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Feature
“Green” Certification Mark Protection: Using the Big Stick The Lanham Act and Federal courts can help protect certification marks. By Charles L. Howard The use of certification marks has surged over the past few years to address a wide variety of environmental and social responsibility concerns. So powerful has this trend become that it is inevitable that there will be an increase in the misuse of these marks by people claiming that a product or service is certified when, in fact, it is not. The remedy for owners of these marks is a federal law that is now almost sixty years old: the Lanham Act. “Green” and social responsibility have become big business. Fortune magazine reported in its August 2006 issue that Walmart is going to become the “Green Machine” of environmental awareness, and the Wall Street Journal reported in December 2006 that Victoria’s Secret will start printing its catalogs on paper certified by a group that monitors logging practices. With such obviously diverse companies making these business decisions, it is clear that the environmental and social responsibility movements have both significant momentum and newfound economic clout. Individual consumers, businesses, and governmental organizations all are increasingly willing to buy—and often at premium prices—goods and services that have been certified as meeting social responsibility or environmental goals. Certification marks like Fair Trade®, Green Seal®, Forest Stewardship Council (FSC) ®, or LEED® certified building construction represent billions of dollars of purchasing power. Yet, the economic market forces that are now allowing these types of certified goods and services to thrive also have a dark side: the premium prices will also encourage the unscrupulous to advertise products as certified when they are not. Although consumers may feel strongly about making sure that their purchasing decisions reflect their political or social beliefs, they are essentially powerless to independently be able to confirm that they are buying what they think they are buying. Can an office worker in New York City really know whether the bean from which his or her morning coffee is made was cultivated and harvested a half world away in socially responsible ways? Because of this impossibility, the sign in the coffee shop that says “Fair Trade” becomes very important. The organizations that grant these types of certifications have dual responsibilities. They must not only develop appropriate criteria and verification methods for those entities that want to be certified, they must protect the value of that certification by taking action against imposters. These boards, associations, or other organizations—often organized on a not-for-profit basis with unpaid directors or limited staff—must protect their certification marks if they are to have continuing value. But without significant litigation budgets, they face conflicting demands for their time and resources in deciding how to respond when they learn that someone is improperly using their certification mark. Teddy Roosevelt’s exhortation to speak softly, but carry a big stick provides useful guidance in answering this question. In this case, the “big stick” involves using federal trademark law to protect the certification mark itself. Not only is such an approach a more effective “big stick” than other approaches to enforcement, it can often be used in a way that permits an organization to recover more than its costs. Speaking softly In other contexts, organizations with certification marks have traditionally tended to “speak softly”: they have simply written a “cease and desist” letter demanding that the imposter cease the misrepresentation. While this may work in some cases and has the advantage that it does not consume much staff time, such an approach has many drawbacks. It may not be enough of a threat to counter the powerful economic forces that cause the misrepresentations to occur. Even if the imposter were to respond and agree to cease the misrepresentation, there is often no good way to know if the misrepresentation has ceased or whether previous misrepresentations have been rectified. Moreover, if the conduct reoccurs, there is little to show for the previous effort. Referral to consumer protection agencies or law enforcement authorities also represents an incomplete response. While intervention by such agencies can bring greater pressure to bear on the offender, action on such a referral can be, and often is, adversely affected by the agency’s budget limitations, levels of staff, or policy priorities. Not infrequently, such matters do not rank high on the priority list for governmental enforcement precisely because agency officials believe the organizations can and should take action on their own behalf. Another option traditionally used for more egregious violations has been a state court lawsuit to enjoin the misrepresentation on the basis of a state unfair trade practice statute that prohibits unfair and deceptive practices. Yet, certifying organizations may be leery of hiring a lawyer and incurring the expense of litigation when the damage to the certifying organization is only the marginal dilution of its reputation and it cannot really prove any direct monetary damage to itself. Although many state unfair trade practice statutes permit a court to award attorney’s fees or multiple damages to a prevailing party, the plaintiff organization must still prove that the defendant’s actions were an unfair practice. In addition, proceeding in state court can, depending on the jurisdiction, involve interminably slow proceedings, an inconsistent quality of judges and incomplete relief, especially where the misrepresentation occurs in more than one state. The big Lanham stick A better answer to the dilemma posed by the need to protect the institutional interests and reputation of the certifying organization without overwhelming the organization in staff or incurring unreimbursed legal bills lies in the use of federal trademark law: the Lanham Act. While most businesses are now quick both to seek trademark protection for themselves and their goods and services and to enforce their trademark rights, the application of this body of law to certification marks appears to have been overlooked and infrequently used. Indeed, there are still only a handful of reported certification infringement mark cases. Federal trademark law, however, provides organizations with just the “big stick” they need to take effective and efficient action against infringers of their marks. As the principal source of federal trademark law, the Lanham Act permits certification marks to be registered and enforced the same way any other trademark or service mark is registered and enforced. A “certification mark”, as defined in the Lanham Act (15 U.S.C. Sec. 1127) may include “any word, name, symbol, or device, or any combination thereof … [that is used to] certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of … goods or services….” Thus, certifying organizations can achieve recognition for their certification marks or name by obtaining federal registration. “Board-certified” physicians and “Roquefort” cheese