Trader Joe's vs. Pirate Joe's

Pirate Joe'sTechdirt is one of many who have been covering the curious tale of Pirate Joe—aka Michael Hallatt, a Vancouver entrepreneur who has set up a store in which he sells, at a markup, products he purchases at the Trader Joe’s chain on the American side of the border.

Hallatt claims he is doing nothing wrong—he buys his “merchandise” at full retail price and is permitted to sell them if he wishes to under the first-sale doctrine. Trader Joe’s begs to differ and has filed a lawsuit for trademark infringement.

Mike Masnick makes some useful points in his discussion of the case. Firstly, he points out that many infringement cases are predicated on protecting a business from counterfeit goods. That is not the case here. These are genuine goods, not counterfeit ones, and Hallatt purchased them legally.

There is also the anti-competition issue, which again, is moot. There are no Trader Joe’s stores in Canada, so Hallatt cannot be argued to be taking business from them. And if Trader Joe’s ever did come to Canada, their retail prices would be cheaper than his marked-up ones, and he’d be driven out of business by normal market forces.

I think this case has potentially interesting ramifications for the media industry. One of the justifications people sometimes use for “illegal” downloading is geographical restrictions. If a product is not available to them through mainstream channels in the first place, can they be blamed for seeking them out through other means?

And if they do download something off the torrents and creators moan about the “lost sale,” can they argue that the sale was never “lost” in the first place because the item was not available for them to buy?

How ironic that, when this argument is applied to a physical good, as Hallatt is applying it, it seems perfectly logical. But when it is applied to a digital good, the “piracy” banner gets waved.

4 Comments on Trader Joe's vs. Pirate Joe's

  1. This may be a modern instance of the lawyers they used to call “ambulance chasers.” Aided by internet robotics, lawyers can quickly identify cases to pursue. Informing the aggrieved of the offense and their status in law is where the revenue stream begins. With skill, that lawyer will parlay this to a very nice payday. The chapter chronicling this might be called, “The Rise of the Trolls.”

  2. Interestingly, we have a small store here, out in the country, that essentially does the same thing with a limited number of products from ALDI. Where I live, your gasoline/time are a precious commodity, with major shopping areas always at least 25 minutes away (often more). They’ve been doing this for years…buying certain staples at ALDI, then offering them slightly marked up at their local bulk food store.

  3. Traders better sue ebay, as ebay has more cookie butter listed than Pirate Joe
    This is 25% (my opinion) of ebay business, not being able to buy a product locally.

    Actually this is just silly. Most business would want to expand sales, even offering a discount for bulk sales to Michael. Maybe the local trader Joe’s manager is already giving him a discount ? Spending more than $10,000 per month would attract a manager’s attention

  4. This is pretty silly. Trader Joe’s can’t claim lost sales, because every item Michael Hallatt sales was sold to him by Trader Joe’s. It’s exactly 1-to-1. TJ’s is not losing a penny over this. There are reasons to want to put a stop to this… mostly about brand confusion, but lost sales/piracy is NOT one of them.

    That said, this articles comparison to digital piracy is entirely without merit. Digital pirates don’t have the same 1-to-1 correlation between original sales and final downloads. I’m fully aware that 1000 downloads does not equal 1000 lost sales. I personally believe it’s much closer to 0 lost sales than 999 lost sales, but because neither side can show real evidence here the only thing I’m certain of is it’s not 1000 lost sales. But the sheer fact that one case is clearly 1-to-1 while the other is clearly not shows that making the comparison between them that this article does is entirely pointless.

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