WIPO Arbitration and Mediation Center

ADMINISTRATIVE PANEL DECISION

Signature Nail Systems, LLC v. Diamond Nails Supplies Pty Ltd as Trustee for the DT Pham & PTT Nguyen Family Trust

Case No. DAU2020-0010

1. The Parties

The Complainant is Signature Nail Systems, LLC, United States of America (“United States”), represented by Gilbert + Tobin Lawyers, Australia.

The Respondent is Diamond Nails Supplies Pty Ltd as Trustee for the DT Pham & PTT Nguyen Family Trust, Australia, represented by Actuate IP, Australia.

2. The Domain Name and Registrar

The disputed domain name <snsnail.com.au> is registered with Web Address Registration Pty Ltd.

3. Procedural History

The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on May 14, 2020. On the same day, the Center transmitted by email to Web Address Registration Pty Ltd a request for registrar verification in connection with the disputed domain name. On May 15, 2020, Web Address Registration Pty Ltd transmitted by email to the Center its verification response confirming that the Respondent is listed as the registrant and providing the contact details.

The Center verified that the Complaint satisfied the formal requirements of the .au Dispute Resolution Policy (the “auDRP” or “Policy”), the Rules for .au Dispute Resolution Policy (the “Rules”), and the WIPO Supplemental Rules for .au Domain Name Dispute Resolution Policy (the “Supplemental Rules”).

In accordance with the Rules, paragraphs 2(a) and 4(a), the Center formally notified the Respondent of the Complaint, and the proceedings commenced on May 19, 2020. In accordance with the Rules, paragraph 5(a), the original due date for Response was June 8, 2020. However, on June 4, 2020, the Respondent contacted the Center requesting an extension to the Response filing period. Pursuant to paragraph 5(d) of the Rules, the Response due date was extended until June 18, 2020. The Response was filed with the Center on June 18, 2020, and the Center informed the parties that it would proceed with panel appointment.

The Center appointed Matthew Kennedy as the sole panelist in this matter on June 23, 2020. The Panel finds that it was properly constituted. The Panel has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, paragraph 7.

On June 24, 2020, the Complainant requested that the Panel permit it to file further submissions. On the same day, pursuant to paragraphs 10 and 12 of the Rules, at the Panel’s direction the Center sent to the Parties Administrative Panel Order No. 1 granting the Complainant permission to submit a supplemental filing no later than June 30, 2020. The Respondent submitted comments on the Complainant’s request on June 30, 2020, and requested an opportunity to reply to the Complainant’s supplemental filing. On the same day, the Complainant submitted a supplemental filing. On July 1, 2020, the Respondent submitted corrected annexes to the Response and reiterated its request for an opportunity to reply. For reasons discussed below, the Panel has not granted the Respondent’s request for an opportunity to reply to the Complainant’s supplemental filing.

4. Factual Background

The Complainant is a United States company that produces nail care products, including coloured nail dipping powders and gel polish. It also provides training services to nail technicians. It adopted its current name in 2009. The Complainant holds several Australian trademark registrations, including the following:

- No. 1648680 for a figurative mark including the letters and words “SNS Healthy Natural Nails Signature Nail Systems”, registered on April 20, 2015, specifying false nails in class 3 (the “leaf” mark);

- No. 1818653 for a figurative mark including the letters and words “SNS Healthy Natural Nails”, registered on August 2, 2017 (applied for on January 4, 2017), specifying beauty salon services in class 44 (the “fingernail cuts leaf” mark); and,

- No. 1963699 for a fancy mark including the letters and words “SNS Healthy Natural Nails”, registered on August 19, 2019, specifying nail care preparations in class 3 (the “vertical bars” mark).

These Australian trademark registrations remain current. The Complainant filed Australian trademark application number 2048573 for SNS on November 8, 2019, and that application is pending at the time of this decision. The Complainant also holds United States trademark registration number 5308692 for NAIL HEALTH & BEAUTY, registered on October 10, 2017, and United States trademark registrations for several marks that include the letters SNS. These United States trademark registrations all include claims of first use in 2017 or later. The Complainant has filed other United States trademark applications, including application number 88094532 for “SNS PerfectFlo” (filed on August 27, 2018, and abandoned prior to the date of this decision). The Complainant also registered the domain name <snsnails.com> that it has used since 2014 in connection with a website where it markets its goods and services worldwide. The Complainant has registered multiple other domain names that begin with the letters “sns” including <snsnails.com.au> that is used in connection with a website titled “SNS Outlets Australia”.

