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Trader Joe's Tries to Shut Down Pirate Joe's

Trader Joe's Tries to Shut Down Pirate Joe's

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Trader Joe's products have a cult following, but not everyone lives close enough to a store to get its Organic Hummus Dip whenever they want. So Vancouver entrepreneur Michael Hallatt had the bright idea to open his own business as a Trader Joe's fixer in Vancouver, where there are no Trader Joe's stores.

Operating out of a store called Pirate Joe's, Hallatt resells Trader Joe's goods that he drives to Washington to acquire. Hallatt says he is breaking no American or Canadian laws in doing so, as he is allowed to purchase and resell trademarked products as long as they are sold without material change, according to ABC News.

Hallett's prices are "slightly higher than the retail price he paid for them in order to defray the transportation and labor expense, overhead and to permit a modest profit," he says.

But Trader Joe's has decided they do not like this one bit and are suing to get the little import shop shut down. Trader Joe's has cited trademark infringement, false endorsement, and false advertising, among other charges. The company says Hallett has harmed its Washington stores with his operation, though Hallett has spent hundreds of thousands of dollars at them since beginning his bootlegging operation.

"Trader Joe's thinks Canadians are too ignorant not to tell the difference between the empire and my little shop on Fourth Avenue," Hallett said.

Hallett considered bowing to Trader Joe's legal pressure because he couldn’t afford to fight the chain in court, but his business insurance decided to back him in the fight, and now Hallett is countersuing for discrimination on the grounds that Trader Joe's told its managers not to sell to him.

"The purpose of Hallatt's business, known as Pirate Joe's, is to provide a convenience to Canadians who wish to purchase Trader Joe's branded products but would prefer to avoid the time, trouble, and expense of traveling to the United States and returning to Canada through border security checkpoints and Canadian customs," Hallett's countersuit says.

"If Trader Joe's really was a person," Hallet said, "he'd be cool with this."

Rebel Canadian grocer Pirate Joe's prepares for Trader Joe's court battle

To your average person, a 6oz bag of dried pineapple is a non-threatening treat. To the cherished grocery store chain Trader Joe’s, that and other products including black bean quinoa chips and dark chocolate-covered edamame are worth a five-year legal battle.

The company claims a rebel Canadian grocery operation called Pirate Joe’s is violating its trademark. Pirate Joe’s buys Trader Joe’s products, smuggles them across the border to Vancouver, and sells them.

The case is set to go to trial in November. For Pirate Joe’s to have a fighting chance against one of the most popular grocery stores in the US, its founder, Mike Hallatt, needs to raise some serious money. So he has turned to the internet, launching a crowdfunding campaign on the platform Crowd Justice, seeking $250,000.

That number pales when compared to the more than $1m Hallatt says he has spent at Trader Joe’s locations in the US, in order to supply Vancouver residents with goods that are not sold in their country.

“It’s the biggest bet in my life,” said Hallatt, who has lived and breathed Pirate Joe’s for more than five years. “Everybody in my world is telling me to quit, and yet customers are coming in and saying: ‘Oh my god, I’ll support you.’”

Trader Joe’s has a cult-like following in the US, where it is known for its friendly corporate culture, affordable prices and speciality food items. Its legal battle with Pirate Joe’s, however, has showcased its corporate might.

The company, which has not commented on pending litigation, sent Hallatt a cease-and-desist order almost immediately after he started Pirate Joe’s, in 2012. It then pursued a trademark case. That was dismissed in October 2013, because the court determined Trader Joe’s, a US company, couldn’t sue in Canada, where it does not have shops or offices.

It was a major win for Hallatt and his customers, many of whom do not have the time, money or documentation to cross the border to shop at the nearest Trader Joe’s, which is nearly 90km from Vancouver.

Celebrations ground to a halt last year, though, when the ninth circuit court of appeals overturned the lower court’s motion to dismiss, sending the case to trial.

The ninth circuit decision has had a significant impact on US trademark law. “Just opening the door to trademark owners to sue in US courts for acts that occurred abroad and to be able to survive a motion to dismiss is huge,” said Christine Farley, a professor at American University Washington College of Law.

Farley said the onus was now on Trader Joe’s, to prove that Hallatt’s business has affected its commerce and trademark rights in the US.

“The ninth circuit has essentially rolled out the red carpet for Trader Joe’s to make the claim and now the ball is in their court,” she said, “they have to figure out how to do it with this quirky set of facts.”

