Say you owned Captainmuon Grocery and only sold private label Captainmuon Chips. Although demand is so high you could distribute your Chips to other groceries and retailers, you see greater value in driving traffic to your store through the exclusive distribution. Don't you have a legal right to create exclusive distribution of your consumable product? Don't you have a legal right to enter into a contract with your shoppers (i.e. You agree to purchase consumable products for consumption only and not resell them)? Don't you have the legal right to limit your product liability (i.e. If I buy and resell a defective bag of your chips, possibly becoming defective after it left your store, you will be jointly and severally liable for the damages as a result of a products liability lawsuit)?
Only playing devils advocate, but I do believe you can play with the facts to highlight the push and pull of contractual rights, ownership/resale rights, and product liability. Also, playing with the facts would highlight how trademark rights/goodwill could be more negatively effected, again something more along the lines of a reseller selling tampered/expired product.
For the initial sale of it, yes. But not after that. See below.
> Don't you have a legal right to enter into a contract with your shoppers (i.e. You agree to purchase consumable products for consumption only and not resell them)?
You couold put that on your package, but legally, I don't think it would pass muster as a contract. Even if you got each customer to sign a form agreeing to such a contract, I'm not sure it would stand up in court, because statutes have limited what rights a customer can sign away even in a written contract. Which might not make sense, but lots of things in the law don't make sense. :-)
(The usual disclaimer that IANAL applies.)
Why not? Lots of things are illegal regardless of what people put in contracts. If I contract you to kill me, you'd still go to jail for murder. Lots of things are illegal to sell unless they meet quality standards, regardless of if consumers know about it being sub-standard or not or agree to it.
Society has decided it just doesn't want to have to deal with that kind of crap and it's annoying consequences for everybody else. I'm against the general principle of hundreds page EUAL fine print being enforceable. If the industry wants that sort of thing, they should agree some set standard contracts vetted by the government that meet specified standards of service and consumer rights. We shouldn't have to deal with obscure and impenetrable special exceptions to everything all the time.
The courts agreed, but Trader Joes had bigger pockets and was able to kill Pirate Joes with just legal fees alone. They didn't have to win, they just had to keep him in court until he was broke. This is a pretty common tactic when big corporations are in lawsuits with individuals. Or in the case of healthcare suits they just wait until the plaintiff is dead of whatever condition they're suing over.
How many times do we have to hear these kinds of stories of abuse, or patent trolls, or of other unfairness and injustice in the legal system before anything is done about it?
I mean the legal system produces some incredible injustices currently: If we get more stories such as billionaires like Jeffrey Epstein raping underage girls and getting a house-arrest with week nights spent sleeping in a special cell, what does that imply for the rest of us?
The 99% of us are burdened with this BS while the 1% take advantage of it.
One of the many reasons this is the "land of opportunity"...
Well, probably more, if this type of stuff keeps getting conflated with legitimate cases of abuse and trolling. As is ... people are getting frothy about the application of the law as written.
What are you mad about? Somebody protecting their trademark? Their direct channel? Their distribution? Their customer guarantees? Their quality assurances?
Yeah - go ahead. Burn it all down. It's not like the system provided you with the cheap-ass (maybe mobile) computers via which you connect to the Internet (also cheaply) anyway...
Also, saying that TJs "bullied" him assumes that he was not in fact trading on the TJs brand. Look at his store sign: http://www.cknw.com/2017/06/08/pirate-joes-in-vancouver-clos.... Even the font he uses is very similar. He wasn't just reselling TJs products. He was capitalizing on the TJs brand to resell products (at a high markup by the way).
Note that the company was started as Transilvania Trading, and didn't get sued until after it changed its name to Pirate Joe's. Moreover, he added the disclaimer "Unauthorized, Unaffiliated and Unafraid" after the lawsuit was filed. Trader Joe's had a very legitimate trademark infringement case, especially during the period where the store was called "Pirate Joe's" with no disclaimer.
1. TJ would argue PJ was selling watered down product bearing the TJ mark (I know a seemly strange arguement bc PJ was buying selling TJ product without alteration);
2. However, Inherent in all the value of all TJ products are: a) The TJ guarantee of product (i.e. TJ will replace any product you bought at TJ without question/receipt) and b) TJ customer services is part of the TJ product value bc TJ product is sold exclusively thru TJ which they control completely.
3. Therefore, without the guarantee and customer service the TJ product PJ sells is "materially different" than the TJ product TJ sells. (Before others go crazy about this point, this is not my position, it's case law, both warranties/customer service can be qualities of trademark products that remove them from first sale doctrine protections);
4. Tying this into the standard of trademark law, TJ can likely prove customers were confused and bought TJ product from PJ thinking it was TJ product, when in fact it was "materially different" product with the TJ mark.plus it doesn't help PJ advertises they sell TJ product.