The Respondent is a retailer of beauty supplies, particularly nail products and salon essentials. It operates a store at Lansvale, New South Wales, Australia, and an online store at “www.diamondnailsupplies.com.au” (the “DNS website”). The Respondent was an authorized wholesale buyer of the Complainant’s products until the Complainant terminated its authorization on March 6, 2020.

The disputed domain name was registered on January 11, 2016. It resolves to a website that prominently displays the SNS vertical bars mark and offers for sale dip powder, dip liquids/gels, dip accessories, and kits. A header reads “SNS Dip Powder Australia”. A brand menu lists SNS, Perfect Flo, and View All and the website offers for sale various SNS and Perfect Flo products. Another page refers to three brands (Bandi, Perfect Flo, and SNS) without displaying any products. A notice at the bottom of the website reads: “Distributed by:* Diamond Nail Supplies Pty Ltd” (followed by the Respondent’s ABN). This notice is in a small font, similar to much of the other text on the site.

5. Parties’ Contentions

A. Complainant

The Parties entered into an authorized wholesale buyer agreement on September 8, 2018 (the “Buyer Agreement”) under which the Complainant granted the Respondent a non-exclusive licence to distribute the Complainant’s SNS products into Australia. Clause 7 of the Buyer Agreement prohibited the Respondent from inter alia registering or attempting to register a domain name containing (whether in whole or in part) the Complainant’s trademarks, trade names, or any confusingly similar mark. The Complainant’s Authorized Wholesale Buyer Summary of Terms (the “Summary of Terms”) (which were digitally signed by Mr. Pham), prohibited an Authorized Wholesale Buyer from using “SNS” as part of a website domain name or as part of its business domain name, including all versions of the SNS trade names, including SNS, SNS Nails, SNS Nail Systems, SNS Academy, SNS Training, Signature Nails, Signature Nail Systems, and any other variants. In “late 2017”, the Complainant informed the Respondent by telephone that by registering and continuing to operate the disputed domain name, the Respondent was in breach of the Buyer Agreement. On October 31, 2019, the Complainant’s legal representative sent a letter to the Respondent demanding inter alia that the Respondent cease operating the disputed domain name and transfer it to the Complainant. On March 6, 2020, the Complainant notified the Respondent of termination of the Buyer Agreement with immediate effect, alleging non-compliance with the terms, including the Summary of Terms, in relation to domain names.

The disputed domain name is identical or confusingly similar to the Complainant’s abbreviated company name SNS, the domain name <snsnails.com.au>, and one or more of its SNS trademark registrations and applications. The Complainant also enjoys common law trademark rights associated with the SNS mark in Australia. The SNS products have been available to Australian distributors, salons, and consumers since February 2013. The SNS brand is highly recognised in the nail care industry and “consumers, distributors and salons consistently refer to all nail dipping powders as ‘SNS’”. Google searches for “SNS” and “SNS nail salon” on Australian websites return 2,350,000 and 314,000 results respectively. There were 18 mentions of “SNS” on a popular lifestyle website. Major Australian lifestyle and beauty websites and publications mention the Complainant’s SNS products and brands. The disputed domain name includes the Complainant’s SNS mark in its entirety. It is also identical to the dominant element of the Complainant’s Australian trademark registration number 1648680, which is “SNS”.

The Respondent has no rights or legitimate interests in respect of the disputed domain name. According to the Oki Data criteria, the Respondent is not making a bona fide offering of goods or services. The Respondent must be offering the goods and services at issue but the disputed domain name was registered two years and eight months prior to the date of the Buyer Agreement. At the time of registration, the Respondent was clearly aware of the Complainant because the disputed domain name includes the word “nail” but the Respondent had not yet been granted distribution rights under the Buyer Agreement. The Respondent’s use of the disputed domain name later ceased to be bona fide because the Buyer Agreement prohibited it from registering or operating such a domain name. At the time of entering into the Buyer Agreement, the Respondent was on notice that the registration of the disputed domain name was non-compliant with its terms. Even if the Respondent was genuinely using the disputed domain name to distribute the Complainant’s products under the SNS trademarks (which is denied), the registration of the disputed domain name went beyond any legitimate interest the Respondent might have in the SNS trademarks in the nominative sense. The website associated with the disputed domain name is offering or intends to offer not only the Complainant’s SNS products but also third-party brands (these brands include Bandi and Perfect Flo and they are not the Complainant’s brands). The website does not accurately disclose the Respondent’s relationship with the Complainant. It prominently displays the SNS mark with only a small and vague disclaimer at the bottom of the page. The Respondent’s retention of the disputed domain name is an attempt to corner the market and deprive the Complainant of the opportunity to reflect its trademark in the domain. The Respondent is not commonly known by the disputed domain name. The Respondent is not making a legitimate noncommercial or fair use of the disputed domain name.

