Empirical studies of trade marks – The existing economic literature

ABSTRACT

This paper surveys empirical studies employing trade mark data that exist in the economic literature to date. In the introductory section we summarise the theory of trade marks. Section 2 documents the use of trade marks by firms of different size and industry and by firms in several advanced countries, including Australia, the UK, and the USA. Section 3 reviews various attempts to gauge the function of a trade mark as an indicator of innovation and product differentiation. Section 4 surveys studies that have demonstrated firms' incentives to use trade marks, including transferring information to consumers, realising synergies between different types of intellectual property rights, strategies to raise rivals' costs and using trade mark portfolios as debt collateral. In Section 5, we provide an overview of the importance of trade-mark-use for firm survival and the association of trade marks with several dimensions of firm performance, including productivity and their ability to generate well-paid jobs.

KEYWORDS:

• Intellectual property
• trade marks
• empirical studies

JEL CLASSIFICATION:

• O33
• O34

Acknowledgements

The authors were invited to write and present this paper at the first of two Workshops on Empirical Studies of Trade Mark Data held in the Faculty of Law, Oxford, December 2012. This on-going project is co-sponsored by the Oxford Intellectual Property Research Centre, ETH Zurich, INNOTEC, the Engelberg Center for Innovation Law and Policy, New York University School of Law, The Office of Harmonisation for the Internal Market, the US Patent and Trademark Office, and the University of East Anglia. We are grateful to participants at this workshop for their constructive comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. We adopt the World Bank classification of 2013 to categorise countries into four groups based on the gross national income per capita: http://data.worldbank.org/about/country-classifications. Accessed April 12, 2015. The groups are: low-income countries (per capita income up to USD 1025), low middle-income group (per capita income between USD 1026 and USD 4125), upper middle-income countries (USD 4126 to USD 12,745 income per capita) and high-income countries with more than USD 12,745 gross national income per capita.

2. In Figure 1 we can see that for the USA, trade marks recovered quite rapidly after this downturn during the ‘dot.com’ bust.

3. See Greenhalgh, Longland, and Bosworth (2003,Tables 11a, 11b, and Figures 7a, 7b).

4. Financial analysis made easy.

5. The Federal Trademark Dilution Act of 1995 is a US federal law that protects well-known trade marks from uses by others that could dilute their distinctiveness. This protection does not require the presence of a likelihood of confusion.

The potency of a [trade]mark may be debilitated by another's use. This is the essence of dilution. Confusion leads to immediate injury, while dilution is an infection, which if allowed to spread, will inevitably destroy the advertising value of the mark. – Federal Trademark Dilution Act of 1995

See Federal Trademark Dilution Act of 1995, H.R. Rep. No. 104-374, at 3 (1995), reprinted in 1996 U.S.C.C.A.N. 1029, 1030 (citing Mortellito v. Nina of Cal., Inc., 335 F. Supp. 1288, 1296 (S.D.N.Y. 1972)).

6. The firms are: Monsanto Roundup, Nutrasweet, GSK Tagamet and Zovirax, and Bayer Aspirin.

7. Note that as measure of IPRs, these authors multiply the number of a firm's IPRs by the number of years the firm owned these IPRs. In these studies, patent stocks are associated with a lower risk of exit, while applying for a patent increases the risk of exit significantly. In addition, distinguishing between new firms and incumbents shows that patent applications only affect incumbents, while they have no significant effect on new firms. Recent applications can be proxies for more risky innovation, while established patents are more likely to be proxies for successful innovation. For the median firm of the 1997–2003 sample, registering a patent decreases the expected life span of an Australian firm by 7.6 years on average, while increasing the stock of renewed patents from zero to 5 patent-years increases it by 13.5 years.

8. This may be partly due to the fact that applications for trade marks are more likely to be contemporaneous with new product launches than patents.

9. See Greenhalgh and Rogers (2010, Ch. 10) for a full discussion of factors causing skill biased demand for labour.

10. As of 2014, 84 countries were signatory members of the NICE agreement. For a full list see: http://www.wipo.int/treaties/en/ShowResults.jsp?treaty_id=12.