The 60 page Trade Mark Incentives study [PDF] considers potential links between trade marks and economic performance in the UK. The document features an overview of corporate trade marking, analyses the role of trade marks in the innovation process for enterprises and discusses branding.
The authors draw on the Office for National Statistics (ONS) Annual Respondent Database (ARD2) for the years 2000-2006, which combines information from ONS business surveys covering all large enterprises and a sample of smaller businesses. That data was related to information on each enterprise’s UK and European Community trade marks and patents.
They conclude that large firms are much more likely to trade mark (12.9%) than smaller firms. 'Micro firms' at 0.4% are the least likely; 1.7% of small and 5.2% of medium sized enterprises trade mark their products and services. The manufacturing, wholesale/retail services, and business services sectors were most likely to use trade marks. As an indicator of each sector’s internationalisation the IPO calculated the ratio of UK trade marks to all trade marks. The most internationalised sector – that with the lowest ratio - is communications (0.439), followed by computer software (0.477) and manufacturing (0.505). The average for all firms was just above half (0.567), reflecting substantial use of the Community trade mark (CTM).
The IPO also classified firms into high - and medium - tech manufacturing groups, along with other and non-manufacturing groups, mainly services. Trade marking by high-tech firms was 9.8%, by medium tech was 7.2%, other manufacturing 7.0% and non-manufacturing 2.2%. The authors ask whether trade marking is associated with higher productivity? They suggest that trade marking firms are 21% more productive than those that do not trade mark. They comment that their analysis -
controls for variables such as workforce size, capital assets, export status and foreign ownership, but not for the extent or nature of innovation, which trade marking may proxy, nor for a wider range of characteristics of the firm that may underlie both its trade mark activity and its productivity performance. For example, when we control for the recent level of advertising expenditure in the firm, the productivity differential for trade marking falls to 7%.A higher intensity of trade marking (more trade marks per employee) is associated with better productivity.
Do trade mark active firms have higher employment? The report appears to demonstrate that employment is significantly higher in firms that are trade mark active (even when controlling for the size of firms), with the authors commenting that -
The strength of the association is such that a firm that regularly trade marks has a workforce that is 20% larger than a similar firm which does not. This suggests that the activity of developing and offering new products and brands to the marketplace requires more employees.On average the trade marking firms apparently pay slightly more (a 0.7% premium)to their employees. Findings for employment and wages together suggest that businesses that regularly trademark support more 'good jobs'.
The authors are cautious in drawing conclusions about overall economic growth. They comment that -
analysis shows that firms that were trade marking from 2000 to 2003 saw their employment and turnover both growing at a rate of 6% per annum faster than other firms during 2003-2006. For both the growth of employment and turnover, the regression analysis controls for firm age, industry levels of trade mark and patent intensity, exporter status and foreign ownership. When we add the stocks of advertising and trade marking to this regression in place of the simple trade mark dummy, the differences in growth and turnover are also significant. However, when we add a measure of interaction between the stock of each firm’s trade marks and its advertising stock to both growth models the coefficient is negative, although not significantly so. What interpretation should we place on this finding? It is contrary to our expectations: we expected that joint trade marking and advertising activity might indicate brand building and, if so, these stocks would be complementary and further strengthen a firm’s growth. Having only four years of data for the calculation of stocks may be too short for such synergies to be uncovered. Furthermore, money spent on trade marks cannot be spent on advertising; hence there is an inherent substitution between these activities. However, there is some good news, as it suggests that trade marks are less likely to support anti-competitive brand building by incumbent firms.Claimed benefits for households reflect suggestions that regular trade marking often signals innovation, sometimes involving -
the introduction of radically new products, adapting new process technology to deliver genuinely new goods and services. Such innovation leads to lower prices, higher quality and a greater variety of products in the marketplace. Consumers will benefit from all three – lower prices increase their real purchasing power; higher product quality at similar prices to earlier inferior varieties gives the customer more value for money; and the increased variety of goods and services is more likely to satisfy customer needs.The IPO has also released Film, Television & Radio, Books, Music and Art: UK Investment in Artistic Originals [PDF], claiming an upward revision of £3.5bn to the UK stock of artistic originals as recorded in the UK National Accounts in 2008. In essence the document reports on measurement of the economic value of the UK 'creative sector' through "creation of long-lived artistic original assets protected by copyright" (inc new books, art, broadcast programmes, music and films) from 1990-2008. The total value of new artistic asset creation in the UK is likely to be worth £3bn more in Gross Value Added (GVA) than national statistics currently suggest.
The associated report on The Role of Intellectual Property Rights in the UK Market Sector [PDF] -
estimates (a) the level of UK market sector investment in knowledge assets protected by Intellectual Property Rights (IPRs) and (b) the impact of investment in those assets via their contribution to labour productivity growth in the UK market sector. Estimates for investment and the stock of IPR capital are based on previous work and includes new estimates for investment in artistic originals.The main findings are:
1) On average, between 2000 and 2008, 48% of knowledge investment in the UK market sector was protected by IPRs
2) The majority of IPR investment is on assets protected by copyright and design rights
3) In 2008 approximately 62% of the stock of knowledge assets in the UK market sector was protected by IPRs
4) On average, between 1990 and 2008, 10.6% of growth in labour productivity was due to growth in capital deepening of IPR-protected assets. Comparable figures for ICT equipment and knowledge capital not protected by IPRs are 11.1% and 10.3% respectively.
