By Sadie Grunewald
Consumers have increasingly expressed in socially conscious purchasing habits over the past decade and businesses have taken note. This is more apparent and likely to increase following last November’s election of Donald Trump. From “Grab Your Wallet” boycott of companies displaying Trump family business products to the recent failed Pepsi commercial controversy attempting to address various social issues, consumers are using purchasing power and businesses are responding to attract those concerns. Environmental and climate impacts are included in this growing socially conscious consumer concern and consumers are likely to increasingly demand environmentally friendly products. Within the past year alone, there has been public and social media outcry of the Dakota Pipeline access and Flint Michigan water crisis, support of the Paris Climate Agreement, increase in nonprofit funding, and overall more sales of bottled water than soda in the United States. A powerful way for businesses to communicate to consumers their environmental values is to deploy environmental marketing tactics and particularly employ ‘green marks’ to imply environmental friendliness and impact. Certification marks can be a powerful tool businesses can use. While environmental marketing has a strong potential to be beneficial to the environment and to businesses, businesses may mislead or deceive consumers of their actual environmental impact, also known as ‘greenwashing.’ Environmental marketing strategies expose businesses to consumer backlash and costly litigation under federal and state law.
I. Environmental Marketing and the Green Mark
Businesses eager to attract environmentally conscious consumers may employ various marketing tactics through advertising, social media packaging, labeling, and branding. More specifically, a business may go beyond minimum marketing tactics and attempt to draw consumers and communicate its environmental friendly products or services through trademark law by employing trademarks or service marks and/or certification marks. Registrations of both trademarks and certification marks are subject to the Lanham Act. Within the past ten years, there has been an increase in the number of applications for trademark registration that have environmental connotations. Terms attached to these marks often include one of the following: “green,” “eco-,” “enviro-,” “clean,” “renewable,” “sustainable,” “climate,” “carbon,” “organic,” and “natural” among other environmental catchwords. Symbols implying sustainability standards that might be a part of a mark includes a leaf, tree, plant, and/or planet. Trademark law, particularly in connection with certification marks, should provide greater oversight to ensure that environmental marks are accurate.
Environmental trademarks and service marks are distinctive words, symbols, or logos that identify the business’s goods or services and distinguishes the business from competing products and services. These marks give businesses benefits in ownership, competitive advantage, and standing out among consumers while also contributing to environmental improvements and being rewarded for their efforts. However, with the influx of trademark registrations, this competitive advantage may be lost as consumers may not be attracted to the mark, may become confused with the plethora of green labels, and develop skepticism of possible deception. Getting past the trademark registration process for marks containing connotations of environmental friendliness may prove to be a significant challenge. Trademark applicants face further challenges with on appeal and when the applications are published for opposition.
Within trademark law, another powerful and arguably more effective tool for businesses to communicate to consumers of their eco-conscious and impact is through certification mark. A certification mark is a trademark owned by a private entity that grants other businesses permission to affix its certification mark when those goods or services meet the specific standards promulgated by the private entity that owns the mark. Unlike trademarks, the certification mark must be used by entities other than the owner and is subject to fees and routine inspections from the owner. This third-party certification is distinct from governmental certification in that it is controlled by the private sector, does not use certification for assessing regulatory compliance, or does not require stringent standards corresponding to standards established by the relevant scientific community. The LEED® mark is an example of a prestigious and successful certification mark in the private sector, which is used to signify compliance with energy-efficiency and sustainable buildings that are sensitive to local environment. Other private sector green certification examples include Carbon Neutral, Carbonfree, Fair Trade, Green Seal, among others. On the other hand, Energy Star® mark is an example of a government-sponsored certification mark, which is used to signify voluntary compliance with energy conservation.
Certification marks can be beneficial because they convey to the consumer compliance of environmental standards for quality, safety, purity, materials, or manufacturing, and/or that those services originated in a specific geographic region. These marks assist consumers in eco-conscious purchasing decisions and assist businesses in obtaining inputs and selecting suppliers. Other benefits of certification marks include greater cooperation between the mark owner and mark user, use of greater technical expertise and financial resources, better inspection and monitoring coverage of regulated entities, and standards flexibility and responsiveness to both the regulated industry and consumer concerns.
Disadvantages of a certification mark include the high cost of royalties for businesses to display the mark and the possible unreliability of private certification, especially when market forces are strong. Notably, the standards developed by private entities are not required to correspond to standards established by any relevant scientific community. Certifiers might be tempted to reduce standards far below those accepted by a relevant scientific community.
II. Greenwashing – Consumers Beware
Greenwashing is a term used to describe the act of misleading consumers using overstated, vague, or unsubstantiated environmental marketing claims. The term ‘greenwashing’ has already entered into the lexicon of courts in at least three cases to this date. When market forces are strong, certification mark owners may be tempted to cut corners in setting standards which potentially exposes consumers to deception as consumers rarely have the resources to verify what standards the business met. There are some websites to assist consumers in search for eco-friendly goods or services such as the Ecolabel Index.