The disputed domain name was registered and/or is subsequently being used in bad faith. Given the Respondent’s knowledge of the Complainant’s rights and reputation in the SNS trademarks and the relationship between the Respondent and the Complainant (including the terms of the Buyer Agreement), the Respondent has maintained the disputed domain name with dishonest commercial motives to prevent the Complainant from reflecting its SNS trademarks and pre-existing <snsnails.com> domain name in a corresponding or similar “.com.au” domain name. On the date of registration of the disputed domain name, the Respondent was in breach of the Registrar’s domain name allocation rules. Moreover, at that date, the Respondent lacked a close and substantial connection to the disputed domain name because the Respondent had yet to be a party to the Buyer Agreement. As regards use, the Buyer Agreement and Summary of Terms contain obligations which expressly prohibited the Respondent from registering or operating a domain name which relate to the SNS trademarks or brand. Despite these obligations, the Respondent continued to operate the disputed domain name. The Respondent ignored all requests to transfer the disputed domain name to the Complainant. The Respondent’s use of the SNS trademark in the disputed domain name and any use by the Respondent of the disputed domain name in relation to its goods and services is likely to mislead or deceive consumers into thinking that the Respondent is affiliated with the Complainant, even though the Buyer Agreement has been terminated, in breach of the Australian Consumer Law 2010. Such conduct may also infringe the Complainant’s trademark registrations under the Trade Marks Act1995.

B. Respondent

The Complainant fails to disclose the fact that there was a commercial relationship between the parties – under which the Respondent acted as a distributor for the Complainant’s products – prior to registration of the disputed domain name and prior to entering into the Buyer Agreement. The Respondent placed its first order with the Complainant on September 24, 2015. The SNS products were initially promoted and sold via the Respondent’s offline store and own website. The disputed domain name was registered in order to promote and sell the SNS products, which the Respondent was a distributor for. The Respondent was not aware of any online marketing of the SNS products in Australia at that time, and felt that both the Respondent and the Complainant would benefit from active online marketing. The Respondent created the website now associated with the disputed domain name in February 2016 and made its first sale of SNS products via that website in March 2016. The Respondent provides evidence, including photographs, to show that Mr. Nguyen of the Complainant attended an event hosted by the Respondent at its offline store to promote the Complainant’s SNS products on or around March 6-7, 2016, where the Respondent distributed A2-size posters displaying the disputed domain name. The Parties communicated and visited each other frequently during the period September 2015 to September 2018. The Complaint confirms that the Parties discussed the disputed domain name and the Buyer Agreement in late 2017. The Parties entered into the Buyer Agreement on September 8, 2018. In view of the foregoing circumstances, by that stage, the Complainant was aware, or should have reasonably been aware, of the disputed domain name and the website associated with it. During the term of the Buyer Agreement, the Respondent continued to distribute the SNS products purchased from the Complainant and its authorised Australian distributors. After termination, the Respondent has continued to purchase the SNS products from the Complainant’s authorised distributor on a wholesale basis and these continue to be promoted and sold on the website associated with the disputed domain name.

