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Hijacking Consumer Trust Systems: Of Self-Declared Watchdogs and Certification Trade Marks

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Abstract

Consumers are becoming more demanding about the social and environmental conditions surrounding how products and services are made and provided. Aware of this trend, marketers have incentives to use social- or green-washing, to match consumers’ desire to purchase conscientiously. A newer marketing trend is “pink-washing”, where companies express their “wokeness” (or social-cultural progressiveness) about sexual and gender identity to sell their goods and services. One way to combat this is via certification trade marks, examined and registered through intellectual property offices, which consumers use as a trust system. However, there are companies that use normal or unregistered trade marks and claim to perform certifications. They are taking advantage of the trust system. This article undertakes a case study of “Rainbow Tick” in Australia and New Zealand to illustrate that it is relatively easy to exploit rising consumer concerns around social and environmental issues by hijacking the trust system of certification trade marks. This article proposes that we need to rebuild the trust system through four measures: (1) applications for normal trade marks that could mislead or deceive that they are certification trade marks should be rejected; (2) failure to apply for a certification trade mark (when the intention is to use the mark as a certification trade mark) should be deemed an application made in bad faith; (3) all certification trade marks should have “Cert. TM” on them, or otherwise indicate their nature; and (4) education programmes should ensure that consumers understand the distinction between normal trade marks and marks with “Cert. TM”, and what exactly this embodies.

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Notes

  1. See e.g. Strong (1996); Auger et al. (2010).

  2. Mainieri et al. (1997); Harper and Makatouni (2002); Choi et al. (2012); Jegethesan et al. (2012); Phau and Suntornnond (2006). Whether consumers’ purchases match their professed ethical concerns is another matter; see Carrington et al. (2010).

  3. On brands and identity construction, see Elliott and Wattanasuwan (1998); Katz (2010), p. 1564.

  4. Darby and Karni (1973). One could also refer to such qualities as “Potemkin qualities”, which are attributes that cannot be verified through testing.

  5. Akerlof (1970).

  6. Nelson (1970).

  7. Chon (2017), p. 279. Chon refers to this as “quintessentially self-certifying”, p. 304.

  8. For example, the Oxford English Dictionary defines the noun “greenwash” as “Disinformation disseminated by an organization so as to present an environmentally responsible public image”.

  9. This term was originally coined to refer to the marketing of products or services by associating it with support of breast cancer research or charities. The term has been co-opted to refer to marketing to indicate liberal views relating to sexuality and gender; e.g. Dahl (2014).

  10. According to the Oxford English Dictionary, to be woke is to be “[a]lert to injustice in society, especially racism”. The reference to racism is attributable to the fact that the term “woke” was developed by the African-American community. However, the term is now used to refer to all kinds of social injustices. See e.g. Mirzaei (2019).

  11. On “woke-washing”, see e.g. Vredenburg et al. (2018); Jones (2019); Iqbal (2019); McCarthy (2018).

  12. Zinkhan and Carlson (1995); Aji and Sutikno (2015); Davies (2019).

  13. E.g. Fulponi (2006); Hatanaka et al. (2005); McCluskey (2000).

  14. New Zealand Trade Mark Nos. 726542, 836644 and 994615; and EU Trade Mark No. 017959045. See e.g. Bird and Hughes (1997).

  15. Chon (2009), pp. 2325–2329 and 2331.

  16. E.g. Karstens and Belz (2006) and Janssen and Hamm (2014).

  17. The “directiveness” of labels has been developed in research on nutritional labels, e.g. Hodgkins et al. (2012).

  18. This might be because of time constraints, lack of patience, “information overload”, or consumers may not understand the information or know how to interpret it. See e.g. Ben-Shahar and Schneider (2014), p. 91.

  19. The author is aware that these are typically referred to as “standard trade marks”. However, to avoid confusion with the “standards” of certification trade marks, the author refers to them as “normal trade marks”.

  20. For example, “Green Star” is a rating system for the sustainability of design, construction and operation of buildings, fitout and communities. The Australian and New Zealand websites claim certification, however the marks are registered as standard marks; Australian Trade Mark No. 1311971; and New Zealand Trade Mark No. 810515. For other examples, New Zealand has a “Gender Tick” (Trade Mark No. 1099169), “Accessibility Tick” (Trade Mark No. 1103309), “SPCA Approved” (visualised with a tick) (Trade Mark Nos. 760598, 961283 and 1031869) and a Government-owned “Privacy Trust Mark” (visualised with a tick in a padlock) (Trade Mark Nos. 1090522 and 1099626); Australia has “RSPCA Approved Farming” (Trade Mark Nos. 1331846, 1437790, 1530813, 1530820, 1640230, 1887930 and 1887931).

