Target Fights Canadian Retailer for Trademark Rights

Target wants a preliminary injunction against a Canadian company that owns 15 Target Apparel stores in Canada; meanwhile, the Canadian company alleges trademark infringement and wants exclusive rights to the Target name.

In Canada this week, Target is battling a Canadian retailer of the same name in an attempt to win exclusive rights to use the Target name in Canada.

Minneapolis-based Target Corporation headed to the Federal Court of Canada on Monday-approximately three months after it announced a plan to expand beyond U.S. borders and open stores in the neighboring northern country.

Target wants a preliminary injunction against Canada-based Isaac Benitah and his company Fairweather, Ltd., which owns 15 Target Apparel stores across the country. The local retail chain wants Fairweather to stop using the Target name until a trial can be conducted later this year to determine which company has the appropriate trademark credentials.

In January 2010, the Minneapolis-based retail chain said that it was eyeing international expansion within the next five to 10 years-and it named Canada, Mexico, and Latin America as possible expansion sites. The company in October confirmed that it plans to expand to Canada, marking its first expansion outside of U.S. borders.

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.

Last month, Target said that its plans to expand into Canada could help boost its sales to roughly $100 billion and nearly double its earnings to about $8 per share by 2017. The company reported revenue of $67.4 billion in its most recently completed fiscal year.