Legal Experts See Tough Fight Ahead in American Red Cross Trademark Suit

The American Red Cross is weighing its legal options and considering suing Johnson & Johnson in response to the pharmaceutical company’s decision this month to pursue legal action against the Red Cross, charging the charity with trademark infringement.

But some legal experts who have reviewed the case say the Red Cross will be facing a difficult fight if it decides to stand toe-to-toe in court against the health-care manufacturing company.

Johnson & Johnson’s lawsuit against the American Red Cross charges that the charity violated a long-held trademark by selling products such as humidifiers, toothbrushes, and combs under its own brand.

The company says that it has the exclusive right to use the Red Cross symbol on commercial products. In the lawsuit, Johnson & Johnson is ordering the American Red Cross to destroy all of its licensed first-aid products, turn over the proceeds of its past sales of such products, and pay damages and court costs.

The Red Cross — like many large charities — works with private companies to sell retail products under its brand and receives royalty payments for the sale of those products. The organization has licensing agreements with 10 companies, which produce disaster radios, hand sanitizers, disposable gloves, nursing shoes, and other items that bear the Red Cross logo.

Four of those partner companies were also sued by Johnson & Johnson.

But unlike most other charities, the Red Cross does not have exclusive rights to its logo, Johnson & Johnson says.

The company says it has the exclusive right to use the red-and-white design and trademark on commercial products, a right it has held since 1887.

The Red Cross, however, says it began using that emblem in 1881 — six years before Johnson & Johnson started using it on commercial products. Red Cross officials also say that Congress in 1905 wrote a clause into the American Red Cross’s charter that gave Johnson & Johnson the rights to use the logo on its products.

Making the Case

When the American Red Cross last year began selling products under its own banner, it violated the trademark, the lawsuit alleges.

Based on that argument, many trademark lawyers say Johnson & Johnson appears to have a strong case.

“One of the principles of trademark law is that typically the one who is first wins,” says Bruce Sunstein, a Boston lawyer. “The other major principle is the one that does not protect one’s trademark loses it. The actual revenue stream to the American Red Cross here is small. But what’s of concern to Johnson & Johnson is, if they don’t do this, they could lose their rights.”

The Red Cross, however, says that the law is on its side.

Mark Everson, chief executive of the Red Cross, says the organization had investigated the use of the trademark before it began licensing its use on commercial products and had been assured by its lawyers that it was “on sound footing.”

In addition, he says, the product sales complement the charity’s mission of helping people prepare for emergencies and disasters.

“I’m concerned that J&J’s action, if they prevail or if they interfere with our actions in the marketplace, will make people less prepared,” Mr. Everson says. “We have an important mission that Americans rely on us to fulfill. We feel that what we’re doing is consistent with that.”

That argument, however, might not be enough for the Red Cross to prevail in a trademark case. The organization would have to prove that Johnson & Johnson does not own the exclusive right to use the trademark on commercial products, says Randy M. Friedberg, a trademark lawyer in New York.

And because of the potential public-relations fallout that comes from taking an established charity to court, Mr. Friedberg says, Johnson & Johnson has to be confident that the lawsuit is worth pursuing.

“My guess is that the Red Cross is in real trouble here,” Mr. Friedberg says. “No company of any merit is going to sue the American Red Cross without trying to find an amicable solution. They are doing what they think they have to from a business perspective.”

Johnson & Johnson officials said they sued the American Red Cross only after the nonprofit organization declined to allow a mediator to resolve the dispute.

Johnson & Johnson “was left with no choice but to seek protection of our trademark rights through the courts,” the company said in a statement.

Still, many observers expect the parties to negotiate a deal before the case goes to trial. “Most trademark spats settle,” Mr. Sunstein says.

Expense and Time

Until the lawsuit is resolved, though, it is likely to generate substantial public interest.

And it could become a major distraction for the Red Cross.

That was the case for the American Eagle Foundation, in Pigeon Forge, Tenn., which was sued by the rock band the Eagles in 1998 over the foundation’s Web address, http://www.eagles.org, toll-free phone number (1-800-2EAGLES), and American Eagle Records recording label.

The rock band dropped the case in 2002.

But the lawsuit, which lasted for four years, made it difficult for the organization to carry on its regular fund-raising efforts and fulfill its mission of caring for injured eagles, says Al Louis Cecere, the foundation’s president.

“It’s something I would not wish on any nonprofit organization or on any person,” Mr. Cecere says. “It’s not a fun thing to go through. It’s very time-consuming and stressful.”