Trader Joe’s vs. Pirate Joe’s

Vancouver is one of the world’s most lovely and livable cities.  It sits on a glittering Pacific inlet at the base of dramatic mountains, has a temperate, mild climate, and a diverse and affluent population.  But for people who love to eat, it has one glaring flaw. There is no Trader Joe’s. [Related: do you know who owns Trader Joe's?]

That has always rankled Vancouverite Michael Hallatt. So much so that a couple of years ago Hallatt decided to open a store in the affluent Vancouver neighborhood of Kitsilano. He named it “Pirate Joe’s.” Hallatt stocked his new store by making frequent trips across the border to Trader Joe’s around the city of Bellingham, Washington. Hallatt spent over $350,000 on Trader Joe’s items, including Charmingly Chewy Chocolate Chip Cookies, Milk Chocolate Covered Potato Chips, Gluten Free Rice Pasta, and Tea Tree Tingle Conditioner. Hallatt marks the products up by a couple of bucks and puts them on the shelves of Pirate Joe’s, where hungry Vancouverites have been snapping them up.

Which sounds like a decent business for Hallatt, and also a sweet deal for Trader Joe’s, which gets to sell a lot of its product in a market where it would otherwise sell nothing. But apparently Trader Joe’s doesn’t want Hallatt’s money. And now they’ve filed a lawsuit in Seattle claiming that Hallatt’s Pirate Joe’s business is infringing their trademarks.

Why on earth would Trader Joe’s be suing one of their best customers? And what, if anything, is wrong with reselling products? 

On the first question, all we know is what Trader Joe’s says in their complaint. TJ’s makes some vague allegations that Hallatt has been handling some of their food items improperly, creating the risk that customers will get sick, and alleges that it “is aware of at least one customer who became ill after consuming a frozen food product purchased from Defendants.”

That’s pretty weak, and in any event, if Hallatt is handling food improperly there are plenty of health inspectors – yes, Canada has those – that can handle that.

TJ’s real concern isn’t about health and safety – it’s about their trademarks. Consumers shopping at Pirate Joe’s, TJ’s says, will be confused. Because the TJ’s trademarks are all over the items on Pirate Joe’s shelves, PJ’s customers will think that TJ’s is sponsoring the Vancouver store. And they’ll be mad that they’re being charged a couple of extra bucks for TJ’s items.

Is this persuasive? In a word, no. The Vancouver store is named Pirate Joe’s, for Pete’s sake. If there was ever a way effectively to communicate to customers that Trader Joe’s was not sponsoring your store, using the word “Pirate” in your name is it.  Plus, there’s the fact that consumers have eyes. By which we mean that if they have them, and if they use them, they are not likely to be confused. As usual, a picture is worth at least a thousand words. Here’s a Trader Joe’s: 

Trader Joe's

(Photo: Anthony92931 via Wikimedia Commons)

 And here’s Hallatt’s Pirate Joe’s store: 

(Photo: Mike Hallatt)

(Photo: Mike Hallatt)

(Photo: Mike Hallatt)

Do you think these look alike? If you do, you need new glasses. If, on the other hand, your vision is good, you may notice that the window display has been modified to read “Irate Joe’s.” Hallatt did this after TJ’s sued him. He also painted a message to his consumers on the sidewalk outside the front door: “Unauthorized. Unaffiliated. Unafraid.” In short, no reasonable person is going to confuse these stores, or believe that TJ’s is sponsoring Pirate Joe’s. 

Instead, PJ’s is reselling TJ’s popular merchandise. The ordinary rule of property is that once you purchase an item, it’s yours to use as you like. Or, to resell. This concept is the basis of a great American (and Canadian) institution: the yard sale.  And more recently, eBay.

Now, reselling on a larger scale is also possible. Sometimes resellers are authorized by the original manufacturer – as in the case of authorized Apple computer resellers like Peachmac. Sometimes they aren’t, as in the case of Pirate Joe’s. But our rules of real property (that is, tangible property, or as The Economist once called it, “things you can drop on your foot”) permit reselling as a general matter.

Does intellectual property law offer a different weapon to Trader Joe’s? Not really. Trademark law doesn’t confer on trademark owners the right to control subsequent unauthorized resales of genuine products, at least if the reseller doesn’t alter the product in a way that confuses consumers. PJ’s doesn’t do anything to the TJ’s products other than truck them across the border in a white panel van. 

If TJ’s has the right to stop PJ’s from reselling their products, then any trademark owner might assert a similar right. Ford could sue Carmax for reselling Fords. Prince (the sports gear company, not the musician) could sue Play It Again Sports for reselling Prince tennis racquets. And if this were true, a trademark law that is aimed at preventing consumer confusion will be preventing something else entirely – competition.  

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  1. RicardoB says:

    It’s ridiculous this is even coming up now. Pirate Joe’s was briefly called Transilvania Trading when it started selling TJ’s at a different location in Kits (though that may have been because the “Transilvania” half of the sign was left behind when Transilvania Breads moved from their original location and re-branded) so he’s only acted to be more clear that he’s unassociated with TJ’s.

    If TJ’s wants to bury PJ’s, open up a store in Vancouver. I really don’t understand why it’s taken them so long to enter the Canadian market. Our arms couldn’t be more open.

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    • jethro says:

      The best response thus far! Why in the world are they monkeying around with a lawsuit instead of just opening a store where someone has already done the market analysis?

