16 March 2017

UK Trade Mark Analytics

A fascinating number-crunching report for the UK government on that nation's demand for trade marks offers a perspective for Australian intellectual property students.

UK Trade Mark Demand: An Analysis states
The Intellectual Property Office (IPO), an executive agency sponsored by the Department for Business, Energy and Industrial Strategy (BEIS), is the UK body responsible for registering trade marks (TMs), patents, designs and copyrights. Registration helps firms, designers and inventors to protect their intellectual property from unauthorised use by others and facilitates trade in these rights. A trade mark can be anything that defines a brand, for example words, sounds, logos, colours or a combination of all of these.
Faced with a very high increase in trade mark applications, the IPO has identified the need to forecast future trade mark applications to plan resource allocations. This report presents forecast results for 2017 and describes the approaches used to produce the forecasts. A panel dataset based on individual trade mark filers is used to forecast the number of UK domestic trade marks filed with the IPO each year. International registrations under the Madrid Protocol have not been considered. The estimation uses the data in panel form, with the cross-sectional element focusing on the owner type (individuals, companies etc.). The forecasting separately models new applications for trade marks and the renewal of existing trade marks. For the renewals modelling, a key predictor is – unsurprisingly – the number of trade marks that are up for renewal. The preferred model specifications make the following predictions for future trade mark filings: ...
The “preferred model” was selected from six alternative specifications for new applications for trade marks and three models for renewals. The specifications differ due to the different segments modelled and variables used. The criteria used to select the model were goodness- of-fit, the performance of the model when used for recent years, and a practical consideration: the number of future years that could be forecast using the model.
Previous work has largely been based on the data held on the trade mark register. While having a long time-series and allowing individual owners to be identified, there is very limited information about the owner of marks. This study has firstly identified the type of owner. For companies, it has then linked the trade marks to data about the company owning the mark. Since 2011, annual growth in the number of trade mark filings has been consistently above ten per cent, a level only seen once in the previous six decades (the 1980s). Most growth is derived from companies, though until the 1990s and the introduction of the European Union Trade Mark (EUTM), an important driver was also filings from foreign entities. Filings by individuals have also begun to contribute to growth in recent years.
The modelling includes looking at the impact of the EUTM on UK IPO filings. Results indicate that the introduction was associated with a fall in new UK trade mark applications each year as foreign businesses filed at a European level rather than in individual member states. A second policy driver is the extent to which recent simplification of the application process has encouraged trade marking. The evidence here is mixed as it is difficult to distinguish the effects of IPO policy from other drivers.
The report is structured thus
Chapter 1 reviews the literature. There is literature on intellectual property rights and their use by individuals and businesses. The focus is usually on patenting and on the role of intellectual property in productivity and innovation. However, researchers have also considered trade marks, looking at both the effects of trade marking and the drivers for registering a mark. Regarding forecasting the number of new trade mark registrations, the literature is more limited. A set of approaches have been developed for patents and these are beginning to be used to analyse trade marking.
The underlying data about each mark, derived from the IPO’s registration records, is described in chapter 2. The data comes from the live register of marks and the chapter reports the modelling of a history for each mark from its initial registration through all subsequent renewals. A key part of this study is linking each trade mark to information about the owner and the chapter describes this work. Owners are firstly categorised, with most identified as businesses or individuals. For businesses, steps were taken to link trade mark owners to a wider set of data about the business.
Chapter 3 describes recent trends in UK trade marking. There has been a growth in the number of new registrations in recent years. Chapter 4 describes the forecasting models used to predict new trade mark filings and renewals. The number of new applications and renewals were modelled separately because the two types of transactions are quite different, which is also borne out in the results.
The modelling finds that the number of new filings is quite persistent, in that last year’s activity determines this year’s to a significant degree. This finding is similar to other comparable studies and, like other studies, the modelling focuses on the annual change in activity. Macroeconomic variables, such as GDP and investment, are used to explain the change in activity and chapter 4 indicates the results of the alternative models. For renewals, the number of trade marks that are due for renewal each year is a predictor of the actual renewal activity that year.
Chapter 5 looks at the evidence on two policy areas: the introduction of the EUTM in 1996 and recent IPO policies to encourage trade marking. It also compares the findings in this report to those from a similar project commissioned by the EU IPO on trade mark and patent filings in Spain.
The authors conclude in 'Discussion and Policy Outlook' -
The previous chapter has described the findings to support IPO in its operational work. This chapter looks at the evidence on two policy areas. Firstly, the adoption of the EUTM in the 1990s and its impact on UK IPO filings provides evidence about the use of the Europe-wide mark. It indicates that the introduction was associated with a reduction of the growth rate of trade mark filings in the UK each year by around 1,500. A second policy driver is the extent to which recent simplification of the application process has encouraged trade marking. The evidence here is mixed as it is difficult to distinguish the effects of IPO policy from other drivers.
Since the UK referendum to leave the European Union, there is interest in forecasting the likely effect of different models of trade mark co-ordination between the UK and the EU. The chapter also looks at whether particular IPO policies can be forecast using the modelling here. The chapter ends on some of the possible next steps in this area of work, noting the context of the current study.
Effect of the introduction of the EU trade mark
In 1996, the European Union-wide Community Trade Mark was introduced allowing filers to receive a trade mark valid across the single market. The EU Trade Mark (EUTM) – as renamed in March 2016 – is valid in the UK. The introduction meant that businesses and individuals could register a mark at the European Office for the Harmonization of the Internal Market (now the EU IPO) and many businesses, especially those from outside the UK, began to use the service instead of registering in the UK. ...