The Complainant has not established that it has rights in a name, trademark or service mark which is identical or confusingly similar to the disputed domain name. None of the Complainant’s trademark registrations is for the mark SNS NAIL or SNS. Many of them are for stylised marks and all of them include additional distinctive textual elements which are not reflected in the disputed domain name. As a result, the disputed domain name is not identical or confusingly similar to any of the Complainant’s trademark registrations. The term “SNS” is widely used as a generic identifier for nail dipping powders and should be given less weight accordingly, while the additional distinctive textual elements should be given more weight. The Complainant’s trademark application for SNS is pending and not registered. Only one of the Complainant’s trademark registrations was applied for before the registration of the disputed domain name but the disputed domain name is not confusingly similar to that trademark. The Complainant has not produced evidence of unregistered rights based on goodwill or reputation. “SNS” is not a distinctive identifier associated with the Complainant or its SNS products. The Complainant provides no financial or quantitative evidence but only screenshots showing mentions of “SNS” online, the vast majority of which are likely to be generic references to nail dipping powders.

The Respondent has rights and legitimate interests in the disputed domain name. The Respondent began using the disputed domain in connection with the promotion and sale of the SNS products in around February 2016. The term “SNS” is widely used as a generic identifier for all nail dipping powders. The disputed domain name is merely a bona fide generic description of the goods sold on the associated website rather than a reference to any of the Complainant’s trademarks. In the alternative, even if the Respondent has used the Complainant’s trademark(s) in the disputed domain name, this use would still be bona fide use as an authorised distributor of the SNS products. The Respondent was distributing the Complainant’s products before the disputed domain name was registered and it did not cease to be bona fide. The website associated with the disputed domain name was only used to promote and sell the Complainant’s products, including SNS and Perfect Flo, but never Bandi. The display of Bandi on one screenshot appears to be an error. The associated website accurately displays the Respondent’s relationship with the Complainant as a distributor of SNS products and the Respondent has taken steps to dispel confusion. The assertion that the Respondent has attempted to corner the market is nonsensical.

The disputed domain name was not registered and is not being used in bad faith. At the date of registration of the disputed domain name, the Respondent was already a distributor for SNS products, purchased from the Complainant and its authorised distributors. There was no formal written agreement between the Respondent and the Complainant regarding the SNS products, and the Complainant had not indicated any objection to the Respondent registering the disputed domain name. The disputed domain name was put to bona fide use shortly after registration to promote and sell the SNS products in around March 2016 and it has been continuously used for that purpose since that time. The Respondent has not breached clause 7 of the Buyer Agreement, which does not say anything about holding or using a domain name registration. The disputed domain name was registered by the Respondent well before the Buyer Agreement.

The Summary of Terms is not incorporated into the Buyer Agreement, and it is not a binding legal agreement in its own right. Furthermore, clause 14 of the Buyer Agreement expressly excludes any other agreements between the parties from which it follows that the Summary of Terms is not binding on the Respondent. The Complainant raised no objection to the continued registration of the disputed domain name until November 22, 2019. By virtue of the Complainant’s actual or constructive knowledge of the disputed domain name at the time of entering into the Buyer Agreement, the benefit that the Complainant derived from the Respondent’s conduct, and its failure to raise any objection in a timely fashion, the Complainant waived its rights to subsequently object to the continued registration of the disputed domain name and/or would be estopped from subsequently taking action against the continued registration of the disputed domain name. The Respondent is not acting in bad faith by continuing to use the disputed domain name. The use of the disputed domain name is not in contravention of the Australian Consumer Law nor trademark infringement under the Trade Marks Act 1995. A complaint under the Policy is not the proper forum for such allegations to be decided. The shortcomings in the Complainant’s evidence demonstrate the need for any such allegations to be rigorously tested in an appropriate forum such as court proceedings.

6. Discussion and Findings

6.1 Supplemental Filings

The Complainant requested permission to make further submissions after the appointment of the Panel on the basis of (i) serious concerns relating to at least some of the Respondent’s evidence; and (ii) newly discovered evidence. Pursuant to paragraphs 10 and 12 of the Rules, the Panel granted the Complainant permission to submit a supplemental filing without prejudice to the determination of the admissibility, relevance, materiality, and weight of the evidence. The Complainant then made a supplemental filing within the time allowed.

The Respondent submits that the Complainant’s supplementary filing should be inadmissible, and not considered in its entirety as part of the Panel’s decision. The Respondent submits that (i) the Complainant provided no particulars whatsoever regarding what part or parts of the Respondent’s evidence the serious allegations relate to, nor provided any basis whatsoever for these allegations; and (ii) the categories of additional evidence described by the Complainant are not new evidence. The Complainant has not shown that there are exceptional circumstances which justify the admission of a supplemental filing. If the Panel accepts the Complainant’s supplemental filing, the Respondent should be allowed an opportunity to reply. The Respondent later provided corrected versions of photographs annexed to the Response and reiterated its request for an opportunity to reply.

