Commercial signs under French law: a practical guide for businesses

A sign is much more than a simple panel above a shop window. It is often the first visual contact between a business and its potential customers, an essential landmark in the urban or commercial landscape. It plays an active part in the identity and reputation of a business, a craftsman or even a liberal profession. However, behind this apparent simplicity lies a set of legal rules that need to be mastered. Not to be confused with the trade name, which identifies the business itself, the sign refers specifically to the place of operation.

Understanding the legal framework governing trade names in France is essential for any entrepreneur. The aim of this article is to shed light on some fundamental points: what is the legal definition of a trade name? What rules need to be observed when choosing and installing a sign? How are the rights to a brand acquired and how can they be effectively protected? And what are the tax issues you need to consider? Addressing these questions will help you secure this key element of your visibility.

What is a sign under French law?

The law provides a precise definition. According to Article L. 581-3 of the Environment Code, which stems from the founding law of 29 December 1979, a sign is any inscription, form or image affixed to a building and relating to an activity carried on there. This definition emphasises the direct link between the sign and the place of activity. Historically, the sign appeared to enable customers to locate and distinguish shops as early as the Middle Ages.the sign retains its primary function as a geographical sign.  

It should be distinguished from pre-signs. The same law defines pre-signs as any inscription, shape or image indicating the proximity of a building where a specific activity is carried out. The difference is therefore material: the sign is on the actual site of the activity, whereas the preliminary sign is offset to indicate the approach to this site.. Case law specifies that the building supporting the sign refers to the façade or shopfront where the activity takes place, and not the entire building or plot of land.. However, a device sealed to the ground or installed on the site where the activity is carried out (even on the outskirts) qualifies as a sign.  

Signs can take a variety of forms. They are usually exterior and visible from the public highwayThey can also be used indoors, particularly in shopping centres or department stores, to identify specific departments or independent shops.. With technological developments, illuminated signs have become commonplace and are subject to specific regulations, particularly concerning their night-time extinction and energy consumption, with a view to combating light pollution and saving energy.  

Finally, commercial signs should not be confused with business signs. Although environmental legislation sometimes lumps them together under the generic term signIn the case of the liberal professions (lawyers, doctors, etc.) and ministerial officers, there is a clear distinction in practice and in professional ethics regulations.. These are subject to strict standards of discretion and content to avoid any confusion with commercial practices..  

Choosing and installing your sign: the rules to follow

Freedom of expression applies to the choice of a signallowing you to choose your own name, a fancy name, a symbol or an abstract design. However, this freedom is subject to numerous rules, whether technical, environmental or linked to respect for the rights of others.  

Technical and regulatory constraints

The main source of regulations is the Environment Code, which aims to protect the living environment and limit visual pollution.. While there are areas where advertising is strictly prohibited (historic monuments, listed sites, etc.), signs generally benefit from a more flexible regime because of their practical necessity.. However, their installation in these areas or on protected buildings requires prior authorisation from the mayor, often after consulting the Architecte des Bâtiments de France or the relevant departmental committee..  

Precise rules, defined by decree (in particular decree no. 82-211 of 24 February 1982)which has since been substantially amended, in particular by the decrees of 2012 and 2013 following the Grenelle 2 law. ), set out the dimensions, locations and distances to be respected. Illuminated signs are particularly targeted, with restrictions on switch-off times (generally between 1am and 6am, with some exceptions), surface area and energy consumption. Laser signs even require prefectoral authorisation..  

Pre-standard signs, on the other hand, are subject to the stricter rules governing advertising.. There are, however, exemptions for certain activities deemed useful (emergency services, sale of local products by local businesses, activities set back from the public highway).but their number is strictly limited (generally two or four maximum). The concept of "local product" is interpreted restrictively, requiring a strong geographical link..  

Road safety also imposes constraints. The Highway Code prohibits signs that could create confusion with road signs or obstruct drivers' visibility..  

There is a legal obligation to maintain signs in a good state of repair. Failure to comply will result in a fine. More importantly, when an activity ceases, the corresponding sign must be removed within three months.unless it is of recognised historical, artistic or picturesque interest.  

