• Class 5 has the highest abandonment rate, while Class 7 has the lowest
• Cancellation rates are in line with applicant obligations
• Class 38 has one of the highest cancellation rates

Trademarks can have infinite lives, and rights owners pay attorneys big bucks to make sure renewals are secured for their most important intangibles. However many brands never become a major hit, and the nature of an industry, as well as market factors, will impact the likelihood of whether a trademark, is allowed to live or is put on the chopping block. WTR has teamed up with Corsearch to gain insight into how behaviours differ in terms of trademarks being retained or discarded based on industry.

This analysis only considers applications filed at the USPTO and the focus is on abandonment and cancellation of trademarks (see our methodology below). Abandonment references trademarks that fail in pre-registration, whereas cancellation refers to trademarks that become ‘dead’ some time after registration. Actions to cancel trademarks include non-renewals and failure to submit use declarations, among other things.

Figure 1 shows the probability that a trademark will be abandoned, registered, or cancelled at the 10-year mark after filing. It is broken down by Nice Class.

The data reveals that there are high rates of abandonment in Classes 5 (mainly pharmaceuticals and other preparations for medical or veterinary purposes), 32 (includes mainly non-alcoholic beverages, as well as beer) and 34 (includes mainly tobacco and articles used for smoking, as well as certain accessories and containers related to their use), at around 50% each.

The high abandonment rate in Class 5 is possibly due to the nature of the pharmaceutical industry. It is common for businesses to file several trademark applications for the same product and then take only one of them forward.

There are several reasons why Class 32 has recorded high abandonment rates, but an important factor is the rapid pace of change in the US beverage industry. The non- and low-alcohol sectors have grown 506% since 2015, and it is expected that these drinks will become increasingly popular. Although beer volume sales took a hit in the US in 2020, prior to the pandemic the craft beer market was causing a shake-up in the industry with lots of companies throwing new brands into the ring.

[huge_it_slider id=”15″]At the other end of the spectrum, the three Nice Classes with the lowest abandonment rates are Classes 7 (mainly machines and machine tools, motors and engines), 17 (mainly electrical, thermal and acoustic insulating materials and plastics for use in manufacture, etc.) and 23 (mainly natural or synthetic yarns and threads for textile use). Class 7 recorded an abandonment rate of 29%, while Class 17 and Class 23 both posted around 30%.

For reference, overall rate of abandonment across Nice Classes at the 10-year mark is 42%.

Figure 1: Probability of abandoned-registered-cancelled trademarks of each Nice Class at year 10

Source: Corsearch

At year 30 Classes 38 (telecommunications services), 28 (games, toys and playthings; video game apparatus; gymnastic and sporting articles; decorations for Christmas trees), and 35 (advertising; business management, organisation and administration, office functions) had some of the highest cancellation rates, as seen in Table 1. These Nice Classes, along with Class 25 (clothing, footwear, and headwear) have shown the highest registration cancellation rates at other milestones, such as year 20 and year 10 (see Tables 2 and 3, respectively).

At the lowest end of the spectrum at years 10, 20 and 30 is Class 13 (firearms; ammunition and projectiles; explosives; fireworks).

Table 1: Cancellation rate – year 30, top compared to bottom

Source: Corsearch

Table 2: Cancellation of registration rate – year 20, top compared to bottom

Source: Corsearch

Table 3: Cancellation of registration rate – year 10, top compared to bottom

Source: Corsearch

WTR says:

A lot of factors can contribute to high rates of abandonment. But it is likely more common in an industry with lots of competition, where companies are acting fast with trademark protection and are betting on several brands going forward, then seeing which is the best option. Notably, in the pharmaceutical sector, a zesty brand name is not often the goal of branding medicine, so these businesses are more likely to cast a wide net and settle on what is most practical.

Cancellations are a bit of a different story as a decision was taken to make these once live trademarks dead. As the team at Corsearch points out, while trademark rights are perpetual, eventually, most trademarks have a shelf life. This is evidenced by the fact that the volume of cancelled trademarks divided by total registrations was at 83% in year 30. Not surprisingly, the number of cancellations creeps up over time. In almost all classes 1% of all registrations are cancelled in year seven, and by year eight 25% of trademarks are dead. This figure rises to 50% in year 10 and 70% in year 20. These trends are in line with when applicant obligations roll around, such as use declarations or renewal times.

A cancellation of a trademark can occur be for a lot of different reasons, and importantly, it does not mean that the brand it is attached to is not successful. In fact, a brand that has been around for 10 years could still possess immense brand recognition. This creates the opportunity, for those who are ambitious, to pick up trademarks and reinvigorate brands. Indeed, this is the business strategy for many brand management firms who try to get hold of the IP before it even comes to cancellation.

Methodology:

This data only includes USPTO national trademarks filed between January 1990 and June 2021. Abandonment references pre-registration trademarks that never made it to registration. Cancellation refers to post-registration trademarks. It includes any action that makes the trademark dead. In that sense it covers non-renewals, as well as failure to submit use declarations, among other things. Ultimately, it addresses both applicant-related abandonments which take place after registration and actions taken by third parties.