Apple has trademrked the layout of its stores. So now, if you want to open a shop with tables in it where people like at IT products I suspect you can't.
Why does this matter? First, because that seems, at the very least to be absurd. How can you trademark where you put a table?
Second, because you can apparently trademark where you put a table you do as a result create an entirely artificial property right that means that Apple can now extract a rent from ownership of that right.
And if you want to know where that leads, listen to this. This is the direction in which capitalism is moving by seeking to control all aspects of our lives, and in the process are seeking to control all we do.
Please do not think we live in a world of benevolent corporations. We most definitely do not.
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I ask this in all seriousness.
If you can’t tell the difference between a patent and a registered trade mark, why should I take any interest in what you have to say on intellectual property law?
For the purposes of my argument it made not one iota of difference
Nor would it for the resulting tax flows that might follow
The argument is completely unaltered by what I accept was an error in this case
Your tone is also noted. You should trade mark it. You could demand a fortune from right wing commentators if you did
With respect, it makes a huge difference. The scope of a registered trade mark and a patent are completely different, and the periods for which they can remain in force are completely different. If challenged, the grounds on which they can be declared invalid are completely different. The two are completely different beasts.
As regards my tone, I think it was reasonable in the circumstances. You’re trying to comment on a specialist area of law but make a basic, fundamental error. There are plenty of rude ways to express that, but I chose one that was merely blunt instead.
I’m actually sympathetic to the argument that Apple should not have been allowed to register this as a trade mark. You’re not helping that argument one bit, though.
I made an error
It made no difference to my argument which is that artificial property rights – and I would argue the named Apple is that – permit tax abuse and rentiers capitalism
So yes they may be different but their impact on offering control – and the opportunity for rents to flow from others or within groups – remains the same
“artificial property rights”
For clarification then, are you opposed to patents and trademarks completely? You don’t think they should exist?
I should be allowed (say) to set up a convenience store and call it ‘Tesco’?
I think there is a case for IP
But not for most IP
And certainly not real names and table layouts
Let’s say (hypothetically) that HMG introduced a change to Corporation Tax – one that was contentious, with some people opposing it and some supporting it. A situation where there are pros and cons, but where there is a valid argument as to whether the pros outweigh the cons and whether the particular form of implementation chosen by HMG is the best one.
I know very little about the detail of tax law. If I weighed in with a blog post that decried this change in Income tax and complained that it would adversely affect low-income families, then I suspect your reaction would be on a par with mine on seeing trademarks and patents being confused.
Apple has emphatically not been granted a “trademark [for] where you put a table”. They have been granted a right which purports to protect a distinctive style of presentation of a retail store, on the basis that people who see that style genuinely believe that they are in an Apple Store. If that is the case, then the grant is quite reasonable as if another trader adopts the same style then there will be confusion. Consumers will be deceived, and they will make purchases in error. This causes real harm; it dilutes the proprietor’s sales, and harms their reputation if (as is often the case) the copy product is not to the same quality.
Here, there are very valid questions over the decision. Do people really make that assumption (i.e. that they are in an Apple Store) based on the surroundings only? Does the representation of the mark (on which their monopoly right is based) really reflect the (allegedly?) distinctive characteristics? Personally, I am very sceptical on both points.
But those are the issues here – not “Oh no, Apple have patented the position of a table…”.
Respectfully, I presume you think people are idiots
I have never known anyone who could look round an Apple store and have any doubt at all where they are
And if Samsung product were on offer I have no doubt at all they would not for a moment think they were in an Apple store
You are arguing an absurd case, and losing it badly precisely because the premise on which you are arguing is so obviously wrong
What you appear to be defending is the massive extension of IP in society (from which my guess is you profit) which imposes enormous costs on society
I am not saying there is no case for IP: there clearly is. But whatever that case is Apple is a sure example of the way it can be and is, in my opinion, abused to secure monopoly profits, create artificial barriers to entry and potentially misallocate profits for tax to offshore locations
Now, shall we deal with the facts?
“I have never known anyone who could look round an Apple store and have any doubt at all where they are”
Isn’t that the whole point of the trademark?
Since Apple products are available through other outlets, one of these other outlets could dress themselves up so anyone looking round would think they were in an Apple store and be fooled into buying older models, generic accessories and so on.
Your statement above undermines everything you’ve said about the issue.
But very oddly, no one else does look like Apple now
Starting with the logo and moving on from there there is not a hint of confusion
So the IP protection is not needed
In which case it has been put in place for other reasons, as I have argued
You simply have no case
So if there are no copycats, you don’t need a trademark?
So (again using them as an example) Tesco don’t need a trademark for their name as there are no copycat Tesco stores? They may as well give the trademark up.
Is that what you are arguing?
It is perfectly obvious what I am arguing
It is perfectly obvious you are wasting my time
“Respectfully, I presume you think people are idiots”
“I have never known anyone who could look round an Apple store and have any doubt at all where they are”
http://www.bbc.co.uk/news/technology-14503724
For starters. This move by Apple to trademark their stores is because not only do their products get copied, sometimes to the point where you can’t tell the difference bar the apple logo being wrong way round, but their stores also get copied. Mostly in the far east, but it is happening in Eastern Europe as well now.
And they already have all the means needed to tackle this abuse
But you still wholly miss the point of my post
“And they already have all the means needed to tackle this abuse”
How exactly? Go hrough a tortuous legal process to try and prove not only infringement (where the basis is not fixed by terms of trademark or patent) and indeed who even got there first, or simply refer to pre-existing patens or trademarks.
You allege that IP is all about rent seeking, tax avoidance and anti-competative behaviour. I very much doubt this, from experience. You also tend to group it all together as one issue, when very materially they are not.
For a start, retailers like Apple who sell their products through independent retailers are forced to use the same pricing on delivered goods between their own internal operations as the pricing they offer external operations. When there is a known price for an object it is used in transfer pricing. The “funnies” in transfer pricing tend to happen when there is no freely available market price for something.
As for IP, you again have to break it down. Trademarks and patents are very different things. From experience, I would argue that those infringing on patents are those being anti-competative – especially in the high tech arena. It is incredibly expensive to develop these products, and it is much cheaper to simply reverse engineer someone else’s work.