In terms of language, unlike other media, there is no general legal obligation to use French for signs.. Legislation has been proposed to require translationbut have so far been unsuccessful.  

Failure to comply with these technical and environmental regulations can result in penalties. The main penalties are administrative or criminal fines, which can be significant (up to €1,500 for an individual and €7,500 for a legal entity for failure to switch off lights at night, for example). ), and applicable to each non-compliant sign. The judge may also order the removal or compliance with a penalty payment..  

The choice of sign and the rights of third parties

Over and above the technical aspects, the choice of sign itself must take account of the prior rights held by third parties. You may be held liable if you use a sign that infringes these rights.

It is strictly forbidden to use another person's surname or pseudonym without their express authorisation.. Protection even extends to the use of a street name if it corresponds to the patronymic of a personality and if commercial use could be prejudicial to the descendants.. Pseudonyms enjoy similar protection if they are original and well-known..  

A frequent conflict arises with registered trademarks. A company cannot adopt a sign that is identical or similar to a trademark registered by a third party for identical or similar products or services, if this registration predates the use of the sign.. Article L. 713-6 of the French Intellectual Property Code provides for an exception for those who use their own surname in good faith, but the trade mark owner may apply to the courts for this use to be limited or restricted to avoid confusion.. Beware also of collective marks, such as the green cross or the pharmacist's caduceus, which may only be used as a sign by authorised members and are subject to regulations governing their use..  

Appellations of origin (AOC/AOP) and geographical indications (IGP) are also protected. It is forbidden to use a protected geographical name or a reference to it in a sign if this is likely to mislead the public about the origin or to misappropriate or weaken the reputation of the appellation. For example, using "Le Champagne" for a restaurant in Normandy was deemed unlawful.. Here again, an exception may be made for the use of one's own surname if it is homonymous with a geographical indication, provided that this does not mislead the public..  

Finally, the use of official signs (national flags, emblems of states or international organisations such as the Red Cross or Olympic symbols) is strictly regulated.. Their use as signs is generally prohibited if it is likely to mislead as to the origin or official status of the establishment.. A purely decorative and non-misleading use (for example, a flag for a restaurant serving foreign cuisine) could be envisaged..  

Contractual stipulations affecting the brand

The choice and use of signs can also be governed by contracts.

In selective distribution or franchise networks, it is common for the supplier or franchisor to impose standards for the distributor's or franchisee's sign, in order to maintain the network's consistency and brand image.. These clauses are lawful under competition law, provided that they are not applied in an unjustified or disproportionate manner..  

A more delicate situation concerns commercial leases. Some lessors try to insert a "trade name clause" obliging the lessee to operate under a specific trade name for the entire term of the lease.. However, the Cour de cassation generally considers such clauses to be null and void, as they infringe the freedom to despecialise (i.e. the tenant may change or add an activity), which is a public policy provision set out in the Commercial Leases Act (in particular article L. 145-15 of the French Commercial Code).. Even if the sign imposed is not directly linked to a specific activity (for example, a franchise sign), the clause may be annulled because it indirectly restricts the tenant's freedom..  

Regulations specific to certain activities

Over and above the general rules, certain professions or sectors of activity are subject to additional constraints concerning their sign, often to protect consumers or guarantee professional ethics.

Commercial and craft activities include :

• Travel agencies : Theoretical obligation to state the type of administrative authorisation (licence, etc.) on the sign, although little complied with in practice.  
• Artisans : The use of the terms "artisan", "artisanal" or derivatives in the sign is reserved for duly qualified persons registered in the trade register. The use of "artisanal" may even be subject to specific specifications. Infringements are punishable by law.  
• Bakeries : The designation "baker" or "boulangerie" is protected by law. It is reserved for professionals who carry out the entire bread-making process themselves (kneading, fermentation, shaping, baking) at the point of sale.  
• Alcoholic beverages : Advertising is restricted, but permitted in the form of signs for drinks that are legal to sell.  
• Tobacconists : Signs are one of the few authorised advertising media, but they must comply with strict specifications defined by decree, in particular the use of the "carrot" and the wording "tabac" (tobacco).  
• Credit institutions : Prohibition on the use of terms or signs that create confusion about the authorised status of the establishment or its category (bank, finance company, etc.).  
• Economic Interest Groupings (EIGs) : The acronym "GIE" or any similar expression is reserved for groupings duly constituted in this form.  
• Funeral services : It is forbidden to use terms that could lead to confusion with municipal services or official delegates.  
• Factory outlets / Factory depots : Regulated use of these names.  
• Sales : The word "sale" or its derivatives may only appear in a sign if the activity corresponds to the legal definition of a sale.  

