Thursday, August 09, 2007

Johnson and Johnson vs Red Cross

[Johnson and Johnson and the Red Cross are both American icons. J&J is one of the most resonsible companies out there.

These two entities share the same logo: the red cross. The Red Cross is allowed to use the logo for non-commercial purposes. However, J&J argues in this article that the Red Cross has been using it for commerce: licensing it to commercial retail partners such as Target.

The Red Cross had previously sold red cross-branded merchandise as fundraisers, and J&J had no objection.]

The red cross symbol is an icon of relief from disaster. For months, it has also been the subject of a festering disagreement between major American institutions: the health care company Johnson & Johnson and the American Red Cross.

A first-aid kit sold on Johnson & Johnson is challenging such sales.
The dispute over rights to the symbol erupted to the surface yesterday in federal court in Manhattan, where J.& J. sued the American Red Cross.

Clearly outraged, the president of the American Red Cross, Mark W. Everson, unleashed his vitriol last night on the company, which makes Band-Aids and Tylenol.

In a news release, Mr. Everson said the company’s actions were “obscene” and “simply so that J.& J. can make more money.”

In a telephone interview, he said, “I’m sort of staggered that they would take this approach.”

The two had shared the symbol amicably for more than 100 years — Johnson & Johnson on its commercial products and the American Red Cross as a symbol of its relief efforts on foreign battlefields and in disasters like floods and tornadoes.

From time to time, the American Red Cross sold products bearing the symbol as fund-raising efforts. Jeffrey J. Leebaw, a spokesman for Johnson & Johnson, said the company had no objection to that.

But in 2004, the American Red Cross began licensing the symbol to commercial partners selling products at retail establishments. According to the lawsuit, those products include humidifiers, medical examination gloves, nail clippers, combs and toothbrushes.

“What we’re talking about here is their deviation from a longstanding partnership and collaboration around the use of this trademark and their push to commercialize this trademark in the for-profit arena,” Mr. Leebaw said. “We deeply regret that it has become necessary to file this complaint. The company has the highest regard for the American Red Cross and its mission.”

Mr. Leebaw added that the company had contributed more than $5 million to the American Red Cross in the last three years.

John T. Crisan, general counsel for Johnson & Johnson’s consumer products division, said in an interview last night that the company had met with the American Red Cross to try to resolve the dispute.

Mr. Crisan said it was not clear how far the American Red Cross wanted to go in licensing the symbol for commercial purposes, noting that the red cross was a trademark of Johnson & Johnson before the American Red Cross was officially chartered. Mr. Crisan said that some of the items being sold under licensing agreements by the American Red Cross seemed to compete directly with products sold by J.& J.

Mr. Everson said that the items the American Red Cross was licensing for retail sale include emergency preparedness kits and grooming kits. The nonprofit organizations get part of the revenue from sales of those products, amounting to what he estimated was less than $10 million a year.

“It’s consistent with our mission,” he said. “People will buy disaster kits, sometimes on an impulse basis. That American Red Cross image on there gives them the confidence that there are the right things in the kit. We think they’re all done with that preparedness theme.”

The lawsuit filed yesterday says that Johnson & Johnson has used the red cross symbol since 1887 on a wide range of products, including wound care products and first-aid kits, which include gloves, wipes, bandages and cream.

The company entered into an agreement with the American Red Cross in 1895. The agreement acknowledged Johnson & Johnson’s exclusive right to the red cross as a “trademark for chemical, surgical and pharmaceutical goods of every description,” according to the lawsuit

The lawsuit says that the American Red Cross has the right under a Congressional charter awarded in 1900 to use the red cross design in connection with its efforts to provide voluntary relief. “Carrying out a commercial enterprise or business is not and never has been one of the purposes of the American Red Cross,” the lawsuit said.

The American Red Cross licensees include Learning Curve, which sells first-aid kits at Target and other retailers; Water-Jel Technologies, which places the cross on a hand sanitizer product; and Magla, which uses the cross on medical examination gloves, according to the lawsuit, which named several licensees as defendants.

Johnson & Johnson, based in New Brunswick, N.J., asked in the lawsuit that all the goods be destroyed and that all profits from the goods, along with costs and punitive damages, be awarded to Johnson & Johnson.

