Service marks as indicators for innovation in ... - Oxford Academic

Research Evaluation, 18(4), October 2009, pages 323–335 DOI: 10.3152/095820209X451023; http://www.ingentaconnect.com/content/beech/rev

Service marks as indicators for innovation in knowledge-based services Ulrich Schmoch and Stephan Gauch

It has long been a tradition in the field of innovation research to use quantitative indicators to measure the extent of innovation activities and analyze them in from a comparative cross-national perspective. For instance, using patents is an established way of assessing innovation output in the realm of technologies and products. With the growing relevance of services as an important economic activity, the need for specific indicators that can be used to measure innovation output in this context is growing. In this paper we discuss the possibilities and limits of using service marks as basic innovation indicators for services. As most macroanalyses on the basis of marks are not harnessing their full potential, improved methods for more detailed approaches are presented. In detail, the use of community trademarks proves to be insufficient for valid statistical analyses; international registrations combined with community trademarks should be used instead. Some examples are given to illustrate the potential of this approach on a lower level of aggregation.

T

erms such as the information/knowledge society or information economy, even though sometimes used in an inflationary manner, imply that knowledge is increasingly becoming the source of economic growth and social welfare. Especially approaches based on the post-industrial paradigm of the information society highlight the relevance of services in the shift from the purely industrial to the post-industrial knowledge economy. One of the main aspects of such approaches suggested by Bell (1973) and a legion of followers is the emergence of the service sector as a pillar of economic growth and employment. The patent system, at least at the European level, does not offer protection of services as innovations. In simple terms, a patent cannot be filed for innovations in services.1 This situation raises questions on how to protect the intellectual property embedded in services using procedures of registering these rights

Stephan Gauch is a researcher at the Chair of Innovation Economics, Faculty of Economics and Management, Berlin University of Technology, VWS 2, Müller-Breslau-Str., D-10623 Berlin, Germany; Email: [email protected]; Tel: +49 (0)30 314 76857; Fax: +49 (0)30-314-76628. Dr Ulrich Schmoch is at the Fraunhofer Institute for Systems Innovation Research, Breslauer Strasse 48, D-76139 Karlsruhe, Germany.

Research Evaluation October 2009

with a legitimate authority. One means of achieving protection is to file a trademark. In contrast to a patent, which usually protects a concept for the solution of a technical problem, or copyrights, which protect the concrete realization of a concept from exact replication, service and trademarks aim to protect labels used for marketing. So mark protection does not require specific technical features or novelty. However, the application of marks is generally linked to the introduction of new products or services into the market place. In contrast to copyrights, which do not have to be centrally registered but are automatically attributed to the originator, trademarks have to be actively registered at national, regional or international organizations.2 The aim of this paper is to elaborate a concept of how trademarks can be used as the quantitative basis to measure innovation in service industries. The paper covers a wide range of methods of how such indicators can be built from the most abstract levels of services down to more refined and granular measurements of information and communication technology (ICT) and other services. Furthermore, methodological problems of these indicators such as the international comparability of service mark indicators are discussed. As an outcome, the paper will present a concept of how marks can be operationalized as innovation indicators for

0958-2029/09/04323-13 US$12.00 © Beech Tree Publishing 2009

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Service marks as indicators

knowledge-intensive services, in particular ICTrelated services. State-of-the-art In contrast to the enormous number of publications and studies analyzing innovation output utilizing patents as quantitative indicators, only a few studies are available using marks as innovation indicators. In 1998, Rogers concluded that there has been almost ‘no research into trademarks or designs as indicators of innovation’ (Rogers, 1998: 17).3 The increasing relevance of the service sector in industrialized countries, along with the availability of databases, has recently led to an increase in the number of studies using trademarks as innovation indicators (see Gatrell and Ceh, 2003; Mendonca et al, 2004; Schmoch, 2002, 2003a,b; Schmoch and Gauch 2004; Gauch 2005; as well as Jensen and Webster, 2004). Mendonca et al (2004) sum up three reasons why marks are of interest for social sciences such as innovation research: 1. The appropriation of economic returns of the product or service the mark is filed for. 2. The cultural aspect of marks as part of globalized culture. 3. Marks as sources of quantitative and qualitative data on socio-economic activities (Mendonca et al, 2004: 1386). In their paper, Mendoca et al (2004) provide a profound analysis of different measures related to marks for different areas at aggregate level. Unfortunately, the analysis does not include keyword approaches to further break down the relatively broad official classification system.4 Their approach, to restrict the demarcation to classes, however pragmatic, is not suited to provide in-depth analysis of knowledgebased services. Moreover, the analysis is limited to either pure product or pure service marks, neglecting the possibility of co-classification of marks in product and service classes. As a further limitation, the analyses are solely based on community trademarks. The argument for restricting the analysis to community trademarks is implicitly based on the assumption that the structure of mark filings is independent of the countries of origin. However, this presumption proves to be problematic. An analysis by Gatrell and Ceh (2003) aims to understand regional disparities in the United States using mark data at a highly aggregated level. It does not account for sectoral differences or different classes of marks and is generally more suited to intra-national analysis, rather than international analysis of innovation dynamics. Thus it is also not suited to achieve a better understanding of service marks as innovation indicators. In general, marks protect the exclusive use of descriptive elements (signs) of products and services,

