Trademark filing activity as an economic indicator during COVID-19

INTRODUCTION

Trademarks are an indicator of business activity. The process for filing and obtaining a trademark registration occurs predominantly on a national level (a global brand requires separate protection in each country of interest), and generally closely precedes the launch of a new product or service into a new market.

Many economic indicators can only be measured in retrospect and take time to collect and analyse. For example, in the UK the Office of National Statistics releases monthly GDP estimates 40 days after month end, and quarterly GDP estimates six weeks after quarter end. As of 8 August, UK GDP figures were available for May 2020 and Q1 2020.

In contrast trademark filing data is generally released within days by national Intellectual Property offices, enabling potential insight to be available in near real time. By collecting trademark filing data from over 200 countries, CLARIVATE is able to analyse and present trends that shine a light on the social and economic impact of COVID-19 in major countries around the world as it happens.

COVID 19

Coronavirus disease 2019 (COVID-19) was first identified in December 2019. The first major outbreak took place in the city of Wuhan in Hubei province, China at the start of 2020. On 23 January 2020 a strict lockdown was put in place covering Wuhan and a number of other cities in Hubei. This lockdown was extended more widely in following days, and was in place for February and March until it officially ended on 6 April 2020.

The impact of the lockdown on trademark filing activity at the Chinese Trademark Office (CTO - which received 70% of the world's trademark applications in 2019) was dramatic. Weekly filing volume fell from 150,000 new applications in the 3rd week of January to under 20,000 applications in late January and early February. Although normally this sharp decline would signify a severe downturn in economic activity, the timing of the lockdown coincided with the Chinese New Year festival - a two week period where each year the Chinese economy enters a form of hibernation as people visit family and take annual leave. As Figure 1 below shows, the decline closely mirrored the natural fall each year due to the national holiday period - the lockdown was a serious issue for Chinese social interaction at a normally key time, but the additional impact to economic output appears to have been minimal.

By the beginning of March 2020 trademark filing activity was ahead of 2019 levels and has continued to match or exceed 2019. As of mid June 2020 the CTO has received 5% more applications YTD than in 2019 - the Chinese economy appears to have shrugged off the impact of COVID-19 and has returned to growth within a short space of time.

Figure 1: Weekly trademark filing activity in China (2020 YTD)

Italy was the first country outside of China to feel the impact of COVID-19. The first case of infection in Italy was confirmed on 30 January 2020, and regional lockdowns in Lombardy and Veneto commenced on 21 February. The lockdown became national on 9 March.

Trademark filing activity in Italy started to fall in the last week of February - in line with the start of regional lockdowns - and the decline accelerated when the restrictions went national. In mid/late March trademark applications were 63% lower than the volume in February and activity stayed depressed until early May when the Italian government announced the partial lifting of restrictions. Volume did not return to 2019 levels until mid June - trademark filing volume in Italy is still 11% behind 2019 which suggests that the Italian economy (which is heavily reliant on tourism and hospitality) is still in difficulty.

Figure 2: Weekly trademark filing activity in Italy (2020 YTD)

Spain was the next country to experience an outbreak. The first COVID-19 case was confirmed on 31 January 2020; within six weeks cases had been identified in each of Spain's 50 provinces. Restrictions began on 14 March, with a fourteen day "stay at home" order applied from 30 March.

Trademark activity fell by 55% in mid March. At the end of the two week severe lockdown in mid April some key industries were restarted (construction, industry) - trademark filing volume jumped immediately, returning to 2019 levels. By the end of June as restrictions were lifted further 2020 YTD was level with 2019 YTD, and by the end of July Spain was 4% ahead of 2019 trademark filing numbers.

Spain - like Italy - is highly dependent on the tourism and hospitality sectors. In late July as COVID-19 infection rates in Spain started to rise and localised lockdowns put in place, travel restrictions were put in place by the UK, one of Spain key sources for tourists. So far trademark activity has not been impacted, suggesting that the Spanish economy is resilient and that working practices put in place to deal with the initial period of disruption may reduce the economic impact of a second wave of infections.

Figure 3: Weekly trademark filing activity in Spain (2020 YTD)

The United Kingdom also confirmed the first local case of COVID-19 on 31 January 2020. The FTSE 100 share index fell by 8% on 9 March, and the UK economy entered "lockdown" on 21st March 2020. Mirroring the pattern seen in Italy and Spain, the severe dislocation of business caused by the sudden closure of offices, shops and factories coincided with a sharp drop in the number of trademark applications filed at the UK Intellectual Property Office (UKIPO). However, the fall in the UK - 30% - was considerably less severe than experienced in Italy and Spain.

Although restrictions do not start to be eased until 13 May, UK trademark filing activity showed strong signs of recovery in the second half of April and by the beginning of May was above 2019 levels and growing strongly each week. This growth was driven predominantly by UK domestic brand owners, and reached record levels in June and July. By early August the UKIPO has received 16% more trademark applications in 2020 than at the same point in 2019.

Figure 4: Weekly trademark filing activity in the United Kingdom (2020 YTD)

In contrast with other major European countries Germany was able to avoid the significant and dramatic levels of COVID-19 infection and mortality in the early months of 2020. Although restrictions - including border controls - were put in place, trademark filing trends suggests that the economic impact in Germany was far less sudden and severe than elsewhere in Europe. 2020 has seen a very stable filing pattern at the German Trademark Office (DPMA), with weekly volume generally tracking 2019 and as at the end of July 9% higher than last year. So far the German economy appears to be weathering the storm.

