We previously posted a blog about a lawsuit filed by Trader Joe’s against Michael Hallatt, a Canadian citizen doing business as “Pirate Joe’s.” Hallatt’s business model involves making trips to the United States to purchase hundreds of bags of groceries from Trader Joe’s and then delivering them for resale at marked up prices to his store in Vancouver, Canada. Trader Joe’s took exception to this practice and brought a lawsuit in federal court in Washington against Hallatt, alleging trademark infringement, trade dress infringement, trademark dilution, false advertising and unfair competition. Hallatt filed a motion to dismiss the lawsuit, claiming that the U.S. court lacked jurisdiction to hear the case.
As reported by NBC News, the U.S. District Court for the Western District of Washington has now dismissed the case, holding that it lacks jurisdiction to apply the Lanham Act, the law governing trademarks in the United States. The majority of the claims asserted by Trader Joe’s sounded in trademark law.
The Court held that while the Lanham Act may be applied against activities occurring in a foreign jurisdiction, the activities in question must have some effect on U.S. commerce and must cause damage to the plaintiff. In this case, the Court found that all of the allegedly infringing activities took place in Canada, where Hallatt sold the Trader Joe’s products to Canadian customers. Moreover, the Court found that Trader Joe’s, which has no presence in Canada, failed to establish any economic harm as a result of the alleged infringement. The Court noted: “Even if Canadian consumers are confused and believe that they are shopping at 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.” Accordingly, the Court held that extraterritorial application of the Lanham Act was not warranted, and dismissed the case for lack of jurisdiction over the subject matter.
It will be interesting to see if Trader Joe’s appeals this decision. We will continue to monitor this case and will report back as events warrant. The case is Trader Joe’s Company v. Hallatt, 2:13-cv-00768-MJP (W.D. Wash.).
