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Marcus R. Schatte d/b/a Sex v. Personal [2002] GENDND 1510 (4 November 2002)


National Arbitration Forum

START-UP TRADEMARK OPPOSITION POLICY

DECISION

Marcus R. Schatte d/b/a Sex v. Personal

Claim Number: FA0209000124756

PARTIES

Complainant is Marcus R. Schatte a/k/a Sex, Houston, TX, USA (“Complainant”).  Respondent is Personal, Osan-si Kyounggi-do, KOREA (“Respondent”) represented by Kijoong Kim.

REGISTRAR AND DISPUTED DOMAIN NAME 

The domain name at issue is <sex.biz>, registered with Gabia Inc.

PANEL

The undersigned certifies that he has acted independently and impartially and to the best of his knowledge, has no known conflict in serving as Panelist in this proceeding.

Judge Irving H. Perluss (Retired) is the Panelist.

PROCEDURAL HISTORY

Complainant has standing to file a Start-up Trademark Opposition Policy (“STOP”) Complaint, as it timely filed the required Intellectual Property (IP) Claim Form with the Registry Operator, NeuLevel.  As an IP Claimant, Complainant timely noted its intent to file a STOP Complaint against Respondent with the Registry Operator, NeuLevel and with the National Arbitration Forum (the “Forum”).

Complainant submitted a Complaint to the Forum electronically on September 9, 2002; the Forum received a hard copy of the Complaint on September 12, 2002.

On September 12, 2002, a Notification of Complaint and Commencement of Administrative Proceeding (the “Commencement Notification”), setting a deadline of October 2, 2002 by which Respondent could file a Response to the Complaint, was transmitted to Respondent in compliance with paragraph 2(a) of the Rules for the Start-up Trademark Opposition Policy (the “STOP Rules”).

A timely Response was received and determined to be complete on September 30, 2002.

Complainant filed an Additional Submission in a timely manner on October 3, 2002.  Respondent also filed an Additional Submission in a timely manner on October 7, 2002.

On October 15, 2002, pursuant to STOP Rule 6(b), the Forum appointed Judge Irving H. Perluss (Retired) as the single Panelist.

RELIEF SOUGHT

Transfer of the domain name from Respondent to Complainant.

PARTIES’ CONTENTIONS

A. Complainant

1. Complainant is the owner of the following trademarks and service marks registered with the United States Patent and Trademark Office (“USPTO”):

a. Mark: SEX – USPTO Registration No. 2555983, registered April 2, 2002 – Principal Register.  IC 009. US 020 023 026 036 038.  G & S:  Magnets, namely, decorative refrigerator magnets.

b. Mark: SEX – USPTO Registration No. 2518885, registered December 11, 2001 – Supplemental Register.  IC 041.  US 100 101 107.  G&S:  development and dissemination of educational materials of others in the fields of human sexuality and sexually transmitted diseases via audio, visual and printed media, and online via a global computer network.

c. Mark: SEX:  USPTO Registration No. 2518886, registered December 11, 2001 – Supplemental Register.  IC 041.  US 100 101 107.  G&S:  development and dissemination of educational materials of others in the fields of human sexuality and sexually transmitted diseases via audio, visual and printed media, and online via a global computer network.

d. Mark: SEX – USPTO Serial No. 78118212, registered December 11, 2001 – Principal Register.  IC 009.  US 021 023 026 036 038.  G & S:  Magnets, namely, decorative refrigerator magnets.

e. Mark:  SEX – USPTO Serial No. 78118233 – filed as ITU, on March 28, 2002 – Principal Register.  IC 016.  US 002 005 022 023 029 037 038 050.  G& S:  Paperweights.

                       

2. The domain name <sex.biz> identically matches the SEX trademarks and service marks strings in which the Complainant has rights, namely, USPTO Registration Nos. 2555983, 2518885, 2518886, and USPTO Serial Nos. 78118212 and 78118233.  The domain name <sex.biz> also identically matches the SEX trade name under which Complainant has continually operated in commerce since Feb. 19, 2001, and for which the Complainant has received a certificate of operation under Assumed Name to operate under the name sex.  This certificate was filed with the County Clerk, Harris County, Texas, on 08/26/02.