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that is, words, shapes, colours or even sounds. With reference to indicators of innovation, the relevant functions of trademarks are twofold.5 First, the registration of a mark is a marketing measure to position and introduce new products and services to a market segment. Second, the registration of a mark is at the same time aimed at the protection of this innovation by prohibiting competitors from using the same sign for a product or service in a market segment. Integrating the aspect of appropriation of economic returns put forward by Mendonca et al (2004) and the twofold function of trademarks in the innovation process, we assume that companies mainly use marks for new products or services. This assumption is strengthened by the fact that the registration of a trademark is not free of cost for the applicant, but includes registration and renewal fees as well as the cost incurred for juridical support by lawyers. The decision to register a mark is thereby economic in nature and hence should be rational in reasoning. This is especially relevant as the registration of a mark does not imply that the name, the pictogram or sound has not been used in the past in some other market context. Rather, it is relevant that it has not been used in a specific market segment and that is distinguishable from other similar representations in other markets.6 Still, regarding the cost argument above, it is plausible to assume that companies primarily decide to file a mark for innovations in products and services, as their chance to gather economic returns is higher compared to non-innovative products and services. This view is consistent with Economides (1987), who proposes that the effects of technological innovations are: likely to result in a new trademarked product rather than a publicly announced alteration of the composition of the old trademarked product. (Economides 1987: 8) According to a broad survey of German enterprises, a close correlation between the innovative activity and mark application can be found. All in all, the assumption of service marks as an innovation indicator is supported by empirical evidence (Schmoch, 2003b). Similar results are also found in other studies. Using data on trademarks filed at the UK Patent Office and community trademarks filed at the European Community Office for Harmonization and stock market data, Greenhalgh and Rogers (2007) find that trademarking activity, especially applying community trademarks is positively correlated to R&D activity. These results are especially strong in the service sector and correspond to those by Schmoch (2003b). According to the interpretation of Greenhalgh and Rogers (2007, 2008) trademark activities are a good proxy for unobservable, firm-level characteristics that raise productivity including innovation. Even though marks are therefore suitable for representing innovations from a theoretical and empirical



Even though marks are suitable for representing innovations from a theoretical and empirical point of view, the quantitative analysis of the output of innovation activity has to meet certain practical requirements

point of view, the quantitative analysis of the output of innovation activity has to meet certain practical requirements. A list of criteria was assembled and discussed by Schmoch (2003b). The criteria include: 1. The relationship between trademark filings and innovation in terms of correlation between both; 2. A certain number of registrations, to achieve statistical relevance; and 3. Variation across countries in the number of registrations to allow for cross-country analysis. Furthermore, to allow for sectoral analysis in terms of competitiveness, the registrations must be: 4. Classifiable into subgroups, for example, product or service fields; finally 5. Databases have to be available to extract relevant information from, including, for example, time of registration, application country or applicant, to name just a few relevant pieces of information. Schmoch (2003b) concludes that all those criteria are met by marks. Methodology and limitations of mark analysis Compared to patent analysis, some potential types of limitations have to be taken into account in the analysis of marks as an indicator for innovation activities. The first type refers to the overall argument from a theoretical perspective that marks are a suitable indicator for innovation activities. The second type of potential limitation is linked to methodological issues regarding the choice of data that can reflect the output of innovative activities and especially the choice of databases and methods. From a theoretical point of view, one might argue that the value of marks lies in the consistency and longevity of the trademark itself, that is, a mark acts as a focus and signal for awareness of customers regarding quality, trustworthiness or reliability, and therefore marks seem to be less likely to signal innovation. But a new mark that deviates from an older, more established one has to be strengthened


by subsequent activities of marketing to achieve the desired effect. Such activities require a substantial amount of resources. These marketing costs should therefore put an additional incentive on filing marks for services that are clearly distinct from already existing services. So in single cases, the application of a mark might not be linked to innovation — according to the mark legislation this is possible — but in general marks refer to new services. Still, there are also other reasons why trademark activity might increase over time. Examples for such potential reasons are: increased uncertainty in established markets; legal and administrative changes relating to the process of trademarking, especially the cost of application; and strategic behaviour of firms in the light of competition (Loundes and Rogers, 2003). The impact of some of the effects that relate to changes in absolute number of mark applications, like changes in the cost-structure of applying for marks, are eliminated by using relative measures instead of using absolute number of marks. The other type of limitations relates to methodological specificities and choice of databases to conduct valid and reliable analyses. In general, descriptive quantitative methods in other fields of S&T research, such as patent analysis and bibliometric analysis, can also be applied to marks to some extent. Still, some special aspects of marks have to be taken into account. These aspects include: • Availability of data in different databases • The specific possibilities to file for trademark protection beyond the national level and the referring restrictions; • Formal aspects of application and registration processes; and • Certain properties of classifications marks. Protection beyond the national level is important for adequate country comparisons. In this context, the possibility of mark protection at the European and international level is of specific interest and will be examined further below. Various databases exist for trademarks. Some of these databases are organized around web-based interfaces accessible via web browsers. Even though these types of databases are valuable for practitioners such as lawyers, they are generally not suited for broad statistical analysis, especially if the aim is to perform long-term analysis including multiple fields and countries. Alternative databases are available as command-line databases that are accessed via a command shell. These databases have the advantage that searches can be conducted via predefined search strategies in the form of batch files extracting the relevant information. Regarding the pooling of trademarks from different offices, it is advisable to use databases for both modes of supra-national mark applications from the same provider. At the moment, the sole provider of suitable database access is Questel Orbit. The databases provided by Questel Orbit are EMMARK,

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as both modes of registration lead to similar results: protection in a number of countries, while at the same time transaction costs are higher for filing a trademark in each of these countries separately. The resulting ‘meta-office’, combining CT- and IRmarks, reflects a realistic picture of the structure of trademark applications of analyzed countries and provides a practical basis for further analyses.10 The advantages of this approach also include certain trade-offs. Since the registration of community trademarks has been possible since 1996 and the Madrid Protocol inhibited certain important Asian and Scandinavian countries as well as the USA and the UK from filing IR-marks at the WIPO, the pooling of IR- and CT-marks results in an overall break in the trend of application numbers. The extent of this trend break is illustrated in Figure 1. Mark registrations prove to reflect the trend of economic activity quite well. The total number of marks distinctly decreases after the end of the so-called new-economy boom in 2000. With the beginning of the following boom in 2003 the mark numbers increase again. Even though there is a general break in the time series due to pooling, there are differences among countries in the way applicants choose one of two ways to file supra-national trademarks. Some countries, such as France or Switzerland, still rely heavily on filings of international registrations at the WIPO (see Figure 2). To make sure that these effects are not due to double filing, we extracted applicant lists for applicants from Switzerland and matched them according to the information found in the applicant field (Schmoch and Gauch, 2004). The results showed that double-counting is negligible and that companies use either CTM or IR as means of protection.11 We therefore conclude that doublecounting is much less of an issue compared to the benefit of increasing data quality significantly.

covering community trademarks, and WOMARK, covering international registrations. Both databases are comparable in scope and quality.7 In practice, protection for marks in a multitude of countries using a centralized registration procedure is achieved in two different ways, either by filing a community trademark at the Office for Harmonization in the Internal Market (OHIM) or by applying for an ‘international registration’ at the World Intellectual Property Office (WIPO) in terms of the Madrid System (Madrid Agreement and Madrid Protocol, MMA and PMMA).8 Both systems provide protection in a broader set of countries. In the case of community trademarks (CTM or CT-marks), protection is automatically provided for all member states of the European Union. In the case of the international registration (IR-mark), a set of designated states has to be chosen by the applicant. Protection of IR-marks is achieved only in these designated states. For the analysis of marks as innovation indicators, this distinction is relevant, as some countries were not members of the MMA (or PMMA) and could thereby not file international registrations at the WIPO. These countries included important industrial nations, such as some Scandinavian states, Great Britain, Japan, the United States of America and Canada, but since 2000 some of them became members of the PMMA, implying inconsistencies in time series from the perspective of statistical analysis.9 Even though it could be argued that this problem could be circumvented by limiting the analysis to community trademarks, Schmoch and Gauch (2004) demonstrated that such a limitation leads to distorted results. For international comparative analysis, they showed that the registrations of both CT-marks and IR-marks have to be pooled by summing up the applications for both, that is, we use CT-marks plus IR-marks as the basis of analysis. This is reasonable 140000

120000

Number

100000

80000

CTM+IR CTM IR

60000

40000

20000

0 90

92

94

96

98

00

02

04

06

08

Year

Figure 1. Number of supra-national trademark applications between 1990 and 2008 for international registrations, community trademarks and the meta-office Source: EMMARK (QUESTEL), WOMARK (QUESTEL), calculations of Fraunhofer ISI & TU Berlin Notes: CTM = community trademarks; IR = international registrations

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Service marks as indicators 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% DE

