Target vs. Target? Just One Hitch Between Me and The Dollar Spot

As excitement builds for U.S retailer Target Corp.’s anticipated launch in Canada, one tiny hiccup awaits the company at the border: a trade-marks lawsuit.  Isaac Benitah, who owns Canadian retailers such as Fairweather and International Clothiers, has filed a $250-million lawsuit in the Federal Court against Target Corp. and an injunction preventing the American company from using the “Target” name.  He claims he has had rights to it since 2001 through his clothing chain, “Target Apparel.” Have you heard of Target Apparel? Neither have I. A prompt Google search, however, reveals that the chain has opened two stores so far – one in Sudbury, ON and another in Nanaimo, BC – and that [in light of the forthcoming proceedings] it intends to launch more.

Target Apparel’s swift action to protect its name comes as no surprise. Mr. Benitah was forced to defend it nine years ago when the Registrar of Trade-marks (the “Registrar”) issued him a notice requiring Mr. Benitah to show that the “Target Apparel” trade-mark was still in use. Fairweather had first acquired it in 2001 along with other various assets from a bankrupt Dylex Ltd.  The Registrar sent Fairweather the notice in 2002 then eventually decided to expunge the trade-mark. Mr. Benitah appealed the Registrar’s decision and emerged successful at both the Federal Court trial division and appellate levels, which stirs some unease for Target Corp. and my penchant for bargain gift-wrap. 

Use It or Lose It

In April 2002, the Registrar issued Fairweather a notice pursuant to s. 45 of the Trade-marks Act, RSC 1985, c T-13, the so-called “use it or lose it” provision.  Fairweather would have been required to show that it had used the “Target Apparel” trade-mark – by, for example, selling Target Apparel merchandise – since having acquired it in 2001. However, on the facts, because Fairweather had not yet used the name, the Registrar’s decision focused on whether there was evidence that absence of use was due to “special circumstances.” Section 45(3) sets out:

Effect of non-use

(3) Where, by reason of the evidence furnished to the Registrar or the failure to furnish any evidence, it appears to the Registrar that a trade-mark, either with respect to all of the wares or services specified in the registration or with respect to any of those wares or services, was not used in Canada at any time during the three year period immediately preceding the date of the notice and that the absence of use has not been due to special circumstances that excuse the absence of use, the registration of the trade-mark is liable to be expunged or amended accordingly.

As Fairweather had only acquired the trade-mark six months before receiving the s. 45 notice, the Registrar ordered that it would only have to establish a “a serious intention to start using the mark in question in the near future.” After deciding that Fairweather had not done so, the Registrar expunged its “Target Apparel” trade-mark.

Designs/Intentions

In appealing the Registrar’s decision, Fairweather submitted additional evidence to prove it did indeed have a “serious intention” to use the trade-mark. The new evidence showed that preliminary designs of labels and hang tags for Target Apparel had actually been developed before the s. 45 notice had been issued.

In a decision released in October 2006, Justice Mactavish at the Federal Court held in Fairweather Ltd v Registrar of Trade-marks, 2006 FC 1248, that Fairweather had successfully established that it intended to use its “Target Apparel” trade-mark in the near future. She considered the extent to which the new evidence had “probative significance” that extended beyond the material that was before the Registrar. Justice Mactavish found that it did.  She held that “concrete steps” had been taken with respect to the development of labels and hang tags to constitute sufficient probative significance. Thus, the appropriate standard of review of the Registrar’s decision was correctness.

In light of the new evidence, Justice Mactavish allowed Fairweather’s appeal.  She also considered evidence of use after the s. 45 notice was issued, including several hundred thousand dollars worth of “Target Apparel” men’s clothing sold in International Clothiers and ongoing artwork on the labels and hang tags, all pointing to the conclusion that Fairweather had provided sufficient evidence of an ongoing intention to use the trade-mark.

Justice Mactavish’s decision was later upheld in the Federal Court of Appeal decision in Bereskin & Parr v Fairweather Ltd, 2007 FCA 376, in which the appellant only challenged the trial judge’s findings of fact. However, the Court found no “palpable and overriding error” in the trial ruling.

A Bull’s Eye Settlement

Given Target Apparel’s performance at the Federal Courts three years ago, Target Corp. seems unlikely to succeed in forcing Mr. Benitah to give up the “Target” name. If hang tag designs were sufficient to signal a serious intention to use the trade-mark, then Target Apparel’s existing stores in Sudbury and Nanaimo only serve to reinforce Mr. Benitah’s position. Moreover, the “Target Apparel” trade-mark has existed in Canada since 1981 and been proudly safeguarded by Fairweather for ten years.

As a result, there is already speculation that Target Corp. will be compelled to offer Mr. Benitah a hefty settlement if it hopes to enter the Canadian market without another “Target” label jousting for customers. Would Mr. Benitah accept such an offer? With two relatively uncharted (and, for the many Canadians who are more familiar with the U.S. retailer, confusing) stores situated in modest-sized cities and a dramatic, hundred-million dollar lawsuit, Mr. Benitah appears to have signalled his agreement to settle – with an expensive wish list. I, for one, have doubts as to whether this is truly a case about taking up arms for one’s pride and joy and the product of the sweat of the brow. All I smell is one shrewd party pooper at a grand opening ceremony.