3. Complainant’s business has continuously operated since Feb. 19, 2001, and provides goods in the way of a line of decorative refrigerator magnets and services in the way of development and dissemination of education materials in the fields of human sexuality and sexually transmitted diseases for use by medical professionals and lay persons including provision of Internet resources and laminated education resource cards.  All goods, letterheads, business cards, bill of sale and promotional materials used by Complainant’s business prominently display the Complainant’s SEX marks.  Complainant’s business is currently developing a line of paperweights to add to its product line also.  Complainant’s business intends to use the domain name <sex.biz> for bona fide business purposes on the Internet to sell Complainant’s services and its goods beginning with its line of decorative refrigerator magnets.

4. Although the mark SEX may be generic, Complainant demonstrated to the United States Patent and Trademark Office that there is a distinctive, unique or secondary meaning to the mark and was granted full registration.

5. Complainant has met its burden under STOP Policy ¶ 4(a)(i).

6. Complainant has made extensive searches and there is no evidence whatever of applications or registrations for trademarks, service marks or trade names by Respondent under his actual name or related names in Korea or the United States.  Complainant has demonstrated that Respondent is not in compliance with STOP Policy ¶ 4(c)(i).

7. It was found in another STOP proceeding, Philatelic.Com v. Peter I. Jeong, FA 112547 (Nat. Arb. Forum July 24, 2002), that Respondent, under his real name, admitted to having no rights or interest in the disputed domain name.

8. In any event, under STOP procedures, the potential registrant receives a notice of a pre-filed IP Claim, which is a warning of a conflict over intellectual property rights.  With full knowledge of Complainant’s detailed IP Claims, Respondent had to affirmatively reply to the Registry to proceed with his application for <sex.biz>.  Only after registering the domain name <sex.biz> much later does Respondent even claim to have started preparations for use.  Additionally, the fact that Respondent registered <sex.biz> under the name “Personal” does not suggest he intended to use the domain name for a bona fide business use.  Further, Respondent is not in compliance with STOP Policy ¶ 4(c)(ii).

9. Respondent registered the domain name <sex.biz> primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the Complainant or to a competitor of Complainant for valuable consideration in excess of Respondent’s documented out-of-pocket costs directly related to the domain name <sex.biz>, thus violating STOP Policy ¶ 4(b)(i).

10. Due to the unique nature of the .BIZ IP Claim system, Respondent was clearly informed, as were all applications for disputed names, by the .BIZ Registry (well in advance of Respondent’s registration of <sex.biz>) of all IP Claims and details including IP Claimants’ names and details of their marks against the registration of <sex.biz>.  There cannot be any question therefore that in this case Respondent proceeded in the face of knowledge of Complainant’s trademark rights.  To so proceed, in the absence of any claim to rights or legitimate interests in the domain name, constitutes bad faith.  Complainant states that Respondent unquestionably knew, well in advance of his registration of <sex.biz> on 3/27/02, of Claimant’s marks and intellectual property rights in the disputed name and consciously and in bad faith affirmed with the Registry, NeuLevel, his intention to proceed with his application for the name despite full disclosure of Complainant’s intellectual property rights, disputes and claims by Complainant through the .BIZ IP Claim service.

11. Respondent demonstrated bad faith in his registration of <sex.biz> in additional ways.  He registered <sex.biz> under the name “Personal” which violates .BIZ Registration Requirements (pg. 2.-1.a.).

12. If Respondent uses the domain name <sex.biz> for a website, and it can be assumed that he eventually will, Respondent will intentionally attempt to attract, for commercial gain, Internet users to Respondent’s website or other online location, by creating a likelihood of confusion with the Complainant’s marks as to the source, sponsorship, affiliation, or endorsement of Respondent’s website or location or of a product or service on Respondent’s website or location.

13. It is evident that Respondent registered the disputed domain name in bad faith under STOP Policy ¶ 4(a)(iii).

B. Respondent

1. This proceeding should be conducted in the Korean language, as Respondent is Korean, and much of the evidence is documented in Korean.

2. The disputed domain name is identical to a trademark or service mark in which Complainant has rights.  But the effect of Complainant’s rights concerning the SEX mark is limited to the United States of America.  Therefore, Complainant may not claim his right against Respondent residing in Korea.

