Apple has scored a victory in the highest court in the EU to register the layout of its stores as a trade mark. So what does this mean for franchisors that have a distinctive layout for their premises?
Background to the Apple case
Apple had already obtained a trade mark registration in the US of a 3D mark consisting of the layout of its flagship stores as shown below:
Apple sought to extend the US trade mark internationally and that extension was accepted in some jurisdictions but refused in others, including in Germany, where it was refused on the ground that the store layout space was nothing other than the representation of an essential aspect of Apple's business, i.e. the sale of its products. The German Registry considered that while consumers might view the layout of such a retail space as an indication of the quality and price bracket of the products sold, they would not see it as an indication of their commercial origin (which is an essential element of a trade mark registration). It also considered that the layout of the Apple store was not sufficiently distinguishable from the stores of other providers of electronic products. Apple appealed to the Federal Patent Court of Germany which referred certain questions to the Court of Justice of the European Union (CJEU).
Summary of the CJEU's decision
The CJEU ruled in Apple's favour and held:
- A design of the layout of a retail store can be registered as a trade mark provided that the design is capable of distinguishing the services of the trade mark applicant from those of other businesses and that the mark meets the other requirements for registration.
- A design of a retail store is capable of distinguishing the products or services of one business from those of other businesses in circumstances where the design and layout departs significantly from the norm or customs of the business sector concerned.
- Provided the conditions above were satisfied, the CJEU found that a design and layout of flagship stores of a goods manufacturer could be registered not only in respect of the goods themselves but also for services, even where those services do not form an integral part of the offer for sale of those goods. The example of services given in the Apple case included the carrying out of in-store demonstrations of the products on display.
Why this is relevant to franchisors
The CJEU's ruling will be welcomed by franchisors which operate commercial establishments with distinctive layouts which are not solely functional, and is therefore likely to be of particular significance for those in the retail and food and beverage sectors.
The possibility of trade mark protection for distinctive layouts of commercial establishments offers an additional level of protection where franchisors might previously have been forced to rely on the complicated law of passing off to take action against a former franchisee who may have de-branded but continues to trade in a copycat establishment, or on trade mark registrations for just certain aspects of the appearance of a commercial establishment, such as a particular colour when applied to specific surfaces.
This decision has been made by the highest court in the EU and will therefore apply across the EU. However, it is likely to be interpreted differently by the various trade mark registries and courts and it will be necessary for the layout of the premises to be unusual and novel and not purely functional, or to have become distinctive of a particular business over time, in order for it to be capable of registration as a trade mark.
This decision may lead many already well-established retailers and restaurant and bar chains to adopt more standardised interior designs in order to maintain a strong identity in their current layouts (including close monitoring of franchisees' premises) or, like new entrants to the market, to devise new, increasingly innovative layout designs.