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A Fake IKEA Store?

Wait, this isn’t IKEA?

While it’s not unusual to go shopping in China and find things like fake DVDs (for pennies on the dollar), now you can go shopping there and find yourself in an entirely fake store. Chinese companies are now copying global giant brands’ (Nike, Ikea, Apple, etc.) overall retail experience. A recent article described how a store known as 11 Furniture has copied IKEA’s entire store layout and décor, with the same exact color scheme, mock room set ups, cafeteria style restaurant, and similar details.

This is especially troublesome for a company like IKEA because the store set up and retail experience is such an integral part of their brand that knockoff stores might effect IKEA’s overall brand image. And although IKEA might not be able to do much to stop 11 Furniture in China, due to that country’s lax enforcement of intellectual property law, such a copycat store would create a whole host of legal issues here in the U.S.

Legally, IKEA’s retail concept is considered “trade dress” – essentially the overall image and appearance of a business. Like trademarks, trade dress is protected by the federal Lanham Act. The U.S. Supreme Court laid out the legal requirements for trade dress protection in Two Pesos v. Taco Cabana, in which two Mexican-themed restaurants fought over whether South-of-the-Border taco shop decor was entitled to legal protection. In that case, the Court held that Taco Cabana’s “festive eating atmosphere, having interior dining and patio areas decorated with artifacts, bright colors, paintings and murals,” could be protected under the Lanham Act.

To qualify for trade dress protection, the claimant has to satisfy several legal elements. In some cases, these can be difficult to prove. For example, one element requires that the trade dress must be non-functional, meaning that competitors do not need to use elements of the trade dress in order to compete effectively in the marketplace. However, what appears to be merely ornamental branding to one party (and therefore, eligible for trade dress protection) will often seem functional to the other – funny how that works out. Courts also consider a variety of factors such as the strength of the trade dress, the degree of similarity between the stores, and whether there has been actual consumer confusion.

Ultimately, if a company establishes these elements in a trade dress dispute against a counterfeiter, they will be entitled to damages under the Lanham Act. These consequences may include an injunction (whereby a court requires the counterfeiter to stop “copying”), damages in form of the defendant’s profits or the plaintiff’s actual damages, and/or attorney fees.

In summary, the bar to prove trade dress infringement is fairly high, but a successful claimant can extract severe penalties from a defendant. The moral of the story: come up with your own trade dress, and be careful not to copy the look and feel of your competitors.

So could a store like 11 Furniture get away with this in the U.S.?

With respect to a store copying IKEA’s overall retain impression, probably not. The Two Pesos case  set the standard on store décor, making it highly improbable that a phony IKEA store could operate without legal consequences in the U.S. However, absent Chinese IP law reform, the store piracy trend will likely continue in that country.

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