Trademarking and copyrighting also offer legal protections. It would be simple enough for someone to set up a identical blog to this (infringing your trademark if you had one), with the same format and copy every one of your posts (copyright infringement).
Would you not feel aggreived if someone started profitting from your labours?
Trademarks are there to protect brand identity – which might have some value on a balance sheet as goodwill, but this is not the same as anti-competative behaviour nor is it a way to generate tax avoidance structures through transfer pricing.
I was discussing IP as an instrument for rentier capitalism.
You have entirely missed the point of my discussion
I used an example of the ring fence of artificial property rights that can be used to shift profits. This was just one.
*sigh*
Try reading my posts. You’ll see that I’ve said
“I’m actually sympathetic to the argument that Apple should not have been allowed to register this as a trade mark”
and
“Here, there are very valid questions over the decision. […] Personally, I am very sceptical on both points.”
So, to sum up today so far, you think patents and trade marks are the same thing, and you think I’m here to support a decision when I’ve said twice that I don’t like it.
“I presume you think people are idiots”
I do start with the assumption that they’re not, in fact, but some of them make it hard for me to maintain that.
Oh, and:
“the massive extension of IP in society (from which my guess is you profit)”
No, it isn’t.
If you were consistent it would help
You weren’t
And if you honestly think I am going to memorise everyone of your comments in the deluge delivered here, you credit yourself with an importance to which I have not subscribed
And your summaries are as blatantly false based on what I have written as anything Tim Worstall might write
Yes, I agree you made noises about supporting me – but bluntly, your arguments offered no shred of conviction in doing so and as such I appropriately shredded them on the basis of the available evidence.
OK, play the man not the ball. Your blog, your choice. Your reputation, also.
Bye.
Respectfully – you played the man from the outset
And don’t like it that you lost doing so
Note – the news article linked to talks about trademark not patents.
Corrected, thanks
There are, however, a couple of discreet logos outside, but no sign saying “Apple”.
This is too boring to be true
They haven’t patented it, they’ve trademarked it. Would you think it legitimate for me to change my name to Murphy Richards and start trying to promote my Fair Tax Mark? Or would it be confusing to people who thought they’d be dealing with your organisation and undermine the campaign you are running?
Error noted
As has been the absurdity of your argument
Much credit to you for passing all of the comments pointing out your error.
What is absurd about pointing out the point of trademarks? Apple has had a lot of trouble in China in particular with having its store formats copied and customers believing they were going to an Apple store but not getting the service that they expected from it. Their store layouts combined with their marks and “Apple Geniuses” are distinctive even to lay eyes.
I do agree with you though that if it had been a patent case it would have been worrying (just as the US penchant for business process patents is) because the protection is much stronger than relying on whether there is a realistic prospect of people being deceived about the identity business they are interacting with.
Oh come on
The logo and the product is enough
Get real. This is almost certainly all about
A) tax abuse
B) ring fencing monopoly profit
C) threatening competition of any sort – no one but samsung argues with a lawyer’s letter from Apple
This is rentiers capitalism and it stinks
Botzarelli = what a monumentally ridiculous argument, effectively equating the manipulation of something as obviously of prime importance as a name with the positioning and orientation of a table.
And why is is that you can’t disclose your full name rather than may or may not be your surname? A trick learned from your fellow trolls, eg Patently and Chris in this thread?
They have trademarked it, not patented it.
As noted already,man error
Article corrected
It does not change one iota of the argument
It’s a trademark Richard, not a patent.
Do you not know the difference?
Yes
I made a mistake – to be candid, working from memory and throwing in the link at the last moment
It does not change the sort one iota
In the interests of fairness, a summary of the EU court decision can be found here;
http://curia.europa.eu/jcms/upload/docs/application/pdf/2014-07/cp140098en.pdf
Judges with far more experience of trademarks than you and I have considered the position and concluded that the store design can be a trademark. It’s not just ‘where you put a table’ but the whole design and layout, which Apple successfully argued would be seen by customers as linked to their brand.
I doubt that Apple will be renting this out to anyone and I doubt that was their intention. Rivals will just have to have their own store design.
Trademarks have been granted for pictures, designs, even colours. It’s not a capitalist conspiracy just businesses that have worked to create a brand, defending that brand.
I am sure Apple will rent this out
It will be a perfect excuse for another rent to flow internally to a tax haven
You clearly miss the point of so much of this
Or do so deliberately
Presumably they would still need to agree an arm’s length price for the use of the trademark with the various tax authorities.
If you are correct that the layout of a store has no value then you have nothing to worry about as the arm’s length price would be zero so no tax advantage would be gained.
If it does have value and a deduction is allowed then everything you have written about the layout of a store having no value will have been wrong.
Do you know anything about arm’s length pricing and IP?
I can only presume not or you could not make such a comment
Show me the database that proves the comparable for the price of IP on a store trademark, please, because I know you can’t – not least because, as all have said, Apple will never rent this out, but that does not prevent a charge being made
Keep going with this line of argument, I suggest. You can only lose it
Richard @14:09: “…I know you canāt ā not least because, as all have said, Apple will never rent this out”
Richard @11:20: “I am sure Apple will rent this out”
Richard, either you are very confused, or the phrase ‘rent this out’ is capable of such divergent meaning as to be an obstacle to understanding. Perhaps a change in terminology here would be appropriate?
In the first context the term related to renting to third parties
In the scone r referred to intra-group renting
Not hard to follow
And at the core of the tax issue
From your exchange with Chris @10:37-11:20-12:32, it appears the two of you were using the term differently, and this formed a significant part of your disagreement.
This type of thing is a constant hazard in internet discussions, threads bogging down as the participants settle on common semantics, or worse, two camps engage in ill-tempered debate only to discover that they have actually agreed all along.
My suspicion is that not only would the time and effort spent adding clarity and precision be more than repaid in not having to post repeated explanations in the comments, the level of acrimony would drop somewhat, and there would be much more productive discussion of the core of the issue.
The clarity was present
So was a lack of willingness to listen and read
And a presumption that I was wrong
Do you object to trade marks in general, or just this one?
