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The Intersection of Marketing Law and Intellectual Property

September 14, 2021

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Sustainability 2.0: the Future of “Green” Claims

Presenters:Katherine Armstrong, Deputy Director, National Advertising Division

Kathryn Farrara, Associate General Counsel NA, UnileverAnna Naydonov, Partner, Finnegan

September 14, 2021

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Agenda

Notable Recent “Greenwashing” Cases

“Recyclable” Claims: the Changing Landscape

Compostable and Biodegradable Claims

Life Cycle Analyses for Sustainability Claims

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Sustainability Proposition Matters

83% of younger consumers showed a willingness to pay for sustainable packaging

67% of consumers identify as environmentally aware2021 Global Buying Green Report (Trivium Packaging)

Two-thirds of shoppers have changed their purchasing behavior during pandemic;

58% reported being “likely” or “very likely” to select products that use recyclable or reusable packaging.

2020 Study from Schorr Packaging

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But Consumers Are Skeptical About Environmental Claims …

53% of Americans never or only sometimes trust environmental claims

45%want a third-party validating source

2021 GreenPrint Survey of 1,017 U.S. adults 18+

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FTC: Companies Called Out on Sustainability Goals Earthworks, Global Witness, and Greenpeace USA v. Chevron (Complaint filed with FTC March 16, 2021)

• Complaint alleges that Chevron overstates its investment in renewable energy and actions to curb greenhouse gas emissions:– implies that Chevron’s business operations do not harm

the environment, despite numerous environmental disasters;

– that it produces “ever-cleaner” or “clean” energy, while spending less than 0.2% of its capital expenditures on renewable energy sources;

– Misrepresents the benefits of “renewable natural gas”• This complaint is the first to ask the FTC to use

the Green Guides against a fossil fuel company for its misleading statements to consumers on the climate and environmental impact of its operations.

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FTC: Companies Called Out on Sustainability Goals Food & Water Watch v. Smithfield Foods, Inc., (Complaint filed with FTC Feb. 4, 2021)

• Food & Water Watch (FWW) filed a letter with the FTC alleging Smithfield Foods Inc. (the nation’s largest pork producer) used false and misleading advertising related to its sustainability efforts.

• FWW alleges that Smithfield claims it has an “industry-leading sustainability program” and is close to achieving an environmental goal of “100% compliance, 100% of the time.”

• In addition, it tells consumers that its facilities are “the opposite” of factory farms, and its website “depict[s] sunny and bucolic farms that bear little resemblance to the actual facilities where the animals used in Smithfield’s products are raised.”

• Smithfield’s operations are allegedly linked to a lengthy record of air and water pollution.

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“Greenwashing”: Class ActionsBush v. Rust-Oleum Corp., 20-CV-03268-LB, 2021 WL 24842 (N.D. Cal. Jan. 4, 2021)

• Product claims to be “non-toxic,” “earth friendly,” and “biodegradable.”

• Plaintiff argued ingredients list and product safety data sheets describe the risks of harm attached to ingredients. For example:– “causes serious eye damage” – “causes skin irritation”– “may be harmful if inhaled ... or swallowed”

• Reasonable consumers would interpret the claims “non-toxic” and “earth friendly” to mean that the products “do not pose any risk of harm to humans, animals, and/or the environment.”

• Motion to dismiss denied. Case proceeds.

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• Butterball’s Corporate Social Responsibility Report and press release

• “Context is key in determining if ‘sustainability’ claims convey general environmental benefit messages that may be difficult to substantiate”

• Aspirational claims v. those that tout concrete or achieved benefits

• “Sustainable” + “the most responsible and sustainable way”: “could be understood by consumers to mean that Butterball’s practices are optimized in relation to their impact on the environment”

• “Recognizes” its “responsibility” to “preserve the planet”: aspirational

Sustainability Goals: Latest at the NAD Animal Outlook v. Butterball, LLC, Case No. 6930 (NAD Aug. 2, 2021)

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Recyclable Claims: Changing Landscape

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Focus on Recycling Rates and Availability of End Markets

The Greenpeace Report • Which Plastics are “Recyclable”?