3. The word “sex” is a generic term.  Furthermore, “sex” is used generally by people all around the world.  For this reason, many of the countries in the world do not allow the registration of the trademark on “sex.”  Respondent can only speculate that the United States Patent and Trademark Office determined that Complainant had a secondary meaning for specific goods or services under the name of “sex” mark.  If then, the Complainant’s trademark is only effective for the specific goods and services which acquired a secondary meaning and within the scope of the region.

4. The disputed domain name was registered on March 27, 2002, and thereafter Respondent worked out a concrete business plan and invited investors as a preparatory stage to start a business.  In other words, before any notice to Respondent of this dispute, Respondent had made demonstrable preparations to use the disputed domain name in connection with a bona fide offering of goods or services.    Respondent ordered the designing of a website for <sex.biz> on April 30, 2002, from Korean Space Image, a private business of Ko, Sokju with its business office at Bukbu 462-23, Yangsan, South Kyongsang-do Province, Korea, the purpose of which is designing websites and providing web-hosting services.

5. Respondent could not proceed further until September 12, 2002, when the “hold” on the disputed domain name was released by NeuLevel, Inc.

6. Respondent was mapping out a joint business plan with a Dutch man called Randolf von Gans who was planning a business using the domain names of <sexin> and <lovein>.  Respondent received a business plan and sent Respondent’s business plan to Randolf.  But after it became clear that the business plan of Randolf was finally to sell the domain names, Respondent stopped the joint business plan consultation with Randolf notifying him that Respondent had no intent to sell the  disputed domain name.

7. After the registration of the disputed domain name, Respondent tried to find investors for the business he was mapping out using the disputed domain name.  Respondent placed an advertisement on a website of a business establishment consulting and investment brokerage company, called BusinessUN Co., Ltd. and with the website <businessun.com/hslee/html/index.html>.  Following the request of Respondent, Hyungseok Lee, a business establishment of this company put an advertisement titled “Invest in sex.biz” on the menu of “Recommended business of Hyungseok Lee” inviting investors to Respondent’s business.  This advertisement was placed on May 7, 2002, before Respondent received the Notification of this Complaint.  The contents of the advertisement are as follows:  “Cooperation proposals came in Germany and Italy.  A Dutch, who manages around 160 sex-related sites, offered one-to-one cooperation. . . . In no time, the site development will be launched.  If you are interested in it, don’t miss this chance.  The earlier the participation is, the more advantage you will get.  Your share will be guaranteed, it will become a hub site.  Investment will be maximum 3000 million won and minimum 50 million won.  It is expected to make 200% profits in a year and 400% in two year. . .”.

8. After the registration of <sex.biz>, Respondent received offers over 10 times to sell the domain name, but Respondent rejected them all replying that <sex.biz> would be used for the business being planned by Respondent and investment in the business would be welcome.

9. For the reasons above, it is evident that before any notice to Respondent of this dispute, Respondent had made demonstrable preparations to use the disputed domain name in connection with a bona fide offering of goods or services, and, therefore, Respondent has rights or legitimate interests in respect of the disputed domain name.

10. Before any notice to Respondent of the Complaint, Respondent knew neither about the Complainant nor about the trademark of Complainant, because Complainant is a totally unknown person in Korea and the word “sex” is a generic term.  Moreover, a Korean could not consider the term “sex” as a trademark of other persons because the term “sex” is viewed as being contrary to public morals or a breach of law.  There is no evidence that Complainant’s trademarks are famous.  The earliest trademark of Complainant was filed on August 15, 2001, just several months before the start of IP Claim service by NeuLevel, Inc., and it was registered on January 8, 2002, after the registration of the disputed domain name.  Respondent clearly rejected all offers for transactions of the disputed domain name including an offer from Complainant.

11. It is unreasonable to infer that Respondent had actual knowledge about Complainant’s trademark by the IP Claim Notice only.  Respondent, as a resident of a non-English speaking country, is not good at English.  Also, the IP Claim Notice is hard to understand for Respondent and is a very long document.  According to the Notice, IP Claims related to <sex.biz> are as many as twenty, and this Notice consists of fourteen pages.

