Why trademark filings may be on the rise at the USPTO
A curious thing is happening at the US Patent and Trademark Office (USPTO). In October, at a Trademark Public Advisory Committee quarterly meeting, the USPTO’s deputy director Laura Peter revealed that July, August, and September were “the three highest filing months on record”.
September became the USPTO’s “biggest filing month in history, with 92,600 classes filed”. Conversely, patent applications have slumped since the start of the COVID-19 pandemic, with a 2% decrease in the number of utility, plant, and reissue patent filings compared to last year.
Is this a real increase in trademark filings? The USPTO measures the volume of trademark filings not by the number of marks or applications, but rather by the number of classes. This makes sense as it relates to the USPTO’s revenue—filing fees are per class. This also means that the spike in classes filed may not reflect an increase in the number of applications, but rather that applicants are filing in more classes.
Potential factors
One reason for this surge could be an increase in applications by foreign companies based on foreign registrations, which sometimes are broad in the classes, goods and services covered since various jurisdictions, unlike the US, do not require use to obtain a trademark registration.
Another potential factor could be that companies delayed filings during the early months of the pandemic. In his remarks at the IP Owner’s Association’s 2020 virtual annual meeting in August, USPTO director Andrei Iancu noted that trademark filings “exhibited a healthy V-shape recovery” and that the “the trailing edge of the ‘V’ represents a rapid bounce back to normalcy”.
During the USPTO’s fiscal year for 2020, which ended in September, there were 2,572 fewer class filings in the second quarter of 2020, when compared to the second quarter of 2019. However, that was more than made up for in the third and fourth quarters of 2020, which recorded 6,868 and 59,898 more class filings than in the third and fourth quarters of 2019, respectively.
The number of class filings has increased 9.6% from the USPTO’s last fiscal year ending in September, according the USPTO’s Performance and Accountability Report for 2020. This growth outpaces the growth of previous years, as there was only a 7.5% and 5.8% increase in 2018 and 2019, respectively.
The USPTO is not alone in these increases. According to data compiled by CompuMark, trademark application filings have increased across a number of jurisdictions when compared to the same period last year, including roughly a 10% increase at the EU IP Office (EUIPO), a 14% increase in South Korea, a 10% increase in India, a 11% increase in Australia, a 9% increase in Spain, an 11% increase in Germany, and a 23% increase in the UK.
China also has recorded a substantial increase, with 24.6% more trademark applications in the first half of 2020 compared to the first half of 2019, which equates to 846,000 additional applications.
USPTO policies
The USPTO took a number of steps during the initial COVID-19 shutdowns to help ease the trademark registration process. Soon after the Coronavirus Aid, Relief, and Economic Security Act was passed in late March, the USPTO allowed applicants to delay some fees and extend some deadlines.
The USPTO initiated a new examination programme in June to prioritise and quickly advance trademark and service mark applications related to COVID-19 treatments or preventions. These actions from the USPTO might have helped offset the decrease in trademark filings in April and May by facilitating the later uptick.
While the USPTO’s actions may help explain why there was not a more significant decline in trademark filings in the second quarter of 2020, they do not fully account for the increase in filings in the summer and fall months.
Deputy director Peter noted that new “applicants trend more towards … foreign filers”. For instance, applications from China rose by 61% from last year. This rise could be based in part on a new rule from 2019 requiring foreign applicants to have US counsel. Foreign filers may now have secured such counsel and are making filings that they had previously planned, but which were on hold.
The increase in trademark application filings by Chinese brand owners is also occurring worldwide. In the UK, for example, the number of trademark applications by China-based mark owners increased by 19% from last year, and the number of such filings at the EUIPO increased by 80%.
In the past, Chinese government subsidies have encouraged the filing of US trademark applications. For example, filings increased in 2017 and 2018 after Chinese national and provincial government programmes provided incentives to Chinese citizens to register US trademarks, at times by paying up to $800 per US trademark registration. Such programmes may have had continuing and lasting effects.
The pandemic’s impact
COVID-19 may have caused an increase in filings as applicants sought to secure trademarks for new products related to addressing the virus. In particular, from the beginning of the pandemic to June, more than 1,500 trademark applications have been filed that reference some variation on “COVID-19” or “coronavirus”.
And, while the pandemic initially might have slowed trademark filings, it may also have spurred the creation of various new brands. The number of applications for a new employer ID—an indication of new business growth in the US—passed 3.2 million as of mid-September, compared with 2.7 million at the same point in 2019. This increase in employer ID filings may signal growth in new businesses not seen since the last high watermark in 2007.
With new businesses come new trademarks. Peter seemed to suggest this in her remarks in October, when she stated that trademark “applicants trend more towards pro se, small and one-time filers”.
Conclusions
The rapid recovery of trademark filings signals an important recognition of brand power. In the wake of the dot.com recession of 2001, it took five years for trademark filings to return to their pre-recession numbers.
After the recession of 2008, it was not until 2011 that filing numbers returned to their pre-recession state. While the COVID-19 pandemic is continuing, and the full impacts are not yet known and are continuing to evolve, so far the data indicate that despite the pandemic, trademarks have continued to be a priority for businesses and consumers alike.
Shanti Sadtler Conway is a partner in the New York office of Kirkland & Ellis. She can be contacted at: shanti.conway@kirkland.com.
Aaron Schroeder is an associate at Kirkland & Ellis. He can be contacted at: aaron.schroeder@kirkland.com.
