The Third of Two: Why Billionaires Sue Small Folks, Why They Have to and Why There is a Better Way

Recently a federal judge threw out a lawsuit where the health products company Johnson & Johnson sued the American Red Cross Committee for using the classic Red Cross logo (Red Cross Prevails in Lawsuit). For most people it is no surprise that the suit was thrown out, but for many it is a mystery why a billion dollar company would sue a charity anyway, since at the very least it does not look very good. But there is a reason for this strange behavior though in my opinion there was another option, and in this story there is an important lesson.

First of all, the Johnson and Johnson company is the legal owner of the Red Cross trademark since 1887, at least in the USA, but through an agreement between the two organizations Johnson & Johnson has the exclusive right to use the logo for commercial products while the Red Cross has the right to use it for humanitarian initiatives. This long standing agreement was challenged last year when the Red Cross started licensing the use of their logo to other companies for use on their products, in much the same way that Disney licenses the use of Winnie the Pooh images to makers of toothbrushes and lunch boxes.

You might think that Johnson and Johnson might turn a blind eye to these commercial uses since the Red Cross is hardly a competitor, but unfortunately trademark law does not allow this. Let me explain. In most jurisdictions a registered trademark lasts forever – unlike patents which expire after a certain number of years. But there is a catch: they only last forever if you use them and defend them.

If Johnson & Johnson lets someone else use one of their trademarks then they risk losing it. For example, suppose that Johnson & Johnson allows the Red Cross to license their logo to say Miller & Miller. If later another company also starts using the Red Cross symbol and Johnson & Johnson take them to court they can use the Miller & Miller example to demonstrate that the trademark is no longer defended and is therefore no longer valid. Ironically, at this stage anyone could use the logo and the Red Cross would also be a loser.

The fact that companies must defend their trademarks to avoid losing them explains the seemingly heartless behavior of Johnson & Johnson. It also explains numerous other cases that make people shake their heads, like when the Virgin Group attacks anybody who dares to use the word Virgin even if it is their own name, or the cases where the London 2012 Olympics Committee has gone after people using their trademark even though most people imagine “Olympics” to be in the public domain. And it explains why billionaire authoress JK Rowling will go after anyone infringing the Harry Potter marks, even if they are volunteers producing amateur theatricals to benefit poor widows and orphans.

Once you understand this aspect of trademark law then you understand that the strange behavior of the rich corporations and individuals is not necessarily motivated by greed. But in my opinion they do not do very well in explaining this to the public. And at the same time it reflects badly on the trademark fraternity that there appears to be no relief in sight in the form of a more equitable trademark law. Being forced to behave harshly because the law forces you is maybe an acceptable short term excuse, but in the long term maybe someone should be looking for a better legal framework. While we are waiting for that there is, however, an alternative for rich corporations and individuals.

When there are only two courses of action and both are bad my advice is always to try the third one. This “third of two” approach is more than just a matter of semantics; it is a method that drives creativity. And creativity is the key to solving this kind of dilemma. For example, in the Johnson & Johnson/Red Cross case the problem is simply that the Red Cross wants to generate some revenue using their valuable logo. At the same time Johnson & Johnson wants to protect their logo from legal challenges. Instead of just fighting over this logo the two parties could look for some creative solutions. For example, Johnson & Johnson’s lawyers could develop some sort of licensing framework which allows them to sublicence the use of the logo to the Red Cross for a peppercorn fee. Or perhaps Johnson & Johnson could simply offer to make a contribution that matches the expected revenue – perhaps the cheapest solution in view of legal costs.

In the case of the Virgin Group, the company could perhaps avoid conflict by helping small businesses find and protect a different name, offering the services of their suppliers to do this quickly and efficiently. And in the case of the Harry Potter copyright issues, perhaps Mr Rowling could make a special booklet containing some images, sketches and small plays which are copyrighted but sold packaged with a non-commercial license included, as is done sometimes with scripts for plays performed in schools.

If you think hard enough you can always find a “third of two” solution, but to make this approach work in a real-world commercial setting you need to have someone who is above the legal and image issues. Your legal department will rightly prioritize protecting trademarks because this is their job. On the other hand your PR department would certainly prefer a softer approach even at the cost of compromising intellectual property rights. The only way to find a win-win solution is to appoint someone above the two groups to find a solution that works for everyone.

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