While not a new development (Pirate Joe’s closed its doors in 2017), I was recently at a Trader Joe’s in Washington and remembered the days when we didn’t have to cross a border twice and drive 3 hours to get the good cheese.
After looking up a few articles to see why the “smuggling store” finally surrendered and closed its doors. The below CBC article clarifies the business of Pirate Joe’s and its response to the lawsuit, and the BBC article nicely summarizes the suit. See below.
I found it interesting that in 2013, a judge dismissed the suit, finding that Pirate Joe’s could not be convicted under US trademark as the alleged infringements did not occur in the USA. This ruling additionally found that there was not sufficient evidence of USA economic harm caused by Pirate Joe’s, as it wasn’t reselling the products within the country. This dismissal was overturned in 2016, when it was found that a US court did in fact have the authority to hear this case.
Ultimately there was no suit resolution, as Pirate Joe’s (aka: “Irate Joe’s”) closed its doors in 2017 citing that the lawsuit had become too expensive.
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CBC post written by Michelle Ghoussoub and posted on June 8, 2017:
‘David vs. Goliath’: Pirate Joe’s shuts down following legal battle with Trader Joe’s
Vancouver store closes its doors following multiple lawsuits from America-based Trader Joe’s
There’s bad news for Canadians hoping to pick up some Trader Joe’s Milk Chocolate Smashing S’mores or Reduced Guilt Chunky Guacamole.
Pirate Joe’s, the Vancouver-based retailer known for reselling products from American chain Trader Joe’s, abruptly shut its doors on Thursday, citing a costly legal battle with the large corporation.
For over five years Pirate Joe’s owner Michael Hallatt has been operating what he described as a “David vs. Goliath” operation to bring beloved Trader Joe’s products to Canada.
His operation involved conducting clandestine bulk shopping trips to Trader Joe’s locations in Seattle, then bringing them over the border to resell them in his Vancouver store.
In 2013 Trader Joe’s filed a lawsuit against Hallatt for trademark infringement and false advertising, a move he says ultimately shut his store down.
“When you have your supplier as an adversary and a litigant it sort of adds another layer of difficulty and uncertainty,” he told CBC As It Happens host Carol Off.
Hallatt also cited the high U.S. dollar as a factor impacting his business.
“It’s really hard to run a business like this with the U.S. dollar running away on us,” he said.
Hallat was known for his tongue-in-cheek humour and unique social media presence. At one point he dropped the “P” from his store’s signage, leaving it at the “irate joe’s” in protest of the lawsuit.
The abrupt announcement of his business’s closure was no exception.
“We are sad that it had to come to this, but hey, at least we had some fun while we were at it right?!” he wrote in an Facebook post.
‘Pirate seeks pirate’
Despite the legal battle, Hallatt said he maintained a pleasant relationship with Trader Joe’s, characterizing his interactions with the corporation as “cordial and adverserial.”
Hallatt says he would often be recognized on his shopping trips and would be asked to leave the store, prompting him to don a variety of disguises and eventually, hire help.
He said he would post job ads on Craigslist with descriptions like “pirate seeks pirate — unauthorized undercover international grocery smuggling operation needs help.”
Hallatt said the genius of Trader Joe’s is the corporation’s unique ability to come up with products that everybody wants before they even know it.
He cited the example of a product called the “everything bagel spice” that’s designed to give any food item the unmistakable garlicky taste of an all-garnished bagel.
“Their stuff just flies off the shelves. I don’t know how they come up with it. I won’t even have heard of it yet and I’m already was already getting phone calls about the stuff,” he said.
“Someone will come in from across town and say do you have the gluten-free buttermilk pancake mix?”
Hallat said his customer’s passion for the products inspired him to keep up his grueling travel schedule, but that with no end to the legal battle in sight, he ultimately decided it was time to close his doors.
“The customers and their enthusiasm for what I was doing up here has been fuelling my passion, but at the same time you have to have some rationale for it and the legal hurdles I needed to climb were just really hard and high,” he said.
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Another good article outlining the legal progress of this case was posted on BBC on June 8, 2017.
Canada’s Trader Joe’s reseller Pirate Joe’s shuts down for good
A Canadian store devoted to reselling Trader Joe’s products north of the border has shut its doors for good.
Pirate Joe’s was popular with Vancouver locals who wanted to get their hands on fancy foods from the American alternative grocer.
But Trader Joe’s sued Pirate Joe’s owner Mike Hallatt in 2013, citing trademark infringement.
With legal costs mounting, the store closed on Wednesday at midnight after five years.
Mr Hallatt says it’s finally time to put away his vanilla meringues.
“I had to face the music,” he told CTV. “I got myself into this, so I had to get myself out of it.”
Trader Joe’s declined to comment on what this means for their lawsuit.
Mr Hallatt has always maintained that his store was legal under the US concept of “first sale doctrine”, but he says that he just can’t afford a drawn-out court battle with a corporate giant.
Mr Hallatt’s business model was unorthodox. Like some kind of Prohibition rumrunner, he would cross the border into the US, stock up on Trader Joes goodies and bring them back to Canada, where he sold them – at a mark up – from a small storefront under the name of Pirate Joe’s.
But it wasn’t liquor Mr Hallatt was smuggling – it was dark-chocolate peanut butter cups, triple-ginger snaps and sweet-apple sausage. Once Trader Joe’s caught wind of his scheme, they banned him from shopping, so he had to recruit others to make grocery runs for him.
“I would love for Trader Joe’s to open up in Canada so they could put me out of my misery”, Mr Hallatt told the BBC earlier this year.
The grocery store sued him in 2013, arguing that his business was infringing on their trademark and hurting their brand. That suit was dismissed by a Washington-state court because the alleged infringement did not occur in the US, and because Trader Joe’s couldn’t prove economic hardship, given all the items were bought at full price.
But in 2016 a US court of appeal overturned the dismissal, and Mr Hallatt has been embroiled in the renewed legal battle ever since.
“This is completely legal, there is no doubt anyone’s mind, it’s a question of brand control,” Mr Hallatt told the BBC.
Communications Law