The Economics Of Failed Trademark Applications In The US

Nadaline Webster,

Obtaining a clear idea of how much it will cost to register a trademark in the US (or anywhere for that matter) is difficult because the answer will always depends. Specifically it depends on how many classes you wish to register across, if it is based on use or intended use, whether you will clear the mark yourself or use the services of a clearance vendor and whether you intend to engage the services of an attorney to manage the clearance and/or filing, or use the  online options at the United States Patent and Trademark Office (USPTO).

Average trademark application costs profile

So, how do you get a sense of the average costs? In Europe, the average trademark application lists 2.27 Nice Classes. The range of fees at the USPTO for their online filing are  $225, $275 or $400 per class. The trademark registration related fees, including the USPTO and trademark attorney fees, can reach up to $5000 in some cases according to Nicholas Wells

So, for the purposes of estimation, our average trademark application in the US is already in use and will list 2 classes of goods and services, attract a median fee of $275 per class and utilize the assistance of an attorney at an additional fee of $1,200 for a total cost of $1,750 plus wear and tear on the potential owners nerves!

Monitoring trademark activity

The trademark world is in a constant state of activity with businesses still awaiting pending applications, facing opposition, infringement or cancellation actions and a trademark that was successfully registered a year ago, may not be still registered today. Our new pay-per-watch trademark monitoring tool Word Watch is a flexible and affordable way to monitor and police brands against potentially infringing new applications.

How many trademark applications at the USPTO do not make the cut?

Examination of data is only ever a single snapshot in time - but nonetheless can provide intriguing insight.

Between the 1st January 2017 and 1st November 2019, a total of 1.34 million trademark applications were filed at the USPTO. 590 thousand of these applications are still pending, but a staggering 240 thousand applications are no longer valid. There is a huge variety of reasons why a trademark may now be invalid and the volume grows over time, but almost one third of the applications received in 2017 have failed to date.

Of the applications still pending, as of 1st November 2019, applications in Class 9 (Electrical and Scientific Devices) account for 10.3% and Class 35 (Advertising and Business) for 8.7% of these applications, as shown on the graph below. Analysis of the invalid applications shows Class 25 issues rising to 11.6% with applications for t-shirts accounting for 7.3% of listed products.

Pending applications (application date 1 Jan 2017 - 1 Nov 2019)

In 2018, a total of 470 thousand applications were filed. 160 thousand of these are still pending (as of 9 November 2019) and a further 100 thousand applications are no longer valid, showing both an increase in applications and a decrease in the failure rate - although there are applications yet to be resolved one way or another. Again, Class 25 accounts for 11.8% of these applications. This time hats were the top product listed in 7.2% of unsuccessful applications.

Of the 420 thousand applications filed so far this year, 88% (over 370 thousand) are still pending with 6 thousand being deemed invalid so far. Of the applications that have not succeeded to date, 11.1% are in Class 25 and 9.3% are in Class 41 - with Class 9 at 9.1%. The top product listed is once again as T-shirts at 6.3%. The t-shirt business is clearly a tough one to crack in terms of trademarks!

Pecuniary Losses

Taking our average trademark application costs profile above and applying it to these numbers is sobering. The 140 thousand applications in 2017 that are not valid today cost an estimated $240 million. In 2018, 100 thousand applications attracted estimated average costs of $174 million. And the 6 thousand applications this year that are already invalid have cost an estimated $11 million (with presumably more yet to come from the pending applications, given that the median processing time for the USPTO is now 11 months). We would also have to wait and see if the legislative changes from 3rd of August will lower the volumes of rejected applications from non-domiciled trademark owners. 

Cost of invalid applications

Poor return on investment in trademark applications

Over the past 3 years, business owners have invested an estimated $425 million into the intellectual property that underpins their business and yet received little to no value for this investment. These estimates of course, do not include the in house costs of development or any other associated costs. Nor does it cater for the costs of particularly complex applications or long drawn out oppositions.

There are a myriad of reasons as to why any individual trademark application might not be valid today - from a pivot in business or rebranding, unforeseen opposition or trademark congestion - all the way to a particular filing strategy that reduces overall costs for the business. Nonetheless, viewed en masse, $425 million is an eye-watering sum of money!

Reduce the risk of failed trademark applications

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Editor’s Note: This post was originally published in April 2018 and has been updated in November 2019.