From the regression analysis, the extent of this shift in the 1990s is discernible, though there is a mixed picture provided by the different models. Table 14 indicates the average number of trade marks that would have been registered additionally in the UK had the EUTM not been available. The table gives the marginal as well as cumulative effect on total UK applications as well as on foreign owners filing in the UK. The marginal effect is the reduction on the annual change in filings.
Adding these annual reductions or increases over the years between 1996 and 2014, the effects become sizable. It is estimated that filings from foreign owners in 2014 were reduced by between 8,000 and 21,000 due to the EUTM. The effect on total filings is also estimated to be negative but smaller. This might reflect an overall positive trend in the data. Estimates are derived by multiplying the number of segments by the estimated coefficient on the EU dummy for total UK applications and applications from foreign owners only.
Since the UK referendum to leave the European Union, there is interest in forecasting the likely effect of different models of trade mark co-ordination between the UK and the EU. The previous paragraphs estimate the number of trade marks that are registered in EU IPO that would have registered in the UK had EUTM not been developed. The cumulative estimate would represent trade marks on the EU register that may need the IP protection that they currently have in the UK were policy to return to the pre-EUTM position. However, because trade marking has seen such strong growth in the past decades, it is likely that this is an under-estimate.
A second aspect to consider is the annual additional new applications that might arise. Overall, there were 108,000 direct filings for trade marks at the EU IPO in 2015. For those trade mark owners who also require IP protection in the UK, it could become necessary to file for a separate trade mark in the UK.
It is probable that only a portion of the filings at EU IPO would also consider a UK filing after any change in the UK’s position. An indication of the lower bound for the EU IPO marks that may require a UK registration is the 12,524 direct filings from the UK at the EU IPO in 2015 (Statistics of European Union Trade Marks, 2016). If all of these were to additionally file for protection in the UK, should the EUTM no longer cover the UK, this would represent an additional increase in filings of 20 per cent (based on estimated UK domestic filings in 2016 of 61,211). Further, it is far larger than the marginal estimate given in Table 14, suggesting that the forecast modelling based on filings at the time when the EU trade mark was introduced, and overall filings were much lower, may underestimate the effect of the EU trade mark. However, it is likely that some of these filers explicitly sought to protect their IP in the European Union, because they do not require protection in the UK.
Policies to simplify trade mark application process
One of the notable features in recent years has been the steep rise in the number of small businesses that have sought trade mark protection for the first time. The IPO has also set in place measures to simplify the application and so reduce the cost of registering a mark. The opportunities have been taken by individual small businesses and individuals and by intermediaries seeking to support businesses to register their trade marks.
Estimating any impact of specific IPO policies has proved difficult, primarily because it is difficult to separate what has driven the recent rise of trade marking. It seems likely that the cost of trade marking has been reduced because of process changes, marketing of the ease and value of a mark and the introduction of registration services online. Equally, however, the UK economy has seen a large growth in the number of start-ups and SMEs, alongside a rise in self-employment. The evidence in this report suggests that new filers have been a significant driver of the recent growth of trade marks.
For estimation, the problem is that both sets of drivers have occurred at around the same time. The improvements in supplying the marks occurs at about the same time as the increased numbers of new businesses. The forecasting has found it difficult to discern the different drivers separately and it is very likely that both have been important.
Trade mark forecasting context and next steps
Forecasting the likely future level of trade mark applications is important for IPO to plan resources. This work has developed current modelling approaches to improve such forecasts. The most recent similar work on trade marking – the EU IPO has commissioned a forecasting model for trade marks (Hidalgo and Gabaly, 2012, 2013) – was discussed earlier in the report. These studies firstly sought to model trade marking purely using register information and at quite an aggregate level. In Hidalgo and Gabaly (2013), macroeconomic variables were added. There are three main differences between the approach used in these studies from the current work. First, this work splits trade mark filers into different segments, whereas Hidalgo and Gabaly looked at trade mark filings in the aggregate. This allows data about the different segments to be integrated into the modelling. Second, the EU IPO studies estimated the level of trade mark filings, while here the change in filings is estimated. Both changes appear to improve the modelling. Further, the modelling here has been underpinned by a significant improvement to the underlying datasets, linking the owner of a trade mark to data about the type of owner.
This linking exercise is a resource intensive exercise. It produces additional variables to model trade marking activity, by identifying characteristics of the trade mark owner from business databases. Some of the additional variables – such as owner type – prove useful in segmenting the modelling. However, it is apparent that the variables derived using business characteristics do not greatly improve the forecasts. The preferred models are mainly auto- regressive with policy dummies.
Continuing to use simple, time-series approaches would therefore be justified for activity modelling to support the resource planning of the IPO. However, one of the key dimensions for future work is to be able to represent policy and intellectual property related policy specifically in the models. Such interventions are occurring at sector and business type level, so the sophistication of the underlying datasets used in this study may be warranted if these interventions shape the future registration of trade marks.
An area of the modelling that may need developing is the representation of the various international routes to co-ordinate the trade mark application. This work has focused on the UK register and applications and renewals to that register. The modelling here does begin to lay the groundwork for going further. Where an entity is the owners of several UK trade marks, this is now represented in the data. It then makes it possible to link across different registers by the owner.