Trader Joe's Wants to Shut Down Pirate Joe's Store in Vancouver

Aug. 17, 2013 — -- Michael Hallatt, a Canadian in Vancouver, British Columbia, spent hundreds of thousands of dollars at Trader Joe's in less than two years, but the grocer wants him to stop shopping at the offbeat chain.

Hallatt, 53, runs a store called Pirate Joe's across the Canadian border where there are no Trader Joe's stores, the national retailer says in a lawsuit. Trader Joe's, based in Monrovia, Calif., sued for an injunction against Hallatt's store and damages as a result of trademark infringement, false endorsement, false advertising and other allegations.

Hallatt resells products including Trader Joe's Organic Hummus Dip, Charmingly Chewy Chocolate Chip Cookies, and Milk Chocolate Covered Potato Chips, the company said a lawsuit filed with the U.S. District Court in Seattle in May. The company named Hallat and his businesses, Pirate Joe's and Transilvania Trading.

Hallatt says, "If Trader Joe's really was a person, he would be cool with this."

Trader Joe's has about 400 grocery stores in 30 states and the District of Columbia, including 14 stores in the state of Washington, which Hallatt has harmed the most with his cross-border operation, Trader Joe's says in its lawsuit.

"It's very typical of companies to think they have to bully little guys out of some sense of brand protection," Hallatt said.

In protest, Hallatt removed the "P" in his front window and website, converting signage into "Irate Joe's". His website states the catchphrase, "Unauthorized, Unaffiliated, Unafraid."

Alison Mochizuki, a spokeswoman for Trader Joe's, declined to comment due to pending litigation.

"We politely decline to comment, as we do no comment on active litigation," Hallatt's attorney said in a statement to ABC News.

Trader Joe's also accuses Hallatt of "conduct that misleads and deceives consumers into falsely believing that Pirate Joe's and/or Transilvania Trading have been authorized or approved by Trader Joe's" the lawsuit states. Hallatt's store also is "visually similar to Trader Joe's stores, imitating Trader Joe's famous 'South Pacific' trade dress," the lawsuit states.

Trader Joe's has previously taken legal action against people who have capitalized on the company's popularity, such as delivery services. Hallatt filed a legal response to the lawsuit last month, which he said he can afford to do with his business insurance.

"I would have caved too because financially there's no way I could duke it out," he said. "I have a great insurance company and they support me in essentially paying for my defense."

Hallatt admits that he is selling prices "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," his legal response states. But he denies harming Trader Joe's business in Washington and that he is trying to market his business as an official representation of the national chain.

"Trader Joe's thinks Canadians are too ignorant not to tell the difference between the empire and my little shop on Fourth Avenue," Hallatt told the San Francisco Chronicle.

He is countersuing for discrimination, saying the company began refusing to sell its merchandise to him beginning in 2012 with "corporate instructions to Trader Joe's store managers in Washington." He said he is legally allowed to "resell trademarked products if they are sold without material change," his legal response states.

He says he is not violating any American or Canadian laws by exporting his purchases to his retail store in Canada.

"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," his legal response states.

One Yelp review of the store states, "These guys are not affiliated with Trader Joe's in any way which means that they have to jump through some pretty knarley hoops to get these products here for us Vancouverites, but they do. The prices are a little higher than Trader Joe's but I for one am happy to pay a little extra to save myself a trip across the border."