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Even with the drop in filings, these are still fairly busy times for trademark lawyers. There may be a shakeout, but it hasn’t happened yet. After 10 straight years of increased activity, the trademark bubble has finally burst. In 2001 the number of trademark applications filed with the U.S. Patent and Trademark Office declined by 23 percent. Trademark filings are a measure of business optimism. Companies and individuals apply for marks they plan to use months or years from now. The flow of applications reflects plans for new product and business launches, not just current activity. A decade of economic bullishness raised the tide of new filings from 1992 through early 2000. Afterward filings dropped each month [see Trademark Application Filings 1990-2001]. All things considered, 2001 was not a bad year overall for filings. In fact, the number of filings last year was still the third-highest in history. Likewise 2000 was not an unalloyed boom year. There were extraordinary variations in the number of filings during each of the last three years. When, exactly, did the trademark bubble burst? At about the same time as the stock market bubble did. The month the Nasdaq Stock Market Composite Index hit its peak, March 2000, more than 30,000 applications were filed — a record. Trademark applications that month were almost double those in January 1999. Applications in December 2001 were half those of March 2000. On a monthly basis, things kept getting worse in 2001. Not surprisingly, Sept. 2001 applications were at a three-year low, reflecting the commercial standstill after the terrorist attacks. By November applications were not much higher, and in December they dipped below where they were in September. What about 2002? Preliminary figures for January show just over 16,000 applications, about on a par with January 1999. If filings for the rest of 2002 continue at that rate, they will fall below 200,000 for the first year since 1997, representing a 10 percent decrease from 2001. This boom and bust cycle has affected businesses, the trademark office and the legal profession in a variety of ways. The trademark office, for example, recently laid-off 135 trademark lawyers. Since each new application potentially blocks someone else from using a similar mark in the same field, boom times frustrate marketers, corporate identity consultants and others who must create and select new marks. Even though filings sharply declined in 2001, the number of filings last year was still double that of a decade ago. It was unquestionably more laborious and difficult to find an available trademark in 2001 than it was in 1991. A large portion of the marks in new applications are never used, but they contribute to the gridlock. As long as an application is pending, it deters other companies from adopting similar marks for competing or related products. Abandonment adds to the problem. At any given time, at least one-third of the marks in pending applications are destined to be abandoned. Most applications are abandoned because the applicant has given up on plans for the product, decided to use a different mark, or gone out of business. Another difficulty in selecting new marks is the scarcity of domain names. With virtually every common dictionary word already registered as a Web site, applicants often resort to the following: Coined marks. New marks continue to be created from whole cloth by corporate identity consultants and software products, although it was hard to find new coined brands in 2001 that made as much of a splash as 2000 filings like Accenture and Cingular. Deliberately misspelled marks. Variations from conventional spelling have always been customary in the trademark world — the federal register, for example, contains more than 1,000 marks where EZ replaces EASY. The need to find available and EZ-to-use Web site names has created new incentives for variations from the norm. For example, 2001 filings include Rite2u for online sales of electronic equipment, Cb4ugo for travel services and Jerky4u for mall food court kiosks featuring a processed beef product. Strange juxtapositions. A company looking for cutting-edge branding and unclaimed dot-com real estate can combine two dictionary words in an uncommon way and find a phrase that works as a mark and a domain, such as Jumpspring for a vertical online marketplace. What about the bust? The trademark office has been riding a roller coaster, first dealing with unprecedented increases in demand for its services, and now dealing with a sharp decline. The silver lining in the 2001 downturn is that trademark applicants are getting much faster service from the trademark office — at least before the layoffs. In recent years, applicants typically waited six to eight months, at times even longer, before an examining attorney reviewed a new application. The average wait is now two to four months. Even with the drop in 2001 filings, these are still fairly busy times for private trademark lawyers. There may be a shakeout, but it hasn’t happened yet. Companies seem to be getting more realistic about the value of certain trademarks. During the boom, an easy way for a company to signal its new-economy bona fides was to include “.com” as part of the trademark. There were fewer than 100 applications for marks incorporating the “.com” suffix in 1994, and by 2000 there were more than 13,000. In 2001, the number plummeted to 2,744. Registration of generic marks such as Pets.com and Furniture.com also fell in 2001. The trademark office continued to take the view that tacking on “.com” to a description of the user’s product or service does not create a distinctive trademark. Marks with the prefixes e- and i- also are no longer popular. The office’s Trial and Appeal Board published several decisions declaring that e- and i- marks were not protectible as trademarks, but were merely descriptive of an electronic version of a product or service. eTerm, eOutdoors and ePhysician all went down in flames. One exception: e-Option was held not descriptive for stock brokerage services, because the word “option” was not straightforwardly descriptive, but a double entendre, signifying both a type of security and a synonym for “alternative.” Marks containing buzzwords like Internet, cyber, Web, virtual and B2B also lost momentum. Applications for these marks were down 50 percent to 85 percent. Applications for goods or services that mentioned computer hardware or software, or otherwise referred to computerization, dropped by half. There was even a steeper drop in applications for marks that referred to the Internet. Trademark filings for food products, on the other hand, stayed relatively steady from year to year: 11,091 in 1999; 10,513 in 2000; and 10,417 in 2001. After all, everyone still needs to put food on the table. Glenn Gundersen is a partner in the Philadelphia office of Dechert, the author of the International Trademark Association’s book “Trademark Searching,” and a co-author of the new book “Intellectual Property in Mergers & Acquisitions.” Related chart: Trademark Application Filings 1990-2001

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