People have relied on acronyms since antiquity, when the government in ancient Rome went by SPQR rather than the more formal Senatus Populusque Romanus. Back then, acronyms may have made it easier for Roman stone carvers, artisans and metalworkers to mark everything from buildings to coins with the insignia of the empire. However, thanks to the convenience offered by abbreviating long phrases into a few characters or syllables, acronyms continue to have pervasive use in modern society. Indeed, many companies use short and easily recalled acronyms to identify their products and services to accommodate the ever-quickening pace of their consumers’ lifestyles. It comes as no surprise, therefore, that companies increasingly are seeking to register acronyms as trademarks with the United States Patent and Trademark Office (USPTO).

Acronyms as Trademarks

While acronyms can be useful, a company must decide whether it is wise to adopt an acronymic moniker to refer either to itself or its goods and services. For instance, the Acronym Specialists Society may decide that it is not in its best interest to use one to advertise its services. Companies that are indeed interested in using one must follow all standard rules regarding the use of trademarks. For starters, the company must actually use the acronym to distinguish its goods or services from those provided by others and indicate their source.

Moreover, the acronym itself must have sufficient distinctiveness. As applied to trademarks, “distinctiveness” generally includes four categories: generic, descriptive, suggestive or arbitrary. Generic terms that are the common name for a product cannot be registered as trademarks because they are inherently not distinctive. Descriptive terms that merely describe something about the product or service may only be registered as a trademark if they acquire distinctiveness after a period of use. Suggestive terms subtly suggesting something about the product, and arbitrary terms that have no relationship to the product, are the strongest candidates for registration.

In the context of acronyms, it is important to note that a trademark’s strength is determined not by the acronym itself, but by the term it signifies. For example, HDTV is likely an unregistrable acronym because high definition television is a generic term in television technology. However, not all acronyms signifying generic terms are unregistrable. According to some U.S. courts of appeals, including the Seventh, Eighth and Eleventh Circuits, while generic terms themselves are not protectable as trademarks, “[a]bbreviations of generic words may become protectable if the party claiming protection for such an abbreviation shows that the abbreviation has a meaning distinct from the underlying words in the mind of the public.” (See Welding Services Inc. v. Forman , 509 F.3d 1351 (11th Cir. 2007).

Additionally, as with word marks, a company should perform a trademark search when choosing an acronym to determine if another party is currently using the acronym as a trademark in a similar fashion. The University of South Florida learned this lesson the hard way when its application to register the trademark “USF” was refused by the USPTO because of the University of San Francisco’s earlier registration of the same thing.

After a company selects an acronym that is both distinctive and not already used by another entity for a similar purpose, it will want to begin advertising its goods and services using the acronym. Almost certainly, the company will seek to avail itself of the broad marketing potential provided by the Internet. However, even with a trademark registration in hand, whether a company is free to maximize the potential of its acronymic trademark on the Internet is not a sure bet. This is especially true when it comes to securing acronymic domain names.

Domain Names

Domain names are used to host and identify the websites that populate the Internet. Because websites provide means for companies to directly connect with consumers and share information about themselves and their products, it is no surprise that many companies seek to register a domain name that encompasses the acronym. This is because if a company starts advertising under the acronym XYZ, it is likely that consumers will try to find more information about that product or service by going to XYZ.com. Opportunities may be missed if a company does not own the XYZ.com domain. Although obtaining a domain name for an acronym trademark may be relatively easy, problems may arise when someone is already using the desired domain name.

Registering a Domain Name

The Internet Corporation for Assigned Names and Numbers oversees the registration of domain names. One of ICANN’s main functions is to certify companies as domain-name registrars. An accredited domain-name registrar is permitted to access and modify the master database of domain names.

All accredited registrars have a search function that allows one to determine if a domain name is available. Assuming that the search does not reveal any conflicting names, ownership of a domain name can be obtained with only a few clicks and payment of appropriate fees. However, if another entity has registered the domain name first, it may be difficult, expensive and sometimes impossible to secure the desired domain even when one owns a registration for the acronymic trademark.

Cybersquatting Conflicts

Generally, multiple entities can legally use the same trademark to identify their products if the entities’ products do not overlap. For example, one can wear a pair of BK (U.S. Trademark Registration No. 1405050) sneakers from British Knights while one eats a BK (U.S. Trademark Registration No. 3476576) burger from Burger King. Because no one would confuse footwear and fast food, the USPTO allows the registration of both trademarks. Separate entities, however, cannot share domain names because they are allocated on a first-come, first-served basis. For this reason, Burger King owns bk.com, while British Knights is stuck with the less desirable bkfootwear.com.

