U.S. judge dismisses case against B.C.'s Pirate Joe's
Kevin Drews, The Canadian Press
Published Friday, October 4, 2013 9:49AM PDT
Last Updated Friday, October 4, 2013 12:50PM PDT
VANCOUVER -- A Washington state judge has dismissed a lawsuit filed by U.S. grocery giant Trader Joe's against a Vancouver man who buys products at its stores south of the border and resells them back in British Columbia from a shop called Pirate Joe's.
Judge Marsha Pechman ruled that there was no basis to apply a U.S. law known as the Lanham Act, which confers broad jurisdictional powers upon U.S. courts.
Trader Joe's filed the lawsuit in May against Michael Hallatt, who is a Canadian citizen with permanent U.S. alien status and operates his business in Vancouver.
"Here, all alleged infringement takes place in Canada and Trader Joe's cannot show economic harm," Pechman said in a written ruling issued this week. "Even if Canadian consumers are confused and believe they are shopping at a Trader Joe's or an approved affiliate when shopping at Pirate Joe's, there is no economic harm to Trader Joe's because the products were purchased at Trader Joe's at retail price."
She said Trader Joe's also unsuccessfully argued Pirate Joe's was competing for Canadian customers who may purchase goods in the U.S.
In its lawsuit filed in Washington, Trader Joe's alleged trademark infringement and false advertising and raised other concerns that it said were hurting its brand.
The company also argued Hallatt was not authorized to resell Trader Joe's products and was misleading people by dressing up his store in a way that looks similar to the U.S. stores.
On Friday, Trader Joe's spokeswoman Alison Mochizuki said the company is disappointed in the ruling and disagrees with Pechman's determination that it could not exercise jurisdiction over Hallatt's activities in Canada.
"We sell our products in our stores to our customers, and to maintain the goodwill and integrity of the Trader Joe's brand it is extremely important to us to protect and preserve the customer experience we have developed in our stores over the past 46 years," Mochizuki said in a statement.
Pechman gave Trader Joe's 10 days to amend its complaint over state law claims.
"We were cautiously optimistic that we were going to prevail with our motion to dismiss, and we were confident that even if it wasn't dismissed we would prevail in the litigation in defending ourselves," Hallatt said.
"We were thrilled that the judge looked at this and saw it for what it was, which was a frivolous lawsuit."
Hallatt said he became a fan of the company's products while spending time in the U.S.
There are no Trader Joe's stores in Canada, and according to Pechman's ruling more than 40 per cent of credit-card transactions at one Bellingham location are from non-U.S. residents.
The judge also noted consumers can't purchase Trader Joe's products from its website.
Hallatt said he started his business in early 2012 and has made regular trips across the border, spending almost $350,000 on goods.
He has now been banned from some Trader Joe's stores in Washington and has hired others to do his shopping for him.
Still, the shelves of his Vancouver store are lined with everything from canned goods and cereals to baking mixes and pasta sauces, all bearing Trader Joe's federally registered trademark logo.
Pirate Joe's states on its website that prices are a little higher in B.C. to cover costs such as transportation and because it adds nutrition-fact labels to the products.
Hallatt said Trader Joe's could still appeal the decision to a higher U.S. court but he's confident such a case would only end with the same ruling.
He said he'd happily close his shop if Trader Joe's opened a store in Vancouver, noting his business is not sustainable in its current form because his main supplier has tried to sue him.
"We'd prefer it if they just opened in Vancouver, put everybody out of their misery," Hallatt said. "But you know, in the meantime, I'm here to supply Vancouverites with products that they're asking me to bring in."
Trader Joe's operates in the District of Columbia and 30 U.S. states, including Washington, where it has 14 stores.