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Trademark activity as a leading economic indicator

In 2018, we published a piece discussing the potential correlations between trademark registration volume and firm financial performance. But, what about the macroeconomic use case? One year later, we investigate whether trademark filing volume can provide an aggregate indicator of business cycle shifts.

SETTING THE SCENE

A trademark is a “word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.” Individuals and organisations alike have tried to trademark a whole host of weird things. My personal favourite is Harley Davidson’s bid to trademark the ‘engine revving sound.’

However, trademarks can be useful beyond the realms of brand protection and trivia. Within academia, it has been demonstrated time-and-time again that trademark activity is a reliable predictor of firm financial performance. (For an exploration of several relevant studies, please refer to Deriving alpha from trademark data).

THE THEORY

Whilst most of the extant literature focuses on firm-level applications for capital market investors, a new publication has gone one step further by investigating the merits of trademark activity as a macroeconomic signal.

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