If a company wants to obtain a domain name that is registered by another party, there are at least two options: (1) write a check or (2) file a complaint. Before deciding on the appropriate option, the company should perform an investigation to determine whether the current owner has a legitimate interest in the domain name, such as owning a registered trademark for the subject acronym. If this is the case, the company’s only option is to persuade the current owner to transfer the domain name. This occurred in 2000, when the law firm of Morgan, Lewis & Bockius agreed to transfer the domain name mlb.com to Major League Baseball.

If it appears, however, that the current owner does not have a legitimate interest in the acronym domain name, then the owner may be a “cybersquatter.” This is an entity registering a domain name that is confusingly similar to another entity’s trademark with a bad-faith intent to profit off the goodwill of that trademark. Thankfully, there are ways to deal with cybersquatters. One can bring suit in federal court under the Anticybersquatting Consumer Protection Act (ACPA), or pursue an administrative proceeding under ICANN’s Uniform Domain-Name Dispute-Resolution Policy (UDRP). One of the main differences between the two procedures is the available remedies. Both provide for the cancellation or transfer of the domain name, but the ACPA additionally provides for monetary damages.

The standard to succeed in either an ACPA or a UDRP action is similar. In simplified terms, the complainant must show that: (1) the disputed domain name is identical or confusingly similar to a trademark in which the complainant has rights; and (2) the disputed domain name is being used in bad faith. The UDRP also requires that the respondent has no rights in the disputed domain name, whereas the ACPA considers the respondent’s lack of rights as evidence of bad faith.

Cybersquatting and its relationship to acronymic trademarks is particularly relevant in light of the recent World Intellectual Property Organization (WIPO) decision CEAT Ltd. v. Vertical Axis Inc ., WIPO Case No. D2011-1981 (Feb. 20, 2011). In CEAT , the complainant, CEAT Ltd., the owner of trademark registrations for the trademark “CEAT,” filed a UDRP complaint demanding the transfer of the ceat.com domain name from the respondent, Vertical Axis. The respondent was in the business of randomly registering a variety of two-, three- and four-letter domain names, including the domain at issue, for use with pay-per-click (PPC) parking pages, which displayed sponsored links. In its defense, the respondent argued that at the time of registering the domain name, it had no knowledge of the complainant and that the PPC page contained no reference to the complainant’s company or even to the complainant’s goods (tires). Therefore, the respondent believed it was not using the domain name in bad faith.

A majority of the WIPO panel, however, disagreed with the respondent, holding that any PPC use is not legitimate unless the PPC page reflects a descriptive use of the domain name at issue. Accordingly, the WIPO panel transferred the domain name to the complainant because, essentially, the complainant had a legitimate interest in the domain name.

While there are many aspects of this holding that may impact future UDRP proceedings, the one arguably affecting businesses the most is that it instills a sense of “first to file a UDRP complaint” among those businesses using the same acronym in connection with different services or goods. Considering there was no evidence that the respondent actually targeted the complainant’s trademark, one can conclude that any company, not just the complainant, that used the acronym “CEAT” as a trademark could have forced the transfer of the domain name. No longer will a company desiring a domain name that is currently owned by an entity that only hosts a PPC page on that domain have to show that bad faith was directed at them by the current owner. While this news is certainly welcomed by such companies, one wonders if the decision was too far-reaching in that it appears to subvert the cybersquatting standard provided by the UDRP.

A company that is interested in adopting an acronymic trademark must take certain factors into account. It must make sure that the proposed acronym is distinct enough that it is protectable, and that no other party is currently using it for a similar trademark purpose. Additionally, if the company wishes to exploit its new trademark on the Internet, it must be wary of both similarly minded companies and nefarious cybersquatters that may attempt to register a domain name that encompasses the acronym first. While this may seem like a lot of aggravation for a few letters, the appeal of an acronymic trademark is undeniable. Would people rather drive a BMW or a Bayerische Motoren Werke? •

Seth Kramer is an associate in the intellectual property department at Fox Rothschild. He can be reached at skramer@foxrothschild.com or 215-299-2704.