly extended by Mr. Schare’s e-mail of 29 November 2006 until the point at which the Respondent sells their remaining inventory of Fretlight products. As it is clear the Respondent still possesses a considerable inventory of Fretlight products “It is the Respondent’s intention to continue to use the Domain Name until every last item of the Complainant’s product has been sold” (para 6.21), this implied authorisation would appear to remain in place unless retracted by further communication between the parties, which if it does exist has not been made available to the Expert. 

7.3.3.10 On the basis of the above I find the Domain Name is not an abusive registration under   paragraph 3(a)(1)(C) of the policy.

7.3.4	    Finding
Accordingly, the Expert finds that the Domain Name is not an Abusive Registration as defined by paragraph 1 of the Policy on the basis that it is not being used in a manner which takes unfair advantage of the Complainant’s rights.

8.  	Decision:
In light of the above findings, namely that the Complainant has Rights in respect of a name or mark which is similar to the Domain Name but that the Domain Name, in the hands of the Respondent, is not an Abusive Registration, the Expert directs that the complaint in respect of the Domain Name be refused.

Andrew Murray						            Date: 20 September  2007