On October 5, U.S. supermarket chain Trader Joe’s initiated a federal legal action against a decentralized finance (DeFi) entity called Trader Joe.
The litigation alleges that the DeFi entity violated trademark rights and demands all earnings accrued by the platform as compensation. This move comes after a failed legal effort by Trader Joe’s in 2022 to shut the platform down.
The Accusations in the Lawsuit
The lawsuit claims that the DeFi platform, Trader Joe, utilized the grocery store’s name without obtaining proper authorization.
The litigation reads, “Defendants did not approach nor obtain consent from Trader Joe’s to christen their platform after the supermarket.” Previously, the grocery store had dispatched cease-and-desist letters to the DeFi entity, which went unanswered.
Launched in 2021 by an unidentified group, the DeFi platform called Trader Joe runs on the Avalanche blockchain. It began its operations as a derivative of SushiSwap. Those who contribute funds to Trader Joe as liquidity providers earn fees from the platform’s traders.
Trader Joe’s lawsuit further explores branding concerns. It asserts that the DeFi platform’s team members employ pseudonyms in their professional interactions, suggesting that the adoption of the “Trader Joe” moniker allows them to commercially capitalize on the supermarket chain’s established trademark and its wider standing in the market.
The legal complaint points out, “Their practice of hiding their true identities, even among themselves, in daily business interactions indicates a motive to evade scrutiny, sidestep legal protocols, and function without facing any legal repercussions.”
Past Legal Encounters and New Developments
In the preceding year, Trader Joe’s brought a case before the United Nations’ World Intellectual Property Organization (WIPO), alleging that the DeFi platform was unduly benefiting from the supermarket chain’s well-established name. Yet, the defense presented by Cheng Chieh Liu, one of the co-founders of the Trader Joe DeFi platform, managed to get the case thrown out. Liu’s defense was anchored in the assertion that the platform was named in honor of his sibling, Joe Liu.
This defense seemed sturdy until a newsletter from cryptofish, another of the platform’s co-founders, on Substack unveiled that, “With no name for the DEX yet, [we] just named it Trader Joe, in reference to the supermarket.”
Following this disclosure, a new lawsuit was initiated in the United States District Court for the Central District of California. The legal counsel representing Trader Joe’s alleges that the defendants fabricated a fictitious backstory about the naming of the platform, asserting, “The claims they made were misleading, and the Defendants were fully aware of their deception.”
The litigation not only demands all revenues generated by the DeFi entity but also calls for the immediate confiscation of all related websites and the permanent cessation of the platform’s operations.