'Greenwashing': A caution to trade mark owners

As consumers become more environmentally conscious, the issue of sustainability has become increasingly important for businesses. This has led to a rise in "greenwashing", whereby businesses make false or exaggerated claims about their environmental practices in order to appear more sustainable. Greenwashing can mislead consumers and give an unfair advantage to businesses that are not genuinely committed to sustainability. The recent crackdown by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission on such practices could have significant implications for businesses that use trade marks to promote their environmental credentials.

What is Greenwashing?

Greenwashing is a business tactic that involves making false, misleading, or exaggerated claims about a business's environmental practices including:

•  terms such as "eco-friendly," "clean," "sustainable," or "green"
• claims relating to the method of production or composition of materials, such as "100% recyclable", "compostable”, “100% natural”, or "zero emissions”
• logos, symbols or colours (in particular, featuring the colour green).

(“Greenwashing Element”).

Greenwashing trade marks

Greenwashing trade marks that may draw the attention of the ACCC include:

• a business’s own trade mark that incorporates a Greenwashing Element
• Certification Trade Marks (CTMs) that could mislead consumers. CTMs are logos that convey that a product or service complies with a particular standard governed by a certification scheme. It may be unclear from the way a CTM is used as to which products/ services or business components the CTM applies
• "Trustmarks", which are typically in the form of nature-based imagery such as leaves, the Earth or the colour green, that may mislead consumers into believing that the business or its products/services have been certified by a third party in accordance with a recognised certification scheme.

Possible legal implications of greenwashing trade marks

Under the Australian Consumer Law

Greenwashing may constitute a breach of the Australian Consumer Law (ACL), in particular:

• section 18, which prohibits engaging in misleading or deceptive conduct in trade or commerce
• section 29, which prohibits a person from making false or misleading representations about the nature, quality, suitability, characteristics or other aspects of goods or services.

If a business uses a trade mark that includes a Greenwashing Element, it may breach the provisions of the ACL. In considering whether a trade mark breaches the ACL, the ACCC is likely to consider a range of factors, including:

• the company's overall environmental performance
• the specific claims made in the trade mark
• the evidence available to support these claims.

For example, a company that claims by way of its trade mark to use only recycled materials in its products without evidence to substantiate this claim may be found to have engaged in greenwashing.

Uncertainty may arise when a Greenwashing Element, or the trade mark itself, lacks specificity. For example, if the trade mark prominently features the prefix “eco-“ or the word “green”, it is not clear what kind of evidence would be necessary to substantiate that representation.

To counter a greenwashing infringement notice or legal proceeding, a trade mark owner must provide information or produce documents that are capable of substantiating or supporting the claim or representation made by their trade mark. This might include information about the trade mark owner’s environmental policies or the results of studies the trade mark owner has conducted on the environmental impacts of their goods or services.

Under the Trade Marks Act

Section 42(b) of the Trade Marks Act 1995 (Cth) (Act) states that an application for registration of a trade mark must be rejected if its use would be contrary to law. A possible breach of the ACL as outlined above would be grounds for objection under section 42(b).

Section 43 of the Act provides for refusal of an application for the registration of a trade mark in respect of particular goods or services if the use of the trade mark in relation to those goods or services is likely to deceive or cause confusion. The underlying purpose of section 43 is similar to sections 18 and 29 of the ACL, that is, to prevent the public being deceived or confused as to the nature of the goods or services being offered.

For section 43 to apply, there must be a connotation within the trade mark itself that would reasonably be expected to deceive or confuse consumers. Various factors are considered, including the character, quality, quantity, composition, and nature of the goods or services associated with the mark, as well as their intended use or purpose and geographical origin. Examples of misdescriptive trade marks include:

• “BUBBLE-UP” applied to non-aerated beverages
• “Primary Health Care” applied to health care services that are not in the nature of first level or first contact health care
• HIMALAYAN SPRING MINERAL WATER if the mineral water is not bottled in, or sourced from the Himalayas, Nepal.

In the context of greenwashing, a section 43 ground for refusal may apply where the trade mark contains a Greenwashing Element which connotes a positive environmental effect, but the goods or services applied for are at odds with this connotation e.g. goods in the nature of single-use virgin plastics.

If a person applies to register a trade mark and the trade mark contains or consists of an element that is likely to deceive or confuse, or which is likely to be contrary to law, it may be rejected for registration by IP Australia or be opposed by a third party on section 42(b) or section 43 grounds. In this way a trade mark owner may be prevented from registering their trade mark, which may cause issues for the use and/or enforcement of the trade mark.

Key takeaways

To date, the ACCC has not issued any infringement notices specifically in relation to a company’s use of greenwashing trade marks. However issues may arise when:

• a trade mark contains elements that falsely suggest a company or group of companies follow an environmental practice or holds an environmental credential
• a company uses a trade mark in a manner that is likely to deceive or mislead consumers about the company’s environmental practices or credentials.

There are hundreds of trade marks currently on the Australian Trade Marks Register that contain words such as "clean", "green", "sustainable" or "eco". The potential for greenwashing claims in trade marks is a pertinent issue for trade mark owners. Businesses that use trade marks to promote their environmental credentials must ensure that they can substantiate any claims they make about their sustainability practices. Failure to do so can result in legal action and penalties, including fines and corrective advertising.

If you have any questions regarding this article, please get in touch with a member of our team below. 

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Sarah Butler

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