The Panel recalls that paragraph 12 of the Rules provides that “[i]n addition to the complaint and the response, the Panel may request or permit, in its sole discretion, further statements or documents from either of the Parties”. At the same time, paragraph 10(b) and (c) require the Panel to ensure that “each Party is given a fair opportunity to present its case” and that “the administrative proceeding takes place with due expedition”. The purpose of the auDRP is “to provide a simple, inexpensive and quick administrative procedure for dealing with domain name entitlement disputes”. See Brilliance Publishing, Inc. v. My Brilliance Pty Ltd / Ceinwen Schneider, WIPO Case No. DAU2013-0007. Accordingly, the Panel will only admit the Complainant’s supplemental filing into the record in exceptional circumstances, such as new facts, newly available evidence, or a material allegation in the Response that could not reasonably have been anticipated at the time of the Complaint.

The Panel has reviewed the Complainant’s supplemental filing and sees no exceptional circumstances that would justify admitting it. Firstly, the Complainant comments on photographs annexed to the Response, alleging in particular that text has been typed over them where the disputed domain name is supposed to appear. The Panel can observe distortions in photographs annexed to the Response and will for that reason accept the Respondent’s corrected versions, as they permit an undistorted view of the evidence.

Secondly, the Complainant seeks to introduce supplementary evidence and new claims of bad faith. It admits that prior to entering into the Buyer Agreement, “[t]he Complainant and [the] Respondent did have a relationship whereby the Respondent under an informal arrangement occasionally purchased SNS Products, including from the Complainant, and distributed them in Australia”. It confirms that the Complainant became aware of the disputed domain name prior to entering into the Buyer Agreement. The Panel observes that the supplementary filing relates neither to new facts nor to evidence newly available to the Complainant. The Panel rejects as implausible the Complainant’s submission that it did not become aware of the relevance and probity of this evidence until the Response relied on the photographs. In the Panel’s view, the Complainant’s failure to present the supplementary evidence and new claims earlier was by its own choice, in particular, its choice to present the Buyer Agreement to the Panel without disclosing the Parties’ prior commercial relationship.

Therefore, the Panel finds that the Complainant was already given a fair opportunity to present its case in the Complaint. In the interests of ensuring that this administrative proceeding takes place with due expedition, the Panel declines to admit the Complainant’s supplemental filing as part of the record of this proceeding. Consequently, the premise for the Respondent’s request for an opportunity to reply to that filing is not fulfilled.

6.2 Substantive Issues

Paragraph 4(a) of the auDRP provides that a complainant must prove each of the following elements:

(i) the disputed domain name is identical or confusingly similar to a name, trademark or service mark in which the complainant has rights; and

(ii) the respondent has no rights or legitimate interests in respect of the disputed domain name; and

(iii) the disputed domain name has been registered or subsequently used in bad faith.

The burden of proof of each element is borne by the Complainant. Failure to prove any one of these elements will result in the Complaint being denied.

A. Identical or Confusingly Similar

Based on the evidence presented, the Panel finds that the Complainant has registered rights in a trademark incorporating the words “SNS Healthy Natural Nails Signature Nail Systems” (the leaf mark) and two other trademarks each incorporating the words “SNS Healthy Natural Nails” (i.e., the fingernail cuts leaf mark and the vertical bars mark) described in Section 4 above. The Complainant also claims rights on the basis of its Australian trademark application for SNS but that application has not proceeded to grant. Therefore, that application is insufficient by itself (i.e., without an adequate independent showing of unregistered rights / secondary meaning) to establish rights for the purposes of the auDRP. See TrueLocal Inc., Geosign Technologies Inc. and True Local Limited v. News Limited, WIPO Case No. DAU2006-0003.

