Target’s trademark miss

Feb 11, 2015
miltons ip

There were no great bargains to be had in Target’s unfortunate foray into Canada. What happened to Target with trademarks is particularly illustrative of how a cross-border move can go badly.  Put simply, Target came to Canada with much fanfare, lost approximately $7B US, and now two years later, Target is retreating via a messy bankruptcy of their Canadian subsidiary.

Target’s woes included substantial trademark difficulties.  When it came to Canada, it was confronted with a prior registration for TARGET for use in association with clothing retail stores.  Clearly this presented a problem.  Target challenged the prior registration but did not succeed in expunging it, and ultimately ended up purchasing the prior registration.  The value of the transaction has not been disclosed but is estimated to be in the “8 figures”.

In fairness to Target, the prior registration was longstanding and there had been sufficient use by the owner that it was not amenable to expungement.  Accordingly, Target really faced a situation with no pretty outcomes, but certainly their bargaining power could not have been improved by the fact that the issue was not resolved until just prior to opening of the stores.

However, as a general rule, with some advance planning, smart, frugal companies can get a much better result at remarkably low cost.  In particular, companies considering a cross-border expansion should rush to file trademark applications in Canada based on ‘proposed use’ (equivalent to ‘intent to use’ in the US)

Because the government fees for filing a Canadian trademark application are only $250 regardless of how many classes of goods or services are claimed in the application, and because it is straightforward to keep an “intent to use” application alive for four years or more, $2000 buys a very effective form of insurance for applicants who may want to enter the Canadian market in the future.

I admit that the Target story is actually not a perfect illustration of the value of proposed use applications in Canada (because of the clear prior registration they confronted), but because they have made such an ugly mess of their entire ‘Canadian adventure’ I don’t mind using them as a good example of imperfect trademark practices.