Sustainability and Intellectual Property in Sweden

Abstract

Intellectual property (IP) is considered to be of major importance in the modern economy and is, as a rule, a prerequisite for the dynamic development of culture, technology, and economic prosperity. It is not clear what role IP has in the pressing global issue of sustainability and the green transition and if it, for that matter, even should have a certain role. This chapter briefly addresses this matter from a Swedish IP perspective.

1 Background

Intellectual property (IP) is considered to be of major importance in the modern economy and is, as a rule, a prerequisite for the dynamic development of culture, technology, and economic prosperity.¹ It is not clear what role IP has in the pressing global issue of sustainability and the green transition and if it, for that matter, even should have a certain role. This chapter briefly addresses this matter from a Swedish IP perspective.

1.1 European Conformity

Sweden is since 1995 a full member of the European Union (EU). IP has naturally been the subject of comprehensive harmonisation efforts with the pursued aim of market integration in the EU (and the integrated European Economic Area thereto). The EU as of today has explicit competence to legislate on issues concerning IP law pursuant to Article 118(1) of TFEU.² The legislative discretion awarded to Sweden is accordingly limited in the field of IP law. Swedish courts and public authorities are bound to follow the case law of the Court of Justice of the European Union (CJEU) to guarantee compliance with EU law in accordance with the fundamental principle of the effectiveness of EU law³ and the principle of EU-consistent interpretation.⁴ In other words, Swedish law effectively mirrors EU law in the field of IP and the issues raised herein cannot be treated as a national matter by Sweden. It should already at this point be mentioned that the European Commission will propose a new strategy to ensure that IP remains a key enabling factor for the circular economy and the emergence of new business models.⁵ As such, the issue of sustainability in IP is essentially a European question outside the scope of Swedish public policy. Nonetheless, the existence of a Swedish perspective is naturally not entirely precluded due to EU law.

1.2 Defining Sustainability

Sustainability cannot easily be defined. As one easily might associate the term with superior environmental performance, the term itself may imply a wide array of aspects outside the scope of the environmental context. For instance, the Sustainable Development Goals of the 2030 Agenda for Sustainable Development as adopted by the United Nations member states in 2015⁶ may serve as a basis for defining sustainability. The Sustainable Development Goals include a vast set of different goals including the mitigation of corruption, promotion of gender equality, to name a few. Within the context of IP rights, these goals could altogether be highly relevant. However, to delimit the topic of this chapter, the topic of sustainability will be treated within the context of the environment only.

Even if the scope of sustainability is limited to only cover environmental aspects, the scope is nevertheless wide. An overall purpose of environmental sustainability can be summarised as the mitigation or complete removal of harmful effects on the environment. Such harmful effects are mainly the emission of greenhouse gases, destruction of ecosystems, impairments to wildlife and ecological diversity, and similar effects. Reducing a single harmful effect on the environment may give rise to an increase of harmful effects elsewhere. If one country decreases the emissions while upholding the same level of overall consumption, the emissions of another (exporting) country may very well increase. A highlighting example from the Nordics of the difficulties with sustainable production is the forest industry. The forest industry has the capacity to deliver products that can substitute fossil intensive alternatives and thereby reduce the carbon footprints of certain products. At the same time, the forest itself is a complex ecosystem. Massive plantation of certain fast-growing trees cause detriment to ecological diversity and the cutting of trees stops the uptake of carbon in the atmosphere—even if the end users can access a product based on renewable resources with a smaller carbon footprint than the substituted more fossil intensive product. The forests’ role in mitigation of climate change is an act of balancing where the benefits of substitution stand in conflict with the interest of preservation. A fundamental problem of this act of balancing is that the discourse has turned polemical and becomes increasingly difficult to overview.⁷

The intricate ecological aspects of sustainability can be elaborated in infinity. Perfect sustainability is nearly unfathomable. Any consumption is contingent on production and production is united with impacts due to the use of resources. The impacts are to varying extents damaging to some, perhaps even conflicting, aspects of sustainable metrics. We could effectively create the most beneficial impact by ceasing to consume and ultimately to live. Now, this is not a manifesto against contemporary and affluent humanity. Notwithstanding, the fact of the matter is that perfect and constant sustainability is nearly unfathomable as long as there is extensive consumption. To put it differently, sustainability is not a final destination but rather an ongoing journey. It is indeed challenging to address the subject of IP and sustainability when sustainability itself arguably is an act of balancing and contingent on an ever-evolving discourse. Having said that, the role of IP and the role of law in general should, as a starting point, be viewed in light of the said inherent challenges of sustainability.

