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Sir Philip Green of Topshop with Hudson's Bay Co. CEO and president Bonnie Brooks at the new Topshop location in Yorkdale Mall in Toronto.Tim Fraser

British retail behemoth Topshop, which opened its first Canadian store in Toronto last week, is used to heated competition among cheap-chic fashion players – but nothing quite like what it faces here.

A small Montreal-based clothing chain with a similar type of product line, including cheap-and-cheerful animal-print tops and mini-dresses, is chasing the same coveted twentysomething customer. And it shares something else, too: a name.

Now the competition has turned into pitched legal battle. Topshop (the British version) and the smaller Top Shop, which is part of Quebec-based retailer Limite, are locked in a squabble over rights to the name, with each intent on forcing the other to ditch its operations.

It's a classic David and Goliath showdown. The British Topshop's parent, titan Arcadia Group, owned by billionaire Sir Philip Green, rings in $4.48-billion of annual sales. Top Shop, which has four stores of that name among parent Limite's 50 outlets, is a family-run business whose annual revenue is between $20-million and $25-million.

"For a giant like this to come in and to just ignore us is just not right," Aysha Singh, co-owner of the Limite, said in a telephone interview. "This has been our pond for just over 25 years. Trying to bully us into not using our own name is just not very practical. ...This is our livelihood. This is what we do."

At stake is more than the Canadian business of the Montreal-based chain, which runs stores in Quebec and Ontario, and that of the British titan, which operates in 37 countries. The Bay, owned by Hudson's Bay Co., has bought the rights to run Topshop in Canada from the British company and is counting on the stylish shops to help with the revival of its department store operations.

"Obviously the Bay is going to have to make a pretty serious investment building the Topshop brand," said Anthony Stokan, partner in retail consultancy Anthony Russell and Associates. "Whenever you get mired in any of these legal or branding issues, these things can drag on for an extended period."

The legal spat borrows a page from another high-profile battle being waged in Canada over the name Target. Isaac Benitah, who runs such fashion chains as Fairweather, is fighting U.S. discount giant Target Corp. over the rights to the Target name. Since the dispute began last year, he has continued opening more Target clothing stores as the legal case slowly winds its way through the courts. In June, the Minneapolis-based Target lost its first court bid to win the exclusive right to use its name in Canada, where the company plans to expand starting in 2013.

The latest case over Topshop is a reminder that small businesses need to protect the value of their intellectual property, Ruth Corbin, managing partner of market researcher CorbinPartners, said in an interview. Those steps include registering a brand name as a trademark with the federal registry, and using the name publicly and continuously. "Legal protection is the best defence when battling bigger companies who want rights to your name."

Between 1995 and 2006, Top Shop ran a store in Mississauga under that name; since July, 2004, it operated at least one other outlet under that banner, it says in court filings. It argues that as a result of the continuous use of the name, it "is the owner in Canada of the good will" tied to the name in association with clothing retail.

The battle was touched off last February when Arcadia, saying it owns the Topshop name in Canada, sent a letter to Top Shop telling it to "cease and desist." David Pickwoad, vice-president of legal services at HBC, which is helping Arcadia in its case, noted that as recently as late last month, Top Shop launched its fourth boutique on the trendy Queen Street West shopping strip, about a kilometre from the Bay's downtown Toronto flagship stores, which has a section of Topshop clothing.

Since February, Top Shop has opened three stores, Mr. Pickwoad said. In June, the Federal Court of Canada turned down a bid by Top Shop's owner to temporarily stop the British retailer from operating here. The case is to come back to court late this year or early in 2012.