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.
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 said it plans to open about 200 Target stores over the next 10 years that would sport its signature red bulls-eye logo.
However, a small Canadian store chain that currently uses the name "Target Apparel" owns the trademark rights to the name in Canada. Fairweather Ltd. has owned the "Target Apparel" name in Canada for 10 years.
The U.S Target retailer actually filed a challenge with Canada's trademark office back last July, claiming the Fairweather owner hasn't been using the Target name. The Canadian company has since opened stores called "Target Apparel" in two small Canadian cities. 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.
Fairweather has lost ownership of the Target trademark back in 2005 after a ruling made by Industry Canada at the time; however, the Federal Court of Appeal later ruled Fairweather's ownership should be reactivated.
The law says company names must be distinct to avoid confusing shoppers, so two companies with similar names would not be allowed. If the U.S. Target loses the battle, it could offer to buy the name from the Canadian owner.
With files from the Canadian Press
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