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#SCX .ch : Crypto #domain sold for 60,000 Swiss francs ends up in #UDRP

ZFBot

SCX.ch is a Swiss cryptocurrency services domain that was sold twice in the course of a year; first, in 2018 to SwissClass Trade AG for 50,000 Swiss francs (CHF,) and a year later to the current registrant for 60,000 CHF.

The first seller, Blockworks AG, Switzerland, filed a UDRP to get the domain back, claiming that the initial sale was not legitimate.

Too bad, said the Respondent, who provided a valid contract. The confusing part: the domain SCX.ch still points to the web site of the Complainant, but the sole WIPO panelist denied the domain’s transfer to them.

Full details on this interesting decision follow:

The domain transfer was denied.

Blockworks AG v. Majercik Jan
Case No. DCH2019-0012

1. The Parties

The Claimant is Blockworks AG, Switzerland, represented by EMM Legal, Switzerland.

The Respondent is Majercik Jan, Czech Republic, represented by Mr. Geiger, Switzerland.

2. Domain Name

The dispute concerns the domain name <scx.ch> (the “Disputed Domain Name”).

3. Procedural History

The Request was filed in with the WIPO Arbitration and Mediation Center (the “Center”) on August 23, 2019. On August 23, 2019, the Center transmitted by email to SWITCH, the “.ch” and “.li” registry, a request for verification in connection with the Disputed Domain Name. On August 27, 2019, SWITCH transmitted by email to the Center its verification response confirming that the Respondent is listed as the holder of the Disputed Domain Name and providing the relevant contact details. In response to a notification by the Center that the Request was administratively deficient, the Claimant filed an amended Request on August 30, 2019. The Center verified that the Request together with the amended Request satisfied the formal requirements of the Rules of procedure for dispute resolution proceedings for “.ch” and “.li” domain names (the “Rules of Procedure”), adopted by SWITCH, on March 1, 2004.

In accordance with the Rules of Procedure, paragraph 14, the Center formally notified the Respondent of the Request, and the Dispute resolution proceedings commenced on September 4, 2019. In accordance with the Rules of Procedure, paragraph 15(a), the due date for Response was September 24, 2019.

The Respondent filed a Response on September 23, 2019, and expressed his willingness to participate in a conciliation on September 27, 2019. The Center appointed Lorenz Ehrler as Conciliator in this matter on October 11, 2019.

In accordance with Rules of Procedure, paragraph 17, the Conciliation conference took place by telephone on November 1, 2019. The Conciliation conference did not result in a settlement between the Parties.

On November 4, 2019, the Center notified the Parties accordingly, after which the Claimant requested the continuation of the Dispute resolution proceedings on November 6, 2019, in accordance with paragraph 19 of the Rules of procedure and paid the required fees.

On November 15, 2019, the Center appointed Andrea Mondini as Expert in this case. The Expert finds that he was properly appointed. In accordance with Rules of Procedure, paragraph 4, the Expert has declared his independence of the parties.

4. Factual Background

The Claimant is a Swiss company which operates a crypto exchange under the brand SCX as an acronym for Swiss Crypto Exchange.

The Swiss trademark SCX (trademark registration number 711027) was filed on September 26, 2017, and registered on December 19, 2017 in the name of Swiss Future Project AG in International Classes 35, 36, 41, 42, and 45.

The Claimant changed its company name from Swiss Future Project AG to Blockworks AG.

The Disputed Domain Name was first registered on April 23, 2001, and was acquired by the Claimant in March 2018. According to the information received from SWITCH, the Respondent registered the Disputed Domain Name on May 13, 2019.

The Disputed Domain Name resolves to a website offering the Claimant’s financial services.

5. Parties’ Contentions

A. Claimant

In summary, the Claimant asserts the following:

The Claimant states that it is the owner of the trademark registration SCX, although this trademark is still registered under its former company name Swiss Future Project AG.

