TRADEMARK BOOSTS BUSINESSES DURING THIS TIME OF PANDEMIC

Trademark applications in Europe are a reflection of company confidence. While they have not decreased in the first wave of Covid-19, some countries and types of businesses have been more affected. The column examines the details using data on applications, demonstrating that applications by new firms and firms in certain product areas have increased. Companies that provide services have submitted fewer applications.

Covid-19 has banned us from doing a lot of things, but it doesn’t appear that trademark application is one of them. When you compare trademark filings at the European Union Intellectual Property Office (EUIPO) in 2020 to those in 2019, you’d never think there’s a global pandemic (In Figure 1, Marks2019 and Marks2020 stand for trademark applications filed in a given month in 2019 and 2020 respectively). New trademark applications increased in June 2020, the last year of the sample, compared to the previous year.

Figure 1 Trademark application trends, January-June 2020 and 2019

Trademark application trends

Source: EUIPO 2020.

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This is significant because trademark applications document significant economic activity. They can be used to safeguard breakthroughs that would otherwise be ineligible for patent protection, as well as marketing operations targeted at capturing rents from patentable technological inventions. It’s no wonder, then, that they’re linked to the invention.

Real-world commercial activity is also linked to trademarks. Regulation 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trademark, Article 18, states that if:

“[T]he proprietor has not put the EU trademark to genuine use in the Union in connection with the goods or services in respect of which it is registered … the EU trademark shall be subject to the sanctions provided for in this Regulation.”

This requirement implies that applicants have at least some marketing plans in place for new or improved goods or services. There is also an application fee, thus filing a trademark application is both expensive and time-consuming. This means that until further data is available, trademark applications can approximate real-time business predictions of demand, which can provide us with useful information.

As a result, it’s encouraging to see that trademark applications have survived Covid-19’s first wave. We looked at whether this upbeat tendency masks variability. To do so, we downloaded bulk information on trademark applications from EUIPO and created a dataset of all trademark applications filed between 1 January 2019 and 20 June 2020 that is representative of the statistics published in the EUIPO report of trademark filings (after a tedious XML file rendering process).

There are three significant conclusions in this study.

  1. The majority of countries are at the same level as in 2019; however, there are a few exceptions.

Figure 2 depicts the change in trademark applications by country from 1 May to 20 June in 2019 and 2020. Each country’s size of the bubble symbolizes the number of trademark applications it filed in 2019. The government’s response to Covid-19 is measured on the horizontal axis using an average Government Response Stringency Index based on the Our World in Data.

Figure 2 Change in trademark applications compared to the strength of social distancing measures.

Change in trademark applications compared to the strength of social distancing measures

Notes: Between 2020 and 2019, the vertical axis represents the percentage change in trademark applications by the country for the period 1 May – 20 June. Each country’s size of the bubble symbolizes the number of trademark applications it filed in 2019. The average Stringency index based on the Our World in Data Covid-19 dataset metric as of 30 April is shown on the horizontal axis.

China appears to be an outlier, with an increase in trademark applications in 2019 compared to the previous year. This could be attributable to the government’s strong backing in the early stages of the pandemic. To conclude that there was a causal relationship, we would need further evidence.

Italy and Germany are two not-so-near runners-up, but several European countries are close to zero, indicating a mild change from 2019. However, certain countries, such as Brazil and Canada, exhibit a distinct downward tendency.

As one can see, there is no clear pattern between the change in trademark applications and the stringency of social distancing measures. For instance, Poland and Sweden were equally resilient in trademark applications but had vastly different social distancing measures. China with some of the strictest measures experienced a dramatic increase.

Examine Figure 1 again, in comparison to 2019, application rates in 2020 decreased in March and April before increasing in May and June. The pandemic may have contributed to the disparity in application rates. In several EU nations, firms may have postponed their applications during the peak months of Covid-19. By May, applicants had become more confident about future demand and had filed a larger number of trademark applications. This is in line with the stock market’s response to Covid-19.

  1. The number of new businesses is increasing.

We can break down trademark applications into categories based on whether they were submitted by a startup or an established company. In May and June of the year 2020, entrants submitted more applications than in May and June of the previous year. For established businesses, the situation was the polar opposite.

Although the difference is small, it appears to indicate that companies have entered the EU market with new offerings.

There is some variation by country as well. Greece, for example, filed a little more than 100 applications between May 1 and June 20, 2020. During this season, a few well-established companies, mostly in the agrifood industry, filed a large number of applications. In France, entrants submitted more applications in 2020 than in previous years.

  1. The Service-related businesses was hit hardest

A trademark application must reveal at least one Nice class in order to be registered. The Nice classification system divides the entire business spectrum into 45 categories: 1-34 for products and 35-45 for services. A trademark claim for an embedded figure, logo, or other distinguishing characteristics in a specific product or service area must specifically name and demonstrate its use in each Nice class.

In comparison to 2019, the percentage of service-related classes filed in 2020 has decreased. While more work needs to be done to study each trademark application’s description, this overall trend suggests that the drop in service firms that require physical presence surpasses any increase in services that use remote contacts. This trade-off was identified early in the pandemic and will remain a source of concern.

Figure 3 depicts the change in each class from 1 May to 20 June in 2020 and 2019. The size of the bubble represents the relative size of each class, as determined by the total number of applications filed in 2019 that disclose each class.

Figure 3 Change in the Nice classes claimed from May-June 2019 to May-June 2020

While most classes experience little fluctuation, there are a few that have significant ups and downs. Unsurprisingly, the highest increases are in classes 5 and 10 (pharmaceutical products and medical equipment). On the other hand, class 41 (entertainment services) has seen the greatest drop. Surprisingly, Class 3 (cleaning and cosmetic products) applications have fallen. There is a distinction between established and new businesses in this category.

A NEAR-REAL-TIME INDICATOR

During Covid-19, governments found a variety of measures to boost businesses. As additional data becomes available, we’ll be able to see if these efforts helped to prevent any harmful consequences. Trademark applications can resemble real-time business demand forecasts, and information is disclosed considerably sooner than it takes for a patent application to be published, which might take up to 18 months. Obtaining bulk data from different offices around the world would provide valuable insight into the economic effects of Covid-19.