US trademark filing activity is on the decline: is it indicative of a dwindling economy?

In an exclusive guest post, head of content strategy at Clarivate IP Group, Robert Reading, reveals an ongoing trend that could see US trademark applications decline for the first time in over a decade – and the reasons for the unexpected fall could be a concern for the wider economic condition.

Guest analysis

Apart from the shock of the Global Financial Crisis in 2008/09, the USPTO has been on a 20-year run of strong annual growth in trademark filing activity. For the decade covering 2009 to 2019, annual growth was steady, averaging 6.3% per year – a compound annual growth rate of which most major corporations would be proud.

USPTO trademark filing activity: annual growth – 2000 to 2021


And then came 2020. When the covid-19 pandemic emerged early in the year, economies around the world were put into ‘lockdown’. In the US, many non-essential businesses were closed and workers furloughed. Entire industry sectors were placed into hibernation, with travel and hospitality stopped almost overnight (and still haven’t recovered). Stock markets crashed: the MCSI Index, which measures the performance of companies in 23 major countries, fell by 34% between February and April 2020. The US economy entered a period of recession. The three largest automobile manufacturers (General Motors, Ford, Chrysler) halted production, while construction of new homes in the US fell by 30% in April. Official unemployment rose to 14.7% in May 2020.

Yet in the face of the economic meltdown, trademark filing activity increased dramatically. As the graph below reveals, 2020 was a record year for trademark applications at the USPTO. Annual growth was 35% over 2019, with over 636,000 US trademark applications filed in total (the previous record set in 2019, with 470,000 applications).

USPTO: trademark filing activity – 2020 to 2021


However, 2020 was a year of two halves at the USPTO. In line with general economic conditions, the first four months of the year saw relatively low filing activity. From May onwards, the recovery picked up pace, exploding in September and again in December to levels never seen before (or since) – as the graph below shows.

US trademark filing activity by month: 2021 vs 2020


To that end, 2021 started with a fee change at the USPTO, in part as an attempt to tackle surging filing levels. The fee for filing an application online was increased from $225 to $250 per class, and while filing volume stabilised in Q3 2021, the major impact of the fee increase – which was announced in advance – was to push applicants to file in December 2020 before it took effect.

The first half of 2021 saw filing volume continue at a significantly higher level than seen in the first half of 2020 (see graph above), although it’s important to bear in mind that H1 2020 was far from normal due to the significant impact of the emerging pandemic. However, there have been signs since May 2021 that filing activity is trending downwards – September 2021 was the fifth consecutive month where US trademark filing volume fell.

Predictions are difficult to make in the trademark space, primarily because future commercial activity – like share prices and other economic behaviour – is determined by information that becomes available after the present time. However, if the monthly average for 2021 (55,634 applications) continues for the last three months of the year, then overall 2021 will receive around 668,000 applications and finish 4.9% higher than last year (636,000 applications). Furthermore, if the average for just Q3 2021 (50,884 applications per month) continues for the rest of the year, then 2021 will receive around 653,000 applications and end up approximately 2.7% higher than last year

But, if the current decline (since May 2021) continues for the remainder of 2021, then the final figure for the year will be around 632,000 applications – a decline of 0.7% compared with 2020. If that occurs, it will be the first time in over a decade that the USPTO has seen negative growth.

US trademark filing activity: 2021 predictions vs 2020


Looking at monthly filing volume since the start of 2019 (see graph below), a number of interesting trends stand out. The peak in July 2019 corresponds to a change at the USPTO effective on 2 August 2019, wherein non-US applicants who had been able to file directly at the USPTO were required to file via a US qualified attorney after this date. The subsequent peak in September 2020 is more difficult to explain – theories include a concern that an October 2020 increase in patent fees at the USPTO might also impact trademark filing fees; alternatively it may be related to concerns that local subsidies in China were being reduced. Finally, the record spike in December 2020 appears to be due to the filing fee increase that was effective 2 January 2021.

US trademark applications – 2019-2021 YTD


These trends are easier to understand when applicant nationality activity is taken into account. The aforementioned trademark filing spikes in July 2019, September 2020 and December 2020 were all driven primarily by activity from China. The new agent requirement had no significant impact on foreign applicants apart from those in China; rumours of a fee increase in October 2020 had no impact on US or non-Chinese applicants, nor did the January 2021 fee increase.

US trademark applications, by applicant nationality – 2019-2021 YTD


The only exception is the declining trend that has been in place since May 2021. Applications from Chinese applicants have been falling for five consecutive months, but so too have filings from US applicants (the volume from other foreign applicants, excluding China, is relatively stable).

The reasons for this declining trend are unclear. If it was related to a reduction in local Chinese subsidies, then US applicants should be unaffected. It could be a reflection of declining opportunities to pivot or innovate. Much of the growth in 2020 and the first half of 2021 was driven by a switch from bricks-and-mortar retail to online platforms. A second driver was a huge new market for products previously not needed in the US consumer space; disposable facemasks and personal hand sanitizers were sold in the billions and new brands proliferated.

The last possible explanation that I can identify is more concerning. Trademark filing volume is a leading indicator of commercial activity – if trademark filing activity in the US and China is declining, then it could be a warning sign that the world’s two largest economies are sailing into headwinds. Even if the US economy is facing more challenges than China’s economy, it is clear that China relies heavily on US consumers for growth – over 27% of all US trademark applications filed since the start of 2020 have been filed by Chinese interests.

Of course, time will tell, and the current trend could reverse in the next couple of months. However, having weathered the storm of covid-19 due to unprecedented levels of governmental financial support, recent trademark data might reveal that there is truth in the old saying: “When America sneezes, the rest of the world catches a cold.”

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