Bull’s Eye: Target Settles Trade-mark Dispute

March, 2012

Target Corp. has settled its trade-mark dispute in Canada concerning the use of trade-marks potentially confusing with its own.  Several related Canadian companies had been using trade-marks which were potentially confusing with the US chain’s trade-marks for several years well before the US chain decided to expand into Canada.  The parties had been battling for several years over the similar trade-marks.  The decision of the U.S. chain to publicly announce its expansion into the Canadian market meant the dispute had to be determined one way or the other.

American chain Target Corp. announced that it would open its first stores in Canada in 2013.  Target Corp. operates retail department stores in the US selling a wide range of merchandise including clothing.  Target operates 1,740 stores in 49 states with revenue exceeding $65 billion US dollars.  Target has been using the word TARGET and the red bull’s eye design since 1962.  In January, Target said it would take over the leases of over two hundred Zeller stores for over $1.5 billion dollars from Hudson Bay Trading Co.  One small problem.  There were already clothing apparel stores operating in Canada branded with the registered trade-mark TARGET APPAREL.

A legal dispute soon commenced between Target and three Canada-based corporations, that sell private label clothing to mid-to-low income customers, comprised of Fairweather, International Clothiers, and Les Ailes de la Mode (we’ll call the three corporations “Fairweather”).

In 2010 Target sued Fairweather for damages and a permanent injunction from using the trade name TARGET or the bull’s eye mark.  Fairweather counterclaimed against TARGET for infringement of its registered trade-mark TARGET APPAREL.  The trial of these matters was scheduled to be heard in 2012.

These lawsuits supplemented Target’s continued attack on the TARGET APPAREL trade-mark registration in the Trade-marks Office beginning in 2002 and launched again in 2010.  Target initiated proceedings against TARGET APPAREL in the Trade-marks Office which required Fairweather to show use of TARGET APPAREL in Canada.  If the Registrar of Trade-marks was not satisfied with the evidence provided, it could cancel the registration.  (In respect of the 2002 Target action in the Trade-marks Office, the Registrar did indeed cancel the TARGET APPAREL registration.  However, Fairweather successfully overturned that decision in the Federal Court of Appeal.)

In addition Target filed an application for an interlocutory injunction against Fairweather to restrain it from operating a retail store with any trade name or trade-mark comprising TARGET or a bull’s eye design and from displaying, advertising or using the word TARGET or a bull’s eye design to direct public attention to Fairweather’s business in a way that would cause confusion between the businesses of Target and Fairweather.

In a judgment delivered in June 2011, Target’s application for an interlocutory injunction was dismissed.  The Federal Court found that Target did not prove on the balance of probabilities that irreparable harm would occur if the injunction was not issued.  The court ruled that the evidence that Target submitted to prove that irreparable harm would result was not sufficient.

Prior to the commencement of the trial concerning the trade-mark matters, Target reached a settlement with Fairweather, which will see Fairweather cease all use of the target name by January 31, 2013.  Target declined to disclose any other details about the settlement agreement.  It has been speculated that the settlement agreement is worth millions of dollars.  As of the date of this article, the Trade-marks Register shows that the new owner of the TARGET APPAREL registered trade-mark is Target Brands, Inc. of Minnesota.  Fairweather Ltd. is noted as the old owner. 

The Power of a Trade-mark Registration

Even in the face of sustained opposition from a multiple billion dollar corporation, the TARGET APPAREL registered trade-mark withstood attack.  It seems as if Target decided it would be best to simply settle its dispute with Fairweather than to take its chances with the lawsuit it filed.  Certainly, it would be an uphill battle for Target to prove its case, as a registered trade-mark serves as a powerful defence to a claim for infringement or passing off.

Fairweather was fortunate that it had the presence of mind to have and maintain a registered trade-mark for TARGET APPAREL.  It is certain that Fairweather’s position would have been a lot more tenuous if it had no registered trade-mark and could only rely on its common law rights to the trade-mark TARGET APPAREL to fend off the attack of Target.

This dispute also highlights the truly national nature of trade-marks.  Although there are some international treaties in respect of trade-mark matters, one must still look to the domestic legislation of each country to assess competing trade-mark rights.  The trade-mark rights one acquires in one country, even in respect of a famous trade-mark, are often inapplicable and inconsequential in another.  A case in point is the problem Apple Computer is facing in China concerning the IPAD trade-mark.

If you are considering expansion of a business and a brand outside the country, it is best to ensure that your intellectual property rights are protected as early in the process as possible.

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Ryan K. Smith is a lawyer and trade-mark agent at Feltmate Delibato Heagle LLP. He specializes in corporate and commercial law with expertise in intellectual property matters including trade-marks, copyrights, privacy, information technology, and confidential information.  You can reach Ryan at rsmith@fdhlawyers.com and (905) 287-2215.