Mike Urban of Urban Distilleries says he trademarked the name Spirit Bear Vodka three years ago.
But the City of Terrace and the Kitasoo First Nation challenged the trademark, saying along with the province they had already trademarked the name Spirit Bear in 2004.
City spokeswoman Alisa Thompson says they asked the company to change its brand, but that hasn't happened. So now they and the Kitasoo are taking the distillery to court.
"It's a unique part of our culture here in Terrace," said Thompson.
"We do have a trademark. We do need to enforce our trademark, or there is no point in having one, so the decision was made to take legal action."
But Urban says he has hired a lawyer and plans to fight the lawsuit because he has invested too much money to establish the brand to change now."
"To start from scratch would kill the company," said Urban.
He also disputes the notion at anyone can trademark the name of a native animal in B.C.
"I'm going to continue using it. Being able to trademark an animal of B.C. — I don't think it is a trademark for one, so that's our stance."