Many
And patents too
Most are an opportunity for tax abuse and ring fencing monopoly profits
Thank you for your good work Richard. Please keep it up.
You may find it interesting to know that a large jewellery chain in a country far away, whose main line of business was diamond jewellery, trademarked the word flawless. Their business slogan was “….., the home of flawless(tm) diamonds”
š
“I am sure Apple will rent this out”
I am sure that Apple will not. Any more than the Coca Cola Corporation is likely to rent out their trademark to a rival.
You miss the point of registering a trademark. It is to protect a brand. Apple think their store design is linked to their brand and want to stop people copying it. Rather defeats the object if Apple were to rent out its trademarked store design to (say) Motorola.
Still, you keep an eye on this issue and if you catch Apple renting out their trademarked store design, do please bring it to our attention and I’ll be the first to accept I was wrong. I suspect here, however, that’s a huge ‘if’.
If you know anything about tax and MNCs (which I doubt) you would know that
A) This will be rented within the group
B) profit will be shifted as a result
C) this is one of the biggest issues in international tax
D) what you wrote is pure nonsense as a consqeunce
E) this will be used to suppress competition
And of course we will never know – barring the fact we know this issue is massive
But keep on denying
Once elites denied other abuses to protect the abusers. Now the deny tax avoidance for the same reason.
So let me understand. Someone somewhere within Apple designed their store layout. Which has a value, as part of the global Apple brand. Surely you would want the value created by the section of Apple doing the designing to be taxed in the country that the work was done in? That is to say, if a subsidiary of Apple opens a store in Kuala Lumpur (for example) and uses the (lets say) Apple USA designed store layout, if there wasn’t a charge for the use of that design would that not be shifting taxable value from the US to Malaysia? Which you would most certainly decry, if the Malaysian tax rates were lower than the US ones.
So what are Apple to do? Not trademark their stores and have every Tom Dick and Harriet copy them all over the world, or do so, thereby creating some value, for which they will be castigated for either charging for, or not charging for, depending on the relative tax rates between various countries?
If you know anything about international tax you would know a) attributing IP to a state is nigh on impossible b) if it is possible it is rarely owned where it is created or there would be none in tax havens c) OECD arm’s length pricing handles this exceptionally badly d) unitary taxation resolves this by allocating the profit to where it is earned – and that is usually where the customer is: after all, IP is worthless if no one buys the product e) this area is one of the biggest abuses in international tax so most IP is not taken for the reasons you note
Your example is as poor as your analysis of it in that case
I agree with you (in the original incarnation of this post) that it would have been quite ridiculous for Apple to patent its table layout, as its not an invention, but I am not sure that you can just substitute ‘trademark’ for ‘patent’ without it making one iota of difference to the argument.
Trademarks are marketing tools that enable consumers to identify a brand from its competitors. As a consumer if I buy a new Apple phone from the Apple store I know I am getting their warranty. If I buy a reconditioned one from the shop down the road I get a cheaper deal but no warranty. It is in the interest of consumers (as well as Apple) to be able to tell the difference, and not to be duped by look-alike insignia and stores.
Of course the decision of how much of Apple’s look and style should be protectable is a matter of judgement – but I don’t think it is absurd (as it would be if we were talking about a patent).
I imagine that Apple is doing this not to be able to rent out the Apple look to all-and-sundry but to make it easier to get look-alike stores shut down.
Maya
Please read other comments as well as this
Apple will probably rent this out – to itself, and shift profit, no doubt, as a result
And candidly I do not think there is any chance at all that someone will mistake an Apple store for another – any more than M & S is mistaken for Debenhams etc etc etc
I am sorry< but I think this part of the ring fence of anti-competitive IP put up by Apple to defend monopoly profit, to assist profit shifting and to prevent competitors entering the market As such I think it indefensible Richard
Richard,
The parallel with mistaking M&S for Debenhams does not work: they are different brands, each with their own identity.
I don’t think that what this ruling says is that other companies can’t sell electronics from tables (or even from stylishly minimal tables). What it says is that other companies can’t pass themselves off as Apple stores.
There are clear cases of copycat stores in China and elsewhere (e.g. http://www.businessinsider.com/copycat-apple-stores-emerge-in-china-dont-let-them-fool-you-2011-7).
If Apple had really trademarked the concept of selling electronics from tables, and was going to charge fees from any company using this model, then I would agree with you that the world has gone crazy, and they should not be granted a license to extract rent like that. But I don’t think thats what is going on here.
It seems more like KFC etc…seeking to try to prevent other chicken shops using Colonel Saunders-a-likes on their storefronts – it is not preventing competitors selling fried chicken, but it is trying to protect its brand.
You may think that the whole idea of trademarks and patents is indefensible. but that is a different question.
No this is not like KFC – that’s a logo
And I think Apple should be able to defend a logo – and that is mote than enough to identify the store
Every other argument beyond that just does not stack
And let’s drop the China comparisons – a market where counterfeiting is so common yo be nearly normal
Sorry, but not a single argument presented on this issue has a shred of common sense credibility to it
There is an element of absurdity to this argument if you believe that the only purpose of a trademark is to have an income stream to a tax haven. Intellectual property rights do extend beyond tax believe it or not.
One of the biggest issues in tax is the abuse of intellectual property rights
The only absurdity is that you either do not know that or deny it
“If you know anything about tax and MNCs (which I doubt)”
Have you ever advised a MNC on any tax issues? Probably not too many among your client base. Having worked on transfer pricing when at HMIT and subsequently for two of the ‘big four’ firms of accountants, I’ll treat your puerile insult with the distain it deserves. When you resort to petty insults it’s clear who is winning the debate.
Apple Inc already own enough patents and trademarks as it is. The idea that this matter is driven by tax is absurd.
