U.S. judge dismisses case against B.C.'s Pirate Joe's
A Washington state judge has dismissed a lawsuit filed by U.S. grocery giant Trader Joe's against a Vancouver retailer who bought products at its stores south of the border and then resold them back in British Columbia from a shop called Pirate Joe's. (file image)
Published Friday, October 4, 2013 6:43AM CST
VANCOUVER -- A Washington state judge has dismissed a lawsuit filed by U.S. grocery giant Trader Joe's against a Vancouver retailer who bought products at its stores south of the border and then resold them back in British Columbia from a shop called Pirate Joe's.
Judge Marsha Pechman dismissed the case this week, saying there was no basis to apply a U.S. law known as the Lanham Act, which confers upon U.S. courts broad jurisdictional powers.
The lawsuit was filed in Washington state in May by Trader Joe's against Michael Hallatt, a Canadian citizen with permanent U.S. alien status who operates a business in Vancouver.
"Here, all alleged infringement takes place in Canada and Trader Joe's cannot show economic harm," wrote Pechman. "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.
Trader Joe's had alleged trademark infringement and false advertising and raised other concerns that it said were hurting the company's brand. The company also argued Hallatt was not authorized to resell Trader Joe's products and was misleading people by dressing up the shop in a way that looks similar to the U.S. stores.
By Thursday night, Trader Joe's had not posted a comment about the ruling on its website, and attempts to contact its Seattle-based lawyers by email were not successful.
However, 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," said Hallatt.
"We were thrilled that the judge looked at this and saw it for what it was, which was a frivolous lawsuit."
Hallatt said he got addicted to 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. because it adds nutrition-fact labels to the products, pays rent and faces transportation costs.
He 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.
Hallatt said he'd happily close if Trader Joe's opened a store in Vancouver, noting his business is not sustainable in it's current form because his main supplier has tried to sue him.
But he said he's not going to quit and get pushed around by somebody who thinks they can threaten a law-abiding small businessman.
"We'd prefer it if they just opened in Vancouver, put everybody out of their misery," he 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 state, which boasts 14 stores.