09 August 2007

Another Renegade Trademark Suit

In proof that the trademark law of the United States is broken Johnson and Johnson is suing the American Red Cross for using the red cross logo that Johnson and Johnson uses to sell its products.

The irony is that Johnson and Johnson stole the logo from the Red Cross, which used it first, quite possibly for the purpose of appropriating the charity's public good will, and then apparently entered into a licensing agreement in 1895 for which it apparently pays no royalties. This suit apparently claims that the Red Cross violated the licensing agreement in 2004 by allowing others to produce products under Red Cross license. It also seems to claim that the American Red Cross is barred by its charter from licensing products (despite the fact that Johnson and Johnson itself is the beneficiary of such an arrangement and has been for more than a century).

There is a tradition, which may or may not have case law support, that a lease more than 99 years was historically invalid under the rule against perpetuities. I'm not aware of any cases that apply that rule to trademarks, but this would be the ideal case to explore the idea. Absent the 1895 agreement, it looks to me as if Johnson and Johnson would have no right to sue the American Red Cross for trademark violations, as the Red Cross is the senior user of the mark.

It also isn't obvious to me that the red cross symbol hasn't been diluted to the point of no longer having a secondary meaning associated only with the charity and Johnson and Johnson. My perception is that the symbol used widely by a variety of ambulance companies and hospitals, apparently without objection or a formal license, as a symbol that they are medical service providers.

Advertising works two ways. It both gives a mark secondary meaning that makes it protectable, and it catapults that mark into our general popular culture. The notion that company should own rights to something that is part of our popular culture is repugnant to free speech ideas, which is why trademark dilution is recognized as a legal doctrine.

At any rate, one thing the case does illustrate well is that there is no fixed durational limit on a trademark, even though both copyrights and patents have fixed durations (not necessarily a bad legal principle). Trademarks lapse only when they are abandoned, which happens rather frequently, because most businesses that obtain trademarks go out of business years or decades after they are founded.

Even more troubling, to my sensibilities, is the relief requested, which makes all sorts of sense from a crude property law analogy, but is, in practice, horribly wasteful and makes little economic sense in the intellectual property context. Johnson and Johnson is asking "that all the goods be destroyed and that all profits from the goods, along with costs and punitive damages, be awarded to Johnson & Johnson." This case is an excellent one to illustrate how an disgorgement remedy based on an unjust enrichment theory makes much more sense than the remedy Johnson & Johnson, supported by the status quo law, is asking the Court to provide.

1 comment:

Jon W. said...

Various branches of the Red Cross have harassed clip art vendors, film and video game makers, and others over the trademark. The mark, itself an inversion of the Swiss flag, is so simple that I would argue that it does not deserve protection. However, its recognition in the Geneva Convention complicates things.

While I'm not really comfortable with J&J's action here, I don't think the ARC should be licensing the mark like this either.