Trademarks and The Modern Economy

Trademarks are important for companies as they provide brand identity and differentiation, protect a company's intellectual property, and help build customer loyalty.

Trademarks and The Modern Economy

A trademark acts as a unique symbol or word that distinguishes a company's products or services from others in the market. Trademarks are essential for companies as they provide brand identity and differentiation. It helps build brand recognition and customer loyalty, making it easier for consumers to identify and choose the company's offerings over competitors. Trademarks also protect a company's intellectual property by preventing others from using similar marks that may confuse customers. Trademarks are safeguarded for a duration of 10 years upon registration, after which they must be renewed. In the event that a trademark remains inactive for over 5 years, it can be subject to termination and can lead to the removal of the trademark from the register.For customers, trademarks hold significance as they serve as indicators of quality and consistency. When customers see a familiar trademark, they associate it with a particular company, its reputation, and the quality of its products or services. Trademarks provide assurance and trust, allowing customers to make informed purchasing decisions based on their previous experiences or positive associations with a specific brand. Developing economies have come to understand the critical link between trademarks and a country's economic health, prompting them to invest more in branding and brand value creation. These economies recognise the necessity of creating a unique market presence and rapid generation of brand value. Brands, which include unique designs, symbols, or trademarks, are valuable intangible assets that differentiate companies' products and provide a competitive advantage over competitors.

Mr. Beast, a renowned YouTuber and philanthropist, recognised the importance of trademark protection for his brand. By registering the trademark "Mr. Beast,” he has secured exclusive rights to his brand identity, ensuring brand recognition and differentiation.This trademark played a vital role in building his brand's value, contributing to Mr. Beast's estimated net worth of $50 million as of 2023. The trademark also provided legal protection against infringement, enabled licensing and merchandising opportunities, and maintained the authenticity and reputation of the Mr. Beast brand.

Brands are more than just logos or slogans; they represent values such as dependability, quality, and innovation. Developing economies work hard to build significant brand equity in order to develop a long-term market presence and foster consumer loyalty. While the terms "trademark" and "brand" are often used interchangeably, they hold distinct meanings. Trademarks specifically represent a company's goods and services, protecting reputation, generating revenue, ensuring legal protection, and differentiating companies from competitors. Brands encompass a broader concept, encapsulating the overall image, reputation, and associations with a company's products or services.

Notable brands demonstrate the power of effective branding strategies. Nike's Swoosh symbolises qualities such as performance, self-empowerment, and inspiration, making it one of the world's most valuable brands. Cred's audience is captivated by its content.

Paper Boat evokes emotions and nostalgia among Indian consumers with its brand concept of "Drinks & Memories”. Since 1939, Parle-G, an iconic biscuit brand, has maintained its brand image by leveraging its original logo for long-term customer recognition.

Hidesign, a high-end leather accessory brand, emphasises craftsmanship and authenticity with the tagline "Real leather. Made the old-fashioned way.”According to the Tech Transparency Project, a nonprofit watchdog, between 2019 and 2021, Apple, the world's most valuable publicly traded company with a market capitalisation of $2.6 trillion, filed 215 trademark oppositions to safeguard its logo, name, and product titles. This exceeds the combined total of approximately 136 trademark oppositions filed by Microsoft, Amazon, Facebook, and Google during the same period. The high number of opposition by Apple can be attributed partly to the fact that "Apple" is a more commonly used term than corporate names like Microsoft or Google. Additionally, the prevalence of imitators, especially in China, attempting to exploit Apple's brand name or logo in the technology and entertainment industries, has contributed to this trend. Apple challenges trademarks already approved by the Patent and Trademark Office, arguing that its marks are widely recognized and that other trademarks could dilute its brand strength or mislead consumers into believing a connection with Apple.

According to the 2023 Brand Finance Report, despite a 15% decrease in brand value from US$350.3 billion to US$299.3 billion, Amazon has regained its position as the world's most valuable brand. Apple had dropped to second place after its brand value declined by 16% to US$297.5 billion. The ranking featured 48 technology brands, down from 50 in 2022, because Snapchat and Twitter were no longer included. Several tech-focused brands, including Samsung Group (down 7% to US$99.7 billion), (down 56% to US$10.0 billion), Facebook (down 42% to US$59.0 billion), and WeChat (down 19% to US$50.2 billion), saw their values fall. However, Instagram (up 42% to US$47.4 billion) and LinkedIn (up 49% to US$15.5 billion) increased their brand value through effective monetization strategies. Notably, the brand values of electric car manufacturers Tesla (up 44% to US$66.2 billion) and BYD (up 57% to US$10.1 billion) increased significantly, reflecting rising demand for electric vehicles as part of a global shift towards a low-carbon economy. This observation implies that brands and trademarks can be important sources of competitive advantage as well as valuable intellectual property.

