Vancouver-based Pirate Joe’s and its owner, Michael Hallat, won a trademark infringement battle against specialty U.S. grocery giant Trader Joe’s, on October 2, 2013. Judge Marsha Pechman of the U.S. District Court for the Western District of Washington dismissed the case on jurisdictional grounds.
Trader Joe’s operates a chain of over 400 stores in 30 U.S. states, including 14 stores in Washington. With no presence in Canada, Canadians frequently drive south of the border to shop at Trader Joe’s stores and stock up on exclusive, speciality products like Speculoos Cookie Butter and Jo-Jos. Capitalizing on the local demand, Hallatt opened the brazenly-named Pirate Joe’s in Vancouver’s Kitsilano neighbourhood. He purchased retail priced products at the U.S. outlets, marked up the prices – much to the chagrin of Trader Joe’s – and then resold the products in his store.
Trader Joe’s made allegations under U.S. federal trademark legislation, the Lanham Act¸ including trademark infringement, unfair competition, false advertising, and trademark dilution. Trader Joe’s made further allegations of deceptive business practices under state legislation, and also argued that Pirate Joe’s had copied the appearance of its stores to confuse customers and pass itself off as an authorized Trader Joe’s retailer.
The court granted Hallat’s motion to dismiss, ruling that all alleged infringement took place in Canada. The court also held that it did not support the extraterritorial application and did not find proof of economic harm or harm to goodwill.
Pirate Joe’s won the case on jurisdictional grounds; however, Trader Joe’s has submitted an amended claim which would allow a U.S. federal court to hear cases involving foregin citizens like Hallat. Trader Joe’s has also filed a motion for the court to reconsider its claims under the Lanham Act. In the meantime, Pirate Joe’s is still in business.