Trader Joe's Loses Vancouver Pirate Joe's Lawsuit

Trader Joe's was in a cross-border fight with a store reselling goods in Canada.

Oct. 7, 2013 — -- Michael Hallatt of Vancouver, Canada, said he is "thrilled" that a judge dismissed a lawsuit by Trader Joe's, hoping to shut down his store across the border called Pirate Joe's, which resells the American company's products.

Hallatt, 53, spent hundreds of thousands of dollars at Trader Joe's in less than two years, running his store across the Canadian border where there are no Trader Joe's stores.

A U.S. District Court judge in Seattle ruled that it did not jurisdiction in the case.

Trader Joe's, based in Monrovia, Calif., sued for an injunction in May 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. Because he is still banned from the shopping at Trader Joe's, he pays other people to shop for him.

Despite the dismissal, Hallatt says he plans to keep the "P" removed from his front window and website, which converted signage into "Irate Joe's". He said he plans to stay "irate" until Trader Joe's allows him to shop in their stores or commits to opening a store in Vancouver. His website states the catchphrase, "Unauthorized, Unaffiliated, Unafraid."

"Trader Joe's response was lamenting the fact that Vancouverites weren't getting the complete experience," Hallatt said. "The complete experience was a long drive and a long wait at the border."

The nearest Trader Joe's is in Bellingham, Wash., a one-hour drive away from Vancouver.

Despite this legal battle, Hallatt said he still "loves" Trader Joe's products.

"I give them the benefit of the doubt that they had bad legal advice," he said. "We like Trader Joe's. If you ask me why I'm doing what I'm doing, you probably never had their Joe-Joe's."

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

Still, Hallatt, who sells the products with a slightly higher price, admits that his store is not a "sustainable business model."

"This was a fight over principal. If you legally own something, you have the right to resell it," he said.

He said he was fortunate that his small business insurance paid for his defense.

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 allegedly harmed the most with his cross-border operation, Trader Joe's says in its lawsuit.

"We sell our products in our stores to our customers; and to maintain the goodwill and integrity of the Trader Joe's brand, it is extremely important to us to protect and preserve the customer experience we have developed in our stores over the past 46 years," Trader Joe's said in a statement. "While we are disappointed and disagree with the Court's determination that it could not exercise jurisdiction over the defendant's activities in Canada, we will continue to do everything in our power to protect our trademarks and the integrity of our products for our customers."

Trader Joe's accused Hallatt of "conduct that misleads and deceives consumers into falsely believing that Pirate Joe's" has "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.

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

Over the weekend, Hallatt said his store had one of its busiest days ever as the press publicized the dismissal of the lawsuit. Many customers wanted to shake his hand, he said, and take photos in front of the store. Among the hottest selling items that sold out were roasted coconut chips, coconut cashews, and "anything with pumpkin in it."

"We'd like to get tamales back," he said. "We had to stop selling frozen stuff. We're looking to do that without causing another international incident."