According to the WIPO Statistics Database for 2022, there were a total of 18,145,100 active trademarks registered across IP offices worldwide. In 2021, approximately 65% of global trademark filings were concentrated in the top five offices, marking an increase from the roughly 42% held by these offices in 2011. China's office accounted for more than half (52.1%) of all global trademark filings, with the majority originating from Chinese residents. The remaining four top offices each accounted for 5% or less of the total filings.

Six out of the top ten offices experienced double-digit growth in trademark filings in 2021. The United Kingdom (+61.8%) and Brazil (+32.3%) had the highest growth rates. Additionally, six out of the top ten offices saw a significant increase in trademark filings of more than 10% in 2021 compared to 2020. These offices were the United Kingdom (61.8%), Brazil (32.3%), Turkey (19.4%), India (15.1%), the European Union Intellectual Property Office (13.5%), and the Republic of Korea (12.7%).China's office had nearly 9.5 million students, followed by the United States with 899,678. Since the early 2000s, China and the United States have held the top two positions. However, China's class count has increased from roughly twice that of the US in 2006 to nearly 11 times that in 2021.

The high number of trademark applications filed by Chinese residents is primarily responsible for this increase. The European Union Intellectual Property Office (EUIPO) came in third with 497,542 class members, followed by India's office with 488,526.The composition of the top ten offices in 2021 differed slightly from 2020. The significant increase in non-resident trademark filings at the UK office propelled it from 12th in the ranking in 2020 to fifth in 2021. The office of Turkey also moved up two places from eighth in 2020 to sixth in 2021.Mexico, Indonesia, Vietnam, and Argentina had comparatively high levels of trademark filings in 2021 among selected middle-income countries. Furthermore, nine of the top 20 IP offices in 2021 will be in low- or middle-income countries. Mexico (199,389 filings), Indonesia (127,142 filings), Vietnam (113,079 filings), and Argentina (85,844 filings) were among these offices. Other offices in low- and middle-income countries, including Ukraine (71,234 filings), the Philippines (64,946 filings), and Colombia (55,606 filings), saw relatively high volumes of trademark filings.China and the Republic of Korea performed well in terms of application class count per unit of GDP. By calculating the application class count per unit of USD 100 billion in GDP, this measure allows for a comparison of trademark filing activity between countries with different filing systems and economies of varying sizes. Smaller countries, such as Chile, Estonia, and New Zealand, outperformed larger countries with higher absolute class counts, such as Germany.An analysis of trademark filings at IP offices around the world reveals an intriguing interplay between developing and developed economies. China stands out as a developing economy that has made significant strides in intellectual property protection, owing to its high number of trademark applications and rapid growth. Both the United Kingdom and the United States have experienced significant growth rates, demonstrating the ongoing importance of trademark protection in mature markets. Similarly, trademark filings in Brazil, Turkey, India, and the Republic of Korea have increased significantly, reflecting their changing business landscapes. Furthermore, the inclusion of middle-income countries such as Mexico, Indonesia, Vietnam, and Argentina among the top offices reflects their growing economic importance and increased emphasis on intellectual property. While developed economies have historically dominated trademark filings, the rise of developing and middle-income countries demonstrates their growing importance in the global economy and intellectual property landscape.

If inflation is taken into consideration, it does not have a direct effect on trademarks themselves. As Trademarks are primarily concerned with the identification and distinction of goods and services in the marketplace, rather than being tied to economic factors like inflation. However, inflation can indirectly impact trademarks in a few ways. Firstly, inflation can affect the costs associated with branding activities, such as designing logos and promoting the brand. Secondly, trademarks are often licensed or franchised to other businesses for use in specific markets in other regions. Inflation can impact the terms of these agreements, including royalty rates, licensing fees, or franchise fees. Parties involved may renegotiate these agreements to account for changes in the purchasing power of money caused by inflation. Lastly, inflation affects the purchasing power of consumers, as the general price level of goods and services increases. This can influence consumer behaviour, preferences, and brand loyalty. Trademark owners may need to adapt their marketing strategies or adjust pricing to account for changes in consumer spending power resulting from inflation. It's important to note that trademark protection itself is not directly influenced by inflation. Trademark rights are typically based on registration and use in a specific jurisdiction, and their validity and enforcement are governed by intellectual property laws rather than economic factors.The interplay between developing and developed economies in trademark filings reflects the shifting dynamics of the global economy and the growing significance of intellectual property. As businesses and countries strive to establish their unique market identities and protect their brand assets, trademarks will continue to be valuable assets that contribute to economic growth and foster consumer trust and loyalty.

Shivani & Aurko