TerraChoice identified the following “Seven Sins of Greenwashing” to help consumers identify incidents of greenwashing in the market place: (1) sin of the hidden trade-off (i.e., focusing on a products sustainable harvest while ignoring its pollution); (2) sin of no proof (i.e., claiming to have a percentage of post-consumer recycled content without any evidence); (3) sin of vagueness (i.e., calling a product “all natural” while ignoring naturally occurring, yet toxic ingredients such as mercury); (4) sin of irrelevance (i.e., calling a product “CFC-free” when CFCs are banned by law); (5) sin of lesser of two evils (i.e., organic cigarettes); (6) sin of fibbing (i.e., falsely claiming to be Energy Star certified); and (7) sin of worshipping false labels (i.e., using false certifications or endorsements).
Even though displaying environmental marketing practices is largely viewed as beneficial, greenwashing undermines and undercuts any benefits derived in the first place. Without enforcement of greenwashing, businesses are unlikely to see consequences of deploying potentially misleading environmental campaigns or significantly analyze its environmental claim. Companies could increase profits by misleading consumers and still employing practices that not only hurt the environment but also implicate and increase environmental justice concerns.
III. Greenwashing Liability
Fraudulent environmental marketing claims expose businesses to liability regardless of it the claims are intentional or unintentional and express or implied. There are federal and state statutory protections and guidelines available against these practices that are available for consumers and environmentalists. Liability can arise from product labeling, product or service warranties, brand recognition, and advertising content. However, environmentalists and consumers argue that the current laws are insufficient in providing a comprehensive and effective system to effectively deter greenwashing. The Trump Administration has indicated its desire to lax federal regulatory standards and has been taking power away from federal agencies. As a result, state laws are likely to play a more dominant role in greenwashing litigation. Consumers have reason to be wary of certain environmental claims in the absence of greenwashing enforcement. Businesses should also be increasingly hesitant on deploying marketing strategies without a full risk-analysis for potential greenwashing liability. In the absence of greenwashing enforcement, businesses who actually implement eco-friendly practices may not benefit from their efforts to do so, may not develop a competitive advantage from those who don’t and the uncertainty of enforcement may deter those businesses from marketing.
The Federal Trade Commission (FTC) regulates advertising and protects consumers from unfair, deceptive, and fraudulent marketing practices and plays a significant and increasing role in the enforcement against environmental fraudulent marketing. The agency developed the “Green Guides” in 1992 and was most recently revised the guides in 2012 to assist businesses engaged in eco-marketing to avoid deceptive or misleading marketing accusations and lawsuits under the FTC Act. The Green Guides detail general and specific regulatory guidance for the various types of environmental claims a business may make. Generally, the Green Guides set out four principles applicable to all businesses: (1) make clear, prominent, and understandable statements, (2) identify what the claims apply to, (3) do not overstate the environmental attribute or benefit, and (4) ensure that the basis for any comparative claim is clear.
While the Green Guides are likely persuasive in the courtroom addressing greenwashing issues, the guides do not have the force of law. In a successful greenwashing lawsuit by the FTC will have demonstrated that either an advertisement is facially or literally false or that while the advertisement is not literally false the advertisement is likely to mislead or confuse consumers. Although private citizens cannot bring these lawsuits, greenwashing liability can significantly impact the business through hefty fines or cease-and-desist orders. However, meaningless environmental claims, even if misleading, do not fall within the FTC jurisdiction.
V. USPTO and Lanham Act
The U.S. Patent and Trademark Office (USPTO) is the federal agency that administers the Lanham Act and regulates registration of trademarks on the federal trademark register. The Lanham Act prohibits the false advertisements of the registered marks. Even though the Lanham Act generally prevents businesses from registering deceptive trademarks, those businesses are not prevented from deploying deceptive marking strategies thereafter. A false advertising lawsuit under the Lanham Act threatens businesses with the potential imposition of damages or injunctive relief.
The prohibition of false advertising is more of an effective tool for companies to police greenwashing of their competitors and other companies than it is for individual consumers. Courts consistently have denied private citizens standing to bring false advertising claims. While the certification marks are regulated by the USPTO, the government involvement with the certification mark after registration is extremely limited and the standards certified are private in nature.
VII. Other Federal Agencies
Other federal agencies may have enforcement powers against greenwashing dependent upon what industry the business is in. These federal agencies could include the Food and Drug Administration (FDA), Department of Treasury’s Bureau of Alcohol and Tobacco Tax and Trade, Environmental Protection Agency (EPA), Consumer Product Safety Commission (CPSC), and U.S. Department of Agriculture (USDA). The USDA organic regime provides the most detailed requirements for the use of an environmental term and often viewed as the most successful program in prevention of greenwashing claims. Federal agencies are unlikely to implement any new rules or regulations regarding greenwashing under the Trump Administration. For example, the FDA was working on potential regulation over the term “natural” but the agencies final decision is unlikely to be published under the new administration.
