J&J Targets Red Cross, Blunders Into PR Firestorm

In Logo Suit, Drug Giant Didn't Bank on Run-In With Hurricane Howard

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BATAVIA (AdAge.com) -- Johnson & Johnson knew suing the American Red Cross for using -- of all things, the red-cross logo -- wasn't a slick public-relations move.
J&J has used the red-cross symbol since 1887, before the Red Cross was chartered.
J&J has used the red-cross symbol since 1887, before the Red Cross was chartered. Credit: Richard B. Levine

So, likely, did the American Red Cross, advised as it is by PR master Howard Rubenstein. And though the relief organization denies it refused to negotiate with J&J because it held the communications high ground, it certainly played its hand effectively, raising the question of whether J&J should have just let the matter slide.

"As a former journalist, I appreciated how undeniably juicy the story would be," wrote Ray Jordan, J&J VP-public affairs and corporate communications, on the JNJBTW.com blog Aug. 9, the day the story broke. "It was almost too easy."

American Red Cross President-CEO Mark Everson seized the opportunity with gusto, firing off the first press release and this quote: "For a multibillion-dollar drug company to claim that the Red Cross violated a criminal statute that was created to protect the humanitarian mission of the Red Cross -- simply so that J&J can make more money -- is obscene."

"I've now lived a classic corporate-public-affairs nightmare," Mr. Jordan wrote. "Would I have chosen this exercise as a reputation-building opportunity for Johnson & Johnson? No, of course not."

So why did J&J go after the Red Cross? That is, after all, the opposite strategy from McDonald's Corp., which decided last week not to pick a PR fight with a children's hospital that attacked it for marketing to kids. In J&J's case, the company had to enforce its trademark or lose it forever, said Mr. Jordan. "We could open the floodgates to all infringers."

Yet, few ordinary people ever suspected J&J owned the trademark before it filed the suit, and some key details that cast J&J in a better light went unreported.

Specifically, J&J contributed $5 million to the Red Cross in the past three years, Mr. Jordan said. That's well more than the $3 million the organization acknowledges making from licensing deals.
Some lessons learned
Defend it or lose it
Trademark infringement left unchallenged, even when a humanitarian organization is involved, can mean losing the trademark.
It's tough to cross the Red Cross
When suing a humanitarian organization, it's maybe best not to pile on. No punitive damages.
Legal and PR departments should coordinate
You can bet suing a humanitarian organization wasn't J&J's PR department's idea.
Try negotiation
When you're a charity already digging out from controversy, fighting a big corporate donor with considerable law on its side may not be so smart -- particularly when the donor has offered mediation on favorable terms.

After months of talks with the Red Cross went nowhere, J&J not only offered mediation, but also said it would use a mediator recommended by the group, Mr. Jordan said. A Red Cross spokeswoman said she didn't know why the group declined that offer.

Fundraising isn't the main purpose of the licensing, she said. Rather, it's to get more Americans to buy emergency-preparedness supplies.

Yet J&J was already heavily marketing first-aid kits bearing the logo in recent years in big-box stores. The Red Cross began licensing the cross in 2004 to other manufacturers who also put it on first-aid kits, including a Target private-label version, and on such things as cool-mist humidifiers of seemingly little value in a disaster.

Historic pact
J&J has used the symbol since 1887, before the Red Cross was chartered. Clara Barton signed an 1895 agreement recognizing J&J's exclusive rights to it for "chemical, surgical and pharmaceutical goods of every description." A 1905 law prohibits anyone other than the American Red Cross from using the symbol, exempting J&J, which already used it.

Still, the flap has created the biggest spike in blog mentions for J&J in at least six months, including when it announced as many as 4,800 layoffs a week earlier, a search on Nielsen Buzzmetrics' Blogpulse indicates. The posts are overwhelmingly negative.

Techdirt.com said J&J seeking punitive damages and destruction of disputed products goes well beyond trademark protection and "makes them look like a bunch of bullies who would kick babies if it would make them money."

But Lowell Wallace, managing partner of consulting firm Marketing Valuation Partners, said J&J did the right thing for both its reputation and its financial position. "They absolutely had to [sue]," he said, regardless of the relatively small revenue impact and the reputation risk in taking on the Red Cross. "Estimates now are that 65%-70% of the total value of Fortune 500 companies are in their intangible assets," he said. And he added that given the Red Cross' recent history of donor complaints and other miscues, J&J's reputation may be even stronger for it.
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