Amelia Manera is a JD candidate at Osgoode Hall Law School.
A report entitled Trade Mark Incentives was released this month by the UK Intellectual Property Office (IPO). The report generally found trade mark activity to be positively correlated with better performance in the areas of productivity, employment, wages, and growth rates.
The IPO provides information, research, and services relating to all areas of intellectual property, including copyright, patents, and trade marks. A previously reported initiative of the IPO is the Peer-to-Patent pilot project that was blogged about here. The current study was commissioned by the IPO and undertaken by Christine Greenhalgh, Mark Rogers, Philipp Schautschick, and Vania Sena.
The purpose of the study was to investigate possible linkages between trade marking and performance. Specifically, the researchers were asked to do three things:
- Document an overview of corporate trade marking activity in Britain;
- Analyse the role of trade marks in the innovation process for firms and their impact on households; and
- Explore possible links between trade marking and branding.
Data for the study was drawn from the Office for National Statistics (ONS) Annual Respondent Database (ARD2) for the years 2000-2006. In addition, data from OFLIP, a population database for UK firms, was used to supplement firm-level data. Data from the Community Innovation Survey (CIS4) were also included for the productivity analysis. Regression analyses were undertaken to establish possible correlations. A detailed explanation of the data and methodology used can be found in the full report.
Throughout their analysis, the researchers drew upon three viewpoints of trade marks in order to assist their interpretation of the statistical results, namely:
- A trade mark acts as an information signal, informing consumers of source and potentially quality of products.
- The registration of trade marks can act as a signal of innovation as it tends to coincide with the introduction of a new product to the market.
- The registration of a product name is the starting point for the growth of a brand.
Bearing these views of trade marks in mind, the researchers investigated potential correlations between trade marking and performance in the following categories: 1) productivity, 2) employment, 3) wages, and 4) growth rates. The results in each category are as follows:
- Based solely on the ARD2 sample of data, trade marking firms have a 21% higher productivity level.
- Adding the CIS4 data removed the statistically significant result, but the correlation was still positive.
- Increased intensity of trade marking (measured as the number of trade marks per employee) also indicated higher productivity, but more stringent statistical analyses reduced the strength of the correlation.
- Employment was found to be significantly higher in firms that engage in trade marking. The result remained the same when corrected for the size of firm based on sales.
- Firms that actively trade mark have a work force that is one fifth larger than firms that do not engage in trade marking.
- A small positive correlation was found between trade marking and increased average wages, however, researchers stated that the correlation could potentially be attributed to other factors such as longer hours worked or higher hourly rates of pay.
It was at this point in the study where researchers drew upon the above results to determine what, if any, impact trade marking had on households. Three benefits to households were identified. First, households benefit from an increase in purchasing power due to lower prices. Second, households receive better value for money as competition spurs an increase in product quality. A third benefit is an increase in product variety leading to a higher likelihood of satisfying the customer’s needs. All three benefits lead to higher customer satisfaction.
Growth Rates (Branding)
- A brand was defined as being a valuable, well known product or service.
- Building a brand involves many aspects, one of which is trade marking.
- Both in terms of employment growth and turnover growth, trade marking firms showed a 6% growth premium over non-trade marking firms.
- An unexpected negative correlation resulted when advertising was added to the regression analysis. Researchers speculated that the negative correlation could have resulted from lack of data (time frame too small) and/or that money spent on trade marks meant money not spent on advertising, and vice versa, creating a substitution effect with regards to resources.
In conclusion, the researchers found positive correlations between trade marking and performance in each category, but determined that the positive associations were not strong enough to establish causality. Researchers were still able to conclude that trade marking firms are different in important and valuable ways from other firms, supporting a conclusion that trade marking successfully fulfills its intended policy purpose of promoting innovation. While there was no mention of next steps or future research, I believe it would be beneficial to conduct further study in this area. As well, the limitations inherent within the datasets used for the current study could be starting point for gathering meaningful future data.