For the liberal professions, the general rule is discretion and the absence of advertising.

• Lawyers: The unified internal regulations limit the information authorised on the plaques (name, academic titles, distinctions, any references to recognised areas of expertise) and impose reasonable dimensions.  
• Doctors and other medical/paramedical professions : The codes of conduct strictly govern the content of the nameplates (name, recognised qualifications, working hours, contractual status) and their presentation must remain discreet.
• Pharmacists : It is forbidden to solicit customers in a way that offends their dignity. External signage is limited to the name of the pharmacy, the green cross (illuminated or not) and the official pharmaceutical caduceus. The name of a group may be mentioned, but must not take precedence over the identity of the pharmacy.

How do you acquire rights to a sign?

Unlike a trademark, which arises from its registration, the right to a sign is acquired differently.

The fundamental principle is that of acquisition by the first continuous public use. It is the fact of using the sign in a visible and constant manner to identify one's establishment that creates the private right. The question of the exact starting point for this use has been the subject of debate: is it sufficient to affix the sign to premises undergoing work?or do we have to wait for the actual opening to customers?? A cautious approach holds that use must be effective and unequivocal, clearly demonstrating the intention to exploit under this sign.. Conversely, prolonged non-use may result in the loss of the right, with the sign falling back into the public domain..  

If it is customary to use a sign, it is a legal requirement for traders and craftspeople who use one to declare it when they register with the Registre du Commerce et des Sociétés (RCS) or the Répertoire des Métiers (RM).. Any subsequent changes must also be declared. However, this registration has a purely declaratory role and is not binding. does not in itself constitute the act that creates the right. Its main effect is to make the sign effective against third parties acting in good faith; without registration, a third party could legitimately be unaware of the existence of the sign, unless he or she had personal knowledge of it from another source..  

For a private right to arise from use, the sign must have the following characteristics distinctive. A term that is purely generic or descriptive of the activity (e.g. "Bakery", "Shoes") cannot be exclusively appropriate.. A competitor could use the same generic term without committing a fault. Distinctiveness can be intrinsic (a fancy name, an original logo) or acquired through intensive use and notoriety.. An initially banal sign can become distinctive if the public strongly associates it with a particular establishment, as recognised by case law in the Décathlon v Go Sport case concerning a simple presentation (name in white on a blue background).  

The case of Internet domain names is special. They can be considered as "electronic" signs.These are used to locate and attract customers to a commercial site. However, their acquisition system differs: it is based on registration with naming organisations (such as AFNIC for .fr) on a "first come, first served" basis.. This rule has given rise to conflicts, particularly cybersquatting. Today, while registration remains the key, applicants must ensure that it does not infringe the prior rights of third parties (trademarks, company names, but also pre-existing trade names).. AFNIC and the courts can intervene to resolve these conflicts.  

Transferring the brand

Intangible element of goodwillof the business or agriculturalThe sign is generally passed on with it.  

During the sale of the businessthe sign is included in the transfer, unless a clause in the sales contract expressly states otherwise. In this way, the seller can reserve the sign for himself, for example if it corresponds to his family name.. However, this reservation must not render the transfer meaningless by depriving the purchaser of the clientele attached to the trade name.. For a craft business, where the personal aspect is more pronounced, it is easier for the seller to keep the name sign..  

It is essential to distinguish the transfer of the sign from the sale of the building on which it is affixed. The sign belongs to the owner of the business and not to the owner of the premises.. The purchaser of the building may not claim any rights over the sign relating to the activity that was carried on there. Old signs, which are sometimes architecturally integrated, may survive if they are of historical or artistic interest, but the commercial rights attached to them do not pass with the stone.  

