Trader Joe’s Co. v. Hallatt, No. C13–768 MJP, 2013 WL 5492515 (W.D. Wash. Oct. 2, 2013)

In specialty grocery store Trader Joe’s Lanham Act trademark infringement and dilution action against a Canadian grocery store named Pirate Joe’s, a Washington district court held that the Lanham Act’s broad jurisdiction was “not without limits when it comes to extraterritorial application” and dismissed Trader Joe’s claims under the statute.

In this case, Pirate Joe’s owner, a Canadian citizen, frequently traveled from Canada to Washington state to purchase Trader Joe’s products at full retail price. He then transported the products across the border to Canada and sold the products unmodified in his store, which was located in Vancouver.

Naturally (or perhaps organically), Trader Joe’s was not pleased and alleged that Pirate Joe’s used Trader Joe’s trademarks to pass as an approved Trader Joe’s retailer. Upon Pirate Joe’s motion to dismiss for lack of subject matter jurisdiction, the court engaged in a lengthy analysis of the extraterritorial application of the Lanham Act. The court recited the Ninth Circuit’s three Timberlanefactors used to determine whether extraterritorial application is appropriate: “(1) the defendant's action creates some effect on American foreign commerce, (2) the effect is sufficiently great to present a cognizable injury to plaintiff under the Lanham Act, and (3) ‘the interests of and links to American foreign commerce [are] sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority.’ ”

The court held that all three factors disfavored extraterritorial application. Unlike previous cases where the Lanham Act had been applied extraterritorially, no part of Pirate Joe’s business operated in the U.S. to compete with Trader Joe’s, and Trader Joe’s did not have any stores located in Canada. Additionally, the products sold by Pirate Joe’s never made its way back to the U.S. to compete with Trader Joe’s products, and any harm to Trader Joe’s goodwill was “too tenuous to support a cognizable Lanham Act claim when all infringing conduct [was] abroad.” Further, the court decided that application of the Lanham Act could potentially conflict with Canada’s trademark law (and Trader Joe’s had two pending trademark applications in Canada).

After a thorough analysis of the Timberlane factors, the Washington court labeled Trader Joe’s Lanham Act case a bad apple and tossed it. It seems that Canadians in the Vancouver area can continue purchasing Two Buck Chuck at Pirate Joe’s, for now.