The transnational effect of US Trademarks

A case that is currently attracting a lot of media attention has been the case of Pirate Joe vs Trader Joe’s. The first is a Canadian retailer, located in Vancouver, who resells products belonging to the second party at a 30 to 40% increased price, without any authorization to use the similar trademark; the second party is a large company based on Monrovia, California, United States, who sells various food products for almost 60 years.

If Pirate Joe had been operating on the United States, it would be relatively simple for Trader Joe’s to file a lawsuit, demanding the that activity is ceased and requesting the payment of damages, and it would be extremely likely that they would have won that case. However, since Pirate Joe operates in Vancouver, Canada, this situation acquires a higher complexity: How to enforce an United States trademark on a foreign, sovereign country?

Beyond requiring the plaintiff to prove the unauthorized use of the trademark, it is necessary to i) prove that its misuse might harm his trademark or business and ii) that the Court of law is able to enforce the judgment against the defendant.

The first prerequisite means that the misuse of a trademark might cause damages to the reputation of the plaintiff, for example, if the quality control practices of products sold might pose a serious risk to public health and if the news spread to the United States, which will in turn, cause harm to the United States business.

The second prerequisite requires that, after the claims of the plaintiff are considered valid, the Court may impose said judgement over the defendant, through for example, freezing or selling their assets on the United States.

In the case in point, the plaintiff (Trader Joe’s) used the arguments above mentioned to prove the damage to its reputation and its commercial value in the United States.

While a federal trial ruled in 2013 against Trader Joe’s by claiming that Pirate Joe’s posed no threat to Trader Joe’s company, the plaintiff appealed and on August 17th, 2016, the 9th U.S Circuit Court of Appeals reversed said decision, claiming that all the prerequisites to persecute the defendant in Canada were present.

Among other arguments, the judge of the case in point based his decision on the lack of sufficient quality control of the products being transported from the United States to Canada and if news of illness concerning said products reached the American public, it would cause considerable damages to Trader Joe’s trademarks since is likely that the average consumer, when faced with the Pirate Joe’s displays of Trader Joe’s trademarks, might presume that the first is an authorized Trader Joe’s retailer.

The Court of Appeals decided that the case should return to the District Court, which caught media’s attention once more due to the importance of transnational trademark protection.