US

UK

IT

SE

CH CTM

CA

FR

JP

NL

FI

KR

IR

Figure 2. Share of total number of trademark applications differentiated by community trademarks or international registration filings in 2003–2005 for selected countries Source: EMMARK (QUESTEL), WOMARK (QUESTEL), calculations of Fraunhofer ISI & TU Berlin Notes: CTM = community trademarks; IR = international registrations DE = Germany; US = USA; UK = United Kingdom; IT = Italy; SE = Sweden; CH = Switzerland; CA = Canada; FR = France; JP = Japan; NL = The Netherlands; FI = Finland; KR = Korea

Especially in the cases of Switzerland and France, we find significant differences between field-based profiles when using either IR or CT data. For instance, in the fields of chemistry and pharmacy, the propensity of French and Swiss enterprises to file for CT instead of IR is high, whereas French firms prefer IR marks in telecommunications services. In the available commercial mark databases suitable for statistical analysis, two types of classifications are available: the VIENNA classification and the NICE classification. The VIENNA classification can be applied only to marks that have a figurative element, and does not provide the information necessary to differentiate between product or service marks. It is thereby not suited for quantitative analysis of product and service marks. The NICE classification provides such a possibility in principle. The seventh edition of the NICE classification consists of 42 classes in total, of which 34 are classes for products and eight are classes for services. Since the eighth revision of the NICE classification of 2002, the NICE class 42 (other services) is split into the classes 42 to 45, where class 42 describes trademarks for scientific and research services as well as services related to information technology; class 43 relates to services in the hotel and restaurant industry; class 44 to medical services; and class 45 to social, community and personal services. Since the analysis conducted in this work is also aiming at long-term analysis of trends in mark applications, and marks are not classified backwards, it is mandatory to use the seventh version of the NICE classification, sacrificing the additional information provided by the differentiation of service classes of the eighth and ninth editions.


The distribution of trademarks over all product classes is very skewed, as some products are aimed at large consumer markets or specific expert groups. Therefore it is not useful to consider all product classes of the NICE classification in the analysis in the context of technological innovation: only those product classes are used that have a technological reference. In contrast to the International Patent Classification (IPC), which is organized in a hierarchical style including sections, classes and subclasses as well as main groups and subgroups, the NICE classification is a non-hierarchical classification. This is problematic, as the level of disaggregation is in consequence rather low. This problem can be circumvented by using keywords. The proper use of classification and keywords in mark analysis will be discussed later by a concrete example of information technology and related services. It is possible to apply general labels to NICE classes or groups of NICE classes according to the main focus of the content of these classes (see also Schmoch, 2003a). Table 1 gives an overview of those labels and the relevant NICE classes they represent.

The distribution of trademarks over all product classes is very skewed, as some products are aimed at large consumer markets or specific expert groups

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Service marks as indicators Table 1. Definition of technology-oriented trademark fields based on NICE classes

Label

NICE classes

Label

NICE classes

Chemistry

1, 2, 3, 4, 13

Management

35

Pharmacy

5

Finance

36

Metal products 6

Repair

37

Machinery

7, 8

Telecommunications

38

Electronics

9, 14

Transport

39

Medical technology

10

Material treatment

40

Electrical devices

11

Entertainment

41

Vehicles

12

Other services

42 (43, 44, 45)

Examples for detailed mark analysis To fully comprehend the analysis of knowledgebased services using marks as indicators, the results from more general quantitative analyses have to be taken into account. These general results provide an interpretative framework, the proverbial ‘big picture’, to later allow for a holistic interpretation of the analysis of knowledge-based services using mark indicators and to prevent misinterpretation or rash policy recommendations based on the given data. In the following, a broad overview of general results will be presented. As marks can be filed for a multitude of classes and there is no limitation to filing a trademark in both service and product classes, it is possible to analyze the shares of either pure product or pure service trademarks and an overlap generated by trademarks that are filed in product classes as well as in

service classes. Those in the overlap broadly represent the essence of product-related services. Figure 3 shows the trend of these shares between 1996 and 2003 in the case of pooled trademark filings at our constructed meta-office. The shares of pure service marks and mixed marks are highly positively correlated. The most striking fact is the decline of the share of pure service and mixed marks after the end of the neweconomy boom. The absolute number of these types of marks rises again after 2002 and their share relative to pure product marks steadily increases in parallel. For a more detailed description of the characteristics of service marks as innovation indicators, some country comparisons were performed. Country comparisons for patents, publications, production or foreign trade based on absolute numbers are not very meaningful, as they implicitly reflect factors such as country size, geostrategic position and other features. Therefore specialization in dices are used quite often for this purpose. They put a specific field or a sector of a country in relation to world averages. These indices are non-dimensional. In the case of analysis of knowledge-intensive services, the reference of analysis is important for a proper interpretation of the results. In some cases the reference frame of analysis can be defined as the total number of trademarks filed in a specific field; in other cases the reference has to be applied to the sum of pure service marks and mixed product/service marks that have a relation with services. This reference varies with the scope of analysis and has to be taken into account for proper interpretation of the results. We therefore represent the reference used in the analysis in the annotations. The specialization indices are calculated using data from selected countries to point out the specificities of each country portfolio. Specialization

