I received an interesting comment from a reader on an article I recently wrote called, “How does a poor economy effect trademark and copyright?” In that article I stated that trademark filings go up in poor economic times because setting oneself apart from their competition is more important in a competitive market. Also, there is good data that show that companies who implement a comprehensive IP (trademark & copyright) strategy see an increase in revenue.

However, the reader asserted that in poor economic times brand loyalty is less important because people are going to purchase more economically prices goods and that they will be less likely to pay more for brand loyalty. The reader also posited the argument that because there are essentially two separate classes of consumer, things like product counterfeiting have little to no actual economic impact. The reader uses the example of the individual how buys a Rolex for $50. The purchaser knows it’s not a real Rolex, and likely would not purchase a real Rolex; therefore, there is little to no dilution / tarnishing / loss of sales on Rolex.

Respectfully, I must disagree with this reader. The reader’s argument does not consider the impact of global counterfeiting on everyday lower cost products. For example, recently over 11,000 counterfeit auto parts were seized; additionally, counterfeit music CDs and Movie DVDs are a regular occurrence, worldwide.

We need not be talking about the difference between a Rolex and a fake Rolex, where both parties know the product is fake and there is minimal dilution of the brand, for there to be a significant impact on financial livelihood of the legitimate company. What about the consumer who simply wants to fix their car, or purchase an album or movie. With internet commerce frequently used for the sale and purchase of goods, consumers rely on brand names and the confidence instilled by those brand names. Counterfeit products do indeed affect the legitimate trademark holders’ bottom line in terms of lost sales and loss of reputation.

Companies spend substantial funds on quality control so that they will have an excellent product and thereby an excellent reputation. It would be short sighted to ignore a company's most valuable asset, their name and reputation.

I don’t deny that there is a certain logic to the reader’s argument, however, it simply does not track with the facts of an increase of US trademark filings, more proactive enforcement of trademarks and copyrights by their owners and increases in revenue in companies who implement comprehensive trademark strategies. The reason for this is that companies want to set themselves apart in a more competitive market.

In recent years the numbers for US trademark filings currently stand at:

Ultimately, protecting a company's trademark is not simply an additional cost of fortifying its products but rather protecting against losses of revenue and reputation.

For more information or to register your trademark today please contact us directly.