What trademarks say about economy

Where the economy is concerned, Glenn Gundersen says trademarks are the path to true enlightenment.

The trademark and copyright lawyer at Dechert L.L.P. has been tracking trademark filings since the early 1990s. He says there's a powerful correlation between such filings and the overall health of the economy. And using that metric, things aren't as bad now as they might seem, he asserts.

When trademark filings are up, it's a good sign that the economy is humming along. But if they go up too fast, you may have a bubble on your hands. Or if they start to tail off after years of modest growth, there might be a recession in the offing.

"We are seeing applications now in 2008 going down, but they are dropping less sharply and fiercely than they did in late 2001," during the last recession, said Gundersen.

In 2000, trademark filings hit what was then an all-time high of 287,000, but then fell off more than 25 percent the following year, according to Gundersen's analysis. It wasn't until 2007 that they finally passed the record set in 2000 by topping 300,000.

Since then, filings have declined slightly, less than 2 percent for the first half of this year, compared with the same time last year, nowhere near the precipitous drop of the last recession.

According to Gundersen, 53, a University of Virginia Law School graduate and a resident of Wynnewood, the correlation is easy to explain. When businesses sense there's money to be made with a new product or service, a key part of the development process is coming up with a catchy slogan or product design that will set them apart.

But coming up with a trademark, and getting it registered with the U.S. Patent and Trademark Office can be costly. Big companies will often test a product design or slogan with focus groups or outsource the entire process to firms that specialize in branding.

They will also hire firms like Dechert to search trademark filings in the United States and abroad to make sure their slogan or product design isn't already being used by another company. Gundersen, who chairs Dechert's 20-lawyer trademark practice group, which comprises lawyers in the firm's Philadelphia headquarters and its office in London, says searches often are conducted not only in the United States but also in Europe and Asia.

"It can be a huge investment," he said of the overall process.

But why would a lawyer bother to keep a statistical measure of trademark filings except as perhaps a catchy branding process for the law firm itself, and what does it have to do with a client's legal issues?

The answer, Gundersen said, is that good statistical measures can reliably show what kinds of hurdles clients face. If there's a rash of filings for, say, various eco-friendly products and services, finding a truly distinctive mark or branding strategy might be a long shot.

"It's more of an indicator of how hard this effort is going to be," Gundersen said.

For the moment, though, trends seem to be going in the opposite direction.

Overall filings for the first six months of this year declined to 177,199, from 180,050 for the same period last year, a drop of 1.6 percent. The filings of individual industry sectors varied widely. Gundersen's analysis shows, for example, that trademark filings for Internet-related goods and services grew 1 percent. But trademark filings for mutual-fund services and brokerage-related businesses declined 20 percent and 38 percent. Of course, during this period the stock market had been tanking.

Quite apart from macro economic trends, Gundersen's trademark research gives clients lots of practical guidance on what slogans are in and where the marketing herd is stampeding off to next.

Last year, for example, many businesses wanted to be known as environmentally responsible - hence a flood of applications for trademarks with the word

green

. Combining

green

and

clean

also was big, as was attaching

eco

to almost anything, including Realtor, mattress and hanger, among others.

Then there are the truly bizarre.

Gundersen said there was a rise in trademark filings for wine last year, from 3,500 to nearly 4,000 in 2007. The stranger ones ranged from "Plate Licker," "Fish Toss," and "Bla Bla Bla," to "Dominatrix," and others that challenge the boundaries of good taste.

"We are talking about people who have a dream," Gundersen says. "All of these people have spent $325 to file a trademark application because they think they are going to launch a product."