12. Complainant charges that Respondent inserted an ad for investment on <businessun.com>.  However, that is not the case of an advertisement for domain sales, lease or transfer.  It is only for invitation of investment to <sex.biz> with the opinion of high returns by Hyungseok Lee, a business establishment consultant.

C.  Complainant’s Additional Submission

1. In reply to Respondent’s contention that it is unfair to have this proceeding in English rather than in Korean, it is evident that Respondent and the law firm that represents him have an excellent command of the English language.  Moreover, the proceeding is proper under the STOP Rules.  Finally, the disputed domain name is in English.

2. Respondent states that “the effect of Complainant’s rights about ‘sex’ mark is limited in United States of America” and “Therefore the Complainant may not claim his rights against Respondent residing in Korea.”  This position is not supported by numerous previously decided cases.  The fact that Complainant has multiple marks for the term SEX in the United States does not in any way diminish his rights in these proceedings against the Respondent in Korea.  It is to be noted that we are concerned with an Internet domain name with a global reach.

3. Complainant strongly asserts that the cases cited in the Complaint along with common sense lead to only one conclusion; the date of notice of this dispute occurred no later than the date of the .BIZ IP Claims Notice to Respondent long before he registered the disputed name and claims to have made plans to use it.  The Respondent therefore has failed to demonstrate any rights to or legitimate interests in the domain name under STOP Policy ¶ 4(c)(ii).

4. Respondent has no legitimate evidence sufficient to satisfy any of the provisions detailed under STOP Policy ¶¶ 4(c)(i), 4(c)(ii), or 4(c)(iii), since he has no rights or legitimate interests in the disputed domain name as the Panel found in Philatelic.Com v. Peter J. Jeong.  He does not own any trademark or service mark that is identical to the domain name; he has not produced valid evidence that he prepared to use the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services before any notice to Respondent of the dispute, and he, as an individual, business, or other organization, has not shown that Respondent has been commonly known by the domain name, even if he had acquired no trademark or service mark rights.

5. The entire exchange between Mr. Jeong with one von Gans in no way can be considered a “joint business plan” or any type of business plan in any way related to <sex.biz>.  It deals with a set of domain names (the von Gans’ names) totally unrelated to <sex.biz> and a totally unrelated business concept for the use of those unrelated domain names and which Mr. von Gans wishes to sell.

6. Respondent has provided no legitimate proof that he had been “mapping out” any business related to <sex.biz> at all.  He claims he attempted to “find out investors” by placing an “advertisement” which he requested from a business establishment consultant, Hyungseok Lee.  Respondent admits in his Response to placing this “advertisement” and quotes it in the Response, but leaves out the critical final section in his quote – “As the M&A is intended in two years, you can make a large sum of money earlier than expected.”  Complainant charges that this “advertisement” provides absolute proof that Respondent registered the name <sex.biz> in bad faith since he openly advertised his plans for a Merger and Acquisition (to sell, rent, or transfer the domain name for huge profit) in two years, but not before taking in millions of dollars from “investors” first.

7. With respect to an “ad” inserted by Respondent on <businessun.com>, he states:  “However, that’s not the case of advertisement for domain sales, lease or transfer.  It’s only for invitation of investment to sex.biz with the opinion of high returns by Hyungseok Lee, a business establishment consultant.”  The critical issue here that Respondent did not mention is the Respondent’s publicly stated plan in the “ad” for a M&A (merger and acquisition) in two years.  It is clear that Respondent primarily and openly intended to sell, lease or transfer the <sex.biz> registration for high profits far in excess of his costs in two years thus proving Respondent’s bad faith registration of the disputed domain name according to the terms of STOP Policy ¶ 4(b)(i).

D.  Respondent’s Additional Submission

1. The IP Claim notice is not “any Notice of Dispute” pursuant to STOP Rule Paragraph 4(c)(ii).  The notice given is not guaranteed, and is provided for information purposes only.

2. If Respondent had no business plan in the name of <sex.biz>, why did the Respondent seek to use immediately the domain name, <sex.biz>, in spite of conflict with NeuLevel, Inc.?  If Respondent has no interests about <sex.biz>, why is Respondent actively responding to the disputes over <sex.biz> with increasing costs?

