The Nation filed a lawsuit after the company used two spellings of the tribe's name to brand products that include clothing, jewelry and bags.
Even though the court dismissed some elements of the lawsuit, it still is considering all the allegations against the trendy retail company, according to an order filed by Senior U.S. District Judge LeRoy Hansen on March 26.
The tribe is alleging trademark infringement, trademark dilution, unfair competition, false advertising, violation of commercial practices law, and violation of the Indian Arts and Crafts Act.
The duel between the two entities dates back to June 2011, when the tribe asked the company to discontinue labeling its products with terms that included "Navajo" or "Navaho."
"The Navajo Nation alleges in its Amended Complaint that it and its members have been known by the name 'Navajo' since at least 1849, have continuously used the NAVAJO trademark in commerce, and have made the NAVAJO name and trademarks famous with numerous products," court documents said.
The tribe was particularly displeased with its name being used for an underwear line and a type of flask commonly used to hold alcohol. The tribe's attorneys wrote that the Nation has "long banned the sale and consumption of alcohol within its borders and the Navajo Nation does not use its mark in conjunction with alcohol.
The court dismissed the tribe's claim that the product is "derogatory, scandalous, and contrary to the Navajo Nation's principles," the order said. It also dismissed the tribe's theory that using an alternative spelling, "Navaho," the spelling not accepted under tribal law, was "scandalous."
The court upheld all other theories, despite Urban Outfitters's request for dismissal. That means the case for trademark infringement and the other claims can continue.
The tribe declined to comment on the situation, given that the case is ongoing. It has until the end of the week to file a revised amended complaint.
Urban Outfitters representatives could not be reached for comment. The international retail company sells its merchandise in more than 200 stores and on the Internet. Its brands include Free People and Anthropologie, both of which are named in the lawsuit.