Trademarks can be trickier than a lot of people realize. Although it would be wonderful to simply tell the government you’re trademarking something and rest assured that it will be protected from that point on, the realities of applying for and protecting one’s trademark status are much more blurry.
This continues to be even increasingly the case as our markets become more and more globalized. Although a complaint for an alleged trademark violation would normally have to prove the defendant was infringing on the plaintiff’s market, defining the line between markets has gotten increasingly difficult with both the advent of the Internet and advances in technology that make travel easier and less painful.
A U.S. district court dismissed a lawsuit filed by Trader Joe’s for alleged patent infringement, but Trader Joe’s appealed that decision to the Ninth Circuit Court of Appeals and the appellate court decided to revive the grocery store’s claims.
The lawsuit began towards the end of 2011 when employees of a Trader Joe’s store in Bellingham, Washington noticed a particular customer who appeared to be buying excessive amounts of products. According to the lawsuit, Michael Hallatt allegedly returned several times a week to buy more groceries, often using disguises to avoid being noticed and even enlisting help from other people to buy products for him.
Hallatt admitted he was buying Trader Joe’s products in order to sell them at a markup in his own store in Canada, which was called Transilvania Trading at the time, but the name was changed to Pirate Joe’s.
In its complaint, Trader Joe’s alleges Hallatt spent more than $350,000 buying products from Trader Joe’s to resell, despite the fact Trader Joe’s says Pirate Joe’s is not an approved reseller of any of the chain’s products and Hallatt himself has never claimed any affiliation with Trader Joe’s.
In its trademark lawsuit against Pirate Joe’s and Hallatt, the store’s owner, Trader Joe’s is alleging unfair competition, trademark infringement, false designation of ownership, as well as false advertising.
The district court initially refused to hear the case against Hallatt, saying the alleged infringement took place in Canada, where Trader Joe’s does not currently have any stores. As a result, the court ruled that Trader Joe’s could not prove Hallatt’s store had infringed on its own business in any way and dismissed the lawsuit.
But the Ninth Circuit Court disagreed. Instead, the appellate court ruled that, by setting up a facsimile storefront and online merchandising that included knockoff branding, Hallatt’s Canadian store had the potential to devalue the American-held trademark of Trader Joe’s. The Ninth Circuit Court, therefore, remanded the case back to a federal district court in the state of Washington.
Hallatt continues to defend his actions and to fight the trademark lawsuit against him. According to a statement from his attorney, they’re fighting this particular legal battle on behalf of all his Canadian customers who want access to Trader Joe’s products.
Although if his actions were really so innocent, it does beg the question of why he didn’t simply go through the proper steps to become an approved reseller of the grocery chain’s products.
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