Could greenwashing be affecting your business in China?

There has been a surge in demand in China for products that are sustainable and eco-friendly. But could “greenwashing” be hurting your chances of registering a green trademark in China? Kristina Koehler-Coluccia from Woodburn Global investigates

There is no doubt that the trend for sustainable, eco-friendly products both in China and around the world has had a net positive effect, but it has also been responsible for a practice called “greenwashing”, which refers to a company providing false or misleading information about their products being eco-friendly to gain market share. For example, the use of words such as “green”, “eco” and “sustainable” to describe products that are not environmentally-friendly is a form of greenwashing.

A few countries, including the European Union, United States and China, accept the registration of green trademarks. Green trademarks are eligible for registration under trademark law as they can be graphically represented and have goods and services that can be distinguished from other registered brands. Green trademarks offer companies a way to advertise their promise to consumers to provide 100% organic and biodegradable products that are free from causing any harm to the environment.

However, in recent years, companies interested in registering green trademarks in China have encountered difficulties and faced rejected applications.

China’s Trademark Law prohibits the registration of deceptive trademarks. A trademark that greenwashes the underlying products can be considered fraudulent. Analysts speculate that these rejections have something to do with China’s concerns over greenwashing.

Contrary to the practice in the United States, the China National Intellectual Property Administration (CNIPA) does not publish the notices it issues regarding specific trademark applications. In any case, notices to applicants tend to be somewhat terse, often leaving them with no choice but to read between the lines. As a result, the motivations behind the rejections of specific applications to register green trademarks cannot be confirmed.

In the United States, the US Patent and Trademark Office (USPTO) has explicitly expressed concerns over greenwashing. In some applications to register green trademarks, the USPTO has required a disclaimer of the relevant terms on deceptiveness grounds. Unfortunately, disclaimers are not an option in China, where an outright refusal is the most common outcome.

The US regulates greenwashing in three ways: under the Lanham Act, which talks about unfair competition and false advertising; through the Federal Trade Commission or the public enforcement action, which is taken by the attorney general; and through the Theory of Liability for false advertising, which is claimed under the state laws. Similar to the guidance released by the EU, the Federal Trade Commission has published green guidelines to regulate greenwashing and green trademarks, encouraging traders to avoid consumer deception and give directions on the general claim of environmental benefits.

In China, brands that are definitely eco-friendly can appeal their application rejection, presenting evidence of the sustainability of their products. However, demonstrating planet-friendliness may not be feasible or sufficient because, in general, the CNIPA is not that open to substantive arguments over refusal grounds.

There are a number of possible solutions to this. Brands that have not yet committed to green trademarks could consider a different name, and those that have already committed could re-evaluate their approach. Brands looking to enter the Chinese market could consider using a different name in China or focusing on their Chinese-language branding. They can also try to register the graphic elements of their trademarks, such as logos.

Green trademarks play a significant role in environmental protection. Though some of them may not be registered as such in China due to the descriptive nature of the words used for the products, brands can try an alternative strategy that indicates the quality of the product.

Ultimately though, China’s overall efforts to regulate green trademarks are to be applauded, since consumers should be able to rely on companies that manufacture real eco-friendly goods and promote sustainable development.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to connect with CBBC staff who can advise on trademarks and other Chinese legal requirements.