Answer to your question: yes
Answer to the second point: if you have such knowledge display it
You did not here
Given that you hide behind opacity I have no clue who you are and take you at face value, which showed no evidence at all of your claimed experience. Either that or a remarkably closed mind to the consequences of the issues on which you have claimed to advise. Let’s be kind and assume the latter
As Richard has often pointed out and Citizens for Tax Justice recently affirmed:
“Apple: Apple has booked $111.3 billion offshoreāmore than any other company. It would owe $36.4 billion in U.S. taxes if these profits were not officially held offĆĀshore for tax purposes. A 2013 Senate inĆĀvestigation found that Apple has structured two Irish subsidiaries to be tax residents of neither the U.S.āwhere they are managed and controlledānor Irelandāwhere they are incorporated. This arrangement enĆĀsures that they pay no taxes to any governĆĀment on the lionās share of their offshore profits.”
They also outsourced the production of the I Pad to China to save $4 on each unit thereby depriving the US of jobs, income and more tax. Is this a company with any social responsibility?
“They also outsourced the production of the I Pad to China to save $4 on each unit thereby depriving the US of jobs, income and more tax.”
But at least they didn’t deprive China of jobs, income and tax
I notice 6 dislikes to Simon’s statement of FACT. I think these folk dislike facts because it is not in their interest that people in general know about the abuse carried out by these companies and individuals.
Well, the USA courts agree that it has the qualities of a trade mark.
The ECJ agree that it has the qualities of a trade mark.
But what do they know about IP law? Considerably more than you I suspect Richard.
So the legal system has been captured by corporate interests to support the rentier system. That is exactly what I am arguing.
That and that doing so aids international tax abuse
But you, apparently, deny it all
Strange
As to your knowledge: misapplied for the benefit of society, I am afraid if you want to support a system that permits the abuse the OECD is seeking to tackle
“So the legal system has been captured by corporate interests to support the rentier system”
Oh grow up, Richard.
There is no answer to that
But I wonder why you comment here if that’s your opinion
Would you think it was a reasonable step to take if Apple did intend to move to an arms-length franchise model (I think McDonalds have trade-marked restaurant layout, and the layout is part of the franchise package)? Would you be comfortable with the principle if it were only possible to licence the trademark to a genuine third party?
Or do you feel in general that the monetisation of intangibles is getting a bit silly?
The arm’s length franchise model is itself a bit of a misnomer, but even if adopted to suggest this element could be separately priced would be absurd, it could not be
And yes, whilst I think IP has a role, far too much now exists solely to aid abuse
Thanks for the reply. And I think I tend to agree (though without any specialised knowledge in any relevant area…) The idea of breaking down IP into as granular as possible an allocation of value to its constituent parts is intellectually appealing, but I’m not sure accounting for such granularity really reflects the substance of transactions or contributes to better quality information for users of corporate reporting.
Agreed
It’s an interesting legal decision to be sure – an analogy from another area of retailing may help. I think Tesco was the first company (at least in the UK) to come up with the idea of supermarkets (I could be wrong – Co-op might have got there first). Before that food was mainly sold in smaller scale grocery stores which weren’t self-service. If Tesco had been allowed to trademark the supermarket as a retail format, then would that have meant that (e.g.) Sainsbury’s couldn’t open any supermarkets? And hence a supermarket monopoly for Tesco? This seems really odd. Is it the Apple store layout *including the Apple logo* that’s being trademarked, or if another company wanted to open a store with a similar layout but no Apple logo would they be in breach of Apple’s trademark? I’m not an expert on this area at all so am genuinely interested in the details of this case.
Howard
What you reveal, using plain straightforward common sense, is that this is an anti-competive measure designed to stifle innovation
Richard
Stop being dramatic. How is this an “anti-competitive measure designed to stifle innovation”?
It would hardly be ‘innovative’ if a competitor copied Apple’s store design.
All it means is that a competitor needs to design its own store layout and look. Hardly an insurmountable barrier to trade is it?
Note what Howard Reed has written
I don’t see how it stifles innovation. Its intended to stop others copying Apple’s innovation and therefore might be considered to encourage innovation.
What would be innovative about somebody else using the same store layout as Apple?
By definition nobody innovative would copy Apple’s store layout
But the mere threat of a lawyer ‘s letter from Apple might be enough to stop any other IT company ever trying a store
If you think that innovation, I don’t
I did note what Howard said.
The crucial word in Howard’s post was “if”. “If” Tesco had been allowed to trademark the supermarket format. They wouldn’t have been able to trademark such a broad concept. They might have been able to trademark something distinctive in colour, materials and style but provided Sainsbury opened up their store in a different style (such that you didn’t think “Hey, I’m in Tesco” when you were in fact in Sainsbury’s) then there would be no trademark infringement. The criteria are spelt out quite nicely in the summary judgement.
Quite how stopping someone from copying you stifles innovation, I’m still trying to work out.
p.s. Premier Supermarkets opened the first supermarket.
Let’s talk realpolitik here
Apple can now issue threatening letters if they want and no one will, in practice, argue
And we do know Apple is robust in defence of its IP
But reality does not feature in your world
Disclaimer: I’m not a lawyer, though I did at least bother to read the ECJ’s judgement before posting.
The answer is almost certainly “No, Sainsbury’s would not be prevented from doing so”.
What has been protected is NOT a method of selling goods, or even presenting them. It is a trademark over a “sign” (under a specific legal meaning, rather than meaning a piece of cardboard with some letters and pictures on it) which, in the mind of a reasonable consumer, represents Apple. Practices such as self-service cannot be trademarked (but could, theoretically, be patented if they were sufficiently innovative).
Apple have argued that they have a “distinctive design and layout of a retail store”. I think most people would agree that this is true – as Richard says, everybody (at least in the UK) knows when they are in an Apple store (though the German trademark office had argued to the contrary).
However, it’s important to note that Apple’s claim was “the representation, by a design in colour (in particular, metallic grey and light brown), of its flagship store” for “retail store services featuring computers, computer software, computer peripherals, mobile phones, consumer electronics and related accessories and demonstrations of products relating thereto”.
This is very important – they have not in any way made a claim over “a shop with tables in it where people like at IT products”; they’ve made a claim over the layout in specific colour scheme in relation to specific classes of IT products.
Also, an important distinction is that you can’t trademark something which itself provides the value of a product. A trademark is supposed to be recognisable so the consumer is reminded of the brand; it is the brand that adds the value. In this case, the layout of the store doesn’t itself add value to the product; however, consumers do pay more for Apple products.