    An example of an unregistered mark that is used as a “certification” mark in Australia and New Zealand is the “Green Tick” (https://www.greentick.com/).

  21. Bloom and Reve (1990).

  22. E.g. Chon (2009), p. 2319; Moussa and Touzani (2008); Larceneux (2003); Fotopoulos and Krystallis (2003); Nilsson et al. (2004).

  23. NZ TM No. 973581 (application 1 March 2013, registered 3 September 2013).

  24. https://www.rainbowtick.nz/. Accessed 30 June 2020.

  25. Radio New Zealand (2019a, 29 May).

  26. Radio New Zealand (2019b, 30 May).

  27. https://www.rainbowtick.nz/. Accessed 30 June 2020.

  28. Australian Trade Mark No. 1563566 (application 19 June 2013, acceptance advertised 7 November 2013).

  29. At the time of writing, there was no “Rainbow Tick” trade mark registered in the UK, US, Canada or through the EUIPO.

  30. KTKL is a charity registered to Te Rūnanga o Ngāti Whātua; New Zealand Charities Registration No. CC22564, registered 4 April 2008.

  31. This is Māori for lesbian, gay or homosexual.

  32. https://www.rainbowtick.nz/#about. Accessed 30 June 2020.

  33. Bazley (2018), pp. 74–75.

  34. https://www.rainbowtick.nz/. Accessed 30 June 2020.

  35. Trade Marks Act 2002 (NZ), Sec. 5 definition of “trade mark”.

  36. Intercity Group (NZ) Ltd v. Nakedbus NZ Ltd (2014) 3 NZLR 177, [98], stating “in New Zealand the essential function of a trade mark is as a badge of origin”; and E & J Gallo Winery v. Lion Nathan Australia Pty Limited (2010) HCA 15, [43]. On the economic theory underlying trade mark protection, see Landes and Posner (1987).

  37. For critique of the search-cost theory of trade marks, see McKenna (2012); Dogan (2018); Dinwoodie and Janis (2007).

  38. Frankel (2011), p. 492; IP Australia (2019), p. 15; Rogers (1949), p. 176.

  39. Chon (2017), p. 303.

  40. New Zealand Trade Mark Nos. 647569 and 730766; and Australian Trade Mark No. 905574 (lapsed).

  41. Australian Trade Mark No. 451318.

  42. On the trust function of trade marks, see Belson (2002); Chon (2014), pp. 945–947.

  43. Belson (2002), p. 347, who also notes that the ability to enforce certification trade marks for infringing use adds to the trust inherent in them.

  44. The Fairtrade label is not without critics; e.g. Davenport and Low (2012); Bassett (2010); Griffiths (2012).

  45. Trade Marks Act 2002 (NZ), Sec. 5 definition of “certification trade mark”.

  46. Trade Marks Act 2002 (NZ), Sec. 5 definitions of “trade mark” and “certification trade mark”.

  47. Trade Marks Act 2002 (NZ), Sec. 14(b).

  48. Trade Marks Act 1995 (Cth), Sec. 171, which states that the registered owner may “use the certification trade mark only in accordance with the rules governing the use of the certification trade mark”.

  49. Trade Marks Act 2002 (NZ), Sec. 55.

  50. Trade Marks Act 2002 (NZ), Sec. 55(1)(c). Cf. competency of the certifier is not a requirement in the US or Canada.

  51. IPONZ Practice Guidelines (2020) “Certification Marks”, para. 6.2.

  52. Ibid., para. 6.2.1.

  53. Ibid., para. 6.2.2.

  54. Ibid., para. 6.2.2.

  55. Trade Marks Act 2002 (NZ), Sec. 55(1)(d).

  56. IPONZ Practice Guidelines (2020) “Certification Marks”, para. 6.4.1.

  57. Ibid., para. 6.4.2.

  58. See Trade Marks Act 2002 (NZ), Sec. 55(2)(a); and IPONZ Practice Guidelines (2020) “Certification Marks”, paras. 6.2.1 and 6.4.

  59. Trade Marks Act 2002 (NZ), Sec. 55(2)(b).

  60. IPONZ Practice Guidelines (2020) “Certification Marks”, para. 6.4.4.3.

  61. Ibid., para. 6.4.4.3.

  62. Ibid.

  63. Fair Trading Act 1986 (NZ), Secs. 27 and 29. See also Commerce Commission (2020b) “Consumer Information Standards”; Commerce Commission (2020d) “Product Safety Standards”.

