Trader Joe's had taken Pirate Joe's and its owner Michael Hallatt to court, alleging, in part, trademark infringement and false advertising, and arguing the Vancouver retailer was hurting its brand.
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But Judge Marsha Pechman has dismissed the case, ruling there was no basis to apply a U.S. law known as the Lanham Act, which confers upon U.S. courts broad jurisdictional powers.
She says all the alleged infringements take place in Canada, and Trader Joe's cannot show economic harm.
Hallatt told CBC News on Friday morning that he felt vindicated by the ruling.
"The Lanham Act, which is this very broad powerful statute that allows corporations to, kind of, you know, beat up on anybody that affects U.S. commerce is very, very strong and powerful and can essentially shut down commerce in another country," said Hallatt.
"And so for us to have it dismissed, it really had to be black and white that we were not affecting U.S. commerce at all."
The company had argued that 40 per cent of the customers who pay by credit card at its Bellingham location are non-US residents.
The theory is the vast majority are Canadian, and if they have access to exclusive Trader Joe products in Vancouver, many will stay in Canada.
But the judge dismissed the lawsuit, ruling Trader Joe's failed to prove it competes for customers with Pirate Joes. Trader Joe's has ten days to file an appeal.
Trader Joe's has 390 stores in 30 U.S. states but no presence in Canada.
So Michael Hallatt crosses the border, buys thousands of dollars worth of products, and then marks them up for resale at his Kitsilano store.
Hallatt said he has been spending around $4,000 to $5,000 a week at Trader Joe's in Bellingham, Wash.Suggest a correction