Trader Joe’s has a big bite!

Many who frequent Trader Joe’s to buy groceries feel immediately calmed by the friendly atmosphere and smiling faces of the ever-cheerful employees! One may be easily forgiven for thinking that Trader Joe’s is perpetually conflict-free and yet this assumption would undoubtedly be a mistake. Earlier this month, Trader Joe’s sued the decentralized exchange platform (dex), Trader Joe, for trademark infringement in Federal Court in California. The essential claim, of course, is that the exchange’s use of the name, “Trader Joe” infringes on the grocery chain’s proprietary and exclusive right to use the name, and such use constitutes trademark infringement.

Allegations of trademark infringement are generally predicated on the claim of “Likelihood of Confusion” between a junior trademark and a senior trademark, as a function of the similarity of the trademarks vis-a-vis the goods/services sold under the banner of the trademarks. The idea is that because the trademarks and goods/services are so similar, consumers may be confused as to the source of the goods/services, thereby both unjustly enriching the infringer and harming the consumer.

At this point, the astute reader may be wondering how a digital crypto-exchange could possibly be confused in any meaningful way with the grocery store chain Trader Joe’s. After all, one sells food products and the other operates as a digital decentralized exchange that enables customers to trade crypto assets. And yet, there does seem to be a strong intuition that something just does not seem fair about allowing Trader Joe to continue to use the brand name of a mega-store that has worked hard and spent untold amounts of capital to build its brand recognition (I never said I wasn’t biased!).

To account for this challenge, an alternative legal theory of harm under trademark jurisprudence has been developed and is known as “trademark dilution”. Simply, while a junior trademark user may not be selling the same product as the rightful senior trademark holder, the mere use of the same name lessens or dilutes the distinctive nature and therefore brand value of the senior. On this account of trademark infringement, neither party has to be selling the same goods/services; it is enough that the senior trademark holder has been using the mark first and with sufficient ubiquity. So, should we care that Trader Joe is in the business of Crypto and Trader Joe’s is in the business of produce? Not under trademark dilution.

While trademark dilution is often a challenging claim to prevail over, it is not hugely burdensome for rather well-known companies. Indeed, to establish a claim of trademark dilution, the essential (although not exclusive) hurdle is demonstrating that the trademark is “famous” and “widely recognized by the general public”. One does not have to be a brilliant legal scholar to see how Trader Joe’s will very likely be able to prevail upon this standard. Trader Joe’s is easily a billion-dollar company with hundreds of stores across the United States. Everyone knows who and what Trader Joe’s is and does.

As a Cryptocurrency enthusiast, what I personally find interesting about this case (as with all crypto lawsuits) is if/how Trader Joe’s can crawl through the financial maze and operational structure that comprises this foreign Cryptocurrency exchange in order to collect on any monies it may win in its lawsuit. Remember, Trader Joe is a decentralized Exchange whose origin-owner is seemingly based out of China. This lawsuit will necessarily involve all sorts of interesting legal questions surrounding the rights (and scope of those rights) involved in the transparency and penetration of a decentralized crypto exchange among perhaps harrier questions of international law and jurisprudence. Stay tuned.

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