One of the things at issue in his case was whether Pirate Joes was, in fact, not misusing the TJ trademarks, etc. TJ's initial loss had nothing to do with the merits of those claims. The issue was whether the harm had occurred in Canada and whether it affected thei US business. TJs won that issue on appeal and the case was slated to go to trial before the settlement.

More generally, TJs has every right to sell to people on specific terms. That's just freedom of contract.