VIII. State Law
Business can be accused of greenwashing and be held liable under various state laws. Accusations of greenwashing may be brought under state statutes covering unfair trade practices, consumer protection, breaches of contract for express warrant or implied warranty of merchantability, fraud, and/or tort law. State consumer protection statutes often mimic the FTC guidelines and may even be more comprehensive and stricter than the FTCA. While the federal agencies step down in power under the new administration, states are likely to step up, taking responsibility in various enforcement issues across different sectors, including greenwashing allegations. Thus, state laws are arguably the most effect legal mechanism currently available to consumers to fight greenwashing. However, while beneficial to consumers within those states and for the time being, the step down of federal oversight negatively impacts the fight against greenwashing in the long run because it creates uncertainty and lack of uniformity in enforcement.
Using a green mark to denote environmental connotations poses a threat to both the consumer and the business if not used correctly. Consumers have been pursuing eco-friendly goods and services and this trend is likely to increase under the Trump Administration. In response, businesses are increasingly going to advertise to appeal to these consumer habits, with likely less federal oversight. Owners of green marks and environmental marketing should understand the potential consequences of greenwash liability and consumer backlash. While there are broad federal protections available to fight greenwashing, claims appear to be more successful for violation of state law, particularly under the current administration. Certification marks can be the most beneficial to consumers and businesses for environmental purchasing habits. However, a real risk with certified marks remain with respect to the role that market forces play and the lack of standard transparency. Greenwashing is illegal but prosecution of such allegations may be daunting within these four years.
 Green Generation: Millennials Say Sustainability is a Shopping Priority, The Nielsen Company (Nov. 5, 2015),
http://www.nielsen.com/us/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority.html (explaining the results of a study indicating that millennials are willing to spend more for products that are environmentally friendly).
 15 U.S.C. § 1051 (2002).
 Timothy C. Bradley, Likelihood of Eco-friendly Confusion, 4 No. 1 Landslide 38 (Sept./Oct. 2011); Michael Hozik, Making Green by Going Green, Geo. Envtl. L. Rev. Online 1 (2016).
 15 U.S.C. § 1054 (1999) (providing for the registration of certification marks).
 See Hill v. Roll Int’l Corp., 195 Cal. App. 4th 1295 (2011) (referencing greenwashing from FTC Green Guides and finding that a reasonable consumer would not believe a green symbol indicated third party approval or environmental superiority); Transfresh Corp. v. Ganzerla & Assoc., 862 F. Supp. 2d 1009 (N.D. Cal. 2012); Koh v. S.C. Johnson & Son, Inc., 2010 U.S. Dist. LEXIS 654 (N.D. Cal. 2010).
 Ecolabel Index, http://www.ecolabelindex.com/ecolabels (last visited April 13, 2017).
 The Seven Sins, TerraChoice, http://sinsofgreenwashing.com/findings/the-seven-sins/ (last visited April 13, 2017); E. Thomas Watson, Green Marketing: It’s not all Bunnies and Flowers, 2 No. 4 Landslide 9 (March/April 2010).
 15 U.S.C. § 45(a)(2) (2006) (giving the FTC enforcement powers).
 Guides for the Use of Environmental Marketing Claims, 16 C.F.R. § 260 (2012); Environmental Marketing, The Federal Trade Commission, https://www.ftc.gov/tips-advice/business-center/advertising-and-marketing/environmental-marketing (last visited April 13, 2017); See generally Michelle Diffenderfer & Keri-Ann Baker, Greenwashing: What Your Client Should Know to Avoid Costly Consumer Litigation and Consumer Backlash, 25 Nat. Res. & Env’t 21 (Winter 2011).
 Guides for the Use of Environmental Marketing Claims, 16 C.F.R. § 260.3 (2012).
 15 U.S.C. § 45(a)(2) (2006).
 15 U.S.C. § 1125(a) (2012) (imposing civil liability for advertising that “misrepresents the nature, characteristics, qualities, or geographic origin of … goods, services, or commercial activities”).
 Nick Feinstein, Learning from Past Mistakes: Future Regulation to Prevent Greenwashing, 40 B.C. Envtl. Aff. L. Rev. 229 (2013).
 Elizabeth Crawford, Manufacturers walk tightrope between demand for natural products and greenwashing allegations, Food Navigator-USA (Mar. 23, 2017), http://www.foodnavigator-usa.com/Regulation/Manufacturers-navigate-greenwashing-allegations.