Chapter 3 Trade marks

IP report 2022 chapter3

Trade marks are signs that act in the market as a badge of commercial origin for producers, products and services. Registering a trade mark provides its owner the exclusive rights to use that mark, or authorise others to use it, as well as an avenue to seek relief for infringement.1 By insulating a mark from copying, trade mark protection enhances transparency between consumers and producers and enables producers to command a premium for quality.

Trade mark applications and registrations

In 2021 a record total of 88,725 trade mark applications were filed in Australia, up 9% on 2020. The growth adds to the 8% increase in trade mark applications in 2020 – despite Australia’s economy having entered recession for the first time in 30 years.

In 2020 growth in trade mark applications was entirely attributed to increased applications by Australian residents, who account for 60% of applications in Australia. Non-resident filings fell 4%. In 2021, non-resident applications rebounded, rising 18% (to 35,386) while resident applications grew 3% (to 53,339)

Figure T1: Trademark applications in Australia grew by 9% in 2021

The growth in trade mark activity over 2020 and 2021 was unexpected in some respects: Trade mark activity tends to be procyclical, rising during periods of economic growth and falling when the economy contracts. However, at an aggregate level, trade mark registrations are positively related to opportunistic entrepreneurship – associated with the creation of growth-oriented businesses – and average household income.2 In Australia, despite ongoing COVID-related restrictions, 2021 saw the highest rate of business entry in a decade (ABS, 2021) and gross disposable income reached its highest level on record.3

Before trade marks can be registered and rights granted, they are examined against certain legislative criteria. These include whether registration would unfairly restrict others from using a mark they legitimately need to distinguish their products or services, and whether there would be a conflict with earlier registered marks for similar goods or services. Trade marks registered in 2021 in Australia reached 70,607, a record number and up 10% on 2020. Residents saw the strongest growth in trade mark registrations, up 15% (from 35,030 in 2020 to 40,307). Registrations from non-residents grew 4% (from 29,051 to 30,300).

Businesses file trade marks to announce new offerings, provided demand for different and higher quality goods.4 The latest trade mark data indicates strong domestic economic activity and interest in Australia as a trading destination. If seeking international protection, applicants have a choice of filing directly with IP offices in the countries of interest or using the Madrid System. The Madrid route provides applicants a simplified route for filing for trade mark protection in multiple countries. In 2021, 22% of applications in Australia were filed via Madrid (19,612 in total), and 78% were filed directly (69,113). The Madrid share of total filings has steadily increased over the past decade.

Countries of origin

The leading foreign countries of origin for trade mark applications in Australia were the US (11,128 applications), China (5,597), the UK (2,615), Germany (1,921), and New Zealand (1,329) which surpassed Japan (1,251). For each of these countries of origin, applications grew in 2021, in the US case, by 25% (see Figure T2).5

Focusing on ‘high-volume’ countries of origin (those in the top quartile for total filings in 2021), Turkey recorded the strongest growth in 2021, with a 56% increase in application, followed by Sweden (+43%) and Israel (+33%).

Compared to patents, trade mark applications are less likely to be filed by international co-applicants. None of the top countries of origin for trade mark applications list international co-applicants on more than 2% of their total filings.

Figure T2: Number and growth of trade mark applications by country of origin

Trade mark classes

Trade mark applications are assigned to product and service categories using the Nice Classification, an international system of 45 product and service classes.6 Applicants can nominate one or several Nice classes for their trade marks. In 2021, applicants filed 166,355 classes, an average of 1.9 classes per application.

The distribution of trade mark filings across Nice classes has remained relatively stable since at least 2002, with most applications concentrated in 5 classes (see Table T1). Trade mark activity is more diffuse throughout the economy than patenting but not randomly distributed: high-tech manufacturing industries are heavy users of trade marks, as are information-intensive services.7 In 2021, strong growth in applications was observed for all 5 top classes, led by Scientific and technological services (+22% on 2020).