  64. Trade Marks Act 2002 (NZ), Sec. 56. In the US, standards of certification trade marks do not need to be publicly available. In this context, Chon (2009), p. 2316, has stated that “consumer trust in certified goods and services can only operate at the caveat emptor level, because so much of the standard-setting and certification process is beyond public oversight”.

  65. Whether many consumers do indeed consult the standards is another matter; Chon (2009), p. 2332, has referred to the “opacity of the characteristics guaranteed by” certification trade marks.

  66. Trade Marks Act 2002 (NZ), Sec. 79.

  67. Radio New Zealand (2019a, 29 May).

  68. Radio New Zealand (2019b, 30 May).

  69. NZS 8200:2015, https://www.standards.govt.nz/touchstone/business/2015/apr/first-standard-in-the-world-for-rainbow-inclusive-workplaces/. Accessed 30 June 2020.

  70. E.g. Deloitte (2019).

  71. For arguments that the costs outweigh the benefits of applying for a certification trade mark, see Hallett (2013).

  72. For other examples, see supra note 20.

  73. Indeed, plain-packaging laws for tobacco, which prohibit the use of trade marks on tobacco products, have raised debate about whether states can restrict trade mark owners from using their trade marks under international trade law. See Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging (WT/DS435/R; WT/DS441/R; WT/DS458/R; WT/DS467/R, 28 June 2018).

  74. Under the Trade Marks Act 2002 (NZ), Sec. 10(1)(b), a trade mark owner has the right to “authorise other persons to use the registered trade mark”.

  75. Lai (2019).

  76. Quality Innovation Performance (QIP) (2020b) “Rainbow Tick Standards”.

  77. Trade Marks Act 1995 (Cth), Secs. 168–183. See IP Australia (2018, 20 June).

  78. QIP (2020b) “Rainbow Tick Standards”.

  79. Ibid.

  80. Ibid.

  81. Rainbow Health Victoria, https://www.glhv.org.au/index.php/. Accessed 30 June 2020.

  82. Australian Research Centre in Sex, Health and Society.

  83. Australian Charities Registration No. 34161364441, registered 3 December 2012.

  84. QIP (2020a) “About Us”.

  85. Trade Marks Act 1995 (Cth), Sec. 173.

  86. Trade Marks Act 1995 (Cth), Sec. 174.

  87. Trade Marks Act 1995 (Cth), Sec. 175(2).

  88. Trade Marks Regulations 1995 (Cth), reg. 16.6; and ACCC (2020a) “Certification Trade Marks”.

  89. Trade Marks Act 1995 (Cth), Sec. 175(2).

  90. Trade Marks Act 1995 (Cth), Sec. 175(5).

  91. Trade Marks Act 1995 (Cth), Sec. 179. All Australian certification trade marks and their rules can be found here: https://www.ipaustralia.gov.au/tools-resources/certification-rules.

  92. Trade Marks Act 1995 (Cth), Sec. 178(2).

  93. Trade Marks Act 1995 (Cth), Sec. 178(3).

  94. Trade Marks Act 1995 (Cth), Sec. 180.

  95. See ACCC (2020b) “Mandatory Standards”.

  96. See also Commerce Commission (2020b) “Consumer Information Standards”; Commerce Commission (2020d) “Product Safety Standards”.

  97. The author’s attempt to speak with the owners of Rainbow Tick to ascertain their reasoning for not applying for a certification trade mark were unsuccessful.

  98. Competition and Consumer Act 2010 (Cth), Sec. 18(1), “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.

  99. Chon (2009), p. 2316.

  100. Chon (2014), p. 950; Katz (2010), p. 563.

  101. Katz (2010), pp. 1565–1570; Chon (2017), pp. 287 and 308.

  102. Chon has argued that a trade mark’s goodwill (or brand value) could be better used (or more nuanced) to signal sustainability standards, though she recognises the problem of greenwashing; Chon (2018), p. 275.

  103. Chon (2017), p. 298, refers to the signal as “flat”.

  104. Note that the trust function of certification trade marks may be impaired by the proliferation of different standards and related marks. Consumers are simultaneously faced with an “information feast in the form of too many different standards” and an “information famine created by the failure to fully understand the meaning of these marks”, Chon (2017), p. 306. There is an “absence of transparency when differences among multiple competing standards are not readily ascertainable”, which impairs the certification trade mark function as a “cognitive shortcut”, Chon (2009), pp. 2332 and 2346. Furthermore, if a manufacturer or trader can choose its certifier, this removes a certain degree of objectivity from the certification, Chon (2009), p. 2328.