– PET #1 and HDPE #2 bottles and jugs

• Which Plastics are Not “Recyclable” and Why? – Although some MRFs accept plastics #3-7 and non-bottle/jug #1-2 (i.e.

loose caps), those are difficult to recycle (expensive, low demand for these types of recycled plastics)

– Large (e.g., full body) shrink sleeves made of polyethylene terephthalate glycol (PETG)/polyvinyl chloride (PVC) prevent proper sorting of bottles in MRFs rendering the entire bottle non-recyclable.

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• Earth Island Institute filed a lawsuit against ten companies, including:– Crystal Geyser Water Company– The Clorox Company – The Coca-Cola Company– Pepsico, Inc.– Mars, Inc., – Danone North America– Mondelez International, Inc.– Colgate-Palmolive Co., – The Proctor & Gamble Company

• The lawsuit seeks to hold these companies accountable for their share of plastic pollution and their claims that plastic packaging is “recyclable.”

• The lawsuit alleges much of the purportedly “recyclable” plastic submitted to recycling facilities by consumers is not actually recycled into resin.

• Case is ongoing.

Lawsuits Following Greenpeace ReportEarth Island Institute v. Crystal Geyser Water Company, 4:20-cv-02212-HSG (N.D. Cal. Feb. 23, 2021)

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Challenges Where Material Only Potentially RecyclableDowning v. Keurig Green Mountain Coffee, 1:20-cv-11673-IT (D. Mass. 2020)

• Keurig advertises its single serve coffee pods as “recyclable.”• Plaintiff alleges that although the pods are made from potentially recyclable

material, they are too small to be economically sorted, and, therefore, most pods consumers attempt to recycle end up in landfills.

• In practice and according to the FTC Green Guides, the pods are not recyclable.

• Defendant’s motion to dismiss was denied. But plaintiff’s class action claims were struck under F. R. Civ. P. 12(f). Plaintiff appealed to First Circuit.

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• Single-use plastic bottles labeled as “100% Recyclable”• FTC Green Guides provide that it is “a product or package

should not be marketed as recyclable unless it can be collected, separated, or otherwise recovered from the waste stream through an established recycling program for reuse or use in manufacturing or assembling another item.”

• Class claims the bottles are deceptively labeled: – 100% of the bottles cannot be recovered from the waste system– No end market for defendant’s plastic bottle caps and labels– 28% of the material is contaminated or lost during processing– Over 75% of PET and HDPE plastics consumers use in the U.S.

must be landfilled or incinerated

• Reasonable consumers believe “100% Recyclable” means recycled in its entirety.

“100% Recyclable” Claims Under AttackSwartz v. Coca-Cola Co., No. 3:21-cv-04643, 2021 WL 2459174 (N.D. Cal. 2021)

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• One Home Brands (Blueland) claimed its Forever spray cleaning bottles were “recyclable” and marketed them as “forever” bottles.– Advertiser also stated that: “every piece of packaging –from

our tablet wrapper, shipping materials, our Forever Bottles (which aren’t intended for you to recycle) – is 100% recyclable.”

• NAD: advertiser’s recyclability claims were not supported:– When customers return bottles to Blueland, the company

sells them to a third-party who then melts the bottles down so that the acrylic resin can be reused.

– But Blueland presented no evidence on the percentage of resin from its bottles that is reused by the recycler in manufacturing or assembling another item.

“100% Recyclable” Claims Under AttackClorox v. One Home Brands, Inc (d/b/a Blueland), NAD Case No. 6416 (Sept. 25, 2020)

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Recyclable and Plastic: What the Future Holds

• May see changes to the FTC Green Guides and class actions focusing more on recycling rates and availability of end markets (as opposed to simply consumer access)

• Plastic reduction and “plastic free” claims:‒ But what is plastic?‒ Currently, numerous pending bills across the country with varying

definitions‒ No one threshold (e.g., %) of how much plastic a product or package

may contain (e.g., % of glue, additives, etc.)