Figure 3. Share of pure product and service marks and mixed product/service trademarks between 1997 and 2008 Source: EMMARK (QUESTEL), WOMARK (QUESTEL), calculations of Fraunhofer ISI & TU Berlin

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indices reflect the relative over- or underspecialization of a given country with reference to all trademark applications worldwide. An extreme over-specialization is represented by a value of +100, and an extreme under-specialization by the value –100. Over-specialization can be the result of either a high activity level of a country in a specific field or very low activity in other countries. Specialization indices can be graphically represented in the form of specialization profiles for countries in the manner of Figure 4. The analysis reveals a high under-specialization of the Asian countries Korea and Japan in pure services. This is partly due to the fact that it is more complicated to export intangible services than physical products. The incentive to apply for a supra-national trademark for services should thereby be lower, resulting in a disproportionately higher

amount of marks filed for products. Similar arguments can be applied to the under-specialization of mark applications for product-related services of Korean or Japanese origin. Another striking case is the high over-specialization of Finland in marks for product-related services. This may be explainable partly by the strong focus of Finland on the field of telecommunications which promotes the amalgamation of products and services. Regarding pure service marks, only the United Kingdom, the Netherlands, Sweden, Switzerland and the United States are positively specialized. Interestingly, the United Kingdom is at the same time underspecialized in pure product marks. Germany, along with Finland and the United Kingdom, is positively specialized in marks for product-accompanying services. Still, the extent of positive specialization of marks for product-related services in the German

Figure 4. Specialization of marks for selected countries into product, service and mixed product/service marks in 2003–2005 Source: EMMARK (QUESTEL), WOMARK (QUESTEL), calculations of Fraunhofer ISI & TU Berlin, reference relative to the total sum of marks Notes: see Figure 2


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Service marks as indicators Table 2. Specialization profiles in pure service marks and mixed product/service marks for selected countries in 2003–2005

DE

US

JP

FR

UK

CH

CA

SE

IT

NL

FI

KR

Pure service marks Management Finance Repair

–8

2

–92

–9

30

–7

8

–6

–13

39

31

–71

–19

4

–91

–19

43

21

–21

–22

5

19

–24

–14

0

–36

–64

1

48

–19

6

14

–31

29

76

–19

–12

–16

–94

51

–7

–23

–8

–21

21

–53

16

–17

Transport

0

–28

–86

8

43

–29

–25

20

–28

41

12

–85

Material treatment

1

–9

–59

14

15

–7

15

29

–32

24

–33

5

Telecommunications

Entertainment

–14

8

–82

6

33

3

–8

–11

–6

–2

21

–41

Other services

–9

1

–77

–6

27

–3

–9

–14

7

12

41

–22

Mixed product service marks Management

–4

–1

–41

–7

12

–3

2

–16

–2

31

–29

19

5

–3

–55

–12

20

1

–23

–22

2

–11

–66

–17

Repair

13

–45

21

2

–14

–10

20

23

15

10

37

–49

Telecommunications

–6

–9

–57

36

–5

–20

–24

6

6

–22

6

6

5

–61

–68

28

–9

11

–41

–11

20

32

–14

–49

Finance

Transport Material treatment

3

–25

14

14

–21

34

31

3

–14

6

14

2

Entertainment

–23

20

38

–2

24

–7

14

–20

–16

–17

5

46

Other services

8

9

–12

–9

–9

3

3

5

–16

–4

3

–20

Source:

EMMARK (QUESTEL), WOMARK (QUESTEL), calculations of Fraunhofer ISI & TU Berlin, reference relative to the total sum of marks

case is not as distinctive as in the cases of the United Kingdom or Finland.12 Mark applications can also be analyzed on a more detailed level using specialization indices for specific fields. Table 2 lists the results for specialization indices for selected countries with regard to different service sectors divided by pure service and mixed product/service marks. The analysis provides valuable information on the orientation. Even though it is not possible to assess all kinds of knowledgebased services using this level of abstraction, it is, nevertheless, possible for some fields, such as ‘business management’, ‘financial services’ and ‘telecommunication services’. Moreover, it is possible to assess the relevance of these fields for either pure services or services in conjunction with products by differentiating between pure service marks and mixed product/service marks. As expected, the fieldbased specialization profiles broadly reflect the close relation of pure service or mixed trademarks already visible in Figure 3, but with a much higher granularity and depth of information. The meaning of theses indices may be illustrated by the example of the United States. At first sight, the strong negative indices in ‘repair’ and ‘transport’ seem to contradict the generally positive specialization of the USA in pure service according to Figure 4. Furthermore, the moderate negative specialization in telecommunications is counter-intuitive. The main reason for this finding is that supra-national marks are closely related to exports. In the case of the USA, the service exports are largely dominated by financial services, and with reference to that the exports of communication services are at a much lower

