What would a recession mean for trademarks? A drop in applications, yes, but also opportunities

Erise IP

With multiple indicators—including new trademark filings—suggesting the U.S. economy is heading toward a recession, can the lessons of previous economic downturns prepare us for what might be ahead?

We’ve seen booms and busts in new trademark applications mirror stock market crashes before and we might be in the midst of one of those cycles now.

New U.S. trademark applications reached an all-time high in March 2000, the same month that the NASDAQ peaked during the Dot Com Boom. The recession started a year later and trademark applications fell to an all-time low in December 2001.

Applications reached their second-highest peak in March 2007, months before the Great Recession started in December. New applications would fall by 16% in the last quarter of 2008 and 20% in the first four months of 2009.

The Trademark Trial and Appeal Board’s docket of ex parte appeals dropped 20% in the 13 months following October 2007 and another 25% in the following six months. The number of pending oppositions and cancellations dropped by 9% between the end of September 2008 and the end of March 2009.

Today, we are coming down from another peak in new trademark applications: 659,000 in 2020, a one-third increase from the previous annual high of 495,000 in 2019. But trademark applications have fallen for the last five quarters dating to mid-2021, according to USPTO data.

So there could be a silver lining to a recession. A continued drop in new applications could help unclog the longstanding USPTO backlog. The average time until the first office action issuance has nearly tripled since the end of 2020, reaching 8.3 months in the final quarter of 2022.

If a recession does take root, what should trademark owners know and do? Here’s some advice along with some historical context.

Opportunities to defend your marks and capitalize on abandoned marks

Recessions are a good time to monitor for potential infringers of your registered and unregistered marks. Litigation remained at usual levels during the Great Recession while trademark office actions fell.

You can do a lot of this monitoring in-house and minimize reaching out to outside counsel until you need to send a cease and desist. In fact, if you are particularly proactive, you can opt to have outside counsel prepare a solid template cease and desist letter for your core marks now that you can modify and send directly later—just get your counsel’s sign-off beforehand.

Another opportunity: Dead marks equal potential. If a mark isn’t live on the registry and it is no longer in use in commerce, it’s available with the caveat that sometimes an old owner will come calling for a fee as soon as you are having some major success. Regardless of whether the prior owner can prove any residual rights in a mark, the cost to deal with those issues in litigation may be the ultimate barrier, so tread carefully when you are considering taking over a “dead” mark.

You can prioritize your marks on a limited budget

For emerging companies trying to streamline their expenses during a recession, they should focus on registering those core marks and certainly their house marks (i.e. brand name) first before allocating resources to product names, taglines, etc.

By the same token, if you are facing questions of whether to renew a mark based on the cost of renewal, prioritize the house marks and ditch retired brands, products, or expired taglines.

Also, don’t forget that trademark rights exist whether you register the mark or not. So if there is a choice between investing money in filing applications or expanding the use of the mark in a tight economic climate, we recommend expanding the use of the mark and then file the application to register the mark as soon as funds free up. If you opt for this route, make sure you keep records of where you are using the mark to sell your goods or offer your services. You can give notice of a trademark by using the TM symbol, so include that marking on your product packaging, website, where your mobile app can be downloaded, etc.

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Erise IP

Erise IP on:

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