Beware: There’s a New Target Coming to Town

Bargain hunters must be thrilled with news that the US’ coveted Target stores are set to launch in Canada.  Other brand owners are not as thrilled, specifically Canada’s clothing conglomerate that houses Fairweather Ltd. and International Clothiers Inc.  The parties have been embroiled in a series of legal proceedings over the trade-mark TARGET.  Here’s a breakdown of what’s been happening:

The Parties

Target Brands Inc., as we all know, is a US retail department store that operates under the TARGET and bull’s eye trade-marks.  It has a significant market presence in the US, with over 1740 stores in 49 states.  Its revenue exceeds $65 billion (US) annually.  Target Brands Inc. does not currently operate in Canada or ship purchases to Canada.  Nevertheless, Target Brands Inc. maintains that it is well-known by Canadians due to significant cross-border advertising and the number of Canadians visiting the US stores.  Target Brands Inc. is looking to enter into the Canadian market with a tentative launch date in 2013.

Fairweather Ltd. and International Clothiers Inc. (we’ll call them “Fairweather” from now on) are related companies that sell private label clothing and accessories.  In 2001, Fairweather bought the trade-mark TARGET APPAREL from another clothing company that went bankrupt (Dylex Limited).  As of 2003, Fairweather operated a clothing store in Toronto under TARGET APPAREL.  Since 2009, Fairweather rolled out a series of stores under the TARGET APPAREL brand across Canada.

Legal Proceedings

It is clear that Target Brands Inc. is not happy with the TARGET APPAREL brand as it has made a number of attempts to oust TARGET APPAREL from the Canadian marketplace.

The first attempt was to invalidate the TARGET APPAREL trade-mark registration on the basis of no use in the marketplace (this is commonly referred to in Canada as a Section 45 expungement proceeding).  Ultimately, Fairweather was able to show that it had continued to use the trade-mark TARGET APPAREL and Target Brands Inc.’s attempt to invalidate the trade-mark registration was unsuccessful.  (In fact, the decision was appealed all the way to the Federal Court of Appeal – but that’s another story).  Not happy with this decision, Target Brands Inc. is trying again and the proceeding is underway. 

What’s On Deck This Time?

Target Brands Inc. also took a more aggressive approach and is seeking a permanent injunction and damages.  Also, Target Brands Inc. brought a motion for an interlocutory injunction.  It’s pretty clear that Target Brands Inc. is not messing around with this and has some money to throw at the problem.

(If you’re scratching your head over injunctions – here’s a quick rundown.  An injunction is a court order to stop someone from doing something.  A permanent injunction stops them from doing something forever.  An interlocutory injunction stops that them from doing it until the final decision is made – basically until the final court decision has been issued.)

Can Fairweather Continue to Use TARGET APPAREL in Canada?

Yes, for now. 

But, keep in mind that this decision only deals with the interlocutory
injunction (or the “in the meantime” injunction). 

The court still has to decide whether it will grant the permanent injunction
which will mean that TARGET APPAREL can no longer be used in Canada.

Target Brands Inc. has taken the position that Fairweather is trading off of its reputation and goodwill associated with its TARGET brand.  Even though Target Brands Inc. has not started trading in Canada, it believes that the TARGET APPAREL brand does not provide the same level of service and will tarnish Target Brands Inc.’s reputation.

Fairweather, on the other hand, believed that if the court granted the interlocutory injunction it would be tantamount to granting a permanent injunction.  Fairweather would be required to pay significant money to re-brand “in the meantime” until the final decision was rendered. 

The court was convinced that even though Target Brands Inc. was not yet operating in Canada, it had developed significant goodwill in Canada and its brand was at risk.  Overall, the court took a pragmatic approach.  Given that Target Brands Inc. will not officially enter the Canadian marketplace until 2013 and that the trial for the permanent injunction was scheduled for November 2012, the coincidental timing didn’t warrant the granting of an interlocutory injunction.