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Trademark Infringement Claims Involving a Non-US Company

Sometimes potential trademark claims aren't always what they seem. The grocery chain Trader Joe's is appealing after losing a lawsuit to enforce its trademark against a Canadian individual who operates a store called "Pirate Joe's." For the past three years, Michael Hallatt has operated a grocery store that sells thousands of dollars of Trader Joe's goods in Vancouver.

Mr. Hallatt opened his store in 2012, and Trader Joe's immediately contacted him to stop his operation. When he refused, Trader Joe's sued in federal court in the state of Washington. In the 2013 lawsuit, Trader Joe's claimed that the Canadian store was infringing on its trademarks and harming its business. Trader Joe's alleged that Pirate Joe's was arranged too similarly to an actual Trader Joe's store and that the store's display of products created consumer confusion. Trader Joe's argued that consumers might believe the retail store was endorsed by or affiliated with Trader Joe's. Trader Joe's has applied for a trademark in Canada but has not opened any stores there.

According to its website, Pirate Joe's is "an unaffiliated and unauthorized re-seller of Trader Joe's products." The website also explains that the store buys retail from Trader Joe's, legally imports the items to Canada, adds Canadian-compliant ingredient and nutrition fact labels, and sells the goods to Canadians who live too far from Trader Joe's in Washington to conveniently make the trip south. To acquire his items, Mr. Hallatt has dressed in drag and traveled as far as Los Angeles to purchase goods. He did find himself banned from some Trader Joe's stores and Trader Joe's apparently distributed his photograph as a warning. Other staff members now purchase the inventory.

In order to prove a trademark infringement claim, the plaintiff must show the defendant's mark created a likelihood of confusion about the origin of the defendant's goods or services. First, the plaintiff must show it has a protected right in the trademark. Then, the plaintiff must show the defendant is using a confusingly similar mark that creates a "likelihood of confusion," mistake, or deception.

Mr. Hallatt continued operating his store while he defended his actions in the lawsuit. He changed the store's name to "_irate Joe's" and adopted the marketing campaign concerning the store's status as "unaffiliated and unauthorized." The judge eventually ruled that Mr. Hallatt could not be subject to U.S. trademark law because the alleged infringements did not occur within the United States. Moreover, Trader Joe's could not prove the business was causing any harm. In fact, Trader Joe's reaped a benefit because all the products sold were from Trader Joe's stores. Mr. Hallatt has announced plans to build a second store and to operate an online storefront.

Sounds crazy, right? It isn't. To discuss a threat to your intellectual property, including trademarks, contact theexperienced Orange County IP lawyers at Myers Berstein today.

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