Trader Joe’s Charges Crypto Platform with Trademark Infringement

Trader Joe’s has filed a lawsuit against a cryptocurrency platform called “Trader Joe,” claiming fraud, trademark infringement, and trademark dilution.

The crypto site uses the URL https://traderjoexyz.com/avalanche and other domains that incorporate the “Trader Joe” name.

According to Barron’s, the crypto site is the 11^th largest in DeFi, with $20 million in trading volume in a 24-hour period.

As Barron’s explains,

Unlike centralized exchanges such as Coinbase Global (ticker: COIN), DeFi platforms facilitate peer-to-peer trading in tokens, such as Bitcoin, without an intermediary, through the use of software called smart contracts. DeFi platforms also typically offer more esoteric crypto financial services, such as earning interest from providing liquidity to trading pools.

The DeFi group’s founders are anonymous, making it hard for Trader Joe’s to take action against them.

In 2022, Trader Joe’s filed a complaint with the World Intellectual Property Organization (“WIPO”) Arbitration and Mediation Center to divest Defendants of the xyz version of the domain name.

Defendant Cheng Chieh Liu claimed that the platform was named for his brother, Joe. WIPO accepted that argument.

Later, other defendants admitted in a Substack publication that the crypto site had, in fact, been named for the grocery chain.

Although the “Trader Joe’s” name doesn’t appear prominently on the crypto website’s home page at the moment, the name is used in the Terms and Conditions of Service.

As the complaint notes,

Trader Joe’s is the owner of several United States federal trademark registrations for the mark TRADER JOE’S for retail grocery services and for a range of food and beverage products and associated merchandise. For more than 50 years, Trader Joe’s has worked tirelessly to ensure that the TRADER JOE’S mark is associated only with goods and services of the highest quality. To achieve this mission, Trader Joe’s maintains strict standards and tightly controls the sale of all products bearing the TRADER JOE’S mark.

The defendants, according to the complaint, named their platform after the market chain and “developed a narrative around a fictionalized “Trader Joe” who sells his crops in the local marketplace, further evoking Trader Joe’s business and brand.”

The crypto character wears a red cap, which is the same color as the Trader Joe’s logo.

The crypto company also operates a “Trader Joe” app in the Apple app store and a page on the social platform formerly known as Twitter and now known as “X.” The “Contact Us” page on the website leads to the X account, which uses food marketplace imagery.

According to Trader Joe’s (the grocery store),

Defendants’ “Trader Joe” branding is designed to allow them to commercially profit from Trader Joe’s famous mark and broader reputation by causing confusion as to the source, sponsorship, affiliation, or endorsement of Defendants’ website and services and by trading on Trader Joe’s hard-earned goodwill and name recognition…

The crypto platform failed to respond to Trader Joe’s cease-and-desist letter.

The platform also allegedly engaged in acts of lawlessness that further tarnished the Trader Joe’s name, including

a vandalism-based marketing campaign in Paris during Paris Blockchain Week—plastering “Trader Joe” branded material on public and private property around the city…

The grocery chain charges that

there is a likelihood that consumers will be confused that Trader Joe’s is associated or affiliated with Trader Joe, or that Trader Joe’s sponsored, approved, or licensed Defendants’ use of its name or the substantially similar “Trader Joe” name.

Also, claims the chain,

Defendants’ repeated use of the “Trader Joe” name in connection with their Platform also impairs the distinctiveness of the TRADER JOE’S Family of Marks and thereby causes dilution by blurring. Further, Defendants’ unscrupulous activities cause dilution by tarnishment of the TRADER JOE’S Family of Marks.

In trademark law,

dilution refers to the use of a trademark or trade name in commerce that is sufficiently similar to a famous mark that by association it confuses or diminishes the public's perception of the famous mark. For example, an appliance company may dilute the trademark of Apple by putting white apple logos on their appliances, confusing consumers as to whether Apple began creating completely new items.

Dilution causes harm to the trademark owner in two main ways: blurring and tarnishment.

Blurring occurs when the distinctiveness of a famous mark is impaired by association with a similar mark or trade name, even when that name is used for different products.

Tarnishment occurs when the reputation of a famous mark is harmed by association with a similar mark or name.

In the US, the Federal Trademark Dilution Act (FTDA), 15 U.S.C. § 1125(c), creates a cause of action to protect famous marks from unauthorized use, to prevent other businesses from trading upon the goodwill and fame of such marks, and to prevent dilution of the distinctive quality of such marks.

A mark is considered “famous” if it’s widely recognized by consumers.

Factors for determining whether a mark is famous include:

• the duration, extent, and geographic reach of advertising and publicity of the mark;
• the amount, volume, and geographic extent of sales of goods or services offered under the mark; and
• the extent of actual recognition of the mark.

Once a mark has been shown to be “famous,” the factors to be considered in determining whether there’s likely confusion by blurring include:

• the degree of similarity between the mark or trade name and the famous mark;
• the degree of the famous mark's inherent or acquired distinctiveness;
• the extent to which the owner of the famous mark is engaged in substantially exclusive use of the mark;
• the degree of recognition of the famous mark;
• whether the user of the mark or trade name intended to create an association with the famous mark; and
• any actual association between the mark or trade name and the famous mark.

Trader Joe’s (the grocery store) is seeking to recover the crypto platform’s profits, treble damages, legal costs, and interest. The store is also seeking an injunction against the further use of its name in connection with the crypto platform.