To quote Kermit the Frog, “it's not easy being green”—this goes for all businesses who strive to tap into the hearts, minds and wallets of the green-conscious consumer. As consumers are becoming more sensitive to the environment, companies are trending toward branding their goods and services with eco-friendly claims such as “carbon-neutral,” “natural” and the like. Sadly, not all claims are made the same, sometimes, such claims are just instances of “greenwashing”—the deceptive use of green marketing that can mislead customers. Thus, regulators, stakeholders and consumers are increasingly scrutinizing eco-claims and demanding transparency—consumers want to know what they are paying for. While intentions may be good in sending out the message that your company's products or services are eco-friendly in some respect or another, the bugaboo for counsel is whether your claims are actually eco-compliant. This article will provide a brief overview of industry and regulatory standards around eco-claims and green-branding, case studies and guidelines for best practices.

Who 's Watching?

Eco-claims/green-branding are policed and prosecuted by various sources—regulatory bodies (governmental and industry), competitors and consumers (or their watch-dogs, including class action plaintiffs attorneys). It goes without saying that exposure by any one of these sources can negatively impact a company's reputation.

On the regulatory front, the Federal Trade Commission (FTC) prosecutes such claims under Section 5 of the FTC Act, which prohibits deceptive acts and practices in commerce. Under Section 5, marketing claims must be accurate and reasonably substantiated by competent and reliable evidence. The FTC also issued its “Guides for the Use of Environmental Marketing Claims,” a.k.a. the “Green Guides,” which set out general principles and guidance to its position on terms like “eco-safe,” “renewable,” “organic,” etc.

In addition, state enforcement agencies can regulate and take action against companies making eco-claims. For example, states such as California, Michigan and Maine adopted legislation that incorporate the FTC's eco-advertising guidelines. States also have their own guidelines around terms such as “biodegradable,” “recyclable,” etc.

Outside the government, various organizations engage in self-regulation by providing third-party certification. A certification mark is owned by an entity that allows other businesses to use the mark if it meets certain standards. Such marks include LEED certification, USDA Organic, and ECOLOGO. These organizations also provide strict guidelines on how to use such marks.

Finally, social media represents the court of public opinion. While social media is a fantastic platform for advertising, it is also a popular avenue for calling out companies making questionable marketing claims. For example, Cosmetic Warriors Ltd (owner of Lush brand products) was slammed by bloggers who found that its allegedly “handmade,” “natural” and “fresh” products contained preservatives like parabens. With social media driving consumer awareness, it is crucial to a brand's reputation to avoid a social media fiasco.

Every Industry Impacted

Eco-claims affect almost every industry, the below examples are a small sampling of claims from various industries to illustrate the importance of making proper eco-claims.

In 2016, Honest Company, founded by Hollywood star Jessica Alba was peppered with lawsuits in California and New York after a Wall Street Journal report showed that its “all natural” home and personal care products contained sodium lauryl sulfate, a known skin irritant. In the California class action, plaintiffs brought claims of negligent misrepresentation and violations of California's Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law. The Honest Company eventually reached a $1.55 million settlement with plaintiffs. See The Honest Company Sodium Lauryl Sulfate SLS Marketing and Sales Practice Litigation, No. 2:16-ml-027919-AB-RAO (C.D. Ca 2016).

Kimberly-Clark Corp. was also hit with a class action for making misleading “natural” statements about its Huggies diapers and wipes in Franjul v. Kimberly-Clark, No. 15-cv-06200, (S.D.N.Y. 2015). The products, while packaged with “pure and natural” and “natural care” statements, contained chemicals and potentially harmful ingredients. For example, the Huggies Natural Care Wipes contained sodium methylparaben, a chemical banned in the European Union as it can strip pigment from the skin. Plaintiffs asserted violations of the Magnusson-Moss Warranty Act, breach of warranty, among other claims and the parties ultimately settled.

In 2014, the FTC brought a case against American Plastic Lumber, Inc. (APL) for misleading consumers about its plastic lumber products. The FTC went after APL for marketing its products as made out of post-consumer recycled content when most of its products generally contained less than 79 percent post-consumer content, and, about 8 percent of its products contained no post-consumer recycled content at all.

As noted above, while certification marks are a good way to communicate green branding, misuse of certification marks can lead to trouble. Consumers brought a class action against Whirlpool Corp. (Whirlpool) over its use of the Energy Star certification mark on its KitchenAid refrigerators in Dei Rossi v. Whirlpool, Case No. 2:12-cv-00125 (E.D. Ca 2016). An investigation launched by the Department of Energy, however, revealed that KitchenAid appliances did not meet Energy Star standards. Plaintiffs brought claims for breach of express warranty and violation of California consumer protection law, among other claims. The court found that placement of a certification mark on a product could serve as an express warranty. The parties eventually settled.

What You Can Do to Be Eco-Compliant

While eco-claims are appealing for a myriad of reasons it should also be approached cautiously. To ensure you claims are not misleading, counsel should review advertising material and content for regulatory and claim compliance. It is also important to stay on top of new regulations, laws and litigations in one's industry. As green claims are likely here to stay and with increased scrutiny, ultimately, you will likely spend less “green” if you make sure your claims are eco-compliant.

Michelle Mancino Marsh is a partner at Arent Fox's intellectual property group. She practices in the areas of unfair competition/false advertising, trademark, copyright and patent law, anti-counterfeiting/anti-piracy, internet law and fashion and wearable technology law. Her clients span a broad range of industries including fashion and retail, food and beverage, computer software and hardware, educational services, financial and consulting services, pharmaceutical, and media and entertainment.

Janice Phaik Lin Goh is an associate at Arent Fox's intellectual property group and practices in the areas of licensing, trademark, advertising and marketing, copyright, and e-commerce. Her work includes reviewing advertising and packaging content, policing, clearing and enforcing trademarks, and drafting license agreements for clients across various industries.