Trader Joe’s reseller shuts down amid court battle: Lessons from the closure of “Pirate Joe’s”

A Canadian store that had secured a cult following for reselling “Trader Joe’s” products into Vancouver has closed after the discount supermarket giant pursued it for years through the US courts system.

Last week the founder of Pirate Joe’s, a shopfront that provided Vancouver residents with access to Trader Joe’s products by purchasing stock from US stores and then reselling it, announced he would be shutting up shop unless any millionaires were able to put up $50,000 to continue a court battle with Trader Joe’s.

Trader Joe’s has been linked to Aldi Nord, one of the two branches of the Aldi retail empire. The brand has no presence in Canada, but in 2016 the New York Times reported the United States Court of Appeals overturned a previous court decision that said because Trader Joe’s had no retail presence in Canada, it could not pursue Pirate Joe’s for trademark violations.

After the court appeals decision gave Trader Joe’s the green light to go further, Pirate Joe’s dropped the “P” from its signage in protest, so the shopfront’s name read “Irate Joe’s”.

The business, which has been open since 2012, acknowledges it is not an “authorised” entity; the store’s slogan is “Unaffiliated. Unauthorized. Unafraid”.

News of the closure has prompted messages of support from across the world, with many customers questioning why a large multinational would go after such a small target, or otherwise simply expand into Canada given the popularity of Trader Joe’s products.

“Big money has no sensitivity when it has something up its arse,” one customer wrote in protest of the closure on social media. 

“Too bad Trader Joe’s didn’t do the right thing: offer Pirate Joe’s a wholesale discount and have a TJs truck meet Pirate Joe’s truck at the border,” said another.

While several shoppers tried to workshop potential compromises between Pirate Joe’s and Trader Joe’s, the store said on Facebook last week it was “sad it has come to this”.

SmartCompany has contacted Aldi US for comment on the closure. Pirate Joe’s founder did not respond to request for comment prior to publication.

Intellectual property one of SME’s “most valuable assets”

LegalVision general counsel Ursula Hogben says because of Australia’s strong intellectual property laws, there isn’t a lot of illegal distribution that happens on our shores. However, businesses should be aware of their obligations when reselling any products for which they don’t own the intellectual property.

“But if you want to be the seller, you ought to contact the manufacturer and try to get the exclusive licence for that product,” she advises. 

Hogben says SMEs know that intellectual property is one of the most valuable parts of their businesses, but owners should take care to plan ahead when it comes to both registering trademarks and considering distribution of other company’s products.

“In any country that you plan to sell, you should trademark your logo and tagline. That includes any country that you intend to sell into in the near future,” Hogben advises. 

While businesses do need to be able to show they genuinely intend to sell into the countries they are registering trademarks for, Hogben says this process “all depends on your ambitions” and Australian businesses should know that the first step to stopping others from using your branding in an improper way is ensuring you have the rights to it yourself.

Ensuring you work through the proper channels when trying to secure the rights to sell a product will help to prevent disputes with other businesses down the line, Hogben says.

SMEs should also get across non-compete clauses that can be built into contracts when a third party buys stock to distribute into a new market, she says.

“Once you’re selling to distributors, you put clauses to protect your IP in your contracts as well, so someone who’s able to sell your product can’t later undercut you,” she says.  

For example, if a company wanted to buy a brand of sandals and try distributing these into Australia, the business that owned the intellectual property for that product would be wise to include a contract clause that prevented the distributor from cancelling that contract and then doing a deal with another sandal brand.

“If they were smart, the [business that owns the IP] would have a non-compete clause,” she says.

*This article was updated at 9am and 2pm on Tuesday, June 14, 2017. 

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