Target Brands Inc. v. Fairweather Ltd. 2011 FC 758
A recent decision by the Federal Court showed once again that there is a high threshold for the granting of interlocutory injunctions.
Pending final disposition of this action, Target sought an interlocutory injunction to restrain the Defendants (Fairweather) from operating a retail store in association with a trade-mark or trade name comprising TARGET or a bull’s-eye design, and from displaying, advertising or using the word TARGET or a bull’s-eye design to direct public attention to Fairweather’s business so as to cause confusion with Target’s business.
Target, however, failed to convince the Court both that it would suffer irreparable harm if the injunction was not granted and that the balance of convenience favoured the granting of an injunction, and the motion was accordingly dismissed.
Target, the American retail chain store, has been operating in the United States since 1962. It is known by its U.S. trade name TARGET either in conjunction with or separately from a red bull’s-eye logo mark. Currently, Target does not have any stores located in Canada and will not ship purchases to Canada. However, Target states that its trade-mark has been well known in Canada since at least the 1990’s due to Canadians visiting their U.S. stores, and due to advertising that crosses the U.S./Canada border. On January 13, 2011, Target announced their plans to open 100 to 150 Target stores in Canada in 2013 and 2014.
In 2001, Fairweather purchased the registered trademark “TARGET APPAREL” and in 2003 opened a Target Apparel discount clothing store in Toronto. This store has regularly advertised clothing sales in Toronto newspapers. A chain of Target Apparel stores were rolled out as a new market niche family discount clothing store in Nova Scotia in 2009, British Columbia in August 2010, and in 12 other locations thereafter. The signage for many of the stores uses the word “Target” in larger letters than the accompanying word “Apparel”, with red as a predominant colour. A red Canadian maple leaf inscribed within a circle accompanies the words Target Apparel.
The test for an interlocutory injunction
The test for an interlocutory injunction involves the following three questions:
- Is there a serious issue to be tried?
- Would the applicant suffer irreparable harm if the injunction is refused?
- In whose favour does the balance of convenience lie?
Failure to succeed on even one of these questions, and the motion will be denied. The threshold for assessing whether there is a “serious issue to be tried” is a low one, essentially requiring that the claim not be frivolous or vexatious. “Irreparable harm” is harm that cannot be compensated by way of an award of damages or otherwise cured, and refers to the nature of the harm incurred rather than its magnitude. The “balance of convenience” is a determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction pending a decision on the merits.
This interlocutory injunction also engaged consideration of the factors to be established in a passing-off action, the components of which are: (a) goodwill; (b) deception of the public due to a misrepresentation (i.e. confusion); and (c) actual or potential damage to the plaintiff.
Application of the test to the present case
This case involves two sizeable business entities with similar business trade names where both sell a similar product, namely clothing. Target’s evidence was sufficient to raise an issue as to whether Fairweather’s Target Apparel stores launch would deceive customers into thinking the stores are affiliated with Target and would harm Target’s reputation.
Target submitted that its brand name is one of the most valuable brands in retailing and that its “brand promise” included neat clean stores, well stocked unique products, and helpful knowledgeable employees. Target argued that Fairweather’s Target Apparel stores break the Target brand promise by selling a more limited range of goods, differing significantly in store design, layout, product assortment and service, and varying from store to store. As a result, Target suggested that once consumers associated a store with a poor shopping experience that it would be difficult if not impossible to change those perceptions, which would have a significant impact on consumer shopping behaviour for years to come. Essentially, Target argued that its ‘brand equity’ would be damaged when consumers who confused the stores would not find the same quality of service as promised.
The Court, however, determined that these assertions were best left for the fullness of a trial where the trial judge would have more flexibility with assessing the expert evidence adduced. Target’s argument was not helped by their practice of allowing other small businesses to continue using the name “Target” in Canada through a license, which undercut its submission that it was harmed by the perception that Target Apparel stores were somehow linked with Target. In the result, Target failed to prove on a balance of probabilities that it would suffer irreparable harm during the intervening months until a decision was rendered in the trial of this matter.
Balance of Convenience
There was no evidence that Target would be prevented or delayed from opening Target stores in Canada as a result of the operation of Fairweather’s Target Apparel stores. Moreover, with a trial date set for late 2012, Target’s allegation of adverse impact on its “brand promise” would be addressed in advance of its planned Target store openings in 2013. The granting of an interlocutory injunction, on the other hand, would mean that Fairweather would have to remove and replace its signage for all stores which would, on the evidence, involve significant negotiations with various landlords. Moreover, Fairweather has taken precautionary steps in the face of Target’s claims by inscribing a maple leaf in a circle rather than use a red bull’s-eye, posting a disclaimer to the effect that it is not associated with Target, and undertaking to maintain records of its sales while litigation is pending. In the result, the Court found that the balance of convenience lied with Fairweather rather than Target.