Can U.S. Trademark Law Extend Into Canada? Apparently so.

The Ninth Circuit Court of Appeals certainly thinks so. It ruled that the Lanham Act, providing most of the trademark law in the United States, can reach into Vancouver, British Columbia.

Pirate Joe's in Vancouver

According to the documents filed in the appeal to the Ninth Circuit and the district court, there is a Trader Joe's store in Bellingham, Washington. It is relatively near to the United States-Canada border. Canadians constituted about forty percent of the Bellingham Trader Joe's business. 

An individual, Mr. Hallatt, has purchased over $350,000 in Trader Joe's groceries. He makes several trips a week into the United States, purchasing large amounts of groceries. Apparently, he takes them back to Canada, perishables and all, and sells them at his store, Pirate Joe's at inflated prices. When the Bellingham store cut him off, Mr. Hallatt began going to stores as far as Seattle, Portland, and further south to gather the groceries.

Does the Lanham Act apply in Canada?

Arguably, the infringing activity takes place in Canada, not the United States. The Ninth Circuit, through Judge Christen, explained that the extraterritorial reach of the Lanham Act is a merits question. It does not implicate the United States' federal courts' subject matter jurisdiction. 

Some readers might question, how can it affect sales in the United States? After all, he was purchasing the groceries. Presumably even if someone purchase from Mr. Hallatt's Pirate Joe's store, there was still a purchase of that same good in the United States.

First of all, trademark law concerns itself about quality control. Here, Trader Joe's could not control quality. Secondly, higher prices in Vancouver could affect United States' commerce by harming Trader Joe's reputation. Finally, there were Canadians coming to the United States to purchase the goods. 

What does Pirate Joe's teach us?

Typically, overseas sales impact the Lanham Act when the goods sold make their way back to the United States. Here, though, the case hinges on reputational damage. There is no argument that the goods have made it back into the United States.

While this is certainly an expansion of the Lanham Act's reach, it may not be as drastic as thought of. Given the dictates of geography, it would seem that the Ninth Circuit's holding will apply only to places like Cascadia in the Pacific Northwest, Detroit-Windsor, Toronto-Buffalo, Lorado-Nuevo Lorado, San Diego-Tijuana, and other cross-border areas of higher population density. However, it will be interesting to see if the law keeps expanding.