The very popular US grocery retailer Trader Joe’s has a following among Canadian consumers. Capitalizing on this popularity north of the border, a Vancouver entrepreneur has made it his business to buy genuine Trader Joe’s-branded merchandise in the US, and re-sell the products in a retail location in Vancouver under the banner Pirate Joe’s. Citing Lanham Act trademark infringement, TJs sued the Canadian businessman in Washington State (Link to the complaint here ).

The US court dismissed the complaint, and Trader Joe’s has now appealed that decision  to the US Federal Circuit Court of Appeals.

While this appeal will run its course under US legal principles, it is worth noting the law on “parallel importation” in Canada.

Parallel importation or “grey marketing” is the importation into Canada of genuine products, which fall outside the brand owner’s established channels. These are not knock-offs or counterfeits, but rather legitimate products imported through a channel “parallel” to the brand owner’s preferred distribution routes (or, in the case of Trader Joe’s, where the brand owner has no established trading network in Canada at all).

There are two main intellectual property tools to attack parallel importation, and unfortunately for brand owners, both of them can be problematic in Canada:

  1. Trade-marks: Brand owners sometimes try to rely on their trade-mark rights in Canada (Trader Joe’s may have some reputation in Canada through spill-over advertising). In parallel import cases, any claim of trade-mark infringement in Canada is likely to face challenges in light of decisions like Coca-Cola Ltd. vs. Pardhan, which dealt with the export of genuine Coca-Cola products (I wrote a case commentary on this decision for Canadian International Lawyer, June 2000);
  2. Copyright: In the Euro Excellence case (Euro Excellence Inc. vs. Kraft Canada Inc.), the brand owner attempted to employ copyright law to stop parallel imports of genuine Toblerone-branded chocolate bars into Canada. On appeal, the Supreme Court of Canada ruled that the Copyright Act could not be used to block the parallel imports.