Shopping Malls Are A Service After All

High Court judges, it seems, are no strangers to shopping. In a pivotal judgment last year one confirmed that the provision of an attractive shopping centre is in itself a protectable retail service for the purpose of trade mark registration.

The ruling in Land Securities plc and Ors. v The Registrar of Trade Marks ([2008] EWHC 1744 (Pat) ) takes retail services one step further in gaining recognition and acceptance as a protectable service in their own right. The impact of that judgment is still being weighed, however, as the UK-IPO consults on acceptable wording for shopping mall retail services specifications.  

We’re S-H-O-P-P-I-N-G

Land Securities follows years of rehabilitation for the concept of retail services in UK and EU trade mark law. Until as recently as 2005, trade marks could not be registered for retail services at all in the UK, notwithstanding their inclusion in Class 35 of the International Classification.

In 2005, however, the ECJ cast its critical eye on the matter and held that the services provided by a retail shop were indeed protectable services in their own right. The Court recognised that in a consumer society, the bringing together of goods for easy viewing, selection and purchase in a pleasant environment was a commercial service in its own right, even though customers did not pay for that service directly (Praktiker Bau- und Heimwerkermärkte AG, Case C-418/02). Following Praktiker, both OHIM and the UK-IPO began accepting trade marks for retail services, albeit with differing rules on acceptable specifications.

The individual shop or store is only one model of retail trade, however. Increasingly, shopping malls and centres set the scene for conspicuous consumption, and Land Securities tested whether the services provided by the owners of such centres, rather than merely the shops themselves, could be protected as retail services, too.

More Than A Roof Over Their Heads

The Land Securities case arose out of UK trade mark applications filed by three different shopping centre management companies. Each sought protection in respect of services along the following lines:

“The bringing together, for the benefit of others, of a variety of retail outlets, entertainment, restaurant and other services, enabling customers to conveniently view and purchase goods and services and make use of such facilities in a shopping centre or mall.”

The Registrar refused the applications on the basis that providing the facilities of a shopping centre or mall was not a protectable service under the Trade Marks Act 1994 and that, in any event, the services lacked the requisite clarity. The Registrar was particularly swayed by the absence of any clear remuneration for the provision of the services claimed by the shopping centre management companies.

On appeal to the High Court, the appellants argued that shopping centres provided a valuable service in innumerable ways. Just as individual shops sought to attract customers by making goods available for easy viewing and selection in a pleasant environment, shopping centres too sought to persuade shoppers to make purchases in stores within the centre by providing an attractive location with good transport links, a suitably designed building with appropriate infrastructure, ambience and facilities such as car parks, toilets and crèches, a good range of retail outlets, and other attractive facilities such as restaurants, cinemas, bowling alleys and the like.

The mere fact that customers made purchases in individual shops and did not pay for the management services provided by the shopping centre directly did not render the services any less commercial or protectable. They could hardly be said to be provided gratuitously in any event, as the retailers and other lessees in the premises typically paid for the services through rents and occasionally through a percentage of profits.

Show Me The Money

The judge noted that there was no definition of “services” in the TMA 1994, nor in the EU Trade Marks Harmonisation Directive. However, the relevant definition in the EC Treaty, under which the power to draft the Directive had arisen, defined them as “normally provided for remuneration.”

In Praktiker, the ECJ regarded retail services provided by shops as being “for remuneration” despite customers not paying for them directly, because the services were supplied to promote sales of goods and the costs were ultimately recovered in the retailers’ profit margins. In Land Securities the Registrar argued that this reasoning could not apply because the remuneration to the shopping mall came from the retail lessees, and not from customers buying goods within the centre.

The judge was unpersuaded. In his view, payment was payment, regardless whence and how it came. He declined to read any restrictions on the manner of remuneration into the definition of “services.” In his view, it was clear that the shopping centres derived an income from retail lessees for providing an attractive environment to bring in shoppers, and he held that the provision of those facilities was indeed for remuneration, and therefore a service within the meaning of trade mark law.

The judge noted the evidence that shopping centres themselves engaged in branding and advertising, and sought to attract customers to their particular malls and centres, in preference to other such malls or centres, by generating a positive reputation and goodwill. In doing these things, the judge regarded them as using the mall and centre names in an essentially trade mark manner: namely to distinguish the offerings of one such centre from those of another. 

There was therefore no reason to deny registered trade mark protection in respect of retail services provided by shopping malls and centres, and the judge ruled that these services were registrable.

The Specifications

The specifications claimed by the appellants were similar to wording already accepted by the UK-IPO for other retail services applications, and the Court regarded them as sufficiently clear.

However, the judge accepted there could be some ambiguity “at the fringes” in, for example, the meaning of “and other services.” These were, however, points that could be remedied and on which the appellants should be given an opportunity to amend.

Comment

The Land Securities judgment may matter most right now to a small band of specialised mall management companies, but its importance is only likely to increase.

Centralised, convenient shopping centres are on the rise, and with them the number of companies involved in their planning and management. The competition for customers at malls is as important as the competition for customers in the stores within malls, since one is the sine qua non of the other. Consequently, branding, advertising and trade mark protection for malls is only likely to increase.

One point ancillary in the judgment, but of increasing importance commercially, is the protection of Internet-based shopping mall services. Virtual shopping malls are on the rise, with retailers like Amazon offering a vast range of products from different vendors for the convenience of Internet shoppers. Such websites are becoming increasingly popular and in Land Securities the Court saw no reason why the bringing together of goods and services through a virtual shopping mall should not also be protectable, as “enabling customers to conveniently view and purchase those goods and services by means of telecommunications.”

Following a lengthy consultation, the UK-IPO has recently published a new practice on mall services specifications in order to comply with Land Securities. Initial proposals met with criticism because they required applicants to specify the goods and services provided by all the retail outlets in the shopping centre concerned. The similar practice for retailers poses practical challenges enough, as shops may have a large and changing stock range. For shopping malls, it is arguably even more challenging, since the goods and services available are likely to change over time as stores open or shut, and the shopping centre management company has little influence over stock decisions taken by retailers.

As a result of these criticisms, the UK-IPO has dropped the requirement that malls must specify the nature of the retail outlets they house and the goods and services sold. Instead, they may claim protection for “the bringing together for the benefit of others, of a variety of retail outlets, entertainment, restaurant and [other clearly defined related services], enabling customers to conveniently view and purchase goods and make use of and purchase such services in a shopping centre or mall.”

Virtual malls can use similar wording, namely “the bringing together for the benefit of others, via the Internet, of a variety of retailers and [other clearly defined related services], through a virtual shopping mall, enabling customers to conveniently view and purchase goods and make use of and purchase such services by means of telecommunications.”

This news is to be welcomed. Had the UK-IPO not made these concessions, the devil in the detail of U.K. specifications would have driven more and more shopping mall operators to file CTMs, as OHIM is prepared to accept much broader claims. Whether use for a single shopping mall in the U.K. would sustain a CTM against non-use attack is an open question, but one that brand owners may have been prepared to defer unless the UK-IPO were to offer a more attractive option. Now it seems that it has.

Applicants for mall services must still specify any supporting services that they wish to protect, such as crèches, coat checks, car parking, toilets, etc. This should, however, present no great challenge in most cases, and is a small price to pay for the benefit of local protection for what is effectively a local service.

Virtual malls, of course, are not so local, and CTMs are likely to remain more attractive for these. As virtual shopping increases, OHIM will no doubt remain firmly in the black.