Table T1: Top five trade mark classes

  Total applications Change in applications 2020-21
Class 9 Technological and electrical apparatus and instruments  16,352 17%
Class 35 Advertising 16,192 14%
Class 41 Education, training and entertainment 12,240 14%
Class 42 Scientific and technological services 11,816 22%
Class 25 Clothing, footwear and headgear 8,405 18%

 

Figure T3 charts the classes with the highest application growth in 2021, excluding ‘low-volume’ classes (below the mean for total applications in 2021). The strongest relative growth (+28%) was in Household or kitchen utensils and containers (Class 21). Demand for homeware and kitchenware is positively related to household discretionary income and capital expenditure on private dwellings (the amount spent on homes). Over 2020 and 2021, high discretionary income prompted many households to upgrade their homes.

Trade mark applications for Telecommunications (Class 38) were up 25% on their 2020 levels (from 2,282 in 2020 to 2,868 in 2021). The Telecommunications class includes telephone and voice mail services and services that provide virtual conferencing, video-on-demand, data sharing and email, internet chatrooms and forums, radio, television and user access to global computer networks. Social distancing and remote work have dramatically increased reliance on these services through the pandemic period.

Aggregate bank data shows that while expenditure in discretionary categories (like furnishings, household equipment, transport, clothing and footwear) declined significantly when restrictions were in place, it rebounded sharply when they eased especially after the shorter lockdowns from late 2020.8 As with Household or kitchen utensils (Class 21), Vehicles (Class 12) and Clothing, footwear and headgear (Class 25) appear in the top trade mark growth classes for 2021.


Figure T3: In 2021, strong growth was observed in trade mark applications for Household kitchen utensils and containers (Class 21), Telecommunications (Class 38) and Vehicles (Class 12)

Leading applicants

The top domestic and international applicants for trade marks come from a broad range of industries (see Table T2). The leading domestic trade mark filer in Australia was gaming machine manufacturer Aristocrat Technologies (110 applications). Ranked second was Endeavour Group, the retail drinks and hotels business formed by Woolworths Group in 2019. Endeavour Group was listed separately on the Australian Securities Exchange in June 2021 in one of the largest demergers in Australian history. The food and groceries sector was further represented in the top 5 resident filers, including Coles Group (57 applications), Aldi Foods (47) and Southcorp Brands (45).

Table T2. Top domestic and international applicants for trade marks in Australia, 2021

 Top domestic applicants
 Rank Applicant Total applications
 1  Aristocrat Technologies Australia Pty Ltd  110
 2  Endeavour Group Limited  108
 3  Coles Group Limited  57
 4  Aldi Foods Pty Ltd  47
 5  Southcorp Brands Pty Ltd  45
 Top international applicants
 Rank Applicant Total applications
 1  Glaxo Group Ltd  110
 2  Apple Inc  103
 3  Novartis AG  94
 4  Samsung Electronics Co Ltd  85
 5  Philip Morris Products SA  84

 

Global pharmaceutical manufacturers dominate the list of top international applicants – for example, Glaxo Group with 110 applications and Novartis AG with 94 – and lifestyle electronics brands – for example, Apple with 103 applications and Samsung with 85.

States and territories

In 2021, New South Wales was the leading source of trade mark applications (with 19,287) followed by Victoria (15,915). Strong growth was observed in trade mark applications from all Australian states and territories except Victoria (−1%) and the Northern Territory (NT) (−12%). Applications for the NT are low in number and volatile year-on-year.

Prolonged COVID-19 shutdowns in Victoria caused its economy to contract by 0.4% in the 2021 financial year, the only state to record an economic contraction.9 Despite the interruption to its economy, Victoria retained its lead position for the most trade marks per capita.