3. In the UDRP and STOP dispute resolution systems, the nature of trademark of Complainant would show or define whether or not Respondent registered the domain name with bad faith.  Disregarding whether the Complainant had the registered trademark right or not, it is not proper for Complainant to claim exclusive rights to a domain name that consists of a generic word.  Therefore, the domain name merely consists of a common generic word that can be registered by the Respondent or any other natural person or corporation on the basis of first-come, first-served.  The registration of merely a common generic word or descriptive mark is not bad faith registration.  Furthermore, according to the Complainant, there are numerous claims for the word “sex” just in the United States.  In this situation, who can assert his or her exclusive right about the SEX mark?

FINDINGS AND CONCLUSIONS

Respondent complains that the arbitration hearing is being conducted in the English language rather than Korean, and that, accordingly, is unfair.

The simple answer to this Complaint is that the disputed domain name <sex.biz> is in the English language.  It is appropriate, accordingly, to utilize the English language in the arbitration proceedings.

Paragraph 15(a) of the STOP Rules instructs this Panel to “decide a complaint on the basis of the statements and documents submitted in accordance with the Policy, these Rules and any rules and principles of law that it deems applicable.”

Paragraph 4(a) of the STOP Policy requires that the Complainant must prove each of the following three elements to obtain an order that a domain name should be transferred:

(1) the domain name is identical to a trademark or service mark in which the Complainant has rights; and

(2) the Respondent has no rights or legitimate interests in respect of the domain name; and

(3) the domain name has been registered or is being used in bad faith.

Due to the common authority of the ICANN policy governing both the Uniform Domain Name Dispute Resolution Policy (“UDRP”) and these STOP proceedings, the Panel will exercise its discretion to rely on relevant UDRP precedent where applicable.

STOP POLICY ¶ 4(a)(i)

Under the STOP proceedings, a STOP Complaint may only be filed when the domain name in dispute is identical to a trademark or service mark for which a Complainant has registered an Intellectual Property (“IP”) claim form.  Therefore, every STOP proceeding necessarily involves a disputed domain name that is identical to a trademark or service mark in which a complainant asserts rights.  The existence of the “.biz” generic top-level domain (“gTLD”) in the disputed domain name is not a factor for purposes of determining that a disputed domain name is not identical to the mark in which the Complainant asserts rights.

Unlike domain name disputes brought under the UDRP, STOP claims require that the disputed domain name be identical to a trademark or service mark in which the Complainant holds rights.  A domain name that is merely confusingly similar to a mark cannot be transferred through a STOP claim (although the holder of a non-identical but similar mark could bring a UDRP complaint when the domain name eventually clears any other pending STOP complaints).  See Commonwealth Bank v. Rauch, FA 102729 (Nat. Arb. Forum Feb. 23, 2002) (finding that the Complainant failed to establish rights in <cominvest.biz> pursuant to STOP Policy ¶ 4(a)(i) because its COMMINVEST mark was not identical to  “cominvest” or <cominvest.biz>).

Here, the evidence establishes conclusively that the Complainant has five registrations in the United States Patent and Trademark Office for the mark SEX which are identical to the domain name <sex.biz>, and the Panel so finds and concludes.

STOP POLICY ¶ 4(a)(ii)

STOP Policy Paragraph 4(c) functions similarly to UDPR Paragraph 4(c) in providing ways for a Respondent to demonstrate its rights or legitimate interests in a domain name.

Under STOP Policy Paragraph 4(c), the Respondent may demonstrate its rights or interests by proving:

i. The Respondent is the owner or beneficiary of a trade or service mark that is identical to the domain name;

or

ii. Before any notice to the Respondent of the dispute, its use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services;

or

iii. The Respondent (as an individual, business, or other organization) has been commonly known by the domain name, even though it has acquired no trademark or service mark rights.

Respondent has submitted no evidence whatever to establish that it falls within STOP Policy ¶¶ 4(c)(i) or (iii), and the Panel finds and concludes that Respondent has not so demonstrated.

With respect to STOP Policy ¶ 4(c)(ii), Respondent contends that he has made demonstrable preparations to use the subject domain name before any notice to him of the dispute.

This is the critical issue in this proceeding.

Respondent contends that he ordered the design of a website and had worked out a concrete business plan with a Dutch person, one Randolf van Gans.  The difficulty is, however, that the ordering of the website demand took place after the STOP IP notice, and Mr. van Gans wanted to sell his domain names, and did not want to enter into a joint venture with Respondent.