The Complainant claims unregistered rights in SNS. The Panel notes that such a claim requires evidence that, prior to the filing of the Complaint, the Complainant has provided goods or services under the unregistered mark and thereby acquired a reputation such that members of the public would associate those goods or services with the Complainant and not with others not authorized by the Complainant to use the mark. See Avid Life Media, Inc. v. Melody Carstairs, WIPO Case No. DAU2011-0001. One would ordinarily expect to have evidence of revenues generated, advertising expenditure, the length of time of use, and illustrations of the mark in actual use. Other indicators might include the number of customers or visitors to the Complainant's website and similar matters. See Travel Insurance Direct Pty Limited v Paul Quinn, WIPO Case No. DAU2014-0007. The Complainant claims SNS products have been “available” to Australians since 2013 without supporting evidence showing use since that time. The Complainant provides search results on websites in the “.com.au” Secondary Level Domain (“2LD”) and on a lifestyle website but the Panel has no way of knowing from this mostly quantitative data how many results refer exclusively to the Complainant or its products. The Complainant also provides some magazine articles referring to “SNS” and “SNS nails”. The Panel does not consider this evidence sufficient to establish the existence of unregistered rights in SNS for the purposes of the auDRP.

The Complainant also claims rights based on its corporate name and domain name. However, the Complainant is incorporated in the United States and its name is not registered with the “relevant Australian government authority” as set out in footnote 1 to paragraph 4(a)(i) of the auDRP. A domain name is not mentioned in paragraph 4(a)(i) of the auDRP at all. Therefore, the Complainant’s corporate name and domain name are insufficient to establish rights for the purposes of the auDRP.

Turning to the question of identity or confusing similarity, the dominant element of each of the Complainant’s registered marks described above is “SNS”. Based on the record of this proceeding, the Panel does not find this element to be a descriptive or generic term for the reasons given in section 6.2B below. Each mark also includes figurative elements that are incapable of representation in a domain name. Therefore, these figurative elements can be disregarded for the purpose of assessing identity or confusing similarity between the disputed domain name and the trademarks. See Cambridge Nutritional Foods Limited and Cambridge Manufacturing Company Limited v. Cambridge Diet Pty Ltd, WIPO Case No. DAU2010-0021.

On a side-by-side comparison of the disputed domain name and the non-figurative elements of the Complainant’s marks, it can be seen that the disputed domain name incorporates their dominant element (“SNS”) and one of their descriptive elements, i.e., “nail”. It does not include the descriptive words “Healthy Natural” or the plural suffix “s” in “nails” in each mark, nor does it include the words “Signature” or “Systems” in the leaf mark. However, the disputed domain name does not merely include one popular or generic word from the trademark without more. Cf. WOW Audio Visual Superstores Pty Ltd v. Comonoz Pty Ltd, WIPO Case No. DAU2007-0003.

The Panel recalls that the first element of the auDRP operates essentially as a threshold requirement for standing to bring a complaint under the auDRP. The Panel considers that an Internet user, seeing the combination of “sns” and “nail”, would regard the disputed domain name as confusingly similar to the Complainant’s marks which incorporate the words “SNS Healthy Natural Nails Signature Nail Systems” or “SNS Healthy Natural Nails”.

The disputed domain name also includes the 2LD suffix “.com.au”. A 2LD suffix is generally disregarded in an assessment of identity or confusing similarity for the purposes of the auDRP. See BT Financial Group Pty Limited v. Basketball Times Pty Ltd, WIPO Case No. DAU2004-0001.

Therefore, the Panel finds that the disputed domain name is confusingly similar to a trademark in which the Complainant has rights. The Complainant has satisfied the first element in paragraph 4(a) of the auDRP.

B. Rights or Legitimate Interests

Paragraph 4(c) of the auDRP sets out circumstances which, without limitation, if found by the Panel to be proven based on its evaluation of all evidence presented, shall demonstrate that the Respondent has rights to, or legitimate interests in, a disputed domain name, for the purposes of paragraph 4(a)(ii) of the auDRP:

(i) before any notice to [the respondent] of the subject matter of the dispute, [the respondent’s] bona fide use of, or demonstrable preparations to use, the [disputed] domain name or a name corresponding to the [disputed] domain name in connection with an offering of goods or services (not being the offering of domain names that [the respondent has] acquired for the purpose of selling, renting or otherwise transferring); or

(ii) [the respondent] (as an individual, business, or other organization) [has] been commonly known by the [disputed] domain name, even if [the respondent has] acquired no trademark or service mark rights; or

(iii) [the respondent is] making a legitimate noncommercial or fair use of the [disputed] domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.