One such quirky fact is that Trader Joe’s, which is privately owned by the German grocery chain Aldi, has a Canadian and a US trademark but decided to pursue the case in a US court. Another is that Hallatt does not hide the fact he is an unauthorized retailer – in fact, he is open about the company’s frustrations with his operation and seems to revel in its relentless efforts to bring him down.

The Pirate Joe’s website declares that it is “unaffiliated, unauthorized, unafraid” and has a section titled “lawsuits n’ such”. Keen observers have also noticed that dropping one letter turns the chain’s name to “Irate” Joe’s.

Hallatt is one of Trader Joe’s best customers – he estimates he has spent $20,000 to $25,000 at stores each month in the past five years – at least $1.3m. But Trader Joe’s will not have to worry about such detail if Hallatt cannot raise the resources to fund a trial.

“If Mike Hallatt can’t pay a trademark attorney to do the litigation,” Farley said, “then they’ve won.”

Which is why Hallatt turned to CrowdJustice, a British platform recently expanded to the US that helps people raise money for court cases against high-powered adversaries. “What we’re setting out to do in general is to level the playing field in the legal system and democratize access to justice,” said CrowdJustice chief executive Julia Salasky.

Pirate Joe's Shuts Down In Vancouver Ahead Of Fall Court Battle

Canadian fans of Trader Joe’s will now have to suck it up and go to the States, or just buy the stuff on Amazon. A Vancouver store that resold the American chain’s products has closed its doors.

“If you just so happen to be a millionaire and have $50,000 available to donate to us to stand up to Trader Joe’s in federal court, please call immediately,” Pirate Joe’s owner Michael Hallatt wrote on Facebook Wednesday.

“Otherwise, please head in today to grab your TJ's loot, because we will likely be closing for good at the end of the day today.”

Hallatt, a Trader Joe's admirer himself, opened his store in 2012.

Since then, he and shoppers he calls "cats" have been travelling south of the border to pick up products at stores.

He then resells them at a markup, according to the website. This is to pay rent and staff, as well as a label supplier so they can re-label all the products with Canadian ingredient and nutrition labels.

But he’s been in a long legal fight with the grocery store chain. It first sued him in 2013 over, among other things, federal trademark infringement and unfair competition. The lawsuit was filed in U.S. federal court in Washington state.

"We're agreeing to disagree on the merits of the case."

It was later dismissed by a judge, who ruled that it didn’t apply to laws in the country and didn't affect the U.S. economy.

But a federal appeals court overturned the district court's decision last summer, according to The New York Times. A trial was scheduled for November.

"If we were going to trial, it would be just prohibitively expensive for me," he told CTV Vancouver. A crowdfunding campaign to cover legal costs came up far short of its $50,000 goal. So he has come to an agreement with Trader Joe’s and is shutting down his store.

But he maintained to CTV that he’s allowed to resell Trader Joe's copyrighted products, under an American legal principle called the first sale doctrine.

The grocery fairy came last night!

A post shared by Pirate Joe's (@superpiratejoes) on Oct 28, 2016 at 1:04pm PDT

“We're agreeing to disagree on the merits of the case,” he said.

Kal Raustiala and Chris Sprigman argued on the Freakonomics blog that American trademark law doesn’t give trademark holders control over anyone who resells their items, as long as those items aren’t altered in any way.

"PJ’s doesn’t do anything to the TJ’s products other than truck them across the border in a white panel van," they wrote.

"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 (a U.S. user-car retailer) for reselling Fords."

Hallatt told The Canadian Press in 2013 that he’d shut down his business if Trader Joe’s came to Canada.

"We'd prefer it if they just opened in Vancouver, put everybody out of their misery," he said.

"But you know, in the meantime, I'm here to supply Vancouverites with products that they're asking me to bring in."

Hey Trader Joe’s, how about that? Canadians will buy your peanut butter pretzels.

Trader Joe's Torpedoes Pirate Joe's, Sues Its Own 'Best Customer'

Grocery chain Trader Joe's has opened up a legal can of whup ass on its self-professed "best customer," Pirate Joe's.

Vancouver, British Columbia shopkeeper Michael Hallatt, claims to have spent more than $350,000 at Trader Joe's in the past two years. Trader Joe's would like him to stop shopping there. What gives?

Hallatt, makes frequent drives across the border to shop the U.S. stores, then resells popular Trader Joe's branded products in his own store, cannily called Pirate Joe's.

Trader Joe's is not happy and filed a lawsuit in California aiming to shut him down, according to the San Francisco Chronicle. The case may or may not have merit.