Respondent also contends that his “demonstrable preparations” include advertising for investors.

It is doubtful whether a business plan can be based on an advertisement for investors, but, in any event, this was subsequent to the IP notice.

Accordingly, the Panel finds and concludes that Respondent does not fall within STOP Policy ¶ 4(c)(ii).  There were no demonstrable bona fide preparations to use the subject domain name for a bona fide offering of goods or services, “. . . Before any notice to Respondent of the dispute. . . .”

Respondent does not have a legitimate interest or rights to the subject domain name.[1]


STOP POLICY ¶ 4(a)(iii)

STOP Policy Paragraph 4(b) provides for non-exclusive examples of circumstances that, if proven, will satisfy the bad faith requirement of STOP Policy Paragraph 4(a)(iii).

To establish bad faith under the STOP Policy, the Complainant need only prove either registration or use of the domain name in bad faith, not both as the UDRP requires.

STOP claims differ from UDRP claims in one very significant and fundamental way.  Unlike the UDRP, under STOP when a registrant (Respondent) registers a domain name for which an IP Claim was previously filed, the registrant is notified of the potential for trademark infringement before being allowed to proceed with the registration.  One Panel has recognized that registration of a domain name, despite such notice in appropriate circumstances, could “almost preclude any possibility of registration in good faith of a domain name. . . .”  See Gene Logic Inc. v. Bock, FA 103042 (Nat. Arb. Forum Mar. 4, 2002) (finding bad faith where Respondent registered the <genelogic.biz> domain name “with full knowledge that his intended business use of this domain name was in direct conflict with a registered trademark of a known competitor in exactly the same field of business”).

Under UDRP Policy ¶ 4(b)(ii), a complainant may demonstrate a respondent’s bad faith by showing that respondent registered the domain name for the purpose of preventing complainant from registering domain names that reflect its mark(s), provided respondent has engaged in a pattern of such conduct.  Under STOP Policy ¶ 4(b)(ii), the Complainant may similarly prove bad faith by showing the Respondent registered the domain name for the purpose of preventing Complainant from registering domain names reflecting its mark(s).  However, under the STOP provision, there is no “pattern” of conduct requirement.  Thus, Panels have found bad faith under STOP Policy ¶ 4(b)(ii) when only one domain name was at issue and no prior history of trademark infringement was established.  See Peachtree Software v. Scarponi, FA 102781 (Nat. Arb. Forum Jan. 23, 2002) (finding bad faith under STOP Policy ¶ 4(b)(ii), noting that it was reasonable to conclude Respondent registered <peachtree.biz> with the intent to prevent Complainant from reflecting its PEACHTREE mark in a corresponding domain name, given Respondent’s knowledge of Complainant’s mark and Respondent’s lack of rights or interests in the mark).

Here, there is a legal presumption of bad faith, because of Complainant’s existent registration of its marks with the United States Patent and Trademark Office, Respondent reasonably should have been aware of Complainant’s marks, actually or constructively.[2]

There is no valid proof to the contrary.

In Interstellar Starship Servs., Ltd. v. Epix, Inc., [1999] USCA9 357; 184 F.3d 1107, 1111 (9th Cir. Or. 1999) it was said:

However, ISS became aware of the ‘EPIX’ trademark when it applied for its own registration of ‘EPIX.’  Adopting a designation with knowledge of its trademark status permits a presumption of intent to deceive.  See Brookfield, 174 F.3d at 1059 (citing Official Airline Guides, Inc. v. Goss, [1993] USCA9 3170; 6 F.3d 1385 (9th Cir. 1993)).  In turn, intent to deceive is strong evidence of a likelihood of confusion.  Sleekcraft, 550 F.2d at 354.

Thus, it is found and concluded that the domain name was registered in bad faith.

DECISION

Based on the above findings and conclusions, it is decided that the domain name <sex.biz> registered by Respondent, Personal, shall be and the same is TRANSFERRED to Complainant, Marcus R. Schatte d/b/a Sex.  Subsequent challenges under the STOP Policy against this domain name SHALL NOT be permitted.

JUDGE IRVING H. PERLUSS (Retired), Panelist
Dated: November 4, 2002


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