updated on 04 November 2014
QuestionCan a retailer's unique store layout be protected from copycats?
Despite the rise of online shopping, there has been a noticeable trend in recent years of consumers coming back to the high street. As a result, many retailers are investing a lot of money in large flagship stores. These flagship stores often create a unique retail experience using cutting-edge retail technology. Many flagship stores are instantly recognisable to the consumer without the company name or brand anywhere in sight.
This is, of course, a picture of one of Apple's iStores. Apple's unique store design has become recognisable around the world.
If another retailer opened on the high street with a store that looked exactly like this, a consumer might be confused into thinking that the store was Apple's or at the very least was linked to Apple. This could damage Apple's brand if, for example, poor-quality products were sold in this 'copycat' store.
In 2010, to protect itself against this risk, Apple began the process of trying to protect this store design from copycats.
Broadly, a trademark is a sign used by a trader to differentiate its goods or services from those of other traders. A trademark is a valuable asset. It communicates basic information about a product or service, and reassures consumers of its origin and quality. Business trading names, product names, logos and even shapes, sounds and colours can all be trademarks. There is nothing that expressly precludes a store layout being registered.
In the United Kingdom, a trademark can be protected with a trademark registration or at common law by means of a passing-off action. To establish passing-off a company will need to show goodwill or reputation attached to its brand or product, and unauthorised use amounting to misrepresentation which causes damage. Enforcing rights under a passing-off action is often an expensive, time-consuming and complex process compared to enforcing rights under a registered trademark. It is therefore preferable to protect your brand with registered trademarks.
Registered trademarks in the United Kingdom are governed by the Trade Marks Act 1994 (the TMA), but EU laws also play a significant role in trademark law in the United Kingdom. The TMA implemented the Directive 2008/95/EC (the Directive), so when considering trademark law in the United Kingdom, it is important to consider the wording of both the TMA and the relevant Directive, as well as case law from the courts of England and Wales and from the European Court of Justice (the ECJ).
Under the TMA a trademark is "any sign capable of being represented graphically" and which is "capable of distinguishing goods or services of one undertaking from those of other undertakings". This wording almost exactly mirrors that of the Directive. It means that any sign that is "capable" of being represented graphically and is distinctive is, in principle, registrable both in the United Kingdom and in any other EU member state. This is subject to a number of absolute grounds for refusal (contained in the Directive and the TMA).
Even if a sign is not inherently registrable under the Directive, there is a proviso if a sign has acquired distinctiveness through extensive use. This is quite a high hurdle that can be difficult to prove. As a result, it is preferable to register a mark under the Directive if at all possible.
So to register a three-dimensional store design as a trademark it must be a sign (i) capable of being represented graphically; (ii) capable of distinguishing goods or services of one undertaking from those of other undertakings; and (iii) not fall into one of the exceptions.
On 10 November 2010 Apple successfully obtained a registered three-dimensional trademark in the United States for this representation of its flagship stores:
However, there is no harmonised international law of trademark registration and Apple is an international brand. To protect its flagship store design internationally, Apple had to apply separately around the world, including in Germany. The German trademark registry initially refused the application. This was on the basis that consumers would not see the store design as an indication of the origin of the goods sold in Apple's stores and, in any case, it was not sufficiently distinguishable from the stores of other electronics providers.
Apple appealed to the German Appeal Court, which in turn concluded that it needed the ECJ to help interpret the Directive. It asked three questions, summarised below:
The ECJ stated that it was "absolutely plain" that designs are among the categories of signs capable of graphic representation. So a representation which depicted the layout of a retail store (by means of an integral collection of lines, curves and shapes) could constitute a trademark. To do so it must also be capable of distinguishing the products or services of one undertaking from those of another. It was therefore irrelevant that the design contains no indication as to the size and proportions of the store or to examine whether such design needs to be treated in the same way as packaging.
Without deciding if the Apple store design did in fact function as a trademark, the ECJ found that it cannot be ruled out that such a sign might be capable of doing so. For example, the court said that this would be the case where the layout departed significantly from the norm or customs of the economic sector concerned.
Finally the ECJ also ruled that this sign could legitimately be registered not just for retail services relating to the goods themselves (ie, sales of computer equipment), but also for ancillary services, for example, carrying out product demonstrations.
It is now for the national court in Germany to decide, having heard from the ECJ that the layout as depicted was at least "capable" of being distinctive.
Ultimately, we now wait to see how the courts in Germany will interpret the guidance from the ECJ. In light of the positive approach taken by the ECJ, it seems likely that the court will grant Apple trademark protection for its store layout in Germany. However, whether or not national registries around the European Union will grant many applications of this kind is, at this stage, unclear. Ultimately, unless a retailer can show that its store design significantly departs from the norm in its sector, it may be difficult to show that its design is sufficiently distinctive to be capable of registration as a trademark.
The question of acquired distinctiveness was not considered in the Apple case, so it is possible that if the German courts reject the application, Apple could attempt to register its store design on the basis that it has acquired distinctiveness.
This decision is unlikely to open the floodgates, but we may see a trickle of familiar store designs becoming subject to trademark protection. Perhaps the most obvious examples will be stores that already operate under a franchise model. These stores have already attached value to their layout and so it seems likely that they will be distinctive enough to qualify for registration.
Jennifer Dingley is a trainee solicitor at Taylor Wessing.