US: Trade marks: Extraterritorial application of the Lanham Act

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Cookies Settings

US: Trade marks: Extraterritorial application of the Lanham Act

In Trader Joe's Company v Michael Norman Hallatt d/b/a Pirate Joe's, the Ninth Circuit Court of Appeals issued a decision which granted Trader Joe's the right to pursue claims for trade mark infringement under the Lanham Act against activity that occurred in Canada.

Trader Joe's is a well-known American grocery store that sells a range of Trader Joe's-branded products which are only available in its stores. Hallatt, a US lawful permanent resident, had been purchasing large quantities of Trader Joe's products in the US, transporting those products into Canada, and then re-selling them at his store in Canada, Pirate Joe's, which was designed to look like a Trader Joe's store. Trader Joe's sued Hallatt alleging that he violated federal and state trade mark and unfair competition laws by misleading customers into falsely believing that Pirate Joe's was authorised by Trader Joe's to sell its products, by displaying Trader Joe's trade marks and trade dress without approval and without adhering to Trader Joe's strict quality control practices.

The district court granted Hallatt's motion to dismiss for lack of subject matter jurisdiction, determining that claims under the Lanham Act did not apply because the allegedly infringing conduct occurred in Canada. Trader Joe's subsequently filed an appeal with the Ninth Circuit.

In issuing its judgment, the Ninth Circuit first looked at whether it had jurisdiction to hear the case. It decided that question affirmatively, holding that "the extraterritorial reach of the Lanham Act is a merits question that does not implicate federal courts' subject matter jurisdiction". It then asked whether the defendant's conduct impacts US commerce in a manner sufficient to invoke the protections of the Lanham Act. To answer this question, the Court applied a three-part test, indicating that the Lanham Act applies to activity outside the US in circumstances in which: "(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 was able to satisfy the first two prongs of the test by arguing that Hallatt's foreign conduct has some effect on US commerce because his activities harm its reputation and decrease the value of its American trade marks (helping them navigate around the first sale doctrine – namely, the exhaustion of remedies where there is a sale of legitimate products). Specifically, Trader Joe's took the position that Hallatt's distribution of Trader Joe's-branded products did not meet their quality control standards, thereby resulting in the devaluation of the mark and the tarnishing of their image. The Ninth Circuit then weighed seven factors to determine that an assertion of extraterritorial authority was justified. Accordingly, the Ninth Circuit remanded the case to the District Court for further proceedings.

With the Ninth Circuit's ruling, Trader Joe's is able to pursue claims for trade mark infringement against Hallatt in the US for activities in Canada. The decision could be particularly helpful to brand owners in their fight against certain categories of infringement resulting from conduct outside the US.

ash-karen-artz.jpg
Danow_Bret

Karen

Artz Ash

Bret J Danow


Katten Muchin Rosenman LLP 575 Madison AvenueNew York, NY 10022-2585United StatesTel: +1 212 940 8554Fax: +1 212 940 8671karen.ash@kattenlaw.comwww.kattenlaw.com

more from across site and SHARED ros bottom lb

More from across our site

INTA has a right to protect its Annual Meeting, but making it harder for others to hold similar events risks leaving delegates with a bigger travel bill
The firm says it hopes to capture patent litigation work in Texas by arming itself with experienced trial lawyers with venue expertise
Ken Iijima's arrival continues a trend of ex-Pizzeys practitioners joining RnB IP, whose co-founder says independent ownership and a lucrative compensation model have become attractive in a consolidating market
McDermott Will & Schulte lawyers explore why the UPC is seeing rapid adoption by medtech for fast-moving disputes, while pharma and biotech take a cautious, selective approach over revocation risks
IP firms may be growing more comfortable with external capital, but uncertainty over who could ultimately own the business is complicating the investment pitch
The former Western District of Texas judge addresses perceptions of his courtroom, reveals what comes next as he returns to practice at A&O Shearman and explains why marathon running is ‘cathartic’
International Anti-Counterfeiting Coalition says it has been blocked from hosting its annual event in the city, ending a long tradition of holding the gathering in the days leading up to INTA’s flagship event
The ITC is a powerful tool for litigators, practitioners say, as the threat of an exclusion order on a critical tech component could mean disrupting the entire data centre's operations
Anna Toh plans to expand Rajah & Tann’s soft IP capabilities, leveraging its Southeast Asia network to support clients on cross-border portfolio management and commercial strategy
The Canadian boutique’s new IP lead says he wants to build a tech-enabled IP practice aimed at giving startups senior expertise away from the traditional ‘big law’ set-up
Gift this article