Speaking to the ABC's 7:30 program, Melbourne design duo Peaches and Keen revealed their surprise at seeing an almost exact replica of one of their designs on a range of children's wear at Target.
"We found out that we had had our work used without our knowledge via Facebook," Peaches and Keen co-founder Lily Daley told the ABC.
"We actually had a fan send us a message on Facebook asking us if we were producing work for the company.
"And so we had no idea about it and probably wouldn't have known if that person hadn't contacted us."
The pair sought the advice of an intellectual property lawyer, who told them it would cost them money to send a cease and desist letter.
They decided to get in touch with Target directly.
"We were offered about $2,000 or $3,000, which was quite a small token amount really for them," Ms Hearn said.
The pair eventually negotiated a $5,000 payment.
In emails to Peaches and Keen, Target's childrenswear design manager David Snow said: "I've managed to secure a budget to pay the $5,000 you've suggested."
"Given my GM is aware of this issue, there is no need to make up an invoice or anything like that."
In a statement, the retailer said:
"Target responded promptly to Peaches and Keen's concerns and believed it had resolved the matter in the manner Peaches and Keen had requested...Target takes its responsibilities in respect of [intellectual property] issues very seriously."
Target has refused to say how regularly it copied designers' work without permission.
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