United States: Litigation Alert: The Ninth Circuit Leaves Pirate Joe's Saying "Shiver Me Timbers!"

Late last week, the U.S. Court of Appeals for the Ninth Circuit determined a court had jurisdiction to decide a trademark lawsuit filed by a U.S. grocery store against a Canadian reseller where the products at issue were only sold in Canada. Trader Joe's Co. v. Hallatt, No. 14-35035, 2016 WL 4488009 (9th Cir. Aug. 26, 2016). The ruling has implications for U.S. companies and their ability to go after foreign infringers in the U.S. even when foreign infringers do not sell products in the U.S.

Aaargh! That's My Treasure: Background and District Court Decision

Trader Joe's operates grocery stores throughout the U.S. and owns several trademarks associated with its stores. Trader Joe's does not, however, have any stores in Canada or sell products directly into Canada.

Defendant Michael Hallatt purchased Trader Joe's products in Washington State, transported them to Canada, and resold them at a store he designed to mimic Trader Joe's stores called Pirate Joe's. In 2013, Trader Joe's sued Hallatt in the U.S. District Court for the Western District of Washington for trademark infringement and unfair competition under the Lanham Act. Trader Joe's alleged that Hallatt was misleading customers into thinking Pirate Joe's was an authorized retailer by displaying Trader Joe's trademarks and mimicking its trade dress. Hallatt denied that his activities were wrongful, and claimed he alerted customers that he was not an authorized Trader Joe's retailer.

In the district court, Hallatt argued that the case should be dismissed because the Lanham Act did not apply to his alleged trademark violations occurring in Canada. The district court agreed, finding that Trader Joe's did not explain how Hallatt's activity impacted American commerce sufficiently to support a Lanham Act claim—the alleged infringement was in Canada after all. Without a Lanham Act hook, the court dismissed Trader Joe's claims for lack of subject-matter jurisdiction.

The Ninth Circuit Revokes Pirate Joe's Letters of Marque

On appeal, the Ninth Circuit reversed the district court's findings on the federal trademark claims, finding instead that the alleged conduct "could harm the reputation of Trader Joe's American-held marks."

The court considered two questions to determine whether the Lanham Act reached the allegedly infringing conduct. First, is extraterritorial application of the Lanham Act an issue that implicates the federal courts' subject-matter jurisdiction? Second, did Trader Joe's sufficiently allege that Hallatt's infringing activities impacted American commerce, invoking the Lanham Act's protections? The court answered "no" to the former, and "yes" to the latter.

Answering the first question, the court explained that the extraterritorial reach of the Lanham Act is not an issue of subject-matter jurisdiction; rather, it is a non-jurisdictional merits issue. As the court recently explained in La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., the Lanham Act's "use in commerce" requirement—which gives the Act its extraterritorial reach—is not jurisdictional, and the broad definition of "commerce" indicates that the Act should apply extraterritorially. 762 F.3d 867 (9th Cir. 2014). This means a defendant's activities abroad, even if not substantial or significant, could fall within the purview of the Lanham Act.

The court next considered the second question, which involves the limits on the Lanham Act's extraterritorial application. The Ninth Circuit applied the three-part Timberlane test, finding that the Lanham Act applies extraterritorially if: "(1) the alleged violations create... some effect on American foreign commerce; (2) the effect [is] sufficiently great to present a cognizable injury to the plaintiffs under the Lanham Act; and (3) the interests of and links to American foreign commerce [are] sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority." Trader Joe's Co., 2016 WL 4488009 at *6.

Under prongs one and two, plaintiffs typically allege that infringing goods, while initially sold outside the U.S., flow into American domestic markets. Trader Joe's satisfied its burden under prongs one and two by alleging a nexus between Hallatt's foreign conduct and American commerce based on alleged harm to Trader Joe's domestic reputation, which could decrease the value of its American trademarks. Trader Joe's claimed that Hallatt's poor quality controls could lead consumers who purchased Trader Joe's brand products at Pirate Joe's to get ill, and the news of such illness could make international news. Further, if Hallatt sold products at inflated prices, customers at Pirate Joe's might "mistakenly associate Trader Joe's with overpriced goods." Id. at *7.

Under the third prong, the court considered issues of international comity by balancing seven factors:

"[1] the degree of conflict with foreign law or policy, [2] the nationality or allegiance of the parties and the locations or principal places of business of corporations, [3] the extent to which enforcement by either state can be expected to achieve compliance, [4] the relative significance of effects on the United States as compared with those elsewhere, [5] the extent to which there is explicit purpose to harm or affect American commerce, [6] the foreseeability of such effect, and [7] the relative importance to the violations charged of conduct within the United States as compared with conduct abroad."

Id. at *8. Taken together, these factors weighed in favor of extraterritorial application. As the court explained, there were no pending proceedings between the parties in Canada; there would be no difficulty in enforcing a damages award against Hallatt; Trader Joe's pled facts indicating a purpose to harm American commerce; and an essential part of Hallatt's business took place in the U.S.—even if the ultimate sale, and most of the marketing, occurred outside of the U.S.

Because the three Timberlane prongs favored extraterritorial application of the Lanham Act, the Court concluded that the Lanham Act reached Hallatt's infringing activity, and reversed the district court's dismissal of the Lanham Act claims.

Foreign Infringers: Prepare to be Boarded

The Ninth Circuit's opinion suggests that infringement that occurs abroad, even when the products at issue do not flow into the U.S., can serve as the basis for a trademark claim so long as the infringement otherwise impacts a mark in the U.S. This has implications for international companies or brands in international cities with U.S. marks since U.S. mark holders may only need to show the right amount of harm (actual or foreseeable) to broaden their ability to sue foreign companies for trademark claims.

The opinion also comes at a time when the scope of protection for foreign activities and foreign marks under the Lanham Act is already evolving. For example, in Belmora LLC v. Bayer Consumer Care AG, the U.S. Court of Appeals for the Fourth Circuit recently held that Bayer could assert its foreign trademark in the U.S. against Belmora, even though Bayer had never used the mark in the U.S. 819 F.3d 697 (4th Cir. 2016). Belmora has until late September to appeal the decision to the U.S. Supreme Court. The U.S. and its partner nations are similarly considering whether to make foreign marks more easily enforceable through proposals like the Trans-Pacific Partnership Agreement (TPP).

Proposals like the TPP (even if it doesn't pass) and recent case developments across the country reinforce the fact that foreign marks and foreign conduct are more important than ever. U.S. companies should consider foreign markets when selecting a mark and should evaluate their policing of foreign infringers to see whether they should file trademark claims in the U.S. against these foreign infringers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
2 Oct 2018, Webinar, California, United States

This CLE webinar will offer suggestions to litigators to help them comply with the new GDPR during e-discovery.

10 Oct 2018, Webinar, California, United States

For the past years, 3D printing has significantly revolutionized the business industry as it provides innovations and improvement to pre-existing processes.

16 Oct 2018, Other, California, United States

This highly interactive colloquium will provide a deep understanding and practical advice regarding major e-discovery challenges facing organizations t​oday.

Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Brinks Gilson & Lione
Stites & Harbison PLLC
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Brinks Gilson & Lione
Stites & Harbison PLLC
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions