Trader Joes has gone international, though not by choice, and they claim, not legally. The grocery chain's is suing their most valuable, yet most despised customer, Michael Hallatt, for trademark infringement, unfair competition, false endorsement and false designation of origin, after he purchased hundreds of thousands of dollars worth of the store's goods and sold them at his own location in Canada, the aptly-titled Pirate Joe's (now changed to _irate Joe's).
Hallatt claims that he's not making significant money off the arrangement, though it might be fair to question that assertion in light of the fact that he has gone as far as California to purchase his wares and has even dressed in drag to avoid detection. Trader Joe's products are good, but not that good.
Questionable bookkeeping or not, we're even more skeptical about TJ's federal claims.
To be sure, Trader Joe's has registered their trademark in Canada, though they have not yet opened any locations across the border. Alleging unfair competition in a market that they haven't even entered is a bit disingenuous.
Furthermore, what about the first sale doctrine (here applied to copyrighted works), or right of first sale, which basically allows someone who purchases goods to do whatever they please with them, absent an agreement to the contrary? We haven't seen any signs at Trader Joe's lately that prohibit the purchase of their goods for resale, nor have we signed an agreement to that effect.
Venue is also a great question. Hallatt's storefront and customers are in Canada. The trademark is registered in Canada (as well as the U.S.). So why has the lawsuit by the California-based corporation been filed in federal court in Washington?
The case presents a number of interesting questions, but here is the most important one: what is Trader Joe's problem? Hallatt buys their products at retail cost and sells them in a market that they haven't yet entered. They benefit financially from the arrangement. And if they do expand across the border, their normal retail prices, which are lower than his re-retail prices, would drive him out of business in a Vancouver minute.
- Man spends $350,000 at Trader Joe's in Seattle and resells it at a profit in Vancouver at his Pirate Joe's (Daily Mail)
- From Naked to Semi-Nude: Naked Juice Agrees to Pay $9 Million (FindLaw's Cal Case Law Blog)
- Pad Thai Slapper Not Guilty for Trader Joe's Fight (FindLaw's Legally Weird)