A U.S. court has the authority to hear a trademark lawsuit by grocery chain Trader Joe's against the man who runs a Vancouver knockoff, Pirate Joe's, a U.S. federal appeals court ruled Friday.

Trader Joe claims Pirate Joe's owner, Michael Hallat, has been purchasing goods at Trader Joe's U.S. stores for resale in Vancouver.

The 9th U.S. Circuit Court of Appeals overturned a decision by a district court in Washington state that initially dismissed California-based Trader Joe's federal trademark claims.

The district court said it lacked authority to hear those claims, because the defendant's alleged trademark violations occurred in Canada, and Trader Joe's had failed to clearly explain how they affected U.S. commerce.

But the 9th U.S. Circuit Court of Appeals said Hallatt's conduct could harm Trader Joe's reputation, decreasing the value of its American-held trademarks.

Circuit court judge Morgan Christen also pointed out the goods Hallatt sold in Vancouver were purchased at Trader Joe's in Washington state.

A call to Hallatt's attorney, Nathan Alexander, was not immediately returned.

Trader Joe's does not have stores in Canada.

The company sued Hallatt in 2013, alleging he drove across the border to a Trader Joe's store in Washington state, bought the company's products and resold them at higher prices at his Vancouver store.

Pirate Joe's in Vancouver resells Trader Joe's merchandise purchased in the U.S. (CBC)

A Trader Joe's store refused to sell to Hallatt, but he put on disguises to avoid detection, shopped at other stores as far away as California and hired others to shop for him, the company said in its lawsuit.

It estimated Hallatt had spent more than $350,000 on its products.

Hallatt said his business was lawful. He provided a service to Canadians who wanted Trader Joe's products but didn't want to go through the trouble of traveling to the U.S. to get them.

In court documents responding to the lawsuit, Hallatt said he never represented himself as an authorized reseller of Trader Joe's products or as an affiliate of Trader Joe's.

The U.S. appeals court has sent the case back to the Washington state district court for further proceedings.