5. Further by selling Product with the TJ mark not backed by the TJ guarantee dilutes the TJ mark and goodwill associated with the mark.
Trademark is definitely tricky, there are always questions of facts (I.e. Was there customer confusion in the marketplace) and so they are always ripe for trial. That said I agree with you TJ likely had a good trademark case supported by case law...unfortunately HN likes to try to make absolutes out of law and so when they hear one week about "first sale doctrine" the next they believe in absolute ownership and absolute rights to resell notwithstanding common knowledge to the contrary (they know there is no absolute right to resell rx; alcohol; guns; etc...)
The colors are similar.
Hey may still have won that one, but it's at least somewhat plausible that consumers might actually be confused by the name.
Only problem is those consumers are in a different country - one where Trader Joe's does not operate. I would bet Pirate Joe's would have happily closed down if Trader Joe's opened up a store in Vancouver, since that's all the Pirate Joe guy wanted in the first place.
I'm not arguing that it's necessarily a good thing or that Trader Joe's would have won. I don't think Trader Joe's should have shut him down. But the fact that he called it Pirate Joe's, and setup the store to look like a Trader Joe's (along with carrying Trader Joe's merchandise), means that it wasn't just a nuisance lawsuit. Trader Joe's had a least some chance of winning, and they had a reasonable legal argument.
Honestly, the average consumer in Canada doesn't even know what Trader Joe's is (well they probably do now, since the Pirate Joe's story has made national news here).
I get all of your points about the legal stuff, but I don't think anybody walking into P/Irate Joe's didn't know what was going on. The owner was very transparent about it, and most of the publicity P/Irate Joe's got in the news was about what the store's premise was.
I look at it very simply. You have a super enthusiastic fan in another country who wants people to have access to your products. You can look at it as an opportunity (to find an amicable solution) or as a threat (to be addressed with lawyers).
One approach generates positive goodwill and the other one generates negative goodwill.
Obviously, it's Trader Joe's prerogative to choose which way they wanted to go, but I personally think they missed out on a marketing opportunity to expand their reach.
Update: I went and read the actual complaint by Trader Joe's and, though it does mention this, I think this comment may be overly generous to their thought process.
The complaint[1], as far as I can tell, was basically that their decor looked kinda like Trader Joe's and they sold Trader Joe's products and this combination is deceptive.
[1]: https://static1.squarespace.com/static/51fc7d3ce4b05ae014fc8...
What's the thinking there? Is it just shock at alienating such a right, or is it part of some actual, coherent worldmodel that satisfies difficult desiderata?
In property law, there is the concept of a restraint on alienation. In competition/anti-trust law, there is the concept of a post-sale restraint. The idea is simple: after you by the chips, they are yours and you can do with them what you want. Restricting resale also limits competition, which is bad for consumers. Whether this view trumps your freedom to contract is a legal question whose answer has varied over time.
Historically, such restraints were a problem for real property in England. An estate might have been held in "fee tail" to be passed on to heirs indefinitely. Society decided that land was not being effectively used in this way, so fee tails were broken by statute beginning in the 1800's. Your freedom to "devise by will" was limited in favor of the property right of alienation.
Software was traditionally sold to the end user, who could use or sell the product as he wished, subject to Copyright restrictions on making additional copies for distribution. Only recently did this property-like right erode in favour of the current norm where software is licensed under a plethora of contractual restrictions you may never have read (the EULA).
If not, customers would be free to avoid onerous terms by choosing a competitor, thus disincentivizing their use in the market. Instead in our current world, I'm sure we can all think of companies who could easily impose the most draconian TOS restrictions & limitations on rights-after-purchase and yet would still sell approximately the same amount of product.
Ergo, we limit these rights by law.
You do have a right to go after Commandermuon Grocery for abusing your trademark.
Usually liability traverses the chain of custody. If I give you a bag of chips, that doesn't absolve Frito-Lay of liability for a salmonella contamination issue associated with that lot of chips. Likewise, if I crush the chips and sell the bag to you, it's not Frito-Lay's problem, it's mine.
This stuff has been litigated extensively. There was a few cases around fancy grey-market watches that Costco was buying overseas and selling here at a discount. Costco provided a third party warranty to address that issue, but was allowed to continue. First sale doctrine applies here too.
