In re STEELBUILDING.COM

LINN, Circuit Judge,

coneurring-in-part and dissenting-in-part.

I agree with the majority’s well-reasoned analysis in all respects but one. I dissent only from the majority’s decision to sustain the Board’s finding of no acquired distinctiveness. Because the Board legally erred in according too little weight to some of the evidence submitted to show the acquisition of secondary meaning, and because the Board acted arbitrarily in not considering other evidence, I would vacate the Board’s determination of no acquired distinctiveness and remand for further consideration.

I agree with the majority that the poll results are inconclusive and do not prove acquired distinctiveness. However, applicant submitted declarations from competitors and others with industry knowledge, as well as customer letters, that demonstrate that individuals view STEEL-BUILDING.COM as source identifying. The Board found that these letters “provide some de facto evidence” of a recognized mark but accorded them little weight because “much of this evidence may be attributable to domain name recognition.” In re Steelbuilding.com, 2003 WL 23350100, at *11 (TTAB Mar. 24, 2003). The Board’s finding that the mark is also a domain name provides it no legal basis to discount this evidence of acquired distinctiveness. The question before the Board is whether consumers consider STEEL-BUILDING.COM to identify the source of Applicant’s interactive, on-line, steel-building services. In re Oppedahl & Larson LLP, 373 F.3d 1171, 1176 (Fed.Cir.2004) (explaining that domain-name marks may obtain registration upon a showing of secondary meaning); 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 7:17.1 (4th ed.2005) (noting that a domain name can become a service mark if it is used to identify and distinguish the source of services).

In the Internet world, domain-name recognition is a form of source identification and may even evidence the acquired distinctiveness of the domain-name mark. See Paccar Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 250 (6th Cir.2003) (“[Wjords in many domain names can and do communicate information as to the source or sponsor of the web site.”); Brookfield Communications, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1055 (9th Cir.1999) (“The domain name is more than a mere address: like trademarks, second-level domain names communicate information as to source.”); Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1327 (9th Cir.1998) (“We reject Toeppen’s premise that a domain name is nothing more than an address. A significant purpose of a domain name is to identify the entity that owns the web site.”);' Xuan-Thao N. Nguyen & Jeffrey A. Maine, Taxing the New Intellectual Property Right, 56 Hastings L.J. 1, 49-50 (2004) (“Courts have consistently held that domain names are not merely addresses, but powerful source indicators on the Internet.”). The Board legally erred in discounting this evidence on the basis that the mark is also a domain name. Its decision must be vacated. See Recot, Inc. v. M.C. Becton, 214 F.3d 1322, 1327-28 (Fed.Cir.2000) (holding that the Board legally erred in not according sufficient weight to evidence of a mark’s fame in a likelihood of confusion analysis, vacating, and remanding for further consideration); see also Sec. & Exch. Comm’n v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947) (holding that a reviewing court may not supply a reasoned basis for the agency’s action that the agency itself has not given); In re Thrift, 298 F.3d 1357, 1366 (Fed.Cir.2002) (applying the Chenery rule to decisions of the Board of Patent Appeals and Interferences); In re Sang-Su Lee, 277 F.3d 1338, 1342 (Fed.Cir.2002) (“Tribunals of the PTO are governed by the Administrative Procedure Act, and their rulings receive the same judicial, deference as do tribunals of other administrative agencies.”).

The Board also erred in giving Applicant’s advertising through banner ads and other Internet channels too little weight, Recot, 214 F.3d at 1327-28, and acted arbitrarily in ignoring Applicant’s evidence of consumer recognition based on the number of consumers who return to the site regularly and login, see Sang-Su Lee, 277 F.3d at 1343-15 (finding arbitrary the Board’s finding of obviousness because of inade-quáte explanation on motivation to combine, vacating, and remanding); Gechter v. Davidson, 116 F.3d 1454, 1457-60 (Fed.Cir.1997) (finding arbitrary the Board’s finding of anticipation because of inadequate explanation on how the reference disclosed claim elements, vacating, and remanding). Applicant spent at least $99,000 on Internet advertising in 2001, and about $98,000 on. print ads. Applicant purchased keyword Internet banner ads— ads that appear as links on a search engine after a user has searched a keyword — and “pay-per-performance” ads, which allow a company to garner a top ranking on a user’s returned-search-result list.

Success of Internet ads is often measured by the “click-through rate.” Applicant’s banner ads appeared 75,000 times per month and enjoyed a clickthrough rate as high as 8% on search terms like “metal building.” A click-through rate of only 4% would yield roughly 3,000 visits to the steelbuilding.com website per month. “Pay-per-performance” advertising would lead to several thousand more visits per month. Applicant presented evidence that each day 200 new users and 200 repeat users logged on to the steelbuilding.com website to request price quotes. Indeed, Internet advertising cost-effectively generated site traffic, which caused an association between Applicant’s services and its domain-name mark. See, e.g., Michael Korybut, Online Auctions of Repossessed Collateral Under Article 9, 31 Rutgers L.J. 29, 54 (1999) (“By targeting the specific market segment and continuous delivery over the Internet, online advertising can efficiently reach the appropriate audience, in sharp contrast to traditional mass marketing where the target audience is constantly exposed to advertisements in which they have no interest.”). The Board’s reliance on In re Leatherman Tool Group Inc., 32 U.S.P.Q.2d 1443 (TTAB 1994), in summarily dismissing Applicant’s Internet advertising evidence is misplaced. Leatherman was decided long before Internet advertising became a cost-effective alternative to traditional advertising media, and its relevance to the facts of the present case is questionable.

The Board also failed to address evidence that Applicant’s sales rose quickly as a result of its advertising. In 2001, cumulative sales rose from $500,000, for the first four months of the mark’s use, to $4,500,000 over the next seven months. The company was featured prominently in the trade press for its innovative services. Because the Board did not discuss this evidence, we are left with no basis to determine whether the Board considered this evidence in determining the extent to which Applicant might have leveraged the Internet and its mark’s domain-name status to acquire secondary meaning, even with only modest advertising expenditures.

For the reasons articulated, I believe the Board committed legal error in weighing the evidence and acted arbitrarily in not considering evidence. These errors had a “bearing on ... the substance of the decision reached” by the Board. See In re Watts, 354 F.3d 1362, 1370 (Fed.Cir.2004) (internal quotations omitted). Therefore, I would vacate the Board’s determination of no acquired distinctiveness and remand for reconsideration consistent with this opinion.