TORONTO - U.S. discount retailer Target might have to choose between using a different name in Canada, buying the Canadian rights to the Target trademark, or face a lawsuit, depending on what happens in a fight over ownership of naming rights.
Fairweather Ltd., which is owned by discount menswear chain International Clothiers, has owned the "Target Apparel" name in Canada for 10 years.
In July, the U.S. retailer filed a challenge with Canada's trademark office, claiming the Fairweather owner hasn't been using the Target name. The Canadian company has since opened stores called "Target Apparel" in Sudbury, Ont., and Nanaimo, B.C.. It is not clear whether the company has plans to open more locations or convert its current stores to that name.
Fairweather has until the end of February to prove to that it has used the name in the last three years, or had plans to use it, in order to keep its ownership rights.
Calls to Fairweather were not returned.
Target, responding to an email request, said it "cannot comment on the pending litigation involving Fairweather Ltd. and its related companies."
However, it added that there was "nothing that prevents Target from using the Target name and branding elements in Canada the same way we do in the United States."
Teresa Scassa, an intellectual property law professor at the University of Ottawa, noted that the owner of a registered trademark in Canada "has the exclusive right to use that mark in Canada so anyone who enters the market with a mark that's identical or confusingly similar to it could be liable."
"It's a challenge for the American Target corporation that there is already a registered trademark, Target Apparel, in Canada and they're going to have to address that and deal with that if they're hoping to move into the Canadian market," Scassa said.
On Thursday, the U.S. retailer said it will spend $1.83 billion to take over the leases for the majority of Zellers stores from its owner, the Hudson's Bay Company. The chain, which is known for designer clothing collaborations priced for the masses, said it plans to open about 200 Target stores over the next 10 years that would sport its signature red bulls-eye logo.
Fairweather has lost ownership of the Target trademark in the past. Industry Canada said that in 2005, the trade mark was expunged, but the Federal Court of Appeal later ruled Fairweather's ownership should be reactivated.
The hearing on Target's most recent complaint must be heard before the end of July.
If the U.S. company loses the battle, it could offer to buy the name from the Canadian owner, said Scassa.
The law says company names must be distinct to avoid confusing shoppers, so two companies with similar names would not be allowed.
Earlier this week, an Ontario chicken wing restaurant operator launched a legal fight against another large U.S. rival with a similar name to his restaurant chain.
Rick Smiciklas, founder of Aurora, Ont.,-based Wild Wings, said he would launch an intellectual property lawsuit against Minneapolis-based Buffalo Wild Wings, a U.S. chain that recently announced plans to expand into Canada.