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  2. Mark Gardiner says:

    As the author of “Build a Brand Like Trader Joe’s”, I spent a year working ‘undercover’ for this fiercely secretive company. Based on what I learned, I’m not at all surprised that they’re aggressively going after ‘Pirate Joe’s’. Those of us who watch TJ’s were surprised it took this long.

    “Will Trader Joe’s ever come to Canada?” is one of the most common questions I get. If they did cross the border, it’s likely that the Lower Mainland of BC (where Pirate Joe’s is) would be the first beachhead. So in one sense, I understand their desire to protect their trademark up there, even though they don’t operate there. That said, few legal experts seem to feel that this suit will be the thing that drives Pirate Joe out of business.

    Knowing the company as I do, I don’t think this is as much about trademark infringement as it is about sheer pique. Underneath the laid- (or should I say ‘lei-d’?) back image, there’s a control-freak style to the current senior management.

    If the company’s senior management philosophy was true to the public perception of the brand, they would have contacted Pirate Joe and said, “OK. Here’s the deal: We’ll sell to you out of our Bellingham store as long as you promise to limit yourself to your one current store, and agree to immediately close your store as soon as we open a store anywhere in British Columbia. Then, we’ll make you our first Canadian store manager.”

    Why make an enemy of a guy who is, effectively, softening the beachhead for the brand’s eventual expansion north?

    Well-loved. Like or Dislike: Thumb up 11 Thumb down 0
  3. Daniel H says:

    That’s it, I am shopping at Fresh and Easy from now on. Did not know T.J. is a greedy giant corp like Whole Foods. Thought it was a family operation.

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    • James says:

      Now why would you think a family operation is inherently less or more greedy than a “giant corporation”? I could introduce you to some families that would put just about any corporation to shame in that respect.

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    • Peter Lippman says:

      TJ’s in fact WAS a family business when Joe Coulombe [sp.?] started it in Pasadena, around 1960. He was a wine-lover and for years gave wine lectures to everybody who would listen (including the Caltech alumni, at alumni events on and near the Pasadena campus).

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  4. Alex says:

    It’s interesting that a comparison is made to the car market where it is highly regulated and often distribution ,ethos are protected by law. (Dealerships are protected). It all comes down to control. I wish I could buy a car direct from Ford but I can’t. Instead we have this convoluted process of haggling through a middle man that is intimidating.

    In TJs case I think they want to prevent this middle man image and maintain the reputation of their product. Who is to say the next guy does not tamper with what he is selling.

    The way TJs is going about it is not really surprising. Given their situation legally it’s probably what an qualified lawyer would advise.

    Now do we think that this is right well? Well in this case many would sympathize for the store as how does this harm TJs? In the near term it may not, but. The long term is unknown and they wish to maintain control as any business does.

    If we are going to question the right to perform the end sale then we should apply that standard evenly. I should be able to avoid the dealership and buy direct. If we allow dealers which are essentially resellers than PJs should be allowed to function and let the market speak.

    All that is clear is TJs believes that how the market speaks on what they buy from PJs will affect TJs reputation.

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  5. Ross says:

    The biggest threat to any small business is obscurity. What better way to get your little shop some worldwide attention than picking a fight with some mega-operation? Do we know that TJ did not offer a more reasonable compromise, but were told, “see you in court”? In all the David-and-Goliath trademark cases I have seen, there is always a hint of the little guy intentionally trying to capitalize on the similarity, but when the legal battle starts, the media always sides with the underdog over the big bad conglomerate.

    I lived in Santa Cruz in the 80s, where a “natural fast food” restaurant tried to trademark the name “McDharma’s” and were promptly sued by McDonalds. They got a lot of mileage out of that conflict, even to this day: http://www.dharmaland.com/history/imageextra.html. So you’ll have to pardon me if I take Hallatt’s version of the story with a grain of salt.

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    • Phil Persinger says:

      Ross–

      In Syracuse back in the 60s & 70s a little greasy spoon in the college town off the SU campus built its menu around a big burger called The Whopper. I can’t tell you whether this item was conceived and named before Burger King developed its own Whopper, but I can tell you that BK had no presence at all in Central NY up to about 1975 when Carroll’s– an upstate NY burger chain– converted all its restaurants, including the ones in Syracuse, to BKs. Of course, it didn’t take long for the corporate suits to send a nasty cease-and-desist letter to the greasy spoon. Owner of greasy spoon took a look at the legal battlefield, decided to not to engage the enemy but simply changed the name of the burger to The Vopper.

      Sun Zi says the best-won battle is the one never fought. BK walked away, the Vopper was victorious and the publicity the greasy spoon got from the whole deal was priceless.

      Of course, BK is still in business and I’m not sure the greasy spoon survived its owner’s retirement. Still, I’ll bet every region in the US has seen a little guy do similar jujutsu on a big corporation. But it’s not often we see a little guy like Pirate Joe make the first move.

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  6. Dan says:

    Remember, Carmax is called Carmax. If it were called “Pirate Ford,” we wouldn’t be so surprised if Ford was after it to change its name. If Hallat called his store GroceryMax, he’d have no issue with TJs either. But then again, he wouldn’t have very many customers. Because his customers are coming in part because of the implied association with TJs due to the name. Which is TJs’s point.

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