Most franchises that have physical stores (think restaurants, book stores, juice bars, computer stores, etc.) have a store layout that is unique to them – one that stands out, attracts attention from passersby, creates a good ambience and is distinctive to the franchise owner.
As the customers and public become more exposed to and familiar with the layout of the store, the layout acquires goodwill and reputation. Akin to how a trademark acquires goodwill and reputation after being in the marketplace for some time.
Naturally, having spent time, effort and heavy investment on creating the distinctive layout and thereafter building goodwill and reputation on the layout, the franchise owners would turn to ways in which they can protect the layout of their retail store from copycats who will use a different trademark but the same layout to attract customers.
With franchisors taking the proactive step to identifying rights they can protect in their business and obtaining protection, franchisees will feel more confident taking up franchises from the franchisor and continuing with their current franchise businesses. This (at the risk of being an understatement) is pertinent to running a successful franchise in any country.
There are a number of ways in which the layout of a store can be protected. The common way in the past has been through industrial design rights. Take for instance the layout of a KFC store shown below. Kentucky Fried Chicken International Holdings, Inc. registered the design in 2008 at the European Union’s Design Office.
Bearing the EU Reg. No. 000896618-0002, the protection for this layout design expires in 2018. A registered design in the EU is initially valid for five years from the date of filing and can be renewed in blocks of five years up to a maximum of 25 years.
Malaysia adopts the same duration for design protection as the EU.
Apart from design rights, franchise owners can also turn to trademark rights for the designs. Many companies have started protecting their layouts with this intellectual property(IP) right. The advantage of trademark rights over design rights is that the rights can be renewed every ten years, without a limit on the number of renewals that can be done by the IP owner. Thus, trademark rights are more desirable than design rights because the rights can be held on to, in theory, forever.
Apple Inc. pursued this path with a successful registration of their store layout in the US in 2008. The description filed with the Trademark Office (USPTO) included “a clear glass storefront surrounded by a paneled façade consisting of large, rectangular horizontal panels over top of the glass front, and…..” and, within the store, an “oblong table with stools…set below video screens flush mounted on the back wall.”
The approval from USPTO became hot news back in 2010 and once again, Apple Inc. is back in the limelight for its recent success in Europe as well. When the German Trademark Office refused registration for Apple’s three-dimensional trademark application on the grounds that the trademark would not be recognized as a trademark by the public and instead the depiction of the space needed in the layout is an essential aspect of Apple’s business, Apple appealed up till the Court of Justice of the EU (CJEU).
The CJEU, in a decision delivered in July this year, concluded that “the representation of the layout of a retail store, by a design alone, without indicating the size or the proportions, may be registered as a trade mark for services”. It was found that Apple’s store layout is protectable as a trademark as it departs from the norm of the service sector it is in.
Decisions such as these in the US and EU are encouraging as layout of a store is sometimes the first thing that is seen by the customer and you want to have that unique selling point protected. Franchise owners should therefore take a look at their layouts and see whether there is anything that makes their layout different from what is out there in their industry.
Other businesses that have taken measures to protect their store, station or retail layout are as depicted below:
If the layout departs from the norm, franchise owners should immediately seek advice from an experienced IP consultant to get the most strategic advice that will give them the competitive edge.
On the local front, as three-dimensional designs are not accepted for trademark registration yet, industrial design protection should be sought first (if possible) and when amendments to our Trademarks Act are in place, allowing for 3D trademarks, the layouts should be protected by trademark rights… as nothing beats having the mark for life (and more)!