First sale doctrine also applies to trademarked goods. Here's a good example of a similar case examining how first sale doctrine applies to trademarks: http://www.theiplawblog.com/2009/12/articles/trademark-law/w...

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.