A store in Vancouver was recently sued for selling popular “Trader Joe’s” products which it had imported across the United States border for resale in Canada. However, it was not sued for grey market importation or any other breach of import/export laws, but for trade-mark infringement and for depreciation of goodwill. The Vancouver store operated under the name “Pirate Joe’s” before it removed the “P”, making it “Irate Joe’s”, a play on the angry plaintiff in the lawsuit filed by the company that owns and operates Trader Joe’s.
Pirate Joe’s made no effort to hide the fact that its products were those of Trader Joe’s. In fact, it advertised the sale of Trader Joe’s products on a sandwich board outside its store.
Trade-mark law is not only concerned with the use of a registered logo or name, but also protects business owners from third parties who attempt to pass off lower quality goods under the same or confusing business name, or who may damage the reputation or goodwill of the business by associating that business with disreputable goods or otherwise harming its good name.
One problem that Trader Joe’s will have to overcome (along with a jurisdictional issue) is whether the resale of actual Trader Joe’s products, under the actual Trader Joe’s trade-mark, is actually infringement.
I would tend to disagree that Pirate Joe’s is infringing the Trader Joe’s trademark, since it is not using the trade-mark to pass off its own wares or services – it is actually reselling the original goods under the owner’s name. In other words, there is no confusion in the consumer’s mind whether the goods are those of Trader Joe’s. Second hand stores and thrift shops do this every day. I would be surprised if this claim was upheld.
There is a chance, however, that Pirate Joe’s could be held liable for other claims, including notional damages for depreciation of goodwill. This would require actual damage to the goodwill of Trader Joe’s, and one may expect that the hype and advertising created may actually increase its goodwill. Trader Joe’s has also claimed that Pirate Joe’s be held liable for deceptive business practices or false advertising.
The case remains to be decided. On August 3, 2013, Pirate Joe’s filed a motion to dismiss the matter entirely, claiming a jurisdictional challenge. Regardless of the outcome, it will be an interesting one to read about (while eating Trader Joe’s snacks).
For more information on trade-marks, contact me.