The sign can also be the subject of a contractual provisionwithout transfer of ownership. This is a central element of the franchisethe franchisor grants the franchisee the right to use the franchisor's brand name, which is a symbol of the network's know-how and reputation.. This provision, often coupled with a brand licence, is subject to the pre-contractual information requirements of the Doubin Law (Article L. 330-3 of the French Commercial Code) if it is accompanied by exclusivity or quasi-exclusivity.. Franchisees must clearly indicate their status as independent businesses..  

Similarly, the central purchasing bodies and groups often make a common sign available to their independent retailer members. The conditions of use are defined in the affiliation contract, which may also be subject to Article L. 330-3 of the French Commercial Code.. The group then has an obligation to protect the common sign against usurpations that would be detrimental to the members.. The sale of a member's business may be subject to a preference agreement concerning the trade name..  

How do you protect your sign?

Protecting your brand against imitation or usurpation is a major challenge. French law offers several mechanisms, but the main one is based on civil liability.

The principal means: the action for unfair competition

As a sign is not an industrial property right like a trademark, it does not benefit from specific infringement proceedings. It is mainly protected by action for unfair competitionbased on article 1240 of the French Civil Code (formerly 1382). To win the case, the owner of the first sign must prove three elements:  

1. A fault committed by the competitor: typically, the use of an identical or similar sign.
2. A damage suffered: loss of customers, dilution of image, damage to reputation.
3. A causal link between the fault and the damage: this is where the risk of confusion in the mind of the public. If customers are likely to confuse the two establishments because of the similarity of the signs, the fault is generally established.  

The originality or distinctiveness of the primary sign is not an absolute condition for taking action, but it makes it much easier to demonstrate fault and the likelihood of confusion.. A banal sign will be more difficult to defend than an original one. The likelihood of confusion is assessed in concrete terms by the courts, taking into account the visual and phonetic similarity of the signs, the identity or similarity of the activities, the target customers and the geographical area concerned..  

The limits of protection

The protection afforded to a trade name by an action for unfair competition is not absolute and has a number of important limitations.

The first is the speciality principle. In principle, protection is limited to the sector of activity actually carried on under the trade name.. There is no risk of confusion, and therefore no unfair competition, if the activities are completely different (for example, a "Le Soleil" sign for a bakery and the same sign for an estate agency). However, this principle is assessed quite broadly: protection extends to similar or related activities where confusion is possible (for example, a restaurant and a cabaret). ).  

The second limit is the territorial framework. As a sign is used to locate an establishment, its protection is naturally linked to its catchment area, i.e. the geographical zone where it is known to customers.. The owner of a "Café de la Gare" in Marseille cannot, in principle, prohibit the use of the same sign in Lille. The protection is "relative, limited by the serious and real interest of the trader".. Of course, this zone varies enormously depending on the activity: very local for a small convenience store, it can be regional, national or even international for department stores, hotel chains, well-known restaurants or companies with a strong online presence..  

These two limits (speciality and territory) can be reduced or exceeded in the case of reputation of the brand. A well-known brand enjoys greater protection. On the one hand, its distinctiveness is presumed to be stronger. Secondly, its protection can extend beyond its original speciality, in the field of parasitism: using a famous brand name, even for non-competing activities, can be punished if the aim is to take undue advantage of its reputation or to harm it.. In the same way, notoriety can justify very broad, even national, territorial protection..  

A special case is that of surname homonyms. In principle, everyone has the right to carry on business under their own name.. If this name is already used as a trade name by a competitor in the same sector and the same geographical area, the first user may not prohibit the second from using his surname.. However, to avoid confusion, the judge may require the second entrant to take measures to differentiate the company: adding a first name, changing the design, making a distinctive statement ("Founded in..."), etc.. However, this option is reserved for surnames and does not apply to pseudonyms..  

Finally, having tolerated the use of a similar sign by a competitor for a long time does not mean that the competitor has given up the right to use the sign.. Waiver of a right cannot be presumed. However, this prolonged tolerance may be taken into account by the judge to moderate the amount of damages awarded..  

Protection against other distinctive signs

The sign may also conflict with other signs, in particular trademarks and domain names.

