Opinion Column

Pirate Joe's forced to shut down over suit from Trader Joe's

By Steve Burgess

Mike Hallatt, the proprietor of Pirate Joe's on West 4th Ave. in Vancouver, B.C., Aug. 18, 2013.  (Carmine Marinelli/Vancouver 24hours File Photo)

Mike Hallatt, the proprietor of Pirate Joe's on West 4th Ave. in Vancouver, B.C., Aug. 18, 2013. (Carmine Marinelli/Vancouver 24hours File Photo)

You think it's fun being Captain Jack Sparrow? Not so. The law is always on a pirate's trail. Eventually they are going to run you down.

So it is with Pirate Joe's. For years, Mike Hallatt has been running his Kitsilano store, reselling products purchased (at full retail price) from Trader Joe's stores in the U.S. In May 2013, Trader Joe's filed a lawsuit to shut him down but the case was dismissed later that year. Pirate Joe's was still master of English Bay. But Hallatt's swashbuckling days were numbered. Trader Joe's kept up the legal pressure and this month its court case was reinstated by a U.S. appeals court.

Why was Trader's Joe's so eager to crush a small Canadian merchant? As Chilwin Cheng of Ascendion Law points out, Pirate Joe's isn't hurting Trader Joe's. It may even be helping it.

“Pirate Joe's is actually enhancing Trader Joe's brand because it is demonstrating to the public that Trader Joes' is a fantastic brand, Cheng said. “Trader Joe's doesn't operate in Canada so it is not losing market share in Canada or the United States from Pirate Joe's activities.”

But Cheng believes that Trader Joe's is following the old “kill one monkey and frighten the rest” strategy.

“Even if Trader Joe's loses, it is saying to the industry, 'We won't back down. Don't mess with us,'” Cheng said. “Trader Joe's benefits from establishing this reputation.”

Ken Poulin, a trademark agent with Kenneth Bradley Trademark Services, said Trader Joe's is playing the bully mostly because it can.

“I would make the analogy of an emotional decision versus an intellectual one,” Poulin said. “Here it seems clear that there is no actual harm being done to Trader Joe's by Pirate Joe's. However, established companies are counselled to be extremely protective of their proprietary branding. This can often lead to a classic David & Goliath scenario, wherein the larger entity finds another avenue to continue the fight, relying on its ability to financially outlast the smaller party.”

More disturbing, Cheng suggested Trader Joe's might be setting a precedent intended to extend American jurisdiction into Canada.

“Trader Joe's lawsuit in the United States has an opportunity to create a precedent, particularly in the current political environment, in which an American court will purport to exercise jurisdiction in a foreign one such as Canada,” Cheng said.

As for Hallatt, he has given up the ship. Last week, he closed Pirate Joe's, putting up a sign reading, “Goliath won.”

In response, I would suggest you boycott your local Trader Joe's, but there isn't one.