Judge rules for American Red Cross in J&J case

NEW YORK (Reuters) - The American Red Cross can continue to use its iconic emblem, a federal judge ruled on Thursday, in a case that pitted Johnson & Johnson against the humanitarian organization and four of its licensees.

J&J, which also uses the symbol, filed suit in U.S. District Court in Manhattan against the American Red Cross and four of the charity's licensees, seeking to prevent them from using the "Greek red cross on a white ground," claiming that it is a trademark violation and that the humanitarian group was barred from using it for commercial purposes.

But U.S. District Judge Jed Rakoff disagreed, noting that the American Red Cross had used the emblem for more than a century and was authorized to do so by various Geneva Conventions and the U.S. Congress.

In his 34-page decision, Judge Rakoff said the "real question" was whether the permission given by U.S. statute to the American Red Cross to use its logo included commercial purposes. The judge ruled the answer was yes.

The American Red Cross and its partners use the logo on products including first aid, health, safety and emergency preparedness products sold in U.S. retailers such as Target Corp, Wal-Mart Stores Inc, Walgreen Co and CVS Caremark Corp.

The organization says the money it receives from the sales is reinvested in its humanitarian work.

Judge Rakoff left intact only a part of the suit that contends the American Red Cross purposefully interfered with J&J's business relationship with two of the four companies.

The American Red Cross entered into licensing agreements with Learning Curve International Inc and three privately held companies: Magla Products LLC, Water-Jel Technologies Inc and First Aid Only Inc.

In return for using the red cross on their packaging and websites, the companies pay the American Red Cross a fee or percentage of their sales. J&J had a similar arrangement with the American Red Cross in the 1980s, the judge found.

"The proceeds from the sale of the products are reinvested in our humanitarian services," American Red Cross spokeswoman Suzy DeFrancis said. "We receive a very small amount of revenue from this."

The American Red Cross filed a countersuit claiming J&J was the one violating trademark law, but the judge noted that the 120-year-old company's right to use the red cross was protected by a grandfather clause.

He also dismissed the American Red Cross's contention that Johnson & Johnson could use the red cross on products only for the same purpose it did before 1905.

"If ARC (American Red Cross) were correct that J&J could only sell kits containing exactly the same products as those sold prior to 1905, J&J would be constrained to continue forever selling kits that contain such antiquated products as cat gut ligatures and kidney plasters," the judge ruled.

His order allows J&J to proceed to trial against the American Red Cross for interfering with its contracts with Water-Jel and First Aid Only and also the four companies' counterclaims against J&J.

"We are pleased that the court upheld J&J's use of its Red Cross trademark over the past century as entirely appropriate under federal law," the company said in a statement.

"We are disappointed that the court rejected our claims involving ARC's commercial uses of the emblem. We are reviewing the decision and look forward to continuing this process to resolve our legal dispute with the American Red Cross."

Mary Elcano, American Red Cross's chief executive, said she read the judge's ruling "with great delight."

"It is our hope that J&J would drop the case, and let us be about the mission of the Red Cross ... We're the same ones that are responding to the hurricanes and tornadoes that ripped through the Midwest in the past couple of weeks. We're the same ones that are helping the Chinese Red Cross and trying to get relief into Myanmar," Elcano said.

In November, the same judge limited the scope of another claim to allegations of interference with J&J's economic relations with Target, Wal-Mart, Walgreen and CVS. The products have been on store shelves throughout the dispute.

The four companies did not immediately return phone calls seeking comment.

(Reporting by Leslie Gevirtz; Editing by Brian Moss, Gary Hill)