The Claimant alleges that it found out on August 2, 2019, that the Disputed Domain Name was transferred out of its account without its authorization. According to the Claimant, the following happened:

– In a first step, on January 14, 2019, the administrative contact was changed from Mr. T (founder, former CEO and current board member of the Claimant) to Mr. B (current chairman of EuroDNS and until January 16, 2019, board member of Claimant). This happened without the knowledge of the executive management of Claimant two days before Mr. B was removed from the board of the Claimant.

– In a second step, on March 12, 2019, the Disputed Domain Name was transferred to SwissClass Trade AG, contact person Ms. J, a former employee and signatory of the Claimant who had left the Claimant on February 13, 2019. In March 2019, Mr. B was a member the board of directors of SwissClass Trade AG with single signature right.

– Thereafter, SwissClass Trade AG sold and transferred the Disputed Domain Name to the Respondent, who has no direct connection to the Claimant.

The Claimant contends that fraud was committed by an unknown person because the Disputed Domain Name was transferred from the Claimant to SwissClass Trade AG “without two binding signatures of Blockworks AG which would have made such transfer legal.”

The Claimant contends that this unauthorized transfer of the Disputed Domain Name clearly infringes Swiss trademark law and Swiss unfair competition law because it is likely that the Respondent will try to hinder the business of the Claimant and/or try to mislead the Claimant’s customers.

The Claimant further asserts that the transfer of the Disputed Domain Name by its former board member Mr. B amounts to “criminal mismanagement” (Art. 158 Swiss Penal Code) and that therefore the contract for the transfer of the Disputed Domain Name from the Claimant to SwissClass Trade AG would be unlawful and thus invalid under Art. 20 of the Swiss Code of Obligations.

The Claimant notes that so far, the Respondent has not made any changes to the name server, that the Claimant’s services can still be reached under the Disputed Domain Name and that there is no indication that the Respondent used the Disputed Domain Name in bad faith. However the Claimant fears that that misuse could happen at any time because the Claimant no longer controls the Disputed Domain Name.

B. Respondent

The Respondent filed a Response requesting that the Request be denied. In essence, the Respondent contends that the Claimant sold the Disputed Domain Name in November 2018 to SwissClass Trade AG, which in turn resold it to him in March 2019. The Respondent filed copies of these sale contracts.

The Respondent asserts that it is incomprehensible that the Claimant wants the Disputed Domain Name back from him, because the Claimant has sold the Disputed Domain Name to SwissClass Trade AG, which was therefore free to resell it.

The Respondent purports that a criminal investigation is pending before the public prosecutor in Zurich against officers of the Claimant, but that he is not involved in those proceedings.

The Respondent states that there is no wrongdoing on his part. He believes that the controversy is between the Claimant’s former and present officers and SwissClass Trade AG, and not between himself and the Claimant.

6. Discussion and Findings

According to the Rules of Procedure, paragraph 24(c), “the Expert shall grant the request if the registration or use of the domain name constitutes a clear infringement of a right in a distinctive sign which the Claimant owns under the laws of Switzerland or Liechtenstein”.

The Rules of Procedure, paragraph 24(d) specify that “a clear infringement of an intellectual property right exists when:

– both the existence and the infringement of the claimed right in a distinctive sign clearly result from the wording of the law or from an acknowledged interpretation of the law and from the presented facts and are proven by the evidence submitted; and

– the respondent has not conclusively pleaded and proven any relevant grounds for defence; and

– the infringement of the right justifies the transfer or deletion of the domain name, depending on the remedy requested in the request”.

A. The Claimant has a right in a distinctive sign under the law of Switzerland

The Claimant has shown that it owns the Swiss trademark registration SCX. Although the trademark is still registered under its former company name Swiss Future Project AG, the Claimant has shown that this is indeed its former company name, because the Claimant and Swiss Future Project AG have the same company number (UID CHE-464.724.479). The Expert thus concludes that this is the same legal entity, and that the name change was simply not recorded in the trademark register. Therefore, the Expert holds that the Claimant is the owner of the Swiss trademark registration SCX.

Accordingly, the Claimant has provided sufficient evidence of Swiss trademark rights in accordance with paragraph 24(d)(i) of the Rules of Procedure.