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level.13 In consequence the specialization index for service exports in communication services proves to be negative as well. Thus the specialization profiles point to relative strengths and weaknesses within the profile, not to absolute ones. In cases of pure service marks for ‘financial services’, the highest positive specialization indices are displayed for the United Kingdom and the Netherlands, accounting for more moderate positive specializations. Interestingly, the United Kingdom shows the highest degree of positive specialization for mixed product/service marks. In the German case, the most evident result is the overall positive specialization of product/service marks with high scores in ‘transport services’, ‘financial services’ and ‘repair’. For pure service marks, only ‘transport services’ and ‘services in material treatment’ are moderately positively specialized. The strong positive specializations in mixed product/service

The strong positive specializations in mixed product/service trademarks are consistent with the findings of the general trademark analysis. These findings are generally consistent with qualitative information of other data on services



trademarks are consistent with the findings of the general trademark analysis. These findings are generally consistent with qualitative information of other data on services, in particular foreign trade data. Compared to these other sources, marks allow for systematic analyses on much lower levels of aggregation. Analysis of knowledge-based services using marks: the case of information technology services The analysis of innovation in knowledge-based services using marks is not limited to agglomerations of NICE classes. Using more advanced techniques of linking keywords and NICE classes, even more granular results can be achieved, allowing for a more comprehensive understanding of knowledge-based services that cannot be clearly identified by using the NICE classification exclusively. The case of information technology (IT) and related services is a good example, as it is one of the most important knowledge-based services. Furthermore, it illustrates how the suggested approach can allow for more detailed analyses. The importance of IT-related services is mostly due to their strong impact on other sectors, as IT services are not limited to software production. Other fields of use are maintenance and administration of servers, computer networks or work stations, consulting for companies regarding choice of hardand software or elaborate IT strategies, crosssectoral services such as IT services for medical instruments, nanotechnology, biotechnology or technologies bridging the shores of product (hardware) and service provision (software).14 In the following, the analysis of innovation in knowledge-based services using marks will exemplarily be conducted as one type of knowledge-based services.15 The challenge to analyze those services is mostly rooted in the internal organization of the NICE classification, which does not allow for decomposition below the level of the 45 classes covering products and services. While some of the product classes can be roughly linked to sectors of activity, this is not the case for some important knowledge-based services. The genuinely IT-based services can be found in class 42, but cannot be distinguished from scientific and technological services. Moreover, a significant portion of IT-related services are also included in class 35, not distinguishable from services relating to management and advertisement.16 Analyses of this field of activity can therefore not be done using the NICE classification on its own. In cases where the NICE classification is not sufficient and does not allow for an appropriate level of detail, we propose a mixed approach using keywords and the NICE classification to identify such marks. In our case we employed the WIPO keyword catalogue that lists goods and services for each NICE class as point of


reference. Again, we use data-pooling IR and CTM as filings at a virtual meta-office.17 Similar to the previous analyses, we start out with specialization profiles differentiated according to pure service marks and mixed product/service marks, limiting our analysis to IT-related marks. The results for the period 2003–2005 show that France and Finland feature the highest positive specialization values (see Figure 5). This is not surprising, as these countries also have a strong focus on ‘telecommunications services’.18 Furthermore, the specialization profiles have the same direction for pure service marks and mixed product/service marks, except in case of the Asian countries that are positively specialized in pure service, but display a negative specialization for mixed product/service marks. In the Asian case; information technology seems to be an exception compared to other pure services; as we have found in our previous analyses that pure service marks of these countries exhibit strongly negative specializations. Another interesting finding relates to the specialization of the United States. Here, we find negative specialization for both pure and mixed mark filings. This effect is also consistent when analyzing the US data separately for CTM and IR filings. It has to be noted that this negative specialization in the case of the USA is a rather recent phenomenon. We find a strong positive specialization in pure IT-related service marks of 30 for the period 1997–1999 and a mildly positive specialization of 1 for the period 2000–2002. In the case of mixed IT-related product/ service marks we find a mildly negative specialization of –4 for the period 1997–1999 and a negative specialization of –16 for the period 2000–2002. The strong negative specialization of the USA for the period 2003–2005 is mostly due to: • The share of IT-related marks relative to the total number of marks has decreased much more strongly compared to European countries; and • The share of IT-related marks from the USA relative to the sum of all IT-related marks for all the countries analyzed has decreased while the share of IT-related marks of some European countries has increased. For example, the share of pure ITrelated service marks from the USA has constantly decreased from 28% in 1997–1999 to 14% in 2003–2005. • At the same time the share of German pure ITrelated service marks has increased from 22% to 26% in these periods. As already discussed above, in the context of telecommunication services, the dominance of financial services in the export of services of the USA is the most relevant fact for these findings, implying relatively moderate shares of IT services and negative specialization indices. As we have noted above, IT becomes increasingly important for other sectors. Therefore we analyzed