Brands : If a trademark is registered subsequently to the use of an identical or similar sign, the owner of the sign may oppose the registration of the trademark or request its invalidation, subject to a strict condition laid down in article L. 711-4 of the French Intellectual Property Code: the sign must be known throughout France. This condition is very strictly assessed by the courts: a mere local or regional reputation, even an important one, is not enough.. Proof of national publicity or recognition is required..  

. domain names The use of an Internet domain name that imitates a pre-existing brand name may constitute an act of unfair competition if there is a risk of confusion, particularly if the activities and geographical area (even if virtual) overlap.. Case law has thus sanctioned the use of a domain name very close to a competing local brand when the site was promoted locally.. In franchise networks, the use by a franchisee of a domain name that includes the network's brand name is a delicate matter and may be contractually regulated or limited so as not to harm the network or violate territorial exclusivities. A practice that has also been penalised is that of certain search engines that display sponsored links to infringing or competing sites when an Internet user searches for a well-known brand or trademark..  

Tax aspects: local tax on outdoor advertising (TLPE)

Last but not least for a company's budget: signs may be subject to local taxation. Since the 2008 law on the modernisation of the economythe former taxes on billposting have been replaced by a single tax: the Local tax on outdoor advertising (TLPE).  

This tax can be introduced by decision of the municipalities or the Établissements Publics de Coopération Intercommunale (EPCI).. It applies to all advertising media, signs and pre-signs visible from a road open to public traffic..  

The tax base is the surface area of the device (excluding frames). The maximum rates are set by law (article L. 2333-9 of the French Code général des collectivités territoriales) and vary according to the type of device (illuminated or not, digital or not), its surface area and the population of the municipality.. Exemptions are provided by law, in particular for signs relating to the main activity carried out in the building if the sum of their areas is less than a certain threshold (e.g. 7 m²), as well as for certain specific signs (pharmacies, historic monuments, etc.).. Local authorities may also decide on additional exemptions or reductions, particularly for small signs..  

In the event of failure to declare or pay the TLPE, the company is liable to penalties: a compulsory taxation procedure and an administrative fine (1st class fine for failure to declare, etc.). ). The old measures for tearing down or destroying untaxed signs have been abolished..  

The choice, management and protection of your trade name raise complex legal issues and can have major implications for your business. For a personalised analysis of your situation and to secure your rights, our firm is at your disposal.

Sources

• Environment Code (in particular art. L. 581-3 et seq., R. 581-7, L. 581-14-4, L. 581-18, L. 581-19, L. 581-34, L. 581-36, L. 581-43)
• Commercial Code (in particular art. L. 123-9, L. 141-5, L. 145-15, L. 145-47 to L. 145-55, L. 251-23, L. 310-3, L. 310-4, L. 330-3)
• Intellectual Property Code (in particular art. L. 711-3, L. 711-4, L. 712-3, L. 713-6)
• Public Health Code (in particular art. L. 3323-2, L. 3511-3, R. 5015-22, R. 5015-53)
• Monetary and Financial Code (in particular art. L. 511-8, L. 512-13)
• Code rural et de la pêche maritime (in particular art. L. 311-3)
• Consumer Code (in particular art. L. 121-80)
• Highway Code (in particular art. R. 418-2 to R. 418-9)
• Code général des collectivités territoriales (in particular art. L. 2223-31, L. 2333-7 to L. 2333-15, R. 2333-27)
• Civil Code (in particular art. 1240)
• Law no. 79-1150 of 29 December 1979 on advertising, signs and pre-signs
• Law no. 96-603 of 5 July 1996 on the development and promotion of trade and craft industries
• Law no. 2008-776 of 4 August 2008 on the modernisation of the economy
• Law no. 2010-788 of 12 July 2010 on the national commitment to the environment (Grenelle 2 Law)
• Act no. 2021-1104 of 22 August 2021 to combat climate change
• Decree no. 82-211 of 24 February 1982 (amended)
• Decree no. 2012-118 of 30 January 2012
• Decree no. 2022-1294 of 5 October 2022
• Paris Convention for the Protection of Industrial Property
• Madrid Agreement on the Repression of False or Deceptive Indications of Source
• Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)