Interior of an ancient drugstore

Walgreens Co. v. Charles R. Walgreen is a case from the Northern District of Illinois that featured the behemoth retailer Walgreens (Walgreens Co.) suing Charles Walgreen, the great-grandson of its founder, for trademark infringement.

After losing a motion to dismiss, Walgreen Co. filed an amended complaint saying that Charles Walgreen was not only infringing on its trademark by opening up another company with the same name — also in the business of selling health products and durable medical supplies — in violation of an agreement from 10 years earlier.

In 2013, the parties had settled a lawsuit by stipulating that Charles Walgreen’s cell phone and cell phone holder company (dba iWag) would stop selling those products, and another company would not infringe on the trademark of Walgreen Co. But they didn’t draft the agreement broadly enough to really protect the Walgreen company.

The court looked at the language that the plaintiff was eager to point out, and which provided that Charles Walgreen, neither individually, nor on behalf of anyone not a part of this agreement, would take any action that conflicted with the non-infringement obligations of the two companies in the 2013 agreement. (The companies in that agreement specifically promised not to use the name Walgreen in connection with cell phones or phone cases.) The court found that it did not mean Charles Walgreen had agreed that other, future companies could not use his family name. 

The settlement agreement simply said that 1) Charles Walgreen had the full power to enter the agreement on behalf of the specific companies that were at issue in that lawsuit, and 2) he would not take any action that would conflict with those specific companies’ obligations from that settlement. Walgreens Co. argued that even though the settlement agreement’s plain language did not mention other future companies, the parties to that agreement had a “mutual understanding” that the settlement prevented Charles Walgreen from starting another business that could be in competition with Walgreens Co. 

The court disagreed. The “plain language” of the agreement (always bad to read if you’re arguing for a creative expansion of an agreement) only stopped Charles Walgreen from taking actions that conflicted with the two, specific companies’ obligations — and nothing in the amended complaint indicated that Mr. Walgreen did anything to violate the agreement. For one thing, that agreement focused on a specific trademark and registration number, and that was not involved in this lawsuit. For another, the other specific companies in the 2013 lawsuit — American Health and Wellness and Walgreen Asset Group — were not parties to this lawsuit, so whether they breached any obligations wasn’t part of this lawsuit.

In short, nothing in the agreement categorically prevented Walgreen from using his last name in creating products for entirely new enterprises. The plaintiff’s assertion that merely establishing a company, and selling similar products with similar logos as plaintiff’s violated the agreement, was not reasonable. That meant the plaintiff failed to demonstrate any breach of contract.

This motion didn’t get rid of the entire case because Walgreens Co. has six other counts that might stick, including trademark infringement and false representation. But the court’s granting dismissal of the breach of contract claim that Walgreens Co. apparently perceived to be a slam dunk doesn’t bode well for the large corporate plaintiff.

Hindsight tends to be 20/20, but it does seem curious that the contract was drafted in such a way that the plaintiff did not get what they wanted 10 years later. It might be that they were negotiating and the defendant, or the attorney for Charles Walgreen at that time, said that he was not going to promise to never use his name again on behalf of companies that don’t yet exist — nor would he promise not to sell products that Walgreens Co. might some day sell (as it is hard to imagine something that Walgreens wouldn’t sell). So maybe it was a negotiated point and is missing from the contract for a reason, but if it wasn’t, it seems to be an oversight that should have been anticipated back in 2013.

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