It is very common for camera stores to import cameras from overseas mass retailers in southeast Asia (IIRC Taiwan is a major source) and sell them in the US at a discount. The only limit is that the official Canon/Nikon repair centers know what region a camera was sold in and won't repair a foreign camera without a damned good reason (or a pro photographer rating, which entails owning a certain number of high-end lenses and so on)
And no just because Trader Joe's products have TJ trademarks does not mean they are covered by first-sale doctrine, they are still food stuffs. Trademark under first sale-doctrine is more applicable to reselling a professional sports jersey containing the trademark logo/colors of the team.
Do not confuse issues around distributorships, which are contracts that say, I will agree to sell you these goods at wholesale prices so long as you agree not to sell them anywhere I say you can't.
Your example with reselling prescription opiates, is that opiates are a controlled substance, food is not.
Trademark would only be a problem here if what Pirate Joes was selling was counterfeit Trader Joe's goods.
Pirate Joes' core business was perfectly legal in the US. The only way trademark could be a problem is that Pirate Joes might be ruled too close to Trader Joes, and that's the trademark of the business, not the trademark of the items for sale in the store.
That is wrong, according to the case law. Facts here are very different bc TJ product is backed by the TJ guarantee; therefore, although identical TJ product when PJ sells it, it is "materially different" because PJ doesn't back the TJ product. That material change is a trademark violation, especially where PJ is advertising they buy/resell TJ product (impossible and confusing to customers).
Simply look up the case law when first sale doctrine does not apply as a result of material changes to the product because the change in warranty/customer service inherently tied to the product/brand.
Here is a decent article [1]published by the American Bar Association regarding the resale of "genuine" goods (not counterfeit) by unauthorized retailers. Skip to the "warranty policy and unauthorized dealer page" section, then "going to court".
Note the exceptions to first sale doctrine include "material changes" to the trademark good, including non physical changes, then does a decent job of listing those changes recorgnized by the courts.
[1] https://www.americanbar.org/publications/blt/2014/07/01_payn...
Edit: from article regarding non-physical changes to trademark product, "Perhaps most commonly, differences in warranty protection coverage between authorized and unauthorized sales often lead to trademark infringement"
Transfer of prescription medication is a different matter, and these are controlled substances with specific rules around transfer. If you happened to be a pharmacist and happened to have someone with a prescription for a drug, there are some scenarios where you could transfer them.
If you give me an apple, I have no obligation to eat or destroy the apple. I'm free to give it to anyone I wish, either as a whole or in parts.
Reselling your prescription opiates is prohibited by specific laws. No such law exists for food.
Patented inventions for example can be resold or even incorporated into other devices which are then sold and you don't get to control such things.
Definitely seems like a gray area, but the deciding factor appears to be how likely a customer is to confuse the reseller with the original manufacturer. Given the name of the store was "Pirate Joe's", and they in fact played up the idea that they were an unauthorized reseller, it seems like that confusion would be highly unlikely.
Not a lawyer but, I'm not sure you do have that right. I know this isn't a copyright issue, but couldn't the same logic of the First Sale Doctrine apply? As a consumer, once I purchase something, it becomes mine and I may do with it as I wish, including reselling it, yes?
IANAL, but the attitudes of judges in US courts seems to go the other way. See the recent inkjet refill lawsuit[1]. The courts appear to prefer the idea that once something is sold, it truly belongs to the person it was sold to. The first sale doctrine in copyright is another example.
* https://www.nytimes.com/2017/05/30/business/supreme-court-pa...
Being free to dispose of property how you see fit has been a foundation of common law for a few centuries.
These types of concessions wind up creeping into "free societies" as economic interest buy laws to help create monopolies.
Fairly clearly, under law, no. Well, kinda: You have the right to decide who you will sell to, entirely.
You have no right to prevent things under the first sale doctrine.
(Some of the attempts to limit this include printing on packaging 'not for resale' as an attempt to EULA the physical product).
Not entirely, see recent cases of bakers who didn't want to sell cakes for gay weddings.
Trader Joes' actions here seem to defy their self-interest. Instead of suing Pirate Joe's out of existence, why not offer to buy them? They've already done half the work of marketing your brand and building a storefront -- seems like it'd be a slam dunk to convert Pirate Joe's into a legitimate Trader Joe's location.
Vertical integration is not a de facto right of a company, in general, for anti-trust concerns.
This is the intent of the big stores. Sams club has a limit to 10,000 packs of cigarettes. And rules on resellers, etc.
Uhh, counter question. Does such a "right" exist in a free market?
> the company filed a lawsuit against Mr. Hallatt for trademark infringement, unfair competition, false designation of origin and false advertising.
It was pretty clear the guy was riffing off the TJ brand - there's plenty of legal precedent for that isn't there? Maybe if he had a different name and was selling products from other companies he'd have more of a leg to stand on.
