A Kelowna distillery has won a legal battle against the City of Terrace and a B.C. First Nation band over the right to use the term 'spirit bear' in its branding.

Mike Urban, who started up Urban Distilleries in 2010, says he is relieved he can continue to sell his a signature line of 'Spirit Bear' gin, vodka and flavoured vodkas using the West Coast kermode bear as the inspiration for the logo and name.

Urban Distilleries' Mike Urban - Kelowna, B.C.

Mike Urban is the owner and founder of Kelowna's Urban Distilleries. (UrbanDistilleries.ca)

"Basically, the whole business was on the line. If I had to stop making that brand, I'd have to come out with a new brand and essentially it would be like starting the business from day one," he told CBC News.

Kermode bears are a subspecies of the North American black bear that live in B.C.'s Central Coast area that carry a recessive gene that makes a number of them white in colour. Nicknamed the "spirit bear," the kermode has been designated as B.C.'s official animal.

In 2011, when Urban Distilleries ramped up business, the City of Terrace and the Kitasoo Band Council claimed they owned the exclusive right to use the term "spirit bear" as a trademark and took the distillery to court.

"I just couldn't believe it when I first found out they were trying to come after me for that name," Urban said.

Urban says he would have lost his business if he was forced to go through the expensive process of re-branding.

But this week a Federal Court judge ruled the city and the Kitasoo band improperly registered the trademark.

The judge also ordered the plaintiffs to pay the distillery's legal costs.

Urban says he can now get back to developing new products under the Spirit Bear brand.

With files from the CBC's Brady Strachan