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Recyclable and Plastic: What the Future Holds• Refillable and reusable packaging• Issues to watch out for:

‒ How to calculate plastic reduction from refillable?‒ What is the proper point of comparison?‒ How to accurately project and measure consumer use data as to the frequency

and use of refillable packaging?‒ How do plastic reduction benefits compare to the product’s overall

environmental impact (e.g., manufacturing, shipping)?

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Compostable and Biodegradable Claims

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• Washington Statute (Wash. Rev. Code Ann. § 70A.455.040)– A product labeled as "compostable" that is sold, offered for sale, or

distributed for use in Washington by a supplier or manufacturer must:i) meet ASTM standard specification D6400;ii) meet ASTM standard specification D6868; oriii) be comprised of wood, which includes renewable wood, or fiber-based substrate only.

– Products for industrial composting must meet specific labeling requirements.

• Examples of other states with compostability statutes: California (enacted), Maryland (enacted), New York (pending), Minnesota (pending)

State Legislation on CompostabilityRequirements for Labeling/Packaging

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District Court CasesCohen v. Repellem Consumer Products Corporation, Case No. 2:20-cv-05830-JMA-ST (E.D.N.Y. 2020)

• Repellem sells plastic food storage and garbage bags under the tradenames ECOsmart bags and Repellem bags.

• Both products are labeled/advertised with the following claims: – "Eco-Friendly" – "biodegradable”– "made of 100% natural ingredients"

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District Court CasesCohen v. Repellem Consumer Products Corporation, Case No. 2:20-cv-05830-JMA-ST (E.D.N.Y. 2020)

• The FTC Green Guides state:– “Unqualified degradable claims for items that are customarily disposed of in landfills

are deceptive because these locations do not present conditions in which complete decomposition will occur within one year.”

– As a general rule, marketers should avoid “broad unqualified general environmental benefit claims like ‘green’ or ‘eco-friendly.’”

• Plaintiff alleged that because the types of bags at issue are generally disposed of in landfills and they take longer than five years to decompose, they are not biodegradable.

• Plaintiff voluntarily dismissed the case in January 2021.

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District Court CasesAmbrose v. The Kroger Co., Case no. 3:20-cv-04009-EMC (N.D. Cal. 2020)

• Defendant advertises and markets its plates and bowls as "compostable.”

• Plaintiff alleges that Kroger's marketing of its plates as compostable is false, misleading, deceptive, unethical/injurious to consumers, and a breach of an express warranty.

• FTC Green Guides state:– It is deceptive to label a product as

compostable if the product releases toxinsinto the compost as it breaks down, rendering the compost unusable.

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District Court CasesAmbrose v. The Kroger Co., Case no. 3:20-cv-04009-EMC (N.D. Cal. 2020)

• Plaintiff argues that Kroger's products contain significant amounts of chemicals that have been associated with cancer, developmental toxicity, immunotoxicity, and more.

• By encouraging consumers to place these products into compost, Kroger is “contaminating entire compost stream with toxic materials that will not break down over time.”

• Kroger filed an answer to the complaint raising several affirmative defenses (failure to state a claim, lack of standing, no entitlement to damages, etc.).‒ Little was said in way of defense to the compostability claim.

• The case is ongoing.

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• S.C. Johnson & Son, Inc. claimed that its ecover dish soap was “biodegradable.”

• The FTC Green Guides state:– Biodegradable claims should be “qualified clearly and

prominently to the extent necessary to avoid deception about . . . [t]he product’s or package’s ability to degrade in the environment where it is customarily disposed.”

What’s Degradable? Identify ItThe Procter & Gamble Company v. S.C. Johnson & Son, Inc., NAD Case No. 6349 (Feb. 18, 2020)

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• NAD determined that, although S.C. Johnson argued that the other claims on the front label (“non-toxic”) and the illustration of a fish clarified the “biodegradable” claim referred to the soap formula, it could easily be interpreted to mean the plastic packaging was also biodegradable.

• NAD recommended that S.C. Johnson modify the use of the claim “biodegradable” on the front label of the product to make clear that it only applies to the product formula and not the product packaging.

