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 self-service online options at the United States Patent and Trademark Office (USPTO).

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. Steve Cook from Cook & Cook provides some excellent guidance on how those filing costs might rise for intent-to-use applications along with a range of potential attorney fees from $500 - $5,000 depending on the complexity of the circumstances.

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 utilise the assistance of an attorney at an additional fee of $1,000 for a total cost of $1,550 plus wear and tear on the potential owners nerves!

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

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

Between the 31st December 2014 and the 1st January 2016, a total of 380,910 trademark applications were filed at the USPTO. 38, 968 of these applications are still pending but a staggering 123,723 applications are no longer valid. There are a huge variety of reasons why a trademark may now be invalid and the volume grows over time but almost 1 third of the applications received in 2015 have failed to date.

Of the applications still pending, applications in Class 9 account for 11.4% and Class 25 for 6.3%. Analysis of the invalid applications shows Class 25 issues rising to to 10% with applications for t-shirts accounting for 4.8% of listed products.

In 2016, a total of 401,365 applications were filed, 87,085 of these are still pending and a further 107,761 applications are now dead 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 11.3% and Class 9 for 10.3% of these applications. T-shirts were again the top product listed in 5.4% of unsuccessful applications.

Of the 447,407 applications filed in 2017. 311,199 are still pending with 36,604 dead so far. Of the applications that have not succeeded to date 12.3% are in Class 25 and 9.5% are in Class 41 with Class 9 at a steady 9.4%. Already the top product listed is again T-shirts at 5.9%. The t-shirt business is clearly a tough one to crack in terms of trademarks!

Taking our average trademark application costs profile above and applying it to these numbers is sobering. The 123,723 applications in 2015 that are not valid today cost an estimated $191 million. In 2016, 107,761 applications attracted estimated average costs of $167 million. And the 36,604 applications in 2017 that are already dead have cost an estimated $56 million with presumably more yet to come from the pending applications.

Dead applications

Over the past 3 years, business owners have invested an estimated $414 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, $414 million is an eye-watering sum of money!

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By Nadaline Webster