“The Red Cross products that J.& J. wants to take away from consumers and have destroyed are those that help Americans get prepared for life’s emergencies,” Mr. Everson said. “I hope that the courts and Congress will not allow Johnson & Johnson to bully the American Red Cross.”

[Comments: After getting past the initial anger at Johnson and Johnson, I am sympathetic to their point. It does seem that the Red Cross has skirted a line, and possibly crossed it.

The Red Cross receives part of the revenue from the licensed products. The problem is the involvement of commercial partners, who presumably are taking part of the revenue as profit. It's reasonable to assume that the Red Cross sought legal advice before doing this. But perhaps they should instead have partnered with J&J to make these licensed goods. Even if J&J took no profit (say their share of the revenues was equal to their marketing expenses, or they donated any profits), they would certainly earn considerable public goodwill.

However, what J&J is requesting - disgorgement of all the 'profits' from the sales of Red Cross licensed merchandise - is clearly reprehensible. It is American custom to request ludicrous damages as a starter in lawsuits, and bargain down from there. But at best, this is not good PR for J&J. And if they really mean to seek these damages, the entire board should be taken out and shot.]


Greg said...

The Red Cross symbol actually was originally used by Clara Barton, founder of the Red Cross movement and the American Red Cross in 1881, prior to the creation of Johnson and Johnson in 1886. The symbol is actually "stolen" from the Swiss flag and is a reversal of the color scheme of that flag. Clara Barton designed the emblem out of respect for Switzerland's long stance on neutrality during war-- a belief she shared when she began the relief mission of the Red Cross during the Civil War. She allowed J&J to use the symbol. I could understand J&J's position if somehow the American Red Cross was creating an economic hardship or substancial loss of revenue, but this is simply not the case. Besides Congress recognized the ARC's right to use the symbol in the futherance of its mission BY STATUTE. I think this is extremely bad PR on the part of J&J even if they outspend the Red Cross into legal defeat.

ARC volunteer said...

AS an American Red Cross volunteer, I am aware of what Red Cross teaches about the symbol, however, I am also aware that many areas in the world use the red cross as a symbol of medical care.
I do believe that one would have had to register the symbol with a trademark company in order to "own" it. J & J and ARC would be forever "suing" someone over a symbol that was not trademarked.

Anonymous said...

# The Red Cross began using the red cross emblem in 1881, six years before Johnson & Johnson (J&J) began using the emblem in 1887.

# J&J obtained a trademark registration in 1887, but did not object to the Red Cross use of the emblem at that time.

#The Geneva Conventions, which reserved the Red Cross emblem for specific uses, were first approved in 1864 and ratified by the United States in 1882; however, the emblem was not protected in U.S. law for the use of the American Red Cross and the U.S. military until after Johnson & Johnson had obtained its trademark.

#A clause in this law (now 18 U.S.C. 706) permits pre-existing uses of the Red Cross, such as Johnson & Johnson's, to continue.Thus J&J's trademark is Valid.

A declaration made by the U.S. upon its ratification of the 1949 Geneva Conventions includes a reservation that pre-1905 U.S. domestic uses of the Red Cross, such as Johnson & Johnson's, would remain lawful.

# Even as ARC disputes the lawsuit by Johnson & Johnson, the American Red Cross continues to recognize the validity of Johnson & Johnson's trademark. They recognize that J&J do indeed have a trademark.

In my opinion the fight is not over money. This is an issue of law. It is clear that the Red Cross was in use of the International Red Cross before J&J however it does not change the fact that in the United States of America J&J holds the Trademark for the logo and according to US law it holds rights to use it for commercial means while the law recoginizes the ARC's right to use the logo for non-commercial means.

It is also clear that ARC has licensed the logo to several commercial companies and here is where the legal issue begins. Commerce is not a part of the Red Cross's charter purposes. While I do not doubt that any profits made by the ARC is used for anything but charity the fact remains that they gave lisence to 3rd parties to make commercial use of said emblem.

The law is a tricky thing. No one person or organization is above the law be they a giant fortune company or a giant charity. How the courts will view this case is yet to be seen and I'm eagerly awaiting the decisions.