The US District Court in Manhattan has recently dismissed an action claiming breach of a trade mark co-existence agreement raised by Johnson & Johnson ("J&J"), the health care conglomerate, against the Red Cross ("RC") aid organisation.

In 1887 J&J began using a red cross design as a trade mark. Whilst this came six years after the creation of RC, the charity did not receive its congressional charter until 1900. J&J and RC had agreed in 1895 to share use of the red cross symbol. J&J also used the symbol on packaging for many of its consumer health products, such as Band-Aids.

J&J took issue with RC licensing the symbol to other companies for use on commercial items sold in stores as part of the organisation’s fund-raising program in 2004. J&J contended that the charter did not allow the Red Cross to engage in commercial activities competing with a private business. The commercial items included humidifiers, hand sanitizer gel, medical examination gloves, nail clippers, combs and toothbrushes.

In his second ruling dismissing part of the case — the first came in November 2007 — Judge Rakoff of the US District Court held that the charitable reasons for Red Cross’ commercial ventures made them all the more reasonable.

“The fact that the ultimate purpose of these licensing activities is a ‘charitable purpose’ — i.e. to raise funds that A.R.C. (the American Red Cross), a not-for-profit organization, can utilize for its charitable endeavors — only further emphasizes their legitimacy,” his decision said.

The judge observed that the weakness of J&J's claim was “well illustrated by the ironic fact” that in 1986 the company itself had entered into a similar promotional agreement with the Red Cross.

Certain issues in the case remain unresolved, including the accusation that the Red Cross purposely interfered with two of J&J's commercial collaborators. However, the Red Cross has outlined that it considers the matter to have been settled.

Whilst J&J may appeal, it appears that this might exacerbate a dispute which is a potential public relations pitfall for the company. The impact of public relations elements in legal disputes is exemplified here by the chairman of the Red Cross making reference to J&J potentially "bullying" the charity. If public perceptions are not addressed by J&J, any goodwill held through J&J's association with the Red Cross trade mark could be tarnished.

03 June 2008

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