Pirate Joe's exclusively sells Trader Joe's branded products and consistently ranks high among shoppers' favorite stores. It sells mostly private label items developed by or labeled for Trader Joe's. In the grocery business, Trader Joe's is called a limited assortment retailer. Like its sister company Aldi, they sell a proprietary selection of products almost exclusively.

Products that can't be bought anywhere else, except maybe Pirate Joe's.

As as shopper, it's hard to stand in judgement. Were I to land someplace without a Trader Joe's, the desire for coconut milk and dark chocolate coated almonds could force me into the black market. And given the demand for cult favorites like Charles Shaw wine (Two Buck Chuck) and Speculous Cookie Butter (they can't keep it in stock), it was only a matter of time before someone saw a business opportunity.

And therein lies Trader's Joe's point. Hallat doesn't sell perishable items, so some regulations don't apply here. I'm not a legal expert, so there's no telling how this will play out, but Trader Joe's has much to protect. Even from a single pirate.

First, stores have a difficult enough time keeping shelves stocked with popular items. Trader Joe's locations are very small, back room space is limited and inventory tight. This is a remarkably lean operation, one that runs like clockwork -- someone regularly emptying shelves to sell across the border can wreck havoc with operations.

Second, the Trader Joe's brand is everything. It's been cultivated quite carefully over the years. Each store branded product given a catchy name, back story and personality. Yes, a product with personality. That's how good Trader Joe's is.

Trader Joe's doesn't operate in Canada, but it might. The company filed for a trademark there in 2010. Opening stores in Vancouver, in Pirate Joe's territory, may not be far off.

And finally, there's the problem of pirated goods in general. Luxury brands regularly police pirated goods and employ legal tactics to stem the tide of faux or illegally obtained goods. Comparing cookie butter to Louis Vuitton may seem silly, but it's the company's currency and carries value in the marketplace.

Hallatt is profiting from another business' product and investment. Trader Joe's invests in the product development, carries the production, transportation and inventory expenses, and pays for the marketing. A $2 to $3 markup adds to the perception that Trader Joe's prices are high, sells them in an environment the company has no control over and if something sold is bad, expired or damaged in some way, the Trader Joe's name is on it.

Hallatt may be a canny entrepreneur supplying a need. But those bottles of Two Buck Chuck shouldn't be his to resell for $5.

Trader Joe's pursues lawsuit against Canadian 'pirate'

B.C. business pirating Trader Joe's

Drop the 'p' and call it "Irate Joe's" instead.

The owner of Pirate Joe's, a popular destination convenience store in Vancouver, is fed up that U.S. retailer Trader Joe's won't drop a lawsuit against the unsanctioned Canadian reseller.

Michael Hallatt insists he is still a huge fan of Trader Joe's, which inspires cult-like loyalty from some customers, but he's irate that the corporate heads of the company are trying to shut down his Kitsilano store.

Trader Joe's has 390 stores in 30 U.S. states, but not one outlet in Canada, where many die-hard fans live. So, for the past year and a half, Hallatt has been crossing the border to buy products from the American retail chain, which he then brings back to resell in Vancouver at his "Pirate Joe's" store.

"There's a great opportunity to provide a service for Vancouverites," he said.

Hallatt said he has been spending around $4,000 to $5,000 a week at Trader Joe's in Bellingham, Wash., which amounts to around $350,000 in total since he began the grub-running in January 2012.

He was on the corporate radar a few months after his cross-border venture began, but it wasn't until May this year that Trader Joe's filed a lawsuit in Washington State Federal Court. The complaint alleges federal trademark infringement, false endorsement, and false advertising, and argues that Pirate Joe's is a threat to the reputation of the Trader Joe's brand.

Hallatt's lawyers filed a motion to dismiss, but so far it appears the suit is proceeding.

"I can't stress this enough: there's a behaviour at the store level and there's a corporate behaviour," Hallatt told CBC News. "The stores are awesome, they are helpful, they get me stuff, they are fantastic."

Hallatt said he has also been banned from Trader Joe's stores, and that the company went to the trouble of sending his photo around to individual stores to enforce the ban. But even that countermeasure hasn't stopped the entrepreneur.

"I am hiring people to shop for me to keep the store open," Hallatt said.

Hallatt says he has a legal right to sell the products, and that he's going to stick around and fight.

"I'm not going to quit," he said.

CBC News contacted Trader Joe's but the company would not comment on the lawsuit.

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But it wasn't liquor Mr Hallatt was smuggling - it was dark-chocolate peanut butter cups, triple-ginger snaps and sweet-apple sausage. Once Trader Joe's caught wind of his scheme, they banned him from shopping, so he had to recruit others to make grocery runs for him.

"I would love for Trader Joe's to open up in Canada so they could put me out of my misery", Mr Hallatt told the BBC earlier this year.

The grocery store sued him in 2013, arguing that his business was infringing on their trademark and hurting their brand. That suit was dismissed by a Washington-state court because the alleged infringement did not occur in the US, and because Trader Joe's couldn't prove economic hardship, given all the items were bought at full price.

But in 2016 a US court of appeal overturned the dismissal, and Mr Hallatt has been embroiled in the renewed legal battle ever since.

"This is completely legal, there is no doubt anyone's mind, it's a question of brand control," Mr Hallatt told the BBC.

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This is one pirate that will have to walk the plank.

Pirate Joe’s, a popular local re-seller of Trader Joe’s goods in Vancouver, has taken down its pirate mast and appeared to have shut its doors.

Pirate Joe's closes Vancouver shop in wake of suit by Trader Joe's Back to video

“If you just so happen to be a millionaire and have $50,000 available to donate to us to stand up to Trader Joe’s in federal court, please call,” read a post shared Wednesday on Facebook by Pirate Joe’s owner Mike Hallatt.

“Otherwise, please head in today to grab your TJ’s loot, because we will likely be closing for good at the end of the day today.”

Arrr!: Trader Joe’s loses suit against Pirate Joe’s over reselling its products in Canada

A Canadian judge ruled that the store owner who had been buying Trader Joe's treasured products in the United States and reselling it across the border at his cheekily named Pirate Joe's for more money was not a swashbuckling crook after all.

Judge Marsha Pechman dismissed Trader Joe's case against businessman Michael Hallatt, concluding that his operation was neither trademark infringement nor false advertising, reported CBC News.

"Even if Canadian consumers are confused and believe they are shopping at Trader Joe's," Pechman said, "there is no economic harm to Trader Joe's because the products were purchased at Trader Joe's at retail price."

Hallatt says he spends between $4,000 and $5,000 at a Trader Joe's in Bellingham, Wash., every week.

Trader Joe's may have won the battle had a U.S. law known as the Lanham Act been applied. Hallatt told CBC News that he feels the ruling absolved him of any guilty.

"The Lanham Act, which is this very broad powerful statute that allows corporations to, kind of, you know, beat up on anybody that affects U.S. commerce is very, very strong and powerful and can essentially shut down commerce in another country," he said.

Hallatt added that for the case to be dismissed they needed to demonstrate that Pirate Joe's in no way disrupted U.S. trade.

Trader Joe’s Loses Lawsuit Against Canadian Reseller Pirate Joe’s

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Trader Joe’s Loses Lawsuit Against Canadian Reseller Pirate Joe’s

Pirate Joe’s is a small retail store in Vancouver that sells only one line of merchandise: stuff purchased from Trader Joe’s and trucked across the border. People in Vancouver love Trader Joe’s, see, but the chain has no Canadian stores. Pirate Joe’s fills in the gaps for customers who don’t want to travel across the border but who really want pecan praline granola and chocolate-covered potato chips.

This is a situation where everyone wins, isn’t it? Trader Joe’s sells thousands of dollars’ worth of merchandise each week to the store owner. The store owner marks every item up a few bucks and sells it in the store. Customers get their Trader Joe’s fix without having to wait in line at the border crossing to Washington state. Trader Joe’s doesn’t think so, and sued in federal court trying to get Pirate Joe’s shut down. They failed, since British Columbia is not a U.S. state. Keep the long arm of your law out of Vancouverites’ cat cookies, Uncle Sam.

The key question in this case is whether shoppers would mistake Pirate Joe’s for a genuine Trader Joe’s store, diluting the brand’s trademark and possibly harming the brand if the store sold a customer spoiled or damaged frozen food. Signage makes it clear that PJ’s isn’t owned or sanctioned by TJ’s, but the tropical decor and paper Trader Joe’s bags that the store sends shoppers home with could confuse the issue a little.

Trader Joe’s reports that as many as 40% of the credit card customers at its Bellingham, Wash. location near the border are from Canada. That would mean that the existence of Pirate Joe’s damages a brand that’s popular among Canadians, if not necessarily in Canada. The court disagreed, however, and Pirate Joe’s remains.

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