On June 23, 2011 the Federal Court dismissed an application for an interlocutory injunction in Target Brands, Inc. v. Fairweather Ltd.1 Target had sought an injunction restraining Fairweather’s use of the trademark TARGET APPAREL even though Target does not yet operate in Canada.

In the decision, the Court considered all aspects of the test for an interlocutory injunction as they relate to the elements of passing off, namely the presence of goodwill, confusion, and resulting damage. Although Target does not currently operate in Canada, there was evidence to suggest confusion and therefore the Court found that Target’s application raised a serious  issue.  However, the Court found that the evidence did not establish that irreparable harm would result, or that the balance of convenience favoured Target.

Background facts

The Plaintiff (“Target”) is a large retail store chain that uses the trade-name TARGET often accompanied by a red bull’s-eye logo. At the time of this decision, Target did not operate in Canada or ship to Canada, although it issued credit cards to Canadians shopping in its US stores. Target recently purchased real estate in Canada, and announced that Canadian expansion would take place in 2013 and 2014.

The Defendant (“Fairweather”) sells clothing and accessories to mid to low income customers, is the owner of the registered trade-mark TARGET APPAREL and since 2003 has operated store in Toronto known as TARGET APPAREL. Since 2009, it has opened additional stores in a number of other parts of the country using TARGET APPAREL in red lettering and a red maple leaf inscribed within a circle.

Target initiated an action for passing off against Fairweather and concurrently brought this application for an interlocutory injunction which would have forced Fairweather to change its stores’ signage pending trial.

Decision

The Court applied the test from RJR-MacDonald2 which requires the applicant, in this case Target, to establish the following three elements:

  • there is a serious issue to be tried;
  • the applicant would suffer irreparable harm if the injunction was refused; and
  • the balance of convenience favours the applicant.

Serious issue

The Court reiterated that the threshold for the serious issue element is a low one. Fairweather submitted that the Court should apply a stricter standard in this case. It argued that an interlocutory injunction would essentially decide the entire case in favour of Target as costs associated with re-branding would prevent Fairweather from returning to the TARGET APPAREL brand even if it was ultimately successful at trial. The Court however disagreed that those difficulties amounted to a final determination of the issues at trial.

The Court found that there was evidence to support that, based on the Orkin3 case, Target had a reputation and at least some goodwill in Canada even though it only carried on business in the US. Applying the traditionally low standard for a serious issue, the Court also found that the evidence submitted was sufficient to suggest that customers would be deceived by Fairweather’s store signage.

Irreparable harm

Although the Court found there would be some confusion between the venues, the issue was whether any harm would arise as a result of that confusion.

Target argued that Fairweather’s use would diminish the brand equity or brand meaning it had built up by breaking Target’s “brand promise”, the association between the brand and certain qualities. The Court found that the expert evidence Target put forward in support of its theory did not establish that irreparable harm would result. The Court found that the assessment of such evidence is best left for the fullness of a trial.

Balance of convenience

While not strictly necessary given its finding on irreparable harm, the Court went on to consider whether the balance of convenience favoured granting the injunction. The Court found that it did not. Among its reasons, the Court pointed out that not granting the injunction would not cause Target to delay or alter its plans to open its stores in Canada. Further, requiring Fairweather to change its signage would do more harm than the simple cost of changing signs as re-branding indicates instability to consumers.

Finally, the Court pointed out that Fairweather took precautionary steps in the face of Target’s claim, i.e. it altered its marks slightly, posted a disclaimer indicating that it was not Target, and undertook to maintain sales records while the litigation was pending.

Conclusion

Since the Court found that Target failed to establish that it would suffer irreparable harm, or that the balance of convenience favoured it, the Court refused to order an interlocutory injunction. This case once again highlights the difficulty in securing interlocutory injunctions in trade-mark cases, and in particular the difficulty in establishing irreparable harm.

Link to Decision

Target Brands, Inc. v. Fairweather Ltd., 2011 FC 758