2 The Current Role of IP in Sustainability

The international rapporteur has rightfully so emphasised that IP rights are intrinsically neutral on the issue of sustainability. Sustainability characterised as the public policy aim of today emerged after the creation of the global IP system. It is already clear from this point that IP was not created for a specific role in the matter of sustainability. Even so, its creation does not preclude an emerged role in sustainability as of today.

The fundamental purpose of IP can be summarised to stimulate and protect creative efforts including innovations by enabling persons to protect and individualise their associations, products, and investments.⁸ In the Swedish legal tradition, the interests of authors in terms of copyright have in these matters been given a particular emphasis. The interests of authors lie within the making of ‘a contribution to the cultural development to the extent his talent warrants’.⁹ The same reasoning could be applied to anyone making a contribution to sustainable innovation and improvements. This gives rise to the question of under what circumstances IP can be attributed to a specific role in sustainability work as of today.

2.1 Swedish Public Policy on Sustainability

Climate change is consistently prevalent on the political agenda in Sweden. For instance, in 2017, the Swedish Climate Act (SFS 2017:720) was enacted. Among other things, the law stipulates in its fifth section that the government must present political climate action plans every four years. The role of IP rights in relation to combatting climate change is neither mentioned in the preparatory works nor in the act itself.¹⁰ When the Swedish government finalised its first political climate action plan in late 2019, IP rights were also not mentioned.¹¹ Nevertheless, the action plan sheds some light on the issue of IP and sustainability in terms of public policy: Goods and services affect the climate throughout the whole life cycle—during manufacture, use, re-use, recycle of material, disposal of waste, and transportation. It is important that consumers in Sweden have the possibility to make informed and conscious decisions when buying goods and services. To decrease the emissions related to private consumption, it is important to facilitate for single consumers to consume more sustainably and make it economically viable to make the right choices. The change in consumer behaviour sends important signals to the market for the transitioning to fossil-free production.¹²

The scope of the aim quoted above could encompass the use and direction of IP rights. It can be concluded that the government’s emphasis on consumer power and the consumers’ access to information for informed decisions is ostensible. Nonetheless, it must be noted that IP rights are clearly omitted.

As mentioned above, the 2030 Agenda may serve as a concrete expression of global sustainability undertakings. When the Swedish Delegation for the 2030 Agenda presented its proposals and assessments for Sweden’s implementation of the Sustainable Development Goals in 2019, IP rights were also omitted.¹³ The Swedish government did not mention IP rights either when it presented its proposal regarding the implementation to the parliament.¹⁴ The Swedish Intellectual Property Office (Patent- och registreringsverket) made a submission, as is customary in the Swedish legislative process, regarding the proposed implementation.¹⁵ The Swedish Intellectual Property Office (SEIPO) did not criticise the fact that IP rights were omitted in the proposal although the authority observed that IP rights play an important part for the undertakings pursuant to the 2030 Agenda. SEIPO quoted its strategic goals encompassing its pursued sustainability aim (freely translated below) in its submission: By promoting the insight and capacity to make use of intellectual property, SEIPO contributes to a strongly innovative and sustainable society.¹⁶

SEIPO’s position is clearly linking innovation to contributions to a sustainable society. Conclusively, innovation is considered to facilitate sustainability.

2.1.1 The Position of the Intellectual Property Office

Part of SEIPO’s stated mission is to ensure that ‘IP that may be protected should also lead to a sustainable society’. The