Figure 5: Weekly trademark filing activity in Germany (2020 YTD)

France followed a similar trajectory to the UK, with the first COVID-19 case confirmed on 24 January. Progressively stronger national restrictions were put in place over the period 13-16 March and the lockdown not lifted until 11 May 2020.

French trademark filing volume at the IMPI fell by 35% in the second half of March and remained low for four weeks until starting to recover in the last week of April. Trademark applications tracked 2019 volume in May and in June and early July have continued to grow and are now regularly above 2019 levels. YTD volume is till 2% lower than for the first half of 2019, but indications are that activity in July will be strong and the deficit erased by the end of the month.

Figure 6: Weekly trademark filing activity in France (2020 YTD)

Away from Europe COVID-19 has had its most severe health impact in the United States, with over 5 million cases (as of 8 August 2020) and over 162,000 deaths. Due to political and historic attitudes to government control, lockdown restrictions have been less harsh and less centralised than in most other countries.

Trademark filing activity at the US Patent & Trademark Office (USPTO) reflects this more "laissez-faire" - application volume was relatively stable from January through to April, and since May 2020 has been consistently higher than 2019 levels. As of early August the USPTO had received over 300,000 new trademark applications, 0.5% lower than 2019 YTD but only because of an extraordinary surge at the end of July 2019 caused by an imminent law change. It is expected that by the end of August 2020 YTD will be well above 2019 levels as momentum grows from foreign brand owners - particularly from China if current trade tensions can be kept from reaching boiling point.

Figure 7: Weekly trademark filing activity in the United States (2020 YTD)

India appeared to managing the threat of COVID-19 relatively well in the first quarter of 2020. National restrictions were put in place on 24 March - approximately one week later than in Europe - and remained in place until 20 April when localised easing began, By the end of May most national restrictions had been lifted, and the "unlocking" of the national economy began.

Indian trademark filing activity has experienced a more severe and prolonged downtown that other major economies, falling by nearly 75% in the last week of March and not recovering to previous levels until the second week of June - some ten weeks later. While June and July have seen a strong recovery 2020 YTD is still 9% behind 2019 levels and the Indian economy is likely to be impacted more severely than the US, Europe and China. It's possible that infrastructure and technology play a key role in this disparity. With a large services sector European and North American business were able to quickly pivot to work from home models due to the availability of laptops and internet access. More agriculture and manufacturing based economies - like India - suffered a higher level of economic dislocation.

Figure 8: Weekly trademark filing activity in India (2020 YTD)

Japan - like other far east neighbours of China - has so far managed to avoid a large scale "first wave" outbreak of COVID-19. Infection and mortality rates in Japan and significantly lower than in Europe and North and South America; Japan has previous experience with corona virus outbreaks and more experience with preventative measures, such as wearing face masks.

Like New Zealand - which has managed to almost completely avoid the health threat posed by COVID-19 - Japan is part of a global economy. The Japanese trademark register receives around 15% of trademark applications from abroad. With economies in Europe and the US in hibernation at the end of 2020 Q3 there was a small decline in trademark filing volume in Japan, and volume at the end of July 2020 was 5% lower than the previous year.

Figure 9: Weekly trademark filing activity in Japan (2020 YTD)

South Korea has also managed to avoid a large scale COVID-19 outbreak and this is reflected in trademark filing trends. Unlike all the other major countries reviewed, South Korea has not experienced any appreciable period of decline in filing activity, with 2020 consistently ahead of 2019 levels. By the end of July the Korean IPO had received 14% more trademark applications that at the same point in 2019, a growth rate exceeded in 2020 only by the UK, where looming Brexit separation plays a role.

Figure 10: Weekly trademark filing activity in South Korea (2020 YTD)

Australia - in part thanks to its relative geographic isolation and lack of land borders - also managed to avoid a widespread COVID-19 outbreak in the first half of 2020.

Trademark filing activity in 2020 at IP Australia has been generally in line with 2019, with a small decline over a four week period as Europe and North America put lockdowns in place in March/April. Filing activity is currently 5% higher than at the same point in 2019, and showing sustained growth.

Although Australia has a very low population density overall, the population is concentrated in coastal urban areas - over 60% of Australia's population of 25 million live in the five largest cities. On 6 June 2020 the city of Melbourne (population 4.9 million) reported no new COVID-19 cases. But by 20 June restrictions were back in place as the infection rate grew, with full lockdown being re-imposed in Melbourne on 9 July as new cases and mortality rates rose.

Australia is the first place in the world to experience a second wave of infections and mortality that matches the level of the first wave. However, even though Melbourne is home to many of Australia's largest business and industry sites, trademark filing activity has not shown any sign of a decline during the re-imposed lockdown.

Figure 11: Weekly trademark filing activity in Australia (2020 YTD)

CONCLUSION

The impact of COVID-19 has been sudden and severe on the economies of major countries around the world. But trademark filing trends suggests that - unlike previous economic shocks - there is significant resilience in economies and an ability to absorb changes and respond rapidly. There have been winners and losers (the pharmaceutical sector and medical supplies have been growing; the hospitably sector is still struggling) but overall the economic impact - while severe - has been restricted to a short period of time and the recovery to normal activity quick and sustained. The initial positive reaction in Australia to the re-imposition of restrictions has been promising, but it remains to be seen if proposed reductions in the level of government support (access to unemployment benefits in the US, furlough support to maintain jobs until October in the UK) are putting off inevitable further pain. Trademark filing data may be able to play the role of the "canary in the mine" and signal clearly and in real time if things do change.