  105. For examples, see supra note 20.

  106. Australian Trade Mark Nos. 964812, 1373101, 1430004, 1463830 and 16612515; Canadian Trade Mark Nos. 1534522, 1160774 and 1309451; and US Trade Mark Registration Nos. 4259650, 4148319, 3366053, 3811009 and 4762338. In the United States, Transfair USA Corp. attempted to register the Fairtrade label as a certification trade mark, but abandoned this (see US Trade Mark Serial No. 78711026).

  107. See e.g. https://au.fsc.org/en-au and https://nz.fsc.org/en-nz. Accessed 30 June 2020.

  108. Australian Trade Mark No. 1313901; New Zealand Trade Mark No. 837174; Canadian Trade Mark No. 0809618; and EU Trade Mark No. 002974905.

  109. US Trade Mark Serial No. 87704442.

  110. Giannakas (2002).

  111. Jahn et al. (2005).

  112. Farrell (1993).

  113. Reckitt & Colman v. Borden Inc & Ors [1990] 13 RPC 341; Erven Warnink BV v. J Townend & Sons (Hull) Ltd [1979] AC 731; Wineworths Group Ltd v. Comite Interprofessionel du Vin de Champagne [1992] 2 NZLR 327; and ConAgra Inc v. McCain Foods (Aust) Pty Ltd [1992] IPR 194.

  114. See also supra note 20.

  115. Note that this would not cover self-regulated star rating systems, even if government-backed. E.g. the Trans-Tasman Health Star Rating (voluntary) and Energy Star Rating (mandatory under the Greenhouse and Energy Minimum Standards (GEMS) Act 2012 (Cth) and Energy Efficiency (Energy Using Products) Regulations 2002 (NZ)). Ratings are calculated by manufacturers, not a third-party. There is no certification. Moreover, such labels serve as informational labels rather than quality assurance labels.

  116. E.g. Trade Marks Act 2002 (NZ), Sec. 17(1)(a); Trade Marks Act 1995 (Cth), Sec. 43; Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union Trade Mark, OJ L 154, 16 June 2017, pp. 1–99, Art. 7.1(g).

  117. Trade Marks Act 1995 (Cth), Secs. 84A(1)(a); and Trade Marks Act 2002 (NZ), Sec. 73(1).

  118. Trade Marks Act 1995 (Cth), Secs. 88(2)(2); and Trade Marks Act 2002 (NZ), Sec. 66(1)(e), the New Zealand legislation qualifies this as deceiving or confusing the “public”. See also Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark, OJ L 154, 16 June 2017, pp. 1–99, Art. 58.1(c).

  119. E.g. Intellectual Reserve Inc v. Robert Sintes [2009] NZCA 305; and NV Sumatra Tobacco Trading Co v. New Zealand Milk Brands Ltd [2011] NZCA 264.

  120. E.g. K-Swiss Inc v. Federation of the Swiss Watch Industry FH [2009] 83 IPR 635.

  121. Trade Marks Act 2002 (NZ), Sec. 17(1)(b); Trade Marks Act 1995 (Cth), Sec. 42(b).

  122. DB Breweries Limited v. Society of Beer Advocates, Inc [2011] NZIPOTM 19, [101]–[105].

  123. Competition and Consumer Act 2010 (Cth), Sch. 2, Sec. 18(1); Fair Trading Act 1986 (NZ), Sec. 9.

  124. One also observes the registration of standard trade marks for certification services for certain Fairtrade and FSC registrations. For Fairtrade, see Australian Trade Mark Nos. 1430004 and 1612515; and New Zealand Trade Mark Nos. 836644 and 994615. For FSC, Australian Trade Mark No. 1313901; and New Zealand Trade Mark Nos. 837172 and 837174.

  125. Trade Mark Regulations 2003 (NZ), Sec. 44(b).

  126. Trade Marks Act 1995 (Cth), Sec. 62A; Trade Marks Act 2002 (NZ), Sec. 17(2)); Trade Marks Act 1994 (UK), Sec. 3(6); Trade-marks Act (RSC, 1985, c T-13), Sec. 38(2)(a1); Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark, OJ L 154, 16 June 2017, pp. 1–99, Art. 59.1(b). See also Dawson (2011).

  127. Fry Consulting Pty Ltd v. Sports Warehouse Inc (No 2) [2012] FCA 81, [174]. See also DC Comics v. Cheqout Pty Limited [2013] FCA 478.

  128. Valley Girl Co Ltd v. Hanama Collection Ptd Ltd & Valleygirl Fashions Pty Ltd [2005] 66 IPR 214, [53].

  129. How exactly this would apply for a non-visual mark, such as a smell or sound, will be left for another day.

  130. WIPO, Paris Convention for the Protection of Industrial Property, 828 UNTS 303 (adopted on 20 March 1883, entered into force 16 April 1970), as amended on 28 September 1979, Art. 5.D, subsumed by the WTO, Agreement on Trade Related Aspects of Intellectual Property Rights, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 UNTS 299; 33 ILM 1197 (adopted on 15 April 1994, entered into force 1 January 1995), Art. 2.1.

  131. Trade Marks Act 2002 (NZ), Sec. 55(1)(b).

  132. IPONZ Practice Guidelines (2020) “Certification Marks”, para. 6.1. For example, the “Certified Organic Bio Gro New Zealand Cert TM” (New Zealand Trade Mark No. 1024301) comes with the limitation that: “It is a clear condition of registration that the mark will always be used in close conjunction with a clear indication that it is a certification mark”.

  133. Trade Marks Act 1995 (Cth), Sec. 43.

  134. Bodenhausen (1968), pp. 78–79.

  135. On how consumers often do not meet this presumption, see Dye (1985), p. 141; Milgrom (2008), p. 121; Song Shin (2003); Sah and Read (2017a, b).

  136. Chon (2009), p. 2340.

  137. The depth of consumer understanding of certification trade marks is unclear, Chon (2017), p. 297.

  138. Chon (2009), p. 2340.

  139. On the use of technology to increase the quality of information that consumers have regarding marks and credence qualities, see Chon (2015, 2016).

  140. See supra note 104.

  141. Note that, while US law does not require that the standards of a certification trade mark are publicly available, every Certificate of Registration of certification trade marks has a “Certification Statement”, which “must be sufficiently detailed to give proper notice of what is being certified. All of the characteristics or features that the mark certifies should be included”. USPTO TMEP (October 2018), para. 1306(3)(a).

  142. See e.g. Commerce Commission (2020c) “Making Accurate Claims”; Commerce Commission (2020a) “Claiming You’re Something You’re Not”.

  143. Fair Trading Act 1986 (NZ), Sec. 6(a).

  144. See https://comcom.govt.nz/.

  145. Commerce Commission (2010, 24 May) “Environmental Claims”.

  146. Competition and Consumer Act 2010 (Cth), Sec. 28(1)(e).

  147. ACCC (2020c) “Misleading Claims and Advertising”.

  148. ACCC (2011, 8 March) “Your Consumer Rights: Environmental Claims”; and ACCC (2010, 15 December) “Your Consumer Rights: Indigenous Arts and Crafts”.

References

Primary Sources

  • Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging (WT/DS435/R; WT/DS441/R; WT/DS458/R; WT/DS467/R, 28 June 2018)

  • ConAgra Inc v. McCain Foods (Aust) Pty Ltd (1992) IPR 194

  • DB Breweries Limited v. Society of Beer Advocates, Inc [2011] NZIPOTM 19

  • DC Comics v. Cheqout Pty Limited [2013] FCA 478

  • E & J Gallo Winery v. Lion Nathan Australia Pty Limited [2010] HCA 15

  • Erven Warnink BV v. J Townend & Sons (Hull) Ltd [1979] AC 731

  • Fry Consulting Pty Ltd v. Sports Warehouse Inc (No 2) [2012] FCA 81

  • Intellectual Reserve Inc v. Robert Sintes [2009] NZCA 305

  • Intercity Group (NZ) Ltd v. Nakedbus NZ Ltd [2014] 3 NZLR 177

  • K-Swiss Inc v. Federation of the Swiss Watch Industry FH (2009) 83 IPR 635

  • NV Sumatra Tobacco Trading Co v. New Zealand Milk Brands Ltd [2011] NZCA 264

  • Reckitt & Colman v. Borden Inc & Ors [1990] 13 RPC 341

  • Valley Girl Co Ltd v. Hanama Collection Pty Ltd & Valleygirl Fashions Pty Ltd (2005) 66 IPR 214

  • Wineworths Group Ltd v. Comite Interprofessionel du Vin de Champagne [1992] 2 NZLR 327

Secondary Sources

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  1. Wellington School of Business and Government, Victoria University of Wellington, Wellington, New Zealand

    Jessica C. Lai

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Lai, J.C. Hijacking Consumer Trust Systems: Of Self-Declared Watchdogs and Certification Trade Marks. IIC 52, 34–61 (2021). https://doi.org/10.1007/s40319-020-00997-w

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