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Figure 5. Specialization profile of information-technology-related mark filings differentiated by pure service and mixed product/service marks for selected countries in 2003–2005 Source: EMMARK (QUESTEL), WOMARK (QUESTEL), calculations of Fraunhofer ISI & TU Berlin, reference relative to the sum of pure service marks and mixed P+S marks Notes: see Figure 2

countries according to their specialization in a given field of activity as well as their specialization of ITrelated aspects in this field. In this way we can map countries in a two-dimensional space that comprises four quadrants (see Figure 6). The quadrants are defined according to the extent of specialization in ITrelated aspects in a given field denoted by the X-axis with increasing specialization from left to right and the specialization of the field itself as the Y-axis with increasing specialization from bottom to top. For this purpose, the share of marks in a given field — for instance, vehicles — with co-classification in IT is referred to this share for all marks in vehicles for all countries. The quadrants therefore point to the potential of the IT-related aspects in a field and the potential to increase comparative advantage of a field in either IT-related aspects or in the field itself. The most interesting quadrants in terms of strengthening of the

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position of a country are the second quadrant (strong overall position and weak position in IT in a given field) and the fourth quadrant (strong position in

II III

I IV

Strong overall position in field Weak position of IT in a field

Strong overall position in field Strong position in IT in a field

Weak overall position in field Weak position of IT in a field

Weak overall position in field Strong position of IT in a field

Figure 6. Mapping scheme of overall specialization versus information technology-related specialization in specific fields



IT-related aspects and weak overall position in a given field). In the second quadrant, a country can improve its relative position by investing more R&D in the field as such and improve its independence from other countries in this service area. For the fourth quadrant, an increase in IT-related aspects might also further the development of the sector by increased spill-over from IT in the field of activity. In Figure 7 we mapped four technology fields according to this method. We find good IT-related performance of Germany (DE) in the fields of ‘vehicles’ but a rather mediocre position in the field of ‘electronics’. This also corresponds to the positive specialization of Germany in the field of vehicles and a less prominent role in the field of electronics. The strong position of the USA in electronics corresponds to a strong one in IT in electronics, as has Japan and the United Kingdom and Canada. We find that there is much more variance in the field of ‘vehicles’ compared to ‘electronics’ which points to a generally close coupling of ITrelated service aspects with electronics.

The same is true for ‘telecommunications’ where the relationship between IT-related activities and telecommunications is closely correlated. These results also correspond to analyses on the convergence of technologies using patent data by Gauch and Blind (2008) even though, due to its focus on patents, this analysis was limited to technical aspects rather than services. In ‘telecommunications’ we find that France and Finland have strong positions in harvesting the benefits of IT. In the field of ‘entertainment’ we only find a moderately dominant role of the USA, UK, Canada and Finland. It should be noted though that this close coupling between overall position in a field and IT-related position in a field is not a natural fact but is rather due to the selection of fields in this case. Conclusions and discussion In this paper we attempted to critically review the potential of quantitative marks as an indicator for

Figure 7. Mapping of overall specialization versus information technology-related specialization for selected fields and countries Source: EMMARK (QUESTEL), WOMARK (QUESTEL), calculations of Fraunhofer ISI & TU Berlin, reference for vehicles and electronics relative to the sum of pure product marks and mixed P+S marks, reference for telecommunications (services) and entertainment (services) relative to the sum of pure service marks and mixed P+S marks, reference for IT reference for IT specialization of a field (x-axis) are all IT-marks in this field


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Marks prove to be appropriate indicators for the quantitative analysis of innovation activities in services. However, it is important to use an adequate methodology for country comparisons

innovation in the service industries and provide instructive example analyses to show that far more detailed analyses are possible compared to the stateof-the-art in contemporary research in this field. All in all, marks prove to be appropriate indicators for the quantitative analysis of innovation activities in services. However, it is important to use an adequate methodology for country comparisons to avoid misleading distortions of the data. In particular, the exclusive application of CTMs may imply inappropriate biases and have to be complemented by IRs. This problem can be encountered by analysis of applications at a virtual meta-office with more balanced results for country comparisons. On this basis, it is possible to compute comparable application numbers and derived indicators such as specialization indices. In this context, it is important to refer exclusively to marks with reference to technology and services, as the inclusion of simple consumer goods implies inappropriate references. The association of mark registrations to classes allows for a differentiation of the analysis by fields. In particular, a distinction between product and service marks as well as mixed product/service marks is feasible. The mixed product/service marks refer to product-related services that are very difficult to grasp using other types of data. A further disaggregation can be achieved by using keywords in addition to classes, so that specific topics within classes can be defined. The various examples illustrate the broad potential of marks as innovation indicators in services. However, further research is recommended to achieve a deeper understanding of the specific aspects described by mark statistics. For instance, mark data may be correlated with data on turnover, employment or R&D.19 Furthermore, service mark data can be linked to innovation data on the basis of the micro-results of the Community Innovation Survey. Another approach can be to conduct specific surveys on knowledge-based services and marks. In any case, the improvement of the understanding of mark statistics holds enormous potential for innovation analysis as, in the present situation, marks are the sole approach for a statistical description of innovation output in knowledge-based services that are both easily and timely available and have already been tested on the micro-level.