If another store opened that looked exactly like Apple’s but without the logo, the question a Court would need to consider would be whether a reasonable consumer could be misled. While the absence of the logo would make it harder to mislead an individual, I would suggest that there’s probably a good chance that Apple would win.
I’m sorry – if the logo was not enough then the rest is mere nonsense
I stand by all my original arguments. Not s single person here as offered a single credible counter-argument
I wasn’t offering a counter-argument. I was responding to a genuine question about how trade mark laws actually work. Whether they should work the way they do is another matter entirely.
Attacking what somebody says as “nonsense” and not credible does you no favours if you haven’t read what they’ve actually said.
But it made no difference to my argument – so if I read it out of the context you offered it in then I apologise
But sorry – I offer an argument and if you pursue another I am entitled to be confused
“Iām not an expert on this area at all so am genuinely interested in the details of this case.”
Howard, the details are here as to what the Trademark applies to;
http://curia.europa.eu/jcms/upload/docs/application/pdf/2014-07/cp140098en.pdf
Thanks Chris. So the trademark does in fact apply to the layout of the store. The implication is that if (e.g.) Microsoft opened a store selling PCs and software that was very similar to Apple but had a big Windows logo instead of the Apple logo at the front then Microsoft would be in breach of trademark. That seems kind of weird to me because it implies that consumers are unable to tell the difference between the Apple logo and the Microsoft logo. But as I say, IP is not my field at all! Thanks for the link anyway.
Howard
You’re a voice for common sense
Richard
“…it implies that consumers are unable to tell the difference between the Apple logo and the Microsoft logo…”
They probably can, but since Apple and Microsoft products are available in many stores, consumers will be used to seeing both logos in many differing locations not necessarily just Microsoft and Apple stores.
Apple seem to think it important that people know when they are in an Apple store not just by seeing an Apple logo but by what Apple consider to be the distinctive surroundings.
I have no expertise in trademark law but the judges who delivered their verdicts do. They saw enough to grant the trademark.
It’s easy enough to denounce every verdict or decision you don’t like by claiming it’s all a conspiracy but that ignores the many cases where trademarks are not granted (not least, if it was all a conspiracy, why did Apple have to appeal against an initial refusal to grant the Trademark?)
We have covered all this many times
Howard
The test generally would be whether a consumer could be confused. If there are microsoft logos everywhere, and it was impossible for a person to enter the store without knowing it wasn’t Apple, a Court would say there’s no confusion.
On the other hand, if I opened a burger joint that was set out exactly like a McDonalds (but without a logo), there’s probably a good argument that I’d get people to come into the store just simply because they think it’s a McDonalds. It’s not a reasonable defense to require every customer to perform due diligence on the shop to check it’s a true McDonalds – they could easily miss the logo and hence there would be sufficient confusion.
You mean you’ve never noticed the Apple logo?
I find that very, very strange
“You mean youāve never noticed the Apple logo? I find that very, very strange”
While trademark laws differ by jurisdiction, I can’t imagine many of them require all consumers to be fooled, or even a majority. It’s not about protecting you and me, it’s also about protecting the IT illiterate. Again, you might not agree with the law, I’m just explaining how it works.
And I reiterate, people ate not that stupid
“I have never known anyone who could look round an Apple store and have any doubt at all where they are”
Doesn’t that support the case that the layout of an Apple store has value? I’m really confused by your line of argument now.
“And candidly I do not think there is any chance at all that someone will mistake an Apple store for another ā any more than M & S is mistaken for Debenhams etc etc etc”
Actually this has happened in China, people have mistaken lookalike Apple stores for the real thing.
The IP is not in China
Next?
But isn’t the point of registering the store layout as a trademark in Europe (having previously been registered in USA) is to deter copycats appearing in Europe in the same way as they did in China?
Moreover, isn’t there judicial oversight in that if a competitor did suddenly start opening stores with a similar design and feel as Apple Stores then it would be up to the courts to arbitrate whether the trademark had been infringed and what remedies, if any, would be appropriate?
As it happens, I was in the Apple Store Covent Garden earlier today (busted Macbook Air) and they are distinctive and different from, say, PC World. Another brand that also has this distinctive feel is Nespresso – if you walk into the one in Regent Street it has a certain design and layout that makes it distinctive and consistent with the brand it wishes to promote.
So you can spot the difference without IP?
Amazing
And you’ve also noticed nothing else looks the same
So what’s the IP for?
Clearly not to defend the store design
I could probably spot the difference because I am reasonably familiar with Apple Stores. The issue is if someone opened up a copycat store somewhere Apple doesn’t currently have a presence (a large town rather than a city for instance) then local consumers, many of whom may not have had the opportunity to visit a genuine Apple Store, could be duped into believing it is the “real thing” and pay premium prices for a substandard product – precisely what happened in China.
I’m not a marketing expert, but I know enough that nowadays a brand is more than just a logo and strapline. Having the registered trademark in place makes it easier for Apple to argue before a court that the copycat is attempting to pass itself off as a genuine Apple store.
Of course, with judicial oversight, it would then be up to the court to decide whether there has been a trademark infringement and, if appropriate, what remedies should be applied.
Bluntly there’s more chance of that than me going to the moon tonight
I really do wonder what planet all you people live on
I’m not 100% sure exactly what part of my response had less chance than your lunar visit, but that aside there appear to be two issues here:
1. Should businesses that have invested in their brand be entitled to protect that brand and its elements from copycats and fraudsters; and
2. Having established intellectual property rights, should a business be able to charge a rent for use of that IP?
With regards to (1), I would imagine that most people would think it reasonable for businesses to be able to protect their brands from counterfeit or those attempting to piggy back on the brand through copycat designs.
(2) isn’t so straightforward, but as I see it, your concern is that Apple will seek to charge itself a fee for use of its trademarks to shift profits from high tax to lower taxed jurisdictions. Perhaps the solution is then for the tax rules to say that you cannot claim a deduction for trademark fees in the sane way you can for copyright and patent royalties, which I believe with one exception have a finite life.
Would that help reconcile the concerns you raise?