And yes, the legal system sucks sometimes, but it seems like this guy was being deliberately provocative (Irate Joe's? I mean you're just begging for a fight now).
Bottom line, if you really like fighting with big institutions it's going to cost you money so you either need a really good case (and being deliberately provocative undermines that) or you need deep pockets yourself.
Not so of Pirate Joe's. The Pirate sells goods in Canada that only comply with U.S. market rules (food safety, nutritional markings, etc.).
That's not really the merit of this case, which is more about trademark and branding, but reselling Trader Joe's goods (not meant for resell) in Canada (different market) is hardly comparable to reselling Costco goods (meant for resell) in the U.S. (same market).
They could, and Levi's jeans did it with Tesco who were selling grey market imports.
ALDI Süd operates the American ALDI stores. ALDI Nord owns Trader Joe's.
trademark. he picked the wrong name for his business.
one story said he met his wife in the us. if she was a us citizen that could be an addtional reason he might want to be able to travel to the us.
in other words, he had reasons to care about potentially having an outstanding judgment against him in the us.
or maybe the appeals court date was before he changed the name to pirate joes?
to be fair, i am making an assumption when i say he picked th wrong name (original name was transilvania trading): that he did not want to be sued in the us. but maybe he did. does not sound like he had a large legal budget though.
there is also the possibility that the name of the business and the other things he did to mimick trader joes had nothing to do with courts reasoning. the fact that he sold goods with a us trademark on the label was enough.
in that case maybe the name matters little.
but if that is true, then shouldn't we see some changes in the risk profile for all sellers of grey market goods even when the names of their stores bear no resemblance to any us trademark associated with goods they sell.
all of the grey market stores i have seen have names that do not mimick any trademarks held by the manufacturers of the goods they sell. but maybe i have not seen enough of them.
my opinion is he picked the wrong name. what consumer would think "transilvania trading" was an authorized reseller of trader joes? otoh, "pirate joes"? but what do i know? not much.
I hate that they ran him out of business. I hate companies that try to enforce the no-resell strategy. It's really another version of the "you can't work on your tractor or phone without my permission" strategy.
There's been several recent recalls of flour over the last few months and other foods tainted but you don't see people suing. The government cracks down but people here can't be bothered to be so petty.
I mean sure it happens if it's really serious but for small stuff people would just think you're a dick.
Accidents happen. It doesn't entitle you to a free pay day.
I can see this line of reasoning: a lot of products TJ sells are of TJ's brand. If this individual buys the product but then lets it spoil and resells it and makes someone sick, there might be a chance for that end-consumer to sue TJ for it.
In Poland, where I live, probably every other adult is an "entrepreneur" these days - people start one-man companies because employers all across the board are pushing people away from normal job contracts towards fake, on-paper B2B relationships. If you visit a grocery store in Poland, then while regular clerks are most likely normal employees, there's a good chance that the shift manager is an "entrepreneur".
What's so hard to understand? The guy was using a knock-off name on a well-known brand without permission to sell their same products. Also, food is one of those specially regulated items that distributors must go through certification and checks on quality in most countries as part of consumer protection laws.
Also, I don't know the term for it offhand, (IANAL,) but there's a legal difference between buying a product as a consumer and then disposing of it because you happen not to need it vs. going in and buying in bulk with full intention to resell. There's a kind of implicit agreement when you buy retail.
The first sale doctrine still applies to bulk purchases. If a seller wants to, they can refuse to sell to anyone that they think will latter resell their product.
You can go into a store right now, buy something at full retail price, and list it on eBay. I doubt you would make any money, unless, like Pirate Joe's, you are selling to a market that is unable to buy from the original retailer.
I also don't understand what you are getting at about TJs losing money on commercial real estate. Since TJ doesn't sell in canada, and they sold more in the stores they this guy bought from, didn't they make more money from their real estate?
I thought people do this all the time, successfully defending themselves in court when necessary. Can you show me statute or a current judicial decision that says otherwise?
What happened here, is that Pirate Joe's didn't have enough money to pay their lawyers, so they gave up and settled with Trader Joe's.
More generally, TJs has every right to sell to people on specific terms. That's just freedom of contract.
google cases of people selling as little as 5 items of "esprit" clothing.
if you resell brands and youre not an authorized vendor, youre not going to have a lot of fun for a while.
A side remark, people often say how great the US / north America is for entrepreneurs, compared to (continental) Europe where there is a lot of red tape and regulations. But in my opinion, if I were to do this in Germany there is no way ALDI (whom trader Joe's belongs to iirc) could sue me out of business. Not even with the old frivolous "we are wrong but you can't afford the defense" trick. There is just so much legal uncertainty in NA that it would give me nightmares doing business there.