The Panel will assess the existence of any rights or legitimate interests as at the time of the filing of the Complaint. This approach is based on the present tense and present perfect tense used in paragraph 4(a)(ii) and 4(c) of the auDRP, and the temporal clause at the beginning of paragraph 4(c)(i).

As regards the first circumstance in paragraph 4(c)(i), the evidence presented by the Complainant shows that the Respondent is using the disputed domain name in connection with an offering of goods. The disputed domain name includes the term “sns” and the descriptive term “nail”. The Respondent was formerly an authorized wholesale buyer of the Complainant’s nail products pursuant to a Buyer Agreement that was terminated on March 6, 2020. In these circumstances, the Panel considers the four requirements developed in Oki Data Americas, Inc. v. ASD, Inc., WIPO Case No. D2001-0903(“Oki Data”) relevant to the question whether the Respondent’s use of the disputed domain name is bona fide. The Panel will consider each of those requirements in turn. First, the Respondent is actually offering goods related to the Complainant’s SNS trademarks on the website associated with the disputed domain name. Second, on the balance of probabilities, the Panel finds that the Respondent is only offeringthe Complainant’s goods in connection with the disputed domain name on that site. The site sells SNS and Perfect Flo brands. An annex to the Complaint shows that the Complainant filed a trademark application for “SNS PerfectFlo”, from which the Panel infers that it is one of the Complainant’s brands. Although one page on the associated website mentions Bandi (a third party brand), there is insufficient evidence for the Panel to conclude that Bandi products are actually offered for sale on the associated website. Third, and crucially, the associated website does not accurately and prominently disclose the Respondent’s relationship with the Complainant as the trademark holder. A notice at the bottom of the website states who the Respondent is but it does not state the Respondent’s relationship to the Complainant. The notice is also inconspicuous, in fact, less conspicuous than when the Respondent was an authorized distributor for the Complainant and displayed its corporate name in larger text alongside. Lastly, the Respondent has clearly not attempted to corner the market in SNS domain names; the Complainant is already the registrant of <snsnails.com.au>. In sum, the Panel finds that the Respondent satisfies only three out of four of the Oki Data requirements due to the lack of a proper disclaimer on the website associated with the disputed domain name.

As regards the second circumstance in paragraph 4(c)(ii) of the auDRP, there is no evidence on the record that the Respondent has been commonly known by the disputed domain name, nor that it has acquired any trademark or service mark rights relevant to “sns” or “snsnail”.

As regards the third circumstance in paragraph 4(c)(iii) of the auDRP, the Complaint shows that the Respondent is using the disputed domain name in connection with an offering of goods. The Respondent is not making a legitimate noncommercial or fair use of the disputed domain name. (This is explored more in detail below when considering the Response).

Based on the above, the Panel considers that the Complainant has made a prima facie case that the Respondent has no rights or legitimate interests in respect of the disputed domain name.

Turning to the Response, it argues that the term “SNS” is widely used as a generic identifier for all nail dipping powders. Indeed, it is not clear whether some of the evidence on the record is referring specifically to the Complainant and its products. The Response also highlights a statement in the Complaint that “consumers, distributors and salons consistently refer to all nail dipping powders as ‘SNS’”. However, the site associated with the disputed domain name is using “SNS” to refer specifically to the Complainant and its products. It lists “SNS” as a “brand” and its website header is “SNS Dipping Powder”. The Respondent’s DNS website advises that “SNS was founded by a humble salon owner with over 30 years of experience in the nail & beauty industry”, which is a reference to the Complainant. Certain evidence from other sites and magazines explains what SNS stands for, which is the Complainant’s corporate name. Therefore, on the basis of the evidence on the record, the Panel is unable to conclude that SNS is a generic term for nail dipping powder.

The Respondent also argues that its use of the disputed domain name complies with the Oki Data requirements. However, due to the lack of a proper disclaimer on the website associated with the disputed domain name (discussed above), the Panel does not agree.

Therefore, the Panel finds that the Complainant has satisfied the second element in paragraph 4(a) of the auDRP.

C. Registered or Subsequently Used in Bad Faith

The Panel notes that the third element of the auDRP uses the word “or” which means that it is sufficient for the Complainant to demonstrate either that the disputed domain name has been registered in bad faith, or that it has been subsequently used in bad faith, but the Complainant is not required to demonstrate both.