As I recall it – the fact that I person might ever be confused was the thing that had less chance than my lunar visit
Let’s be clear, I have no concerns barring those on tax, the rentier economy, monopoly profits, barriers to entry and what I think to be anti-competitive practices
And so far – you included – has meaningfully engaged with the topic of debate. Pedantry has ruled
“IP is worthless if no one buys the product”
Demonstrably false.
Facebook had no revenue stream for years. Tell me its brand was worthless during that time.
I could give a 1000 other examples.
It had ‘purchasers’
The consideration was deferred as a result if the business model, that’s all
“It had āpurchasersā
The consideration was deferred as a result if the business model, thatās all”
Yes, that’s precisely what the definition of goodwill is. It is the excess a purchaser would pay over the net assets of the business. That excess arises as a result of the business model, which is an intangible asset (call it goodwill, brand, IP, whatever…). You were previously seeking to deny (or severely downplay) its existence, now you demonstrate it perfectly.
Ever been to a shop where that is true?
No, I thought not
You really are wasting my time
Keep up the good work Richard. You have really got the supporters of tax abuse rattled. Their thinly didguised concern over the difference between patents and trade marks is merely a smoke screen to hide their support for what all tax abuse helps guarantee – namely third world poverty abroad and austerity at home.
Thanks
Appreciated
And candidly I do not think there is any chance at all that someone will mistake an Apple store for another
This assumes somebody is familiar enough with genuine Apple stores to tell the difference.
Maybe it’s that Apple logo you’ve never noticed
Your shopping life must be pretty interesting but in case it helps, Next don’t sell fish, just in case you didn’t know
Yes, but the copycat stores also have the Apple logo. So to discern the difference, one would need to be familiar with genuine Apple stores. And not everyone is familiar with Apple stores.
Then Apple could sue on the logo
They need nothing more
That means, as I said, there is an ulterior motive for this
I rest my case
The Apple Store in Covent Garden has no logos on display anywhere inside the store except for on the products. They have two logos outside, but the word “Apple” appears nowhere. It would be easy to copy the format.
Just go and read what this whole issue was about again please – or listen
You really have lost the plot
Please don’t revisit until you have found it
“By definition nobody innovative would copy Appleās store layout ”
But if they copied Apple’s store layout they wouldn’t be innovative, would they?
I fail to see what this has got to do with threatening letters from lawyers. They might get a letter if they copied the store layout, but then they wouldn’t be innovative.
“Many
And patents too
Most are an opportunity for tax abuse and ring fencing monopoly profits”
I would be genuinely interested in reading the peer-reviewed study that reached this conclusion, particularly in respect of patents. Can you provide a citation so I can take a look?
Peer review is a mechanism for oppressing non-hegemonic thinking
And this is not an academic journal
So the answer is a) no and b) I would not bother to go to look for it
For all its faults, peer review is one of the best tools we have for separating the credible from the shoddy (or indeed utter drivel). Case in point: it has taken <90 mins for the denizens of He Who Must Not Be Named's blog to repurpose your argument into an attack on the concept of climate change.
That proves nothing at all
Thanks for confirming that your quantitative assertion has has not been shown to be supported by any actual research. I’m now entirely convinced as to its veracity.
“Peer review is a mechanism for oppressing non-hegemonic thinking”
When you publish papers, do you get them peer reviewed?
Not usually
If he publisher wants it, yes
But I do always seek the opinion of those whose judgement I value
“But I do always seek the opinion of those whose judgement I value”
Reading through the way you have responded to many of the posts on this blogs and others, with the general attitude displayed being that you seem to think you are always right I suspect this is simply a way of saying “people who agree with me”.
I’ve read all of the comments submitted on this piece, Richard, and, unfortunately, I will never get that time back at the end of my life. Neither will you. But it may make the time until then a little richer culturally. I admire your persistence, but sometimes I question the sanity of diligently repeating the points you make – after all, those who oppose are only arguing for the sake of their organisations’ slippery ladders.
Perhaps, now it’s late, they’ve all re-entered their spacecraft and submarines and have left the surface of our world, until tomorrow. There’s nearly always a tomorrow for those who serve the beast.
š
I agree, Don’t Call Me Dave, it is clear that Richard Murphy is right, and everyone else (tax professionals, ECJ, the US courts) just doesn’t know what they are talking about, and are wrong.
You really have no clue what my argument is, do you Chris
Go read the blog again
And listen to the Quick Take
Then you will realise how bizarre that comment is
I didn’t suggest for a second that they were wrong, right, or indeterminate. It doesn’t actually matter which if the cultural context of the bizarre situation that one accepts and speak to support tends to place one below the belly button of Cerberus. Think of it in sociological or historical terms – why does this happen now, here, and for/to these people, and not for/to those without the historical attributes which they possess and display?
If companies can have a look and feel, why not a personality and a religion too? Oops, in the USA, they can! Reification of social relations is a pretty common phenomenon around these parts, but why do we have companies or any such entities at all with or without “brands”? That’s the question. Not whether a tax pro has a clue.
Or whether they depart in subs or Fireball XL5.
“Please do not think we live in a world of benevolent corporations. We most definitely do not.”
From the Wired article, it appears that Apple has simply sought to test the law in front of experienced and impartial judges who ruled on the facts presented to them, and applied the law to those facts. Hard to see what Apple has done wrong.
You appear (by your final paragraph) to suggest that something other than this has occurred. But you don’t quite say what you think happened beyond innuendo.
Can you state clearly what you think Apple has done wrong?
Read the blog
Listen to the linked audio blog
Apple is, I suggest, part of the monopolistic rentier economy
I think that whole rentier economy is anti-competitive, destructive to innovation and human well-being, undermines democracy and creates inequality.
After that they’re doing just fine
And yes, I am commenting in an iPad. Just for the record
And this is why they won their case? You have suggested something untoward.
Do you know a lot of responsibility for the design and innovation at Apple comes from a 47 year old Essex lad? Not sure if that is a sign of a monopolist class with vast barriers to entry.
I am not a big Apple user (got an Iphone but that’s all), but they are successful because they have taken a lot of care in supplying things people want to buy. Don’t we want companies that do this to be successful? I sure do.
