Target, Canadian Co. Can’t Settle Trademark Dispute

Target and Fairweather, Ltd.-which owns 15 Target Apparel stores across Canada-failed to reach a settlement through formal mediation; thus, a federal court trial is scheduled to begin in November 2012.

Target Corporation and a Canadian retailer of the same name have failed to reach a settlement in a trademark infringement lawsuit.

Minneapolis-based Target and Fairweather, Ltd.-which owns 15 Target Apparel stores across Canada-entered formal mediation on Thursday. The parties sued each other earlier this year, both alleging trademark infringement and seeking an injunction to prevent the other from using the Target name in Canada.

Later on Thursday, Federal Court of Canada Justice Roger Hughes indicated in court documents that he met with representatives of both parties separately and together and “the matter did not settle.” He added that “no arrangements were made for any further meeting.”

Consequently, a federal court trial is scheduled to begin in November 2012.

In October, Target confirmed plans to expand beyond U.S. borders and open stores in Canada. Then in January of this year, the retailer said that it had taken tangible steps toward its expansion: It agreed to pay about $1.8 billion to take over the leases of up to 220 sites that were operated at that time by Canadian retailer Zellers, Inc.

Just days after the January announcement, Target reportedly asked the Canadian Federal Court to prevent Fairweather from opening additional stores under the Target Apparel name. Target said that use of the Target name was “deliberately calculated to deceive and confuse the public in Canada.”

Fairweather since filed a counterclaim that denies the allegations, accuses Target Corporation of trademark infringement, and asks for exclusive rights to the Target name. The company also wants $250 million in damages from Target Corporation.

According to Bloomberg, Fairweather owner Isaac Benitah has been rapidly opening new Target Apparel stores this year. The stores reportedly feature the name “Target” in big block letters, with the word “Apparel” in smaller lettering below. Additionally, one ad announcing future store openings incorporates a bull's-eye design resembling Target Corporation's trademark-and another indicates that Benitah is looking for more real estate to expand Target Apparel, Bloomberg reported.

Fairweather acquired the Target Apparel name in 2001 from a failing retailer but didn't use it right away, according to Bloomberg. Six months later, Target Corporation reportedly filed a challenge with the Canadian Registrar of Trademarks, arguing that the trademark should be invalidated due to its nonuse. The Registrar's office sided with Target, but the Federal Court of Canada overturned the decision because Fairweather by then had begun making clothing under the Target Apparel label. That decision was upheld by the Federal Court of Appeal in 2007 but only covers the right to the name on apparel, not on stores themselves, Bloomberg said.

Target Apparel stores are smaller than Target stores in the United States and sell mostly men's, women's, and youth apparel, according to Bloomberg. Target Apparel's logo features a red maple leaf inside a white circle.

In late May, Target Corporation said that it had chosen 105 Zellers sites-located across all 10 Canadian provinces-at which it plans to construct Target stores. The company can select additional sites this fall, and it plans to begin opening its Canadian stores in 2013.

Target is Minnesota's second-largest public company based on revenue, which totaled $67.4 billion in the fiscal year that ended in January.