Massachusetts-based TJX, owner of discount retailers TJ Maxx, TK Maxx, Marshalls and others, has filed a lawsuit in the United Kingdom’s High Court alleging that Sports Direct violated patent law when it opened a new chain of stores it calls “Brand Max” in 2017, according to the UK’s Sunday Times.
TJX alleges that consumers will have difficulty telling Brand Max apart from its UK discount chain, TK Maxx. Specifically, TJX lawyers claim that Sports Direct “deliberately intended to ride on the coat-tails” of the chain’s reputation with shoppers and that the two would be “mistaken for each other by a significant portion of customers,” according to the Sunday Times report.
Brand Max already operates 18 stores in Britain and markets itself on the large discounts it offers on designer clothing, homewares and recreational products—mirroring the consumer appeal of TK Maxx.
As a result, TJX will ask the court for an injunction that will force the chain to stop using the “Brand Max” name throughout Europe and transfer the web addresses for the offending chain to TJX, along with unspecified damages.
TJX lawyers claim that TK Maxx, which operates 337 stores in the United Kingdom and which reported annual sales of 3 billion pounds ($3.77 billion) at the end of its last fiscal year, has such an established reputation that it would not be possible for Sports Direct to have been unaware of its trademark. Even if that was possible, Sports Direct “took the decision to get as close as they could to the…brand and in so doing, live dangerously,” the TJX legal team said.
Sports Direct hedged its off-price bet and made headlines in the UK earlier in 2018 when it purchased embattled high-end retailer, House of Fraser, for 90 million pounds ($113 million) in late August after a potential buyout fell through. C.banner International Holdings Ltd. backed out of a deal to buy a majority stake in the company in early August of 2018, the collapse of which threatened about 17,000 jobs. Sports Direct CEO Mike Ashley then stepped in with his deal, pledging to make the chain “the Harrods of the high street.”
Still, there is little mystery why Sports Direct would want to encroach upon the off-price category, as both Ross Stores and TJX reported better-than-expected results in 2018. TJX’s latest quarter accounted for sales of $9.8 billion, leading to comparable sales growth of 7 percent.
The sector also does particularly well with millennials and Gen Z, according to TJX CFO Scott Goldenburg, and the leader in off-price retail expects to grow to 6,100 stores company-wide in the coming years.