Sloppy Litigation on Trademark Settlement Agreement Not to Use the Word "Blue"

Case: Blue Cross & Blue Shield Ass'n v. American Express Co. (7th Cir. No. 05-4004, 10/30/06)


The One Sentence Summary: The Seventh Circuit criticized carelesss litigation involving an agreement to settle trademark litigation, and remanded the case for consideration of a laches defense.

Great Quotes From This Opinion:

Rule 65(d) . . . is an old rule, easy to understand and easy to follow; that it should be ignored repeatedly by both the judge and counsel in large-stakes commercial litigation is unfathomable.

Gobs of judicial (and law-firm) time have been squandered by the combination of sloppy drafting, repeated violations of Rule 65(d), and inattention to all sources of subject-matter jurisdiction. If these lawyers were physicians, their patients would be dead.

What They Were Fighting About: American Express and Blue Cross had settled earlier trademark litigation by agreeing that American Express would not use the word "blue" on its cards. American Express forgot about the settlement agreement, and introduced its "Blue Cash" card.

Seventh Circuit Holdings:

• The district court's order retaining jurisdiction over the parties' settlement agreement should have been entered as an injunction under Rule 65(d) of the Federal Rules of Civil Procedure, and should not have incorporated the settlement agreement by reference.
• Rule 60(a) should not have been used by the district court to enter a new judgment - it allows correction of court records to reflect what was actually done rather than what should have been done.
• The agreement that American Express could not use the word "blue" on its cards was unambiguous, and its use of the term "Blue Cash" violated the agreement.
• On remand, the district court should consider whether Blue Cross's failure to protest a phone number incorporating the word "blue" prejudiced American Express by causing it to forget about the existence of the settlement agreement.