Target Settles Name Dispute With Canada Retailer

Fairweather, Ltd., International Clothiers, and Les Ailes will stop using the Target name and branding elements by January 31, 2013-right around the time when Minneapolis-based Target plans to begin opening stores in Canada.

Target Corporation has reached an agreement with a Canadian retailer in a contentious trademark battle, thus clearing the way for a smooth expansion north of U.S. borders in 2013.

Under the agreement, Fairweather, Ltd., and its sister firms, International Clothiers and Les Ailes, will stop using the Target name and branding elements by January 31, 2013-right around the time when Minneapolis-based Target plans to begin opening stores in Canada. Further details about the agreement were not disclosed.

Fairweather operates a group of clothing outlets in Canada under the name Target Apparel.

In January 2011, 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 then filed a counterclaim that denied the allegations, accused Target Corporation of trademark infringement, and asked for exclusive rights to the Target name. The company also wanted $250 million in damages from Target Corporation.

The two companies have been fighting for almost a year over which entity has the right to use the Target name in Canada. 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.

In June, Target was dealt a blow in the trademark fight when a federal court judge in Canada dismissed an injunction request by the retailer; the request aimed to prevent Fairweather from using the Target name until a trademark trial, which was scheduled to begin in November of this year.

In October 2010, Target confirmed plans to expand into Canada, marking its first expansion outside of U.S. borders. The company plans to open an initial wave of 100 to 150 stores within the country in 2013 and 2014. Within five to 10 years after that, Target expects to have more than 200 stores in Canada.

Target's Canada expansion is hoped to help it reach sales of roughly $100 billion-and earnings of about $8 per share-by 2017.

Target serves customers at 1,767 stores and on its website. It is Minnesota's second-largest public company based on revenue, which totaled $67.4 billion in the fiscal year that ended in January 2011.