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In this paper we deliberately chose service and manufacturing fields that are closely linked to IT and therefore demonstrate a strong correlation between position in a field and position regarding ITrelated aspects. In other fields this may not be true per se. The further analysis of such fields, not closely linked to IT, as in the case of ‘vehicles’ demonstrated here, could provide even more interesting insights for innovation policy in the light of knowledge-intensive services in relation to products as well as services.

Notes 1.

Some might argue that the debate about patents granted for computer implemented innovations or business models contradicts this fact. Still, a discussion of these issues is beyond the scope of this work. A European study covering the aspects of patents in service industries has been conducted by Blind et al (2004). 2. In the United States it is also possible to register a copyright. In the European Union and Asian countries such a possibility is not given. Copyrights are thereby less suited as quantitative indicators as they are available in databases at international level. 3. It has to be noted that Rogers conceptualizes trademarks and intellectual property rights (IPR) in general as input indicators. In our work IPR and trademarks are treated as output indicators. 4. The so-called NICE classification. 5. Another function of marks is the long-term generation and stabilization of trust of consumers towards companies. The mechanism is thereby based on marketing activities of companies. Our focus, as it is limited to trademarks as innovation indicators, is more towards the registration of marks and not subsequent branding or advertisement activities of companies. For the relevance of marks as mechanisms of trust, refer to Hellmann (2003). Thereby the branding aspect, as subsequent activity to the application, should be differentiated from the innovation aspect of trademarks, which is aimed at the innovation activity before the application of a mark. 6. The trademark ‘Boss’, for example, is used in the textile sector, the production of musical instruments, office requisites and many others. All these marks are owned by different companies. 7. There have been competing databases with similar functions produced by STN International. Unfortunately, these databases have now been discontinued. 8. There are also other means of obtaining protection in certain sets of countries, such as: the Benelux mark, with protection in Belgium, the Netherlands and Luxembourg; the OAPI mark, valid in 15 African countries; and the ARIPO mark, initially providing protection for three and later 14 African countries (see Bugdahl, 1998: 131). For practical reasons the above proposed measures of trademark registration, namely the international registration and the community trademark, are the most suitable for comparative international analysis. 9. The United States, for instance, became a member state in terms of the Madrid Protocol in 2003 but did not become a member of the Madrid Agreement; Japan became member in 2000. 10. The pooling of applications of trademarks and the resulting meta-office yield different but, as discussed above, more realistic results. It should be noted that the analyses of Mendonca et al (2004) are limited to CTM data. It is very much to be expected that by using the pooling method different results can be obtained. 11. The amount of overlap was analyzed for the first quarter of the year 2003 using Suisse application data. For this timeframe, lists of firms where extracted from the owner field. Both lists then were matched using fuzzy-based matching algorithms and the overlap was calculated as the share of firms appearing in both lists. The ratio of overlap is around 0.3% of all filings and can therefore be ignored for pragmatic reasons (Schmoch and Gauch, 2004).


Service marks as indicators 12. It has to be noted that German trademark applications hold a high share of the overall amount of applications at both offices. Thereby the impact on the reference is higher and the specialization indices are less pronounced. 13. Such export data for services are provided by Gehrke et al, (2009) based on data from the OECD. 14. As in the case of embedded technology where software is hardwired in hardware devices. 15. Other studies using similar methods have been conducted for financial services and IT services in Switzerland (Schmoch and Gauch, 2004). 16. We want to demarcate IT-related services from genuine telecommunications services but expect a high amount of coclassification between both fields. This also allows determination of the trend of convergence between those two fields in the service sector for different countries. More general studies relating to technological convergence have been conducted by Gauch and Blind (2008) using co-classification data of patent applications filed at the European Patent Office. 17. Keyword searches could be substituted by using unique identifiers such as the Term IDs that can be searched in the EUROACE database at OHIM or the serial numbers at the WIPO that can be found in the database NIVILO:CLASS. Unfortunately such identifiers are not part of commercial databases. An approach that uses such identifiers would not only be superior to keyword-based methods, but would also allow for building hierarchical classifications on top of NICE in the fashion of the IPC, allowing for even more elaborate analyses. 18. It has to be noted that we did not use NICE class 38 in our analysis which represents marks in ‘telecommunication services’. 19. In the past years, various countries have provided data for R&D in services.

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