Expect more Targets in Canada now that there's deal over name

Target Corp. has reached agreement with a Canadian retail company that allows the Minneapolis-based discounter to spread its Target brand across Canada. The deal clears the way for a strategic expansion as Target prepares to open the first of 100 or more stores in Canada in 2013.

Under the agreement, Fairweather Ltd., International Clothiers and Les Ailes have agreed to stop using the Target trademark by Jan. 31, 2013. Additional terms of the agreement were not disclosed, Target said in a news release Wednesday. A Target spokesperson reached by phone declined to comment beyond what was in the release.

The two companies have been fighting in court for nearly a year over who gets to use the Target name in Canada. Target had claimed that Fairweather lost control of the Target name because it stopped using the name several years ago.

The history of the Target brand name in Canada is tangled. The parent company of the Canadian retailers claimed it owned the Canadian rights to the Target name since acquiring assets from the now-defunct Dylex Ltd. in 2001. Dylex had registered the Target name in Canada in 1981.

Target and Fairweather held mediation talks in Canada's Federal Court in early June, but talks broke off later that month.

Dave Brennan, professor of marketing and co-director of the Institute for Retailing Excellence at the University of St. Thomas, said in an interview Wednesday that it was imperative for Target to clean up the trademark issue.

"They don't want a cloud hanging over their head as they start business in Canada," Brennan said. "They want [their Canadian stores] to look, act and feel like Target stores do here in the U.S."

"The alternative is far more expensive for both companies," Port said in an interview Wednesday.

Target Corp.'s larger size gave it advantages in the dispute. Port called the case a classic example of the differences in U.S. trademark law and trademark law in much of the rest of the world.

The U.S. uses a "first to use" principle compared with a "first to register," he said. So while trademark law may recognize boundaries and territories, the marketplace doesn't.

"As the bigger company, I don't have to worry about territories," Port said. "You may have trademark rights, but I have better market penetration, so I win."