B. No clear infringement of the Claimant’s right

The Respondent has submitted a document on the Claimant‘s letterhead signed on November 19, 2018, in which the Claimant sold for CHF 50,000 and transferred the Disputed Domain Name to SwissClass Trade AG in partial payment of an amount purportedly owed by the Claimant to SwissClass Trade AG. This document is signed on behalf of the Claimant a member of the board of the Claimant and Ms. J (head administrative Services of the Claimant): According to the Commercial Register, both officers had joint signature power on behalf of the Claimant when they signed this document, so that the Claimant is bound by the contracts they entered into.

This document contradicts the Claimant’s allegation that Mr. B transferred the Disputed Domain Name to SwissClass Trade AG “without two binding signatures of Blockworks AG which would have made such transfer legal.”

The sale and transfer of the Disputed Domain Name from the Claimant to SwissClass Trade AG is therefore formally signed by two officers of the Claimant with joint power to sign, and on its face appears to be valid.

In this Expert’s view, where a trademark owner itself (like here the Claimant) sells and transfers a domain name corresponding to its trademark to a buyer, the trademark owner grants its implied consent to the buyer and his successors in title to use the domain name, otherwise the sale would not make sense. A trademark owner cannot on the one hand sell a domain name corresponding to its trademark and then on the other hand claim it back by asserting trademark infringement.

The Claimant asserts that the transfer of the Disputed Domain Name from the Claimant to SwissClass Trade AG was a result of “criminal mismanagement” on the part of one of its officers and that therefore the contract for the transfer of the Disputed Domain Name from the Claimant to SwissClass Trade AG would be unlawful and thus invalid under Art. 20 of the Swiss Code of Obligations. However, the very limited documents submitted by the Claimant in this matter are not sufficient to corroborate these allegations.

The Respondent has further submitted a contract dated March 29, 2019, according to which he bought the Disputed Domain Name from SwissClass Trade AG for EUR 60,000. On its face, also this contract is valid. The Respondent contends that that there is no wrongdoing on his part.

The Expert notes that the Respondent’s conduct raises questions: the Respondent has not explained why he decided to buy the Disputed Domain Name for EUR 60,000 and what he intended to do with it, although he could immediately see that the Disputed Domain Name still resolves to an active website of a third party (the Claimant). However, under Swiss law, the good faith is presumed (Art. 3 Swiss Civil Code), and the Claimant has not provided sufficient evidence to rebut this presumption. Even the Claimant concedes that so far there is no indication that the Respondent used the Disputed Domain Name in bad faith.

The Claimant asserts violation of Art. 3 lit. d of the Swiss Unfair Competition Act according to which it is unlawful to take measures that may cause confusion with the goods, works or services of others. However, the Respondent has not created such confusion so far, because the Claimant’s website can still be reached under the Disputed Domain Name, and there is no evidence that the Respondent has taken or threatens to take any steps that would create such confusion.

As already mentioned, the Rules of Procedure, paragraph 24(d) specify that there is a clear infringement of an intellectual property right exists only when the infringement of the claimed right in a distinctive sign clearly result from the wording of the law or from an acknowledged interpretation of the law and from the presented facts and are proven by the evidence submitted. The Expert holds that the Claimant has not provided sufficient evidence to meet this threshold.

It seems to the Expert that the core of the dispute is rather between the Claimant’s present and former officers and SwissClass Trade AG, and not necessarily between the Claimant and the Respondent. The Expert is of the view that state court proceedings would be better suited to take the evidence and adjudicate this complex matter.

Accordingly, the Expert finds that Claimant has not provided sufficient evidence of a clear infringement of the Claimant’s right in the distinctive sign SCX in the sense of paragraph 24(d)(i) of the Rules of Procedure. Of course, the Claimant remains entirely free to initiate legal proceedings before the competent state authorities.

7. Expert Decision

For the above reasons, the Request is denied.

Andrea Mondini
Expert
Dated: November 20, 2019


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