I do
But the use of excessive IP protection ( I stress, excessive – I have accepted the need for some) blocks innovation
Hi Richard,
I’m a little bit confused. Where is the requirement for there to be a trademark in order to justify arm’s length rentals under TIOPA? The only requirement I can see is that there is an advantageous transaction.
As I’m sure you know, trademark law was merely a statutory extension of passing off law which had evolved in the common law. The law of passing off gives you an in rem right to sue those who are operating in such a way as to create a real risk of confusion, much like TM law.
Given the fact that Apple could therefore shift profits using IP without a trademark by relying on the ‘brand’ which would arguably be roughly the same arm’s length price why do you suggest that they have gone to the effort of actually trademarking. Could it possibly be that there are legal advantages (ie clarity of case, speed of case) rather than tax ones.
Your arguments about the extent of IP law are really in a completely different arena to those of whether deductions should be given/what is an arm’s length price. I certainly agree that it really is impossible to price the 3rd party value of some IP and hence the area is ripe for abuse (and undoubtedly Apple does use these techniques). My only issue is your assertion that Apple have only obtained the TM for tax avoidance motives.
But you say Apple do not need the IP to protect their asset.
In that case there must be another reason to create it.
What then apart from tax, or protecting mnopoluy profits, putting up barriers to entry and suppressing innovation, to all if which I have referred?
No, I’m saying that they don’t need the TM to charge an arm’s length price to get the tax deduction. (I assume when you say IP you mean TM.)
There is thus very little tax reason to create the IP. The reason for registering the trademark is in the word ‘register.’ Think of it like land registration. You still own your house without registration, it was just more of a faff to prove that right.
I would suggest that there are three main questions in the replies in this blog:
1) Should the store layout amount to a trademark under the law? This is a legal question only.
2) Should IP rights generally be as expansive as they are? This is where your points about monopoly profits and rentiers come in.
3) Assuming IP does exist, should tax deductions be available generally?
With respect I think many of the replies above get confused between the three issues (although I accept that 2 and 3 are closely related in that both techniques can give rise to supernormal profits).
But you miss the point
Unregistered IP provides no opportunity for its reallocation to a low tax jurisdiction for tax
Registered IP does because form need not follow substance in that case – and that is often the aim, whether or not here (which us not the issue)
That is why this issue is of massive concern in tax
“Unregistered IP provides no opportunity for its reallocation to a low tax jurisdiction for tax”
Not true at all. “Know-how”, for example, is a class of IP which is explicitly recognised in UK tax law. It’s all been swept into the new intangibles regime now, of course, but it used to be treated as a separate type of asset from patents and so on – it was pretty much defined as useful stuff that you didn’t have a patent for.
People can (and do!) charge for making know-how available in exactly the same way as they can any other IP. As mentioned above, registering IP means they have more documentation available to demonstrate the tax position, but it doesn’t have any impact on the tax position itself.
But you can’t artificially relocate it
And that makes it class to useless
You can relocate the right to use it, which has the same effect – I’ve seen it done. Or at least, I’ve seen cases where documents were drawn up showing that it had been done, and that it was taken into account in setting transfer prices. I wasn’t involved in the transfer pricing discussions themselves, though, so I don’t know what the final outcome was.
In other words, you have no clue really?
In reply to Andrew Jackson, yes you are right, ‘Know How’ can be unregistered IP is accepted as an asset by HMRC and can be relocated across borders. I’ve been involved in such situations.
If unregistered IP was ‘close to useless’ as Richard claims, you have to wonder why they wrote lots of tax rules to govern ‘know how’. You will find them in Part 7 CAA 2001 and Part 2 chapter 14 ITTOIA 2005.
I’m not surprised Richard wasn’t aware of it as it is quite technical. I’m not at all surprised Richard refuses to accept the existence of something that exists where it refutes one of his arguments.
So, Richard, you really ought to apologise to Andrew. The person shown to have ‘no clue’ about ‘know how’ is you.
Unregistered know how does of course exist
But, critically, it has to be allocated to the place where it might have arisen, with which I have little problem even if technically it creates significant ALP issues that suggest a residual or profit split approach best (not least because there is not much of a market in unregistered know how)
So we get back to why register IP, and the answer is that it can be allocated to places where it does not arise
You just keep helping me make my point
No, Richard: as I said, although you might not be able to shift the know-hw itself, you can allocate the right to use the know-how to a particular jurisdiction, and you don’t need to register it to allow this to happen. In fact you can’t register it, it’s not that sort of IP.
The only advantage registered IP has over unregistered is that it gives you another bit of paper to wave at HMRC’s TP team in support of your position – but not one they are very impressed by.
Andrew
Did you read what I said?
The only point I am making is that relating to ownership
Why not stick to the issue and not create diversions that just waste time? You’re not on an hourly rate here
Richard
Your position: “So we get back to why register IP, and the answer is that it can be allocated to places where it does not arise”
My position: “you can allocate the right to use the know-how to a particular jurisdiction, and you donāt need to register it to allow this to happen”
What is the practical difference between relocating an intangible, and relocating the right to use it? None whatsoever – not in commercial practice, and not from a tax perspective. And neither of those depends on the intangible being registered in any way.
Tax havens
In two words that you completely ignore and which are at the heart of the international tax crisis
Now, tell me why you ignore them?
“Unregistered know how does of course exist
But, critically, it has to be allocated to the place where it might have arisen”
What on earth are you on about?
You can SELL know how (That is why we have S462 CAA 2001 which specifically deals with the tax consequences of disposing of know how!!).
The new owner could then enter into license agreements based on allowing that that know how to be used so you can certainly sell know how to a company in an overseas country which could then receive an income stream for the licensing of the use of that know how.
You are talking complete nonsense. You’re like someone in the middle of a field of cows insisting you are surrounded by horses.
I am discussing intra-group issues
I have a very strong feeling you have never once understood what this discussion has been about – but the incomprehension is all yours. After all, I set the terms for the debate
I suggest you disengage now. You’re wasting your time and mine
I don’t at all ignore tax havens. I disagree with you about aspects of them, and about the best solutions to the problems they pose, but that doesn’t mean I ignore them.
