The Welsh Language Board has called for an urgent review of planning rules after Marks and Spencer won the right not to display a bilingual sign outside a new store.
Marks and Spencer argued the phrase 'Simply Food' was a trademark
Gwynedd Council had refused to allow a "Simply Food" logo to be fixed to the exterior of the Bangor store, claiming the phrase should be bilingual.
The company claimed it was a brand and registered trademark.
The Board said it showed the weakness of the language in planning issues.
The Assembly Government's planning inspectorate backed M&S, saying most commercial signage in Bangor was in English only.
Gwynedd Council had turned down a planning application from the retail chain, which was seeking permission to erect a sign.
But in January, councillors on the planning committee turned the request down, so M&S appealed to the Planning Inspectorate.
The Bangor M&S store is due to open within weeks
The Welsh Language Board's Chief Executive Meirion Prys Jones said the case highlighted the weakness of the language in town planning.
He said: "Here we have a council trying the promote the visual use of the language - in line with the Assembly Government's vision of a bilingual Wales - and it is prevented from doing so by the Assembly Government's Planning Directorate.
"The case highlights the weak position of the language in the field of Town and Country Planning. This matter needs to be reviewed urgently.
"It is not unreasonable for companies to use their brand names - but they can also show respect towards a local community and culture."
M&S claimed that the English-only sign was needed because it wanted to bring it to the attention of shoppers that only food was sold inside, not its usual range of goods.
It had also pointed out that council planners in south Wales did not stipulate that signs should be bilingual.
In turning down Gwynedd Council's appeal, the planning inspector said he fully understood its desire to foster the use of the Welsh language, but other stores in Bangor did not carry bilingual signs.
Bilingual signs are to be displayed inside the new store, which is due to open within the next few weeks, according to its policy internationally.
A spokesman for Gwynedd Council's planning and transportation service said: "Naturally the council is disappointed in losing the appeal but the inspector has accepted the principle that amenity in the area is in connection with culture and language benefits.
"In the case of the appeal, the inspectorate has considered the language character of the centre of Bangor and the number of English signs that are there already and noted the language and culture in a wider content."
The council also said it would consider a further challenge to the decision.