The United States Court of Appeals for the Ninth Circuit held that Washington State has the authority to hear a trademark lawsuit brought by Trader Joe’s against a Canadian store named Pirate Joe’s. Pirate Joe’s has admitted to purchasing Trader Joe’s products and reselling them in Canada.
Several years ago Trader Joe’s sued the Canadian store for trademark infringement, but in October of 2013, that case was dismissed. The district court in Washington State said it lacked the authority to hear the claims because the alleged infringement occurred in Canada. The Court further stated that Trader Joe’s failed to clearly explain how Pirate Joe’s affected their U.S. commerce.
On August 26, 2016, the United States Court of Appeals for the Ninth Circuit reversed the district court’s decision stating that the actions of Mr. Hallatt, owner of Pirate Joe’s, could essentially devalue the American-held trademark.
Judge Morgan Christen of the Ninth Circuit wrote:
According to Trader Joe’s, Hallatt’s poor quality control practices could impact American commerce if consumers who purchase Trader Joe’s-brand products that have been transported to Canada become ill, and news of such illness travels across the border. Trader Joe’s alleges this may harm its reputation, reduce the value of its trademarks, and cause lost sales. Trader Joe’s argues its risk of harm is particularly high because Pirate Joe’s displays Trader Joe’s trademarks, which leads consumers to believe that it is an authorized Trader Joe’s retailer.
There is nothing implausible about the concern that Trader Joe’s will suffer a tarnished reputation and resultant monetary harm in the United States from contaminated goods sold in Canada….Trader Joe’s also alleges that Pirate Joe’s has inferior customer service, something Trader Joe’s believes reflects poorly on its brand.
Hallatt, admittedly, has been purchasing goods from Trader Joe’s and re-selling them since 2011. Employees of Trader Joe’s discovered this practice and eventually blacklisted Hallat from the store. That did not stop him though; he donned disguises and paid people from as far as California to shop and ship items for him to sell. He even posted a Craigslist ad for a “co-pirate for undercover work” with a “well-established international grocery smuggling operation.” Hallett sells the Trader Joe’s items at an increased price of around 30-40%, claiming it covers rent and suppliers. It is estimated he has spent over $350,000 on Trader Joe’s products.
Hallett states that his business is lawful and he is just providing a service to Canadians who do not want to travel across the border to get items from Trader Joe’s.