But you’re digressing: abusing tax havens doesn’t rely on registering your IP either.
Respectfully, that was the issue we were discussing
You introduced irrelevance
I don’t want to have to read all the posts on here. In China the people copy designs so easily. An example of this is the BMW X5. The Chinese made a copy of the outside and put their badge on it. Top Gear made fun of this, but it doesn’t help BMW. I see the need for all companies to make sure they are covered as many ways as possible. It wouldn’t have been covered by the BMW badge because it wasn’t one, it just looked the same in every way possible.
By not reading the posts you have, like mist here, entirely missed the point if the discussion and so make your contribution irrelevant to it
You don’t seem to understand the issues in the world. A very narrow minded person.
Thanks
“What then apart from tax, or protecting mnopoluy profits, putting up barriers to entry and suppressing innovation, to all if which I have referred?”
I fail to see how trademarking the design of a store puts up barriers to entry. Or suppresses innovation. There are a trillion and one ways to design a store, the fact that Apple uses one of those ways hardly stops Joe Bloggs from setting up his own mobile/computer business. That is not to deny the existence of barriers to entry, clearly there are massive barriers to entry in Apple’s business – but the way they set out their stores is not one of them (unless you subscribe value to you it, which you don’t). Likewise suppressing innovation – the idea that trademarking the layout of a store prevents poor old Joe Bloggs down the road from setting up is ludicruous.
Heavens, if Apple has been responsible for “suppressing innovation” then let’s have all producers of every single good in the economy being a monopolist. It’s hard to think of a more innovative, revolutionary consumer product in the last 10 years than the smartphone and similar devices – and it’s come about as a result of a monopoly. The onus is on you to show how these products would have been improved or improved faster (by a significant time period) in the absence of a monopoly. For the benefits they provide, these products really are dirt cheap.
I don’t doubt there are many examples of where monopolies are or have been very bad for the consumer. But in picking the likes of Apple and Microsoft you have probably picked the worst ones.
A will have to differ
“Not usually
If he publisher wants it, yes
But I do always seek the opinion of those whose judgement I value”
In other words, the opinion of those who agree with you.
If you honestly think I only value the opinion of this who agree with me you are seriously mistaken
There are many who I don’t agree with who I listen to, with respect, and whose company I also enjoy.
John Whiting is one. We don’t agree. I do not think he should be on HMRC’s board. But he’s also a man I like and can get on with.
Will Morris at the CBI is another for whom I have a warm regard.
And Heather Self could join those ranks I think.
Disagreement is no impediment to respect.
“But the use of excessive IP protection ( I stress, excessive ā I have accepted the need for some) blocks innovation”
This may be in true in some cases, but you’ve chosen the oddest example to make your case.
From what I can see Apple has probably been the most innovative company on the planet in the past 20 years. Can you name me a more innovative company? Maybe it is so innovative precisely because it has the protection that IP law affords? They know someone can’t nick their ideas.
Perhaps you can answer this: how would we better off (both monetarily and non-monetarily) if Apple hadn’t had the IP protection it has? What does your Apple lack at this moment in time that would make your life significantly better? And would prices really be all that lower? These smartphones are dirt cheap if you think about it.
There are far, far better examples to use, I’m just surprised you’ve gone for this one.
Apple is the perfect example
It innovated enormously, of course, but now it only delivers marginal changes for incremental marketing gain
So now it is protecting its rentier wealth, secured by IP ring fences of increasing height of which this is just another
And you wonder why we have a stagnating economy?
Of course IP has value and I am not arguing for its total abolition. But when Apple expends vast effort on IP wars you know this is not the company it once was
“Unregistered IP provides no opportunity for its reallocation to a low tax jurisdiction for tax”
Par contre, mon brave. You can certainly quite easliy park the copyright to your Magnum Opus in Ireland or the Netherlands.
“a) attributing IP to a state is nigh on impossible”
Exactly what do you mean by that statement? Registered IP is by definition territorial in nature (to a country or a group of countries in the case of marks and designs), and by a simple reason attributable to either its country of registration, or the country in which it is owned.
“You mean youāve never noticed the Apple logo?”
Which a reseller, whether authorised or not, has a fair-use right to correctly advertise the fact that he or she is selling Apple products, and to accurately describe the goods being sold (see e.g. First Sale doctrine in US law). A bit of clever store design and careful, fair use of the logo and I’m sure you could pass yourself off as an Apple store to the average consumer. Hence this trademark.
In any case, if Apple wants to pay IP transfer pricing games, they have buckets of the stuff to play with already, and don’t need more. This trademark genuinely seems an attempt at a purely defensive use. There really isn’t tax evasion going on under every IP stone – from experience, I reckon that the overwhelming majority is entirely defensive in nature (whether patent, design or trademark – in the case of patents it’s often essentially R&D investment insurance), followed by patents generated to licence or as capital/collateral, followed way behind by tax avoidance/evasion, money laundering (yes, you can but it’s very very naughty and very very illegal), and finally crazy people trying to patent the gift of god’s love (seriously).
I can only assign my copyright to Ireland by a) recognising it as IP – and copyright is defined by law, as I presume tyou know, meaning that, in practice I make claim to a registration (explicitly in the published work) and b) by selling that idenitfiable work to which claim can be made to an entity in those places.
Hence wholly proving my point and completely demolishing yours
The rest is just boring repitition of nonsense said many times here. Try using the Aplle logo without permission, I suggest, and see what happens
I admire your innovative understanding of the word “registration”.
Before what governmental authority is the copyright “registration” effected? What forms do I need, and what is the fee? I’m not sure the UKIPO has the same understanding of what a “registration” is as you do.
The presence or absense of a copyright notice has no legal effect – the copyright is inherent and exists anyway, and a notice is good practice to state intent that you will enforce your rights and to establish a date of first copyright for proving the date of creation in case of a conflict.
The presence does have legal effect
It says, for example, what rights the author is willing to grant and refers to the Act which may prevent the abuse.
I agree it not a ‘registration’ per se – but that was clear in what I said
So as ever, you’re being a pedant – as well as straightforwardly wrong