Table T3. Trade mark applications, Australian states and territories, 2020–2021

  Total 2021  Change, 2020-21  Applications per capita
(thousands) 
NSW  19,287 +5% 2.4
VIC 15,915 -1% 2.4
QLD 9,760 +4% 1.9
WA 3,949 +11% 1.5
SA 3,051 +0% 1.7
ACT 744 +4% 1.7
TAS 549 +13% 1.0
NT 149 -12% 0.6

 

Australian filings overseas

IP rights granted in Australia do not provide protection in other countries. To protect IP in other countries, Australian applicants must file trade mark applications abroad in those countries. Before the pandemic, trade mark applications filed by Australians overseas exhibited strong continuous growth. Based on latest data from WIPO, Australian residents filed a total of 20,452 trade mark applications abroad in 2020, an increase of 1% on 2019 (from 20,198 filing).

Trade mark applicants can obtain and maintain protection for their marks in multiple countries by filing a single international registration via the Madrid system. For the first time ever, more Australian applications abroad were filed via the Madrid system than directly with foreign IP offices. Of Australian applications abroad 53% were filed using the Madrid system, while the remaining 47% were filed directly with overseas IP offices.

At a global level, Australian IP owners use the Madrid system less intensively than the Patent Cooperation Treaty (PCT), the international patent system. However, the Madrid system covers fewer countries than the PCT. As the Madrid system has expanded over the past decade to cover a larger number of countries, the system’s use by Australian applicants has intensified. In 2009, 84 countries were party to the Madrid system. By the end of 2020, Madrid covered 123 countries, or 64% of all countries worldwide.10 The Madrid share of Australian filings abroad has risen 24 percentage points since 2012, from 29% to 53% in 2021.

The total trade mark applications filed abroad by Australian residents contained 47,466 class nominations, up 1% from 2019. Despite a 13% decline, China remained the primary destination for these filings (19% of all class nominations in applications abroad), followed by the US (16%), New Zealand (15%) and the UK (7%). Growth in class nominations was observed across each of these destinations in 2021.

Of the ‘high-volume’ destination countries (those in the top quartile for class nominations in 2020), Canada experienced the strongest growth in filings from Australian residents (+96%), followed by Brazil (+91%) and Malaysia (+44%).

  1. Trade marks can be renewed every 10 years in perpetuity so long as they are in use, on the basis that the need to prevent consumer confusion does not lessen over time.
  2. See Lyalkov S, M Carmona, E Congregado, A Millán, and J M. Millán (2019), ‘Trademarks and Their Association with Kirznerian Entrepreneurs,’ Industry and Innovation, 27(1-2): 1-10. See also Jensen PH and E Webster (2011), ‘Patterns of trademarking activity in Australia,’ Australian Journal of Intellectual Property, Melbourne Institute Working Paper 2(4).
  3. ABS (2021), Counts of Australian businesses, including entries and exits, December 2021, Australian Bureau of Statistics, Commonwealth of Australia.
  4. ABS (2021a), Australian National Accounts: National income, expenditure and product, September 2021, Australian Bureau of Statistics, Commonwealth of Australia.
  5. Castaldi C, J Block & MJ Flikkema (2020), ‘Editorial: why and when do firms trademark? Bridging perspectives from industrial organisation, innovation and entrepreneurship’. Industry and Innovation, 27: 1–2, 1–10.
  6. We count an application as originating from a country if at least one applicant on the application is a resident of that country, as indicated by the applicant’s address.
  7. For more information, see https://www.wipo.int/classifications/nice/en/.
  8. Mendonca S, T Pereira & M Godinho (2004), ‘Trade marks as an indicator of innovation and industrial change’. Research Policy 33: 1385–404.
  9. ABS (2021), ‘Impact of lockdowns on household consumption – Insights from alternative data sources’. Australian national accounts: National income, expenditure and product, September 2021. Accessed 19 February 2021, https://www.abs.gov.au/articles/impact-lockdowns-household-consumption-insights-alternative-data-sources.
  10. ABS (2021), Australian National Accounts: State Accounts, 2020–21 financial year. Accessed 22 February 2021, https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-state-accounts/latest-release.