When the Law Forces You to Sue

I chuckled when I saw the headline on this AP story in my local St. Paul newspaper last week: Red Cross Sued for Using Red Cross. It’s often pretty easy to make trademark law look silly. (I know because I’ve spent all summer writing an article about it — coming soon to an articles editor in-box near you!). But that headline pretty much sums up the story: Johnson & Johnson has sued the American Red Cross (ARC) over the relief organization’s efforts to license the use of its red plus-sign image on medical products (like this one) that it endorses. J&J claims that it owns exclusive trademark rights to the red cross image when used on such items, and the nonprofit Red Cross can use it only to identify its core good works.

So why is Johnson & Johnson pursuing a lawsuit that gets the company lampooned in the press? And makes it look like a heartless miser? And gets it threatened with boycott? And to top it off, triggers a reaction from their opponent that stokes all those sentiments? Indeed, ARC president Mark Everson even delivered an implicit threat (via a New York Times story) to use its substantial political heft to ask Congress for special preemptive legislation (an entirely plausible scenario, though I wonder if J&J would have a takings claim):

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.

Johnson & Johnson protests that the company is a reluctant plaintiff, as its spokesman told the Times:

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.

What gives?

Michael Froomkin has the answer, I think:

For non-trademark geeks, I should also perhaps explain that given the way trademark law works, if J&J didn’t sue ARC and the companies that are branding goods based on its licenses, then J&J would risk losing control of its valuable mark.

As one of those trademark geeks, that was my thought too. Common law surrounding the maintenance of trademark rights suggests that the failure to police a mark can ultimately lead to a finding that you have “abandoned” your rights. This abandonment doesn’t happen very often, but it’s such a catastrophe if it does occur that markholders pretty aggressively take care that they never appear to acquiesce to any potentially infringing use of their mark. Which means they send cease and desist letters and file complaints even against the most sympathetic defendants, when it is otherwise totally against their interest to do so.

I think this is a pretty good example of a perverse incentive. Should the legal system really force people to sue when they would prefer not to? What about a mechanism by which J&J could acquiesce for limited purposes without any adverse effect on their rights in any subsequent litigation?

[Cross-posted at Concurring Opinions]

5 Responses to “When the Law Forces You to Sue”

  1. This is going to become a more common problem as a collaborative-mashup-commentary culture becomes more widespread. We’re already running into it full force in free software, where we’d like to be able to say ‘use the trademark unless you’re a bad guy’ but can’t because of this same risk.

  2. Well as another trademark geek here, while I do see the abandonment argument, or even possibly a laches problem if they were to send C&D’s and then not follow up, this to me sounds like a situation that could have easily been avoided without litigation through licensing. TMs can be licensed (along with the good will) for limited purposes, and there is nothing which requires that the cost of such licensing be prohibitive (could even well be a token fee). To me this says that if J&J really was “reluctant,” they have options that allow them to assert their rights that do not involve bringing suit. Unless of course we have a situation where both sides are stonewalling and there was no way forward…

  3. Luis: That’s fascinating. Of course, uses that still point correctly to the source of the code should be all right, because in principle they actually strengthen the mark. But it could be tricky to draft such a condition to apply to exactly the kinds of downstream uses you want to favor.

    Chris: Agreed, although “token” licenses are sometimes rejected as “naked” licenses. Note the comments from Michael Froomkin and me on the Concurring Opinions cross post… Also, I think you are correct that some of the backstory is the ARC’s refusal to agree to a license — so should J&J be able to do something unilateral?

  4. A license for a nominal fee crossed my mind, but ARC might then be impliedly conceding that they were required to take the license. Some sort of estoppel argument might conceivably come back to haunt them later on.

  5. That looks to me like a lot of waves for a small case. And I think it’s owned the big names of the competitors.
    First, J&J were NOT forced to sue – they just risk losing control of a valuable mark. Second, there would have been a better solution by license agreements, wouldn`t it?

    So maybe there’s just one at J&J having had a bad day.