Target Dealt Blow in Trademark Fight With Canada Co.

A federal court judge in Canada dismissed an injunction request by the Minneapolis-based retailer; the request aimed to prevent a Canadian company that owns 15 Target Apparel retail stores from using the Target name until a trademark trial that's set to begin next year.

Target Corporation suffered a setback Thursday in a trademark battle with a Canadian company that owns 15 Target Apparel stores north of U.S. borders.

As part of the ongoing legal battle, Canadian federal court Justice Leonard Mandamin dismissed an injunction request by Minneapolis-based Target. The request was an attempt to prevent Isaac Benitah and his Canada-based company, Fairweather, Ltd., from using the Target name until a trial can be conducted later this year to determine which company has the appropriate trademark credentials.

According to Canadian Business, Mandamin ruled that Target didn't prove that it would suffer “irreparable harm” during the months leading up to the trial, which is scheduled to begin next year.

“In my view, the issue of control over trademarks covering the word 'Target' is a matter that must be left for trial,” Mandamin reportedly wrote. “The outcome of this lawsuit and corresponding counterclaim aside, I have not heard any evidence that Target will be prevented or delayed from opening Target stores in Canada.”

Target plans to open an initial wave of 100 to 150 stores in Canada in 2013 and 2014. Within five to 10 years after that, the company expects to have more than 200 stores in the country. Target's Canada expansion is hoped to help it reach sales of roughly $100 billion-and earnings of about $8 per share-by 2017.

In January of this year, Target 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 that 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 has 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, 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.

Citing research it conducted, Target Corporation previously reported that more than 10 percent of Canadians have shopped at Target stores in the United States within the past year, and 70 percent are aware of the brand.

Target-which operates a retail segment and a credit-card segment-now serves customers at 1,755 stores in 49 states nationwide and on its Web site. It is Minnesota's second-largest public company based on its revenue, which totaled $67.4 billion in its most recently completed fiscal year.