are just two traditional examples of such marks with ® which we all are familiar. Once a mark is registered, and, even in some cases when it is not, the full panoply of federal trademark law becomes available to a certification mark holder to enforce its rights and prevent infringement. The benefits of using this approach are many. In the first place, an organization may file suit in federal court against the infringer on a very simple and narrow issue- was the infringer using the mark without authority. Although the issue is a simple and straightforward one, resort to federal court almost inevitably escalates the significance of the matter to the infringing defendant. Federal judges are usually quite familiar with the Lanham Act, the issues involved in trademark law, and the need for expedited proceedings. Consequently, the potential for obtaining quick relief is greater. In fact, many trademark infringement cases begin with a request for a preliminary injunction, an order to the defendant at the commencement of the suit, usually on the basis of a truncated hearing, to cease using the mark even while the rest of the suit is pending. The narrowness of the issue means that certification mark infringement cases are relatively simple to prove. The registration and ownership of the mark are easily demonstrated. All that remains is the proof that the defendant was not entitled to use it but did anyway. The absence of certification is usually proved with the certifying organization’s own business records, leaving only the defendant’s improper use to be proved by some other way. And even here, the proof often relates to how the infringer’s use came to the attention of the organization. While the certification mark claim gives a federal court jurisdiction over the matter, state law unfair trade practice claims are also usually added to the complaint. But even where this is done, the practical effect of bringing such a state law claim in federal court is that it often can be proved with the same evidence used in the certification mark infringement. With greater ease of proof comes an additional benefit: a defendant who cannot contest the certification mark and knows that he has improperly used it is much more likely to seek to settle the matter than continue to contest it. Such settlements are often on terms favorable to the plaintiff organization. Despite these considerable advantages to proceeding in federal court to enforce the reputation and quality of a certification mark, perhaps the greatest advantage is in the measure of damages. Under Section 35 of the Lanham Act (15 U.S.C. Sec. 1117), a court may award damages based either on the plaintiff’s loss or the defendant’s gain. A not-for-profit certifying organization may not be able to prove any direct financial loss to itself, but it is axiomatic that the defendant received some direct financial benefit from the misrepresentation. Because the whole point of these environmentally or socially responsible marks is to encourage economic activity when pure market forces would not otherwise do so, those illegally claiming certification stand to gain a windfall if consumers buy their product thinking that it meets the certified criteria. Even more, the Lanham Act provides that the court shall award treble damages and award attorney’s fees for the intentional use of a counterfeit mark: a counterfeit or other mark virtually indistinguishable from the registered mark. Even without a showing of counterfeiting, the court is authorized to award reasonable attorney’s fees to a successful party in exceptional cases. As a result of these provisions, an organization with a strong case can recover more than the cost of litigation, and these actions can even be a significant revenue source for the organization. By order of the court Apart from the ability to recover money damages and attorney’s fees, the court’s ability to issue other orders can be of great assistance to a plaintiff organization. The court may, for example, order the defendant to make no further use of the mark and to rectify past misrepresentations by notifying those who may have been misled. The court may also order that any materials containing the misrepresentation be destroyed or returned. These orders, regardless of whether entered after a trial or in connection with a settlement agreement and a consent judgment, give the organization a significant advantage if the defendant ever infringes again: the organization can go back to the same court seeking a contempt order. Thus, rather than having to prove the merits of its case again, the organization need only prove that the court’s order was violated. A final advantage of proceeding in federal court on a certification mark claim is the relative ease of continuing an enforcement program. Since the procedures in federal court are the same everywhere, with only slight local rule variations, an organization can essentially use and reuse the same pleadings, briefs, affidavits, and other court documents by making only the changes necessary to reflect the facts of each case and adapting any state law claims to the applicable state. And, since lawyers from one jurisdiction frequently appear in federal court in other jurisdictions upon approval by the court and with local lawyer participation, an organization can train one set of lawyers to respond to infringement situations wherever they may occur. The result is even greater cost savings in taking enforcement action. Using the big stick of a federal lawsuit sends a clear message to those who may be tempted to misrepresent their certification by an organization. While there is no guarantee that an organization will always recover its enforcement costs or more, the law could not be more favorable. With a relatively simple fact question at issue and the prospect of recovering attorney’s fees and damages based on a defendant’s gain in expedited proceedings before judges who are familiar with the law, the demand on the organization’s resources should not be great. And, as Teddy Roosevelt surely would have agreed: one must sometimes use the big stick if carrying it is to have any value. |
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| Charles
L. Howard is a partner with Shipman & Goodwin, LLC. His
intellectual property litigation experience encompasses copyright,
trademark, trade secret, covenant not to compete and patent litigation,
including proceedings before the Trademark Trial and Appeal
Board. He also has a national practice in representing
organizational ombudsmen at universities and multinational
corporations. In January of 2002, he was appointed by the United States
Sentencing Commission to serve as one of sixteen members to a national
Advisory Group to review and recommend revisions to the federal
organizational sentencing guidelines. He was chair of the firm’s
Litigation Department from 1985-2000. He is an arbitrator for the
American Arbitration Association. He was an Assistant Attorney General
for Attorney John C. Danforth of Missouri from 1975-1976. Copyright © 2007 Directors & Boards, P.O. Box 41966 Philadelphia, PA 19101-1966. All rights reserved. Contact the webmaster. < Privacy Notice > |
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