Photo.com Saved In UDRP But No Reverse Domain Name Hijacking

TUESDAY,27 January 2015 THE DOMAINS
According to the news from Domain.cn 1(1)on January 27th, Fotocom Société Anonyme of Ottignies-Louvain-la-Neuve, Belgium, just lost its bid to grab the generic domain Photo.com.

Although the three member panel threw out the case out finding the Complainant failed on the first element of not proving trademark rights the panel refused to find Reverse Domain Name Hijacking (RDNH).

Here are the highlights:

Based in Belgium, Complainant describes itself as “a market leader in the online digital photo industry,” serving 186 countries. Complainant holds registered Benelux trademark no. 833326 for FOTOCOM and registered Community trademark no. 10500726 for FOTO.COM.

Complainant contends that Respondent is actually controlled or influenced by its former Chief Executive Officer (hereinafter “Panos”).

According to the Complaint, Panos was Complainant’s CEO from 2005 until 2011, and it is alleged that in 2010 Panos launched a “competing activity” under the name “Photo.com.”

It is further alleged that in 2010, Panos, in his position as CEO, hired a United Kingdom law firm to pursue the acquisition the Domain Name from a domain broker. Complainant alleges that Panos was actually secretly bidding against his own company and that, in February 2010, the Domain Name was sold for USD 1,250,000 to a company, xxlpix Limited, controlled by Panos.

Complainant even alleges that the purchase price for the Domain Name Panos surreptitiously acquired was actually financed by Complainant’s money, through the “illegal diversion” of company funds “through illegal offshore mechanisms.”

The name of the Domain Name registrant changed a number of times from February 2012 until September 2012, when the Domain Name was registered with another registrar under a “privacy registration service.”

Complainant alleges that on October 15, 2014, six days after it filed the initial Complaint in this case, it received an e-mail from Werner A. Krachtus, CEO of motiondrive AG, advising that he was the real registrant of the Domain Name, having acquired it on or around September 4, 2012 at a “domain marketplace.”

According to the e-mail, as alleged by Complainant, the Domain Name had resolved to a parking page for two years but motiondrive AG plans to launch a website using the Domain Name. In the meantime, the e‑mail allegedly states, motiondrive AG had concluded an agreement to rent the Domain Name to a third party for three months.

Complainant alleges that, notwithstanding his e-mail, “it is obvious that Mr. Krachtus is not the real registrant” of the Domain Name. On October 22, 2014, Complainant sent a letter to Mr. Krachtus which “gave him the opportunity to demonstrate his good faith.” The letter contained a host of questions and requests for documents, including the alleged rental agreement, proof of payment by motiondrive AG to the Domain Name seller, and a copy of the parking agreement. Complainant alleges that Mr. Krachtus refused to provide the requested information and documents.

Based in part on this refusal, Complainant maintains that Panos “is still the real owner of the Domain Name.”

According to Complainant, the Domain Name currently resolves to a parking website which provides hyperlinks to third-party websites offering goods in direct competition with Complainant.

Respondent motiondrive AG describes itself as “a full service IT provider active in the photo business,” having “developed software for over 10 years with a focus on image processing and print data generation.”

Respondent owns Community trademark 5009089 for PHOTOBANK, registered in July 2007. Respondent contends that its PHOTOBOOK computer system “processes up to 10,000 customer orders for photo books and photo-related products per day.” Its turnover from such activities has surpassed EUR 1,500,000 annually since 2009.

Respondent also owns Community trademarks PHOTOFRAME, PHOTOMEMORY, and MYPHOTOBOOK, registered in September 2006, September 2007, and February 2013, respectively. Respondent’s CEO Krachtus is also CEO of Fomanu AG, which company operates a website at (translated from the German as “photo book” in English) where consumers may order photo books, calendars, and related software.

According to Respondent, it purchased the Domain Name for more than EUR 1,000,000 on September 4, 2012, and confirmation that the Domain Name was registered to Respondent was provided on September 11, 2012. Respondent CEO Krachtus swears in an affidavit that he had no knowledge of Panos, and that he and Respondent dealt exclusively with intermediary DomainHoldings, which acted on behalf of the undisclosed prior owner of the Domain Name.

Respondent claims that it registered the Domain Name because of its perceived value as a platform for Respondent’s various products, including photo books, photo calendars, photo mugs, and the like.

Respondent asserts that it is in the process of developing a comprehensive website, rather than releasing a website on a piecemeal basis, for its various photo-related offerings. Respondent annexed to its Response various invoices from IT consultants to Respondent in 2013 and 2014. In the meantime, Respondent states, it has parked the Domain Name at a site which derives pay-per-click (“PPC”) revenues on the strength of the popular generic word “photo”. Respondent adds that it had sought to enter into a three-month lease of the Domain Name with a third party while the website was being developed, but the lease negotiations have borne no fruit to date.

The Panel unanimously finds that Respondent has a legitimate interest in the Domain Name.

There is evidence in the record that Respondent, a viable company for several years and the holder of several trademarks containing the word “PHOTO,” purchased the Domain Name for more than EUR 1,000,000 in September 2012, and there is record evidence of Respondent’s efforts to set up a comprehensive website in aid of its sundry photo-related commercial activities.

There is, by contrast, no evidence in the record that Respondent targeted Complainant or its FOTO-formative trademarks, and no evidence that Respondent colluded with (or even knew of) Complainant’s former CEO Panos. T

he Panel therefore concludes that Respondent enjoys rights or legitimate interests squarely within the meaning of Policy paragraph 4©(i).

Accordingly, Complainant has failed to satisfy Policy paragraph 4(a)(ii) and this Complaint must therefore be denied.

The Panel need not do so, but would also find Complainant to have failed to prove bad faith registration and use for essentially the same reasons as were articulated above under the “Rights or Legitimate Interests” head.

The Panel notes finally that this Complaint was ill-suited for resolution under the Policy, which is designed to address clear cases of cybersquatting.

Having said that, the Panel is not inclined to declare Complainant guilty of Reverse Domain Name Hijacking.

7. Decision

Robert A. Badgley
Presiding Panelist

Andrew D. S. Lothian
Panelist

Alexander Duisberg
Panelist

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