What’s Degradable? Identify ItThe Procter & Gamble Company v. S.C. Johnson & Son, Inc., NAD Case No. 6349 (Feb. 18, 2020)

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Compostable and Biodegradable: Issues to Watch

• Uncertainty and fast-developing landscape with state legislation

• Challenges regarding alleged ingredients/components that contaminate or render compost unusable

• Combination of recyclable, compostable, degradable, and other claims: potential confusion and combined impact of claims

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Life Cycle Analyses for Sustainability Claims

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• Challenger opposed the advertiser's claims that its batteries are “The only 100% carbon neutral alkaline battery” and “Certified Carbon free” as the LCA provided only accounted for Canadian distribution and recycling.

• Certifications from third parties Carbonfund.org and CarboNZero were found insufficient because based on foreign evidence and failed to disclose when reductions would occur.

• NAD determined that although the LCA assessed the “full cradle-to grave” cycle (i.e., raw material extraction through use and disposal), it was for Canada and not the U.S. and thus was irrelevant to support LEI’sclaims.

Use of Foreign LCA Data to Support US ClaimsLEI Electronics Inc., Eco Alkalines Batteries, NAD Case No. 5927 (Feb. 5, 2016)

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• Beech-Nut Nutrition Company claimed its glass baby food containers are “the ultimate in sustainability.”

• The FTC Green Guides state:

- “Depending on context, ‘sustainable’ may convey a wide range of meanings.”

- “If in context, reasonable consumers perceive a sustainable claim as a general environmental benefit claim, the marketer must be able to substantiate that claim and all attendant reasonably implied claims.”

Scope of LCA Must Match Scope of ClaimBeech-Nut Nutrition Co., Beech-Nut Baby Foods, NAD Case No. 6070 (Apr. 4, 2017)

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• Claim: “ultimate in sustainability”• The LCA showed that glass has a lower carbon footprint

than other comparable sized PET containers.‒ BUT it only made a conclusion regarding that single

aspect of sustainability.‒ The LCA did not evaluate the actual jars which were the

subject of the advertising claim. ‒ It evaluated the most commonly used carbonated beverage

containers.• NAD: the LCA’s conclusion was too narrow to

support the broad sustainability message conveyed in the claim.

Scope of LCA Must Match Scope of ClaimBeech-Nut Nutrition Co., Beech-Nut Baby Foods, NAD Case No. 6070 (Apr. 4, 2017)

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• Implied claims from Epson’s EcoTank SuperTank Printer advertisements and the impact of the “EcoTank” name itself:- “EcoTank printers provide significant, general environmental benefits.”- “EcoTank printers are more beneficial for the environment than other printers.”

LCA Not Being Truly Cradle-to-GraveEpson America, Inc., Epson EcoTank Supertank Printers, NAD Case No. 6009 (Oct. 11, 2016)

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LCA Not Being Truly Cradle-to-GraveEpson America, Inc., Epson EcoTank Supertank Printers, NAD Case No. 6009 (Oct. 11, 2016)

• The advertiser relied on the Clean Report in support of its position that its EcoTank ink tanks (1) provide savings in waste production, and (2) reduced carbon emissions.

• The Report calculated the (1) cartridge waste and (2) carbon savings for the advertiser’s printer, specifically:‒ number of cartridges used,‒ transit of cartridges to retail‒ transit of cartridges at end-of-life‒ Individual trips to stores to pick up

cartridges/ink bottles/toners‒ waste generated; and‒ carbon emissions from transit

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LCA Not Being Truly Cradle-to-GraveEpson America, Inc., Epson EcoTank Supertank Printers, NAD Case No. 6009 (Oct. 11, 2016)

• Challenger argued the Clean Report should have considered other environmental impacts such as typical consumer behavior, paper manufacturing, transport and consumption, energy consumption, and other elements of the product’s carbon footprint.

• NAD disagreed and concluded that “a full life cycle analysis is not necessary because the challenged advertising does not communicate that the EcoTank printers are more environmentally friendly overall than competitive printers.”

