Internet Library of Law
and Court Decisions

Charles Chips Enterprises, Inc. v. Mark Patterson, d/b/a Innate 2 Create and Ted Henderson

In this domain name dispute brought under the Uniform Domain Name Dispute Resolution Policy (“UDRP”), the Panel, following the majority view, holds that an alleged reseller of Complainant’s products has no legitimate interest in a domain name containing Complainant’s marks when he sells both Complainant’s products and those of its competitors at the web site he operated at that domain.  Finding that the use of Complainant’s mark in such circumstances was undertaken in bad faith to profit from consumer confusion as to the source of the web site and the products sold thereat, the Panel directed Respondents to transfer the disputed domain name to the Complainant.

Complainant Charles Chips Enterprises, Inc. (“Charles Chips”) is the owner of numerous federal registered trademarks which it uses to market snack foods.  These marks include the mark “Charles Chips,” along with a number of other marks that incorporate the word “Charles” in conjunction with a type of snack food.  Charles Chips registered its “Charles Chips” mark in 1976.  It claimed common law trademark rights in that mark dating back to the 1940’s, based on its use of the mark since that time to market its products.

Respondents Mark Patterson and Ted Henderson claim that they are authorized resellers of Charles Chips products, serving as “sub distributors” for “Charles Chips of Southern California,” one of Complainant’s authorized distributors.  Respondents registered the domain name “Charles Chips.com” in 1998 under Patterson’s trade name, “Innate 2 Create.”  At that domain, Respondents operate a web site at which they sell both Complainant’s products and those of Complainant’s competitors.

Complainant commenced this proceeding, seeking transfer of the domain name pursuant to the Uniform Domain Name Dispute Resolution Policy.  Finding Complainant had met each of the elements necessary for such relief, the Panel directed Respondents to transfer their “Charleschips.com” domain to Complainant.

To be entitled to relief under the UDRP, a Complainant must demonstrate that (i) the domain name is identical or confusingly similar to Complainant’s trademark; (ii) Respondent has no legitimate interest or rights in the domain name; and (iii) the domain name has been registered and is being used in bad faith.

The Panel found that the domain name “Charleschips.com” was identical to Complainant’s “Charles Chips” mark.

The Panel also found that Respondents had no legitimate interest in the disputed domain name.  The Panel adopted the majority view, which recognizes that resellers can have a legitimate interest in a domain containing the mark of products they sell sufficient to defeat a UDRP proceeding commenced by the mark holder.  However, to establish such a right, a reseller must demonstrate that he only sells the mark holder’s products at the site --- he cannot also sell those of a competitor.  Because that was precisely what Respondents were doing here, the Panel held Respondents had no legitimate interest in the domain name.

Finally, the Panel held that Respondents had acted in bad faith, because they had used the “Charles Chips” domain to intentionally attract for commercial gain visitors by creating a likelihood of confusion as to the source of their web site, and its affiliation with Complainant.

The Panel accordingly resolved this domain name dispute by directing the transfer of the disputed domain name - CharlesChips.com  - to Complainant.