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Trademark applications as an indicator of post-Covid economic activity

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Trademark applications as an indicator of post-Covid economic activity

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Covid-19 has stopped us doing many things, but it seems that filing for trademarks isn’t one of them. Compare European Union Intellectual Property Office (EUIPO) trademark filings in 2020 to the numbers in 2019 and you wouldn’t guess there’s a global pandemic at all (In Figure 1, Marks2019 and Marks2020 stand for trademark applications filed in a given month in 2019 and 2020 respectively). Even in June 2020, the last month of the sample, new trademark applications increased relative to the year before 

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

Trademark applications as an indicator of post-Covid economic activity 2

Source: EUIPO 2020. 

This matters because trademark applications capture meaningful economic activity. They can be used to protect innovations that otherwise cannot satisfy patentability requirements, or as a means to protect marketing activities aimed to capture rents from patentable technological inventions (Zhou et al. 2016). So it is no surprise that they are correlated with innovation (Mendonça et al. 2004, Flikkema et al. 2019). 

Trademarks are also attached to real-world commercial activity. Article 18 of Regulation 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark warns that if: 

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

This obligation implies that applicants have planned at least some marketing activities for a new or improved product or service. There is an application fee too, so filing a trademark application involves cost and effort. This means that until more data become available, trademark applications can approximate real-time business expectations of what demand will be, and this can give us significant insights.

So it is encouraging to see that trademark applications have withstood the first wave of Covid-19. I have examined whether this encouraging trend hides heterogeneity (Drivas 2020). To do this, I downloaded bulk information on trademark applications from EUIPO [https://euipo.europa.eu/ohimportal/en/open-data] and, (after a tedious XML file rendering process) I created a dataset of the all the trademark applications filed between 1 January 2019 and 20 June 20 2020 that is representative of the statistics published in the EUIPO report of trademark filings.

There are three major findings.

1. Most countries are at the same level as in 2019 – but there are outliers

Figure 2 shows the change in trademark applications from 1 May to 20 June, by country,  between 2019 and 2020. The size of the bubble represents the number of trademark applications each country filed in 2019. The horizontal axis measures the strength of the government’s response to Covid-19, using an average Government Response Stringency Index based on the Our World in Data Covid-19 dataset [https://ourworldindata.org/coronavirus-source-data].

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

Trademark applications as an indicator of post-Covid economic activity 3

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

China appears to be an outlier, increasing its trademark applications compared to 2019. This might be due to the strong government support during the early days of the pandemic (Huang et al. 2020). We would need more evidence to conclude that there was a causal relationship.

Two not-so-close runners-up are Italy and Germany, while many European countries are close to zero indicating a moderate change from last year. Some countries, however, show a clear negative trend: Brazil and Canada are two examples. 

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.

Look again at Figure 1. Application rates in 2020 were decreasing in March and April, and then  increased in May and June relative to 2019. This difference in application rates could have been due to the pandemic. Firms may have postponed their applications during these early months in many EU countries when Covid-19 was peaking. By May, applicants were optimistic of future demand and filed for an increased number of trademark applications. This would be consistent with the stock market reaction to Covid-19 (Capelle-Blancard and Desroziers 2020).

2. New firms are picking up the pace

We can decompose trademark applications based on whether they were filed by a new entrant or an established firm. The share of applications by entrants increased over in May and June compared to 2019. The opposite occurred for established firms.

The difference is not big, but it does seem to indicate that firms entered the EU market with new offerings. 

There is also some heterogeneity by country. For instance, Greece filed for a little more than 100 applications between 1 May and 20 June 2020. A few established firms, primarily in the agrifood sector, filed for applications in bulk during this season. For France, entrants filed for more applications in 2020. 

3. Service-related business was hit hardest

For a trademark application to be registered it needs to disclose at least one Nice class. The Nice classification system categorises the entire business spectrum of products and services in 45 classes: 1-34 for products, 35-45 to services. A trademark claim for an embedded figure, logo or any other differentiating feature in a particular product or service area must explicitly name the appropriate Nice classes, and demonstrate its use in each class. 

The share of service-related classes filed in 2020 compared to 2019 has fallen. While more work needs to be done to examine the description in each trademark application, this overall trend implies that the decrease in service businesses requiring physical presence outweighs any increase in services that use remote interactions. This trade-off was recognised early during the pandemic and will continue to be of concern (Baldwin and Tomiura 2020, Shingal 2020).

Figure 3 shows the change for each class between 2020 and 2019 for 1 May to 20 June. The size of the bubble displays the relative size of each class, calculated as the total number of applications that disclose each class filed during 2019. 

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

Trademark applications as an indicator of post-Covid economic activity 4

Notes: The vertical axis is the change for each class between 2020 and 2019 for 1 May  – 20 June. See Drivas (2020) for a detailed calculation of this change measure. The size of the bubble and the horizontal axis considers the frequency class n is disclosed during 2019.

While for most classes the change is close to zero, there are some classes with big ups and downs. Classes 5 and 10 (pharmaceutical products and medical equipment) have unsurprisingly the largest increase. On the contrary, class 41 (entertainment services) has experienced the largest decrease. Interestingly, applications in Class 3 (cleaning and cosmetic products) have decreased. In this class there is a difference between established and new firms.

A near-real-time indicator

Governments have found many ways to support business during Covid-19 (Wyplosz 2020). As more data are becoming available, we will find out whether these measures mitigated any of the negative effects. Trademark applications can approximate real-time business expectations of demand and information is disclosed much sooner than the 18 months that elapses before a patent application is published. Acquiring bulk information from other offices around the world would provide significant insights on the effects of Covid-19 on economic activity.

References

Baldwin, R, and E Tomiura (2020), “Thinking ahead about the trade impact of COVID-19”, in R Baldwin and B Weder di Mauro (eds), Economics in the Time of COVID-19: 59-71.

Capelle-Blancard, G, and A Desroziers (2020), “The stock market is not the economy? Insights from the COVID-19 crisis”, Covid Economics: Vetted and Real-Time Papers 28: 29-69.

Drivas, K (2020), “The short-run effect of COVID-19 on new marketing endeavors: Evidence from EUIPO’s trademark applications”, Covid Economics: Vetted and Real-Time Papers 43: 1-18.

EUIPO (2020), “EUIPO Statistics in European Union Trade Marks 1996-01 to 2020-06 Evolution”.

Mendonça, S, T S Pereira, and M M Godinho (2004), “Trademarks as an indicator of innovation and industrial change”, Research Policy 33(9): 1385-1404. 

Flikkema, M, C Castaldi, A-P de Man, and M Seip (2019), “Trademarks’ relatedness to product and service innovation: A branding strategy approach”, Research Policy 48(6): 1340-1353.

Huang, Y, C Lin, P Wang, and Z Xu (2020), “Saving China from the coronavirus and economic meltdown: Experiences and lessons”, in R Baldwin and B Weder di Mauro (eds), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes: 77-91.

Shingal, A (2020), “Services trade and COVID-19,” VoxEU.org, 25 April. 

Wyplosz, C (2020), “So far, so good: And now don’t be afraid of moral hazard”, VoxEU.org, 4 June. 

Zhou, H, P G Sandner, S L Martinelli, and J H Block (2016), “Patents, trademarks, and their complementarity in venture capital funding”, Technovation 47: 14-22.

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