What Nice Classes Were Least Affected In The 2008/09 Recession?

Colm MacSweeny,

Although the economic damage wrought by the Coronavirus pandemic is as yet unknown, and reports are rapidly changing by the day, at the time of writing, the following numbers were given for the G7 nations:

  • UK – economy to shrink by 30% in the first half of 2020
  • USA – GDP shrunk by 4.8% in the first quarter of 2020
  • Germany – GDP expected to contract by 10% in 2020
  • France – economy estimated to shrink by 8% this year
  • Japan – economy set to shrink by 25% in the second quarter
  • Canada – economy predicted to shrink by 6.2%
  • Italy - public debt will hit almost 160% of GDP this year and its economy estimated to shrink by close to a tenth

When viewing these somewhat disheartening figures, two things must be remembered:

  1. They are estimates only; and
  2. No one truly knows how consumers and producers will behave as countries slowly begin to lift their lockdowns over the coming weeks and months.  

That said, we cannot ignore the fact that there is a strong probability of an upcoming Covid-19 generated recession, the likes of which we have never previously experienced, given the unprecedented measures that have led to this global crisis. However, the best predictors we have of future behaviour in economics are those of the past. When examining the trademark filings made during the 2008/09 recession, striking differences occur between the USPTO’s data and EUIPO.  

The least affected Nice Classes in the USPTO were Nice Class 34 (Smokers’ articles) and Class 13 (Explosives and Firearms). These were the only classes in which application volumes did not decline during 2008-2009 and in certain cases showed positive trends.

Guns and tobacco in times of trouble

During 2008/09, 1,000 applications which included Class 34 were filed in the EUIPO, which was a slight decrease from 2007.  However, the USPTO filings in Class 34 actually reached a high of 3,000 during 2008/09. Top filers in the USPTO were:

  • Philip Morris USA Inc
  • Starbuzz Tobacco Inc
  • K. Hansotia & Co

The top three product applications were cigars, cigarettes, and tobacco, respectively.

The explanation for why trademark applications in the USPTO held steady during the 2008 financial crisis is simple – during hard times, smoking rates increase, as do cigarette manufacturers’ profits. In 2008, the international cigarette sales of Philip Morris Inc totalled $869.7 billion, and its gross turnover was $63.64 billion, representing increases of 2.5% and 15.2%, respectively, as compared to the previous year.

Exploring smoking habits of the period allows us to see why more trademark applications were made in the USPTO as opposed to the EUIPO. Smoking habits in the latter were already much higher than the former. Only 26.3% of the USA population smoked. By contrast, 36.4% of Spaniards smoked, 36.6% of French people and a whopping 46.4% of Austrians lit up regularly (1). Put simply, there were more opportunities for growth relating to smoking articles in the American market.

Application filings in the USPTO for Class 13 (Explosives and Firearms) also remained stable during 2008/09, with 1400 filings per year. For Americans, economic instability tends to result in increased concerns regarding personal protection. The top filers of those years were:

  • Gunhide Properties LLC
  • Phantom I.P. LLC
  • Jake’s Fireworks Inc

Business as usual in Europe?

The two least affected classes in the EUIPO during the 2008 financial crisis were Class 35 (Advertising and Business) and Class 41 (Education and Entertainment).  However, both of these classes featured in the top 10 of the most affected classes in the USPTO in 2008-2009. 

One possible hypothesis for why filing in Classes 35 and 41 remained stable in Europe but dropped in the USA relates to the level of funds made available to businesses to invest in the activities covered by these classes in that period. In America, banks dramatically reduced the availability of lending following the collapse of Lehman Brothers. However, the British Bankers’ Association (BBA) reported that bank lending to small businesses actually increased in 2008. Therefore, in Britain at least, companies had access to funding to continue with their advertising, public relation, education, and entertainment projects.

In summary

It will take some years to collate the data required to make conclusive findings on the (possible) upcoming recession resulting from the Covid-19 pandemic. However, if you’re interested in further exploring the impacts that previous global downturns have had on trademark trends, you can do so in our new report “Trademarks in Times of Recession”.

 

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(1) This had dropped by over 20% in 2019, but Austria is still known as the “ashtray of Europe” - https://www.vox.com/2019/10/31/20936017/smoking-ban-austria

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By Colm MacSweeny
Colm MacSweeny, Senior Trademark Analyst at TrademarkNow, has been working in business development for the company over the past 2 years. He specializes in finding inquisitive professionals in the legal industry and introducing them to the benefits of AI-powered clearance and watching. Colm holds a BA in Economics & Psychology and a Masters in Business Economics. He has written blogs and ebooks for tech startups and has played music professionally for many years. Colm enjoys spending his time doing anything creative, whether that be music, art, reading or simply having a conversation with someone interesting!

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