Paragraph 4(b) of the auDRP provides that certain circumstances, if found by the Panel to be present, shall be evidence of the registration and use of a domain name in bad faith, although it is not an exhaustive list of such circumstances. The fourth circumstance is as follows:

(iv) by using the domain name, [the respondent has] intentionally attempted to attract, for commercial gain, Internet users to a website or other online location, by creating a likelihood of confusion with the complainant's name or mark as to the source, sponsorship, affiliation, or endorsement of that website or location or of a product or service on that website or location.

As regards registration, the disputed domain name was registered in January 2016, after the registration of the leaf mark but before the registration of the Complainant’s other Australian trademarks. The Complainant’s description of the relationship between the Parties in the Complaint begins with the Buyer Agreement in September 2018. The Complaint implies that the Respondent did not offer the goods and services at issue until two years and eight months after the registration of the disputed domain name, when it entered into the Buyer Agreement. It states that the Parties had a conversation in 2017 in which the Complainant allegedly objected to the disputed domain name but fails to disclose the material fact that the Parties already had a commercial relationship, even before the registration of the disputed domain name. The Respondent actually began ordering products from the Complainant for resale in September 2015 and continued to do so thereafter. Given that the Complaint fails to address the nature and circumstances of the Parties’ commercial relationship at the time of registration of the disputed domain name, the Panel is unable to determine from the Complaint whether the disputed domain name was registered in bad faith.

As regards use, the Respondent uses the disputed domain name, which is confusingly similar to the Complainant’s marks, in connection with a website that prominently displays the Complainant’s vertical bars mark and offers for sale the Complainant’s products. The Respondent has not been an authorized wholesale buyer of the Complainant’s products since March 6, 2020, yet the website associated with the disputed domain name does not accurately and prominently disclose the Respondent’s current relationship with the Complainant. This gives the misleading impression that the website is affiliated with, or endorsed by, the Complainant. In view of these findings and those in Section 6.2B above, the Panel finds that, by using the disputed domain name, the Respondent is intentionally attempting to attract, for commercial gain, Internet users to its website by creating a likelihood of confusion with the Complainant's mark as to the source, sponsorship, affiliation, or endorsement of that website or of products on that website within the meaning of paragraph 4(b)(iv) of the auDRP.

The Respondent argues that the Complainant waived its rights to object to the continued registration of the disputed domain name and/or that the Complainant is estopped from taking action against the continued registration of the disputed domain name. The Respondent argues that the Complainant had actual or constructive knowledge of the disputed domain name since a promotional event in 2016 attended by Mr. Nguyen of the Complainant, where the disputed domain name was displayed on posters. However, the Panel finds that the disputed domain name was not on the flyer for this event nor on one version of the poster, but only in small type above the Respondent’s online store address on another version of the poster, where it could be easily overlooked. Moreover, there is no evidence showing the Complainant’s actual awareness of the disputed domain name at that time. The Complainant acknowledges that it became aware of the disputed domain name in 2017, before the Parties entered into the Buyer Agreement in 2018. That agreement prohibited the Respondent from “registering” a domain name containing (whether in whole or in part) the Complainant’s trademarks. The Panel is unable to draw from these facts the inference that the Complainant waived its right to object to the Respondent’s continued “use” of the disputed domain name. The Summary of Terms initialled by Mr. Pham of the Respondent did address “use” of SNS in domain names but the legal effect of that summary is not clear from the evidence on record. It is not clear when the Complainant first objected to the disputed domain name. The evidence does not show that the Respondent has suffered any detriment from the timing or manner of the Complainant’s objection to use of the disputed domain name. In sum, the Panel finds no waiver or grounds for estoppel.

The Panel notes that the present Decision does not prevent either Party from pursuing their dispute, including as regards breach of contract, consumer protection law, or trademark infringement, in a court of competent jurisdiction.

Therefore, the Panel finds that the disputed domain name has been used in bad faith. The Complainant has satisfied the third element in paragraph 4(a) of the auDRP.

7. Decision

For all the foregoing reasons, in accordance with paragraphs 4(i) of the Policy and 15 of the Rules, the Panel orders that the disputed domain name <snsnail.com.au> be transferred to the Complainant.

Matthew Kennedy
Sole Panelist
Date: July 2, 2020