Over the past several years, companies across the globe have seen an increasing demand for green and sustainable products and services. This demand has resulted in the rise of “green branding”. Green branding is where a company brands itself as environmentally friendly or sustainable in order to appeal to consumers. This branding practice often uses words such as “green” or “sustainable” in association with a brand, whether through a trademark or a slogan.
In January, we shared our Trends, Tips and Traps in Marketing & Advertising Law for 2023. In this IP Update, we explore one of the traps mentioned in the article, namely, environmental claims.
Companies should be aware that there is a fine line between green branding and greenwashing. Greenwashing is a deceptive marketing practice, whereby companies make misleading (which could include exaggerated) or false environmental claims regarding the company’s operations, products, or services. Brand owners should therefore be tuned-in to the potential trademark implications and regulatory considerations when making environmental claims to best navigate their green branding strategy and to avoid the pitfalls of greenwashing.
Trademarks are powerful branding tools that can be used to build a “green” brand and further enforce exclusive rights against third parties. However, companies should consider the following trademark issues when deploying a new “green” brand.
In Canada, subsection 12(1)(b) of the Trademarks Act prevents a trademark from being registered when the trademark is clearly descriptive of the character or quality of the goods or services. “Green” trademarks may be at a heightened risk of being considered clearly descriptive of the associated goods or services. For example, the Trademarks Opposition Board has previously noted that the term “green” can relate to a “product tending to preserve the quality of the environment” (Sobeys Capital Inc v EDENRED, 2012 TMOB 86 at para 41). Accordingly, adding the word “green” to an otherwise descriptive term might not be enough to render the trademark registrable as a whole. An unregistered trademark which is descriptive can be difficult to enforce.
The Trademarks Act also expressly prohibits the use of misleading statements. Section 7 of the Act prohibits anyone from making use of a materially false description that is likely to mislead the public as to the:
- the character, quality, quantity or composition,
- the geographical origin, or
- the mode of the manufacture, production or performance of the goods or services.
Accordingly, the use of a “green” brand in association with goods or services that do not live up to the brand’s sustainability claims would likely run afoul of the Trademarks Act.
The aforementioned provisions could pose a significant barrier to the use and registration of certain “green” trademarks. Not only do such brands face hurdles to registration and enforceability, but when not supported by data, they can trigger civil liability.
As discussed in our previous article, Canadian regulatory authorities have flagged greenwashing as a serious concern to Canadians. In fact, a global review found that 40% of green claims made online may be misleading to consumers.
Environmental claims must be made with great care to avoid action from certain regulators, such as the Competition Bureau. The Bureau is responsible for enforcing Competition Act, the Textile Labelling Act, and the Consumer Packaging and Labelling Act, among other legislation. These statutes prohibit advertisers from making false and misleading statements. In recent years, the Bureau has made it clear that environmental claims are a high priority for it and has published its own guidance on greenwashing. This guidance urges that companies follow best practices by ensuring that their claims:
- are truthful and aren’t misleading;
- are specific: being precise about the environmental benefits of a product;
- are substantiated and verifiable: claims must be tested and all tests must be adequate and proper;
- do not result in misinterpretations;
- do not exaggerate the environmental benefits of a product; and
- do not imply that a product is endorsed by a third-party organization if it isn’t.
Bureau investigations regarding environmental claims have resulted in significant settlements, so the guidance should not be taken lightly.
Similarly, the Canadian Securities Administrators (CSA) appears to be closely monitoring marketing and disclosures related to environmental claims, as the CSA has released multiple reports and staff notices aimed at greenwashing. In a recent CSA Staff Notice, the CSA highlights the increase in parties making false or misleading environmental claims and provides examples of “overly promotional” greenwashing language that can put brands at risk.
Companies should also be aware of the Canadian Code of Advertising Standards, which prohibits deceptive or misleading advertising and requires advertisers to substantiate their claims. In fact, Interpretation Guideline #3 pertains to environmental claims and refers to the Bureau’s aforementioned guidance on greenwashing. Further product-specific guidance is also available from some industry associations.
Since regulators are keeping a watchful eye on environmental claims, companies must be diligent about the veracity of those claims when pursuing a green branding strategy.
In view of the potential obstacles associated with green branding, it is crucial that all those engaged in such branding seek legal advice from their trademark and advertising counsel.
The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.