• NAD “determined that because the message is limited to a specific benefit, evidence on the environmental impact of the EcoTank’s high-capacity ink tank could provide a reasonable basis for Epson’s claim.”

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LCAs: Main Takeaways

• Broad environmental claims often require a full cradle-to-grave LCA that holistically assesses the overall environmental impact of a product

• LCA measuring one aspect of sustainability will not support a broad environmental claim

• If the environmental benefits proven by the LCA are negligible or are outweighed by negative impact in other life cycle categories, reliance on the LCA to support an environmental claim is likely misleading and unsupported

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The FTC Green Guides: Upcoming 2022 Update

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The FTC Green Guides: Update Coming in 2022

• “It is deceptive to misrepresent, directly or by implication, that a product, packaging, or service offers a general environmental benefit.”

• “Because it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims, marketers should not make unqualified general environmental benefit claims.”

• Substantiation for “specific environmental attributes” will “not adequately qualify a general environmental benefit claim.”

FTC Green Guides (2012)

• The FTC has announced that it intends to update its Green Guides in 2022.

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Katherine Armstrong, Deputy Director, National Advertising Division

Katherine Armstrong is a Deputy Director of the National Advertising Division (NAD) at BBB National Programs, the advertising industry’s system of self-regulation founded in 1971 to boost consumer trust in advertising. In her role, Katherine manages NAD attorneys and the overall case management and handling of monitoring and competitor challenged truth-in-advertising cases, supporting long-term operations planning for the 50-year old program.

Prior to joining NAD, Ms. Armstrong was in private practice at Faegre Drinker Biddle & Reath where she advised clients on privacy, advertising and marketing issues, as well as other matters regulated by the Federal Trade Commission (FTC). Before joining Faegre Drinker, she worked in a variety of capacities at the FTC for 30 years managing law enforcement investigations, consent negotiations, rulemakings, and other policy initiatives. Ms. Armstrong served as advisor to FTC Chairman Janet Steiger and other FTC Commissioners where she provided advice on legal and policy issues associated with all consumer protection matters before the FTC.

Ms. Armstrong is CIPP/US certified, is the vice Chair of the ABA’s Janet D. Steiger Fellowship Project, and active in lay leadership at St. John’s Episcopal Church in Mclean, Virginia.

Your Presenters

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Kathryn L. Farrara, Associate General Counsel, Unilever

Kathryn serves as the Associate General Counsel for Unilever, North America where she leads theLegal Marketing, Data & Digital practice group. Her team covers a broad scope of activities from earlystages of product innovation to crisis management and everything in between. In addition to day today counseling on claim substantiation, regulatory compliance, contracts, intellectual property, dataprivacy and security; Kathryn’s team plays a critical role in marketing governance and transformation –often piloting new programs and technologies for the globe.

Prior to joining Unilever, Kathryn served as an adjunct professor for New York Law School where shetaught an introductory course on Advertising & Media Law and a Senior Attorney for the NationalAdvertising Division (NAD) of the BBB National Partners Program.

Your Presenters

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Anna Naydonov, Partner, Finnegan

Anna is a first-chair litigator who focuses on high-stakes advertising and trademark litigation, including Lanham Act cases, class action defense, and appeals. Anna also extensively counsels some of the world’s most famous brands on claims substantiation, trademark, copyright, and right of publicity issues. Anna was selected as a DC Rising Star by the National Law Journal in 2020. She was also chosen as a Managing Intellectual Property (MIP) Rising Star and a Legal Media Group Americas Rising Stars award winner for copyright and trademark work in 2019.

Contact Anna:+1 202 408 4427anna.naydonov@finnegan.com

Your Presenters

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Questions?

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Our Disclaimer

These materials have been prepared solely for educational and entertainment purposes to contribute to the understanding of U.S. and European intellectual property law. These materials reflect only the personal views of the authors and are not individualized legal advice. It is understood that each case is fact specific, and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (including Finnegan Europe LLP, and Fei Han Foreign Legal Affairs Law Firm) cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with these authors. While every attempt was made to ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed.