Target enters mediation in Canadian naming rights dispute

Target Corp. and a Canadian clothing retailer entered formal mediation in a dispute over whether the second-largest U.S. discount chain can use its name north of the border.

Target, the 1,750-store company, and Fairweather Ltd. of Toronto are suing each other, alleging trademark infringement and seeking injunctions to prevent the other from using the Target name in Canada.

Minneapolis-based Target said in January it planned to start opening about 150 Canadian outlets in 2013 after agreeing to pay C$1.83 billion ($1.87 billion) for 220 store leases of discount chain Zellers from the Hudson's Bay Co.

The mediation, which began today in Toronto under Federal Court of Canada Justice Roger Hughes, is closed to outsiders and the participants were prevented from talking to reporters. If a settlement isn't reached, the Federal Court trial isn't scheduled to begin until November 2012.

Closely held Fairweather, controlled by Isaac Benitah, argues that it bought the Canadian rights to the Target name in 2001 from defunct retail group Dylex Ltd. Fairweather said it has operated a Target Apparel store in Toronto since 2005 and has additional locations under the banner in place or planned in other cities.

The U.S. Target took legal action in 2002 against Benitah, who runs several other Canadian chains including International Clothiers. The Federal Court of Appeal ruled in 2007 in favor of Benitah's use of the name on apparel. Target Corp. filed another trademark challenge last year before its first expansion outside the U.S., and then initiated new litigation which Fairweather countered with its own Federal Court action.

The case is Target Brands Inc., Target Corp. v. Fairweather Ltd. et al. T-1902-10.

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