Trader Joe's goes after Pirate Joe's for reselling products

Trader Joe's in West Hartford, Connecticut.

Trader Joe's is suing a small business owner for reselling its products in Canada. The popular grocer doesn't operate in Canada, which is a business opportunity for Mike Hallatt, who runs a Vancouver shop called Pirate Joe's. Hallatt says he's spent hundreds of thousands of dollars shopping at Trader Joe's in America. He then marks up their products and resells them. Trader Joe's wants that to stop.

Hallatt joins Marketplace's Mark Garrison to discuss. Click on the audio player above to hear more.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.
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Does Canada not have something similar to the doctrine of first sale? Certainly the US stores cannot refuse to sell to him (beyond limiting the quantity he can buy at any one time, provided they have a corporate policy for that). They are a business that sells to the general public and can't pick and choose customers. The only concern that I would have is if the name of the store violated trademark protection.

In the US, a business can refuse to sell to any person for any reason, including no reason at all, with a few exceptions. One of those exceptions is discrimination based on factors such as race, gender, disability, and so on.

As far as violation of trademark: this guy could have called his store "Mike's Grocery" and made it any theme he wanted. Instead, he blatantly banked on Trader Joes' established identity by calling the store Pirate Joe's and giving it a pirate/tropical theme, which Trader Joe's is known for. Trader Joe's has spent lots of time and money creating a public image, and the owner of Pirate Joe's is deliberately using that to his advantage.

Notwithstanding the laid back (dare I say "lei-d back"?) vibe in Trader Joe's stores, it comes as no surprise to me that the company's famously defensive senior management is going after "Pirate Joe" Hallatt.

I've followed the company's news ever since going undercover there for a year to write, "Build a Brand Like Trader Joe's", so I've read almost every legal opinion about the case. The consensus is that TJ's won't succeed -- at least, not with a suit brought in the U.S.

Trader Joe's will argue that Pirate Joe, by selling some TJ's merchandise in Canada, siphons off sales in the U.S., but for every person who shops a Pirate Joe's instead of making a cross-border trip, there's probably another who's turned on to the brand by that restricted selection of products, and makes a point of shopping at a real TJ's store when they're south of the border. TJ's may argue that it plans to open in Canada; if it does indeed have such a plan, the Lower Mainland of British Columbia (in and around Vancouver) is the logical place to start.

I think that if the store's cool, friendly brand actually permeated the Head Office in Monrovia, they'd have made a deal with Hallatt (who is after all probably the chain's single best customer!)

Wouldn't it have been more in keeping to say, "OK, you can have your one store, the same size as it is now. We'll keep selling you product at full retail. You agree that if and when we open a store anywhere on the Lower Mainland of British Columbia, your store will close. And, by the way, when we do open there, we'll give you right of first refusal for a manager's job, since you obviously know and love us so much."

The fact that Pirate Joe would go to so much trouble just builds the Trader Joe's myth up that much more. It could have been a positive. As it is, when they lose their suit, the store will seem petty, vindictive, and ineffective.

It's one more indication that the current senior management really doesn't understand why the brand's got such a loyal following.

Often a company will sue based on the legal argument that the two businesses might be confused with one another. I think, in this instance, that argument would be very strong.

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