Trader Joe's Canadian Knockoff Closes Shop

Pirate Joe’s, a store in Vancouver, British Columbia, known for reselling signature products from Trader Joe’s – which doesn't operate stores in Canada – is shutting down following a long-running legal dispute, Canadian broadcasting network CTV News has reported.

Pirate Joe’s owner, Michael Hallatt, had been called back to court due to Trader Joe’s new claim that he isn’t handling its goods according to its standards, the network said. To fight back, Hallatt turned to crowdfunding to raise money for legal fees in his fight against Trader Joe’s, hoping to garner $50,000 in the process throughout the month of June to help deal with expert witness disclosures, rebuttals to Trader Joe’s reports, and other legal motions. At time of press, his campaign had raised only about one-tenth of this amount, with almost one-third of the month over, none of which would go to him if the campaign failed to meet its goal.

Hallatt’s business model was to purchase products in excess across the border, and then resell them at full price in his Vancouver store. According to his crowdfunding page, this now has him banned at all Trader Joe’s locations.

Monrovia, Calif.-based Trader Joe’s opened its initial case against Hallatt in October 2011, claiming that he could devalue the American-held trademark with the knockoff branding and online merchandising, The New York Times reported last August. Hallatt has long claimed that he's protected by the First Sale Doctrine.

“In essence, this doctrine is what allows you to advertise the fact that you are selling a used Ford Explorer without having to get permission from Ford. It defends the right of secondary markets to exist,” he explained on his crowdfunding page. “If I lose this case, it could create a precedent that would affect not only countless consumers, but hundreds of thousands of entrepreneurs who operate in a similar way.”

Although the court ruled in his favor during the initial trial, a U.S. federal appeals court last August determined that Washington state had the authority to hear a trademark lawsuit by Trader Joe’s against Pirate Joe’s, NYT said. The ruling overturned a district court’s decision to dismiss Trader Joe’s federal trademark claims against Pirate Joe’s, noting that Hallatt could devalue the American-held trademark with the knockoff branding and online merchandising.

Hallatt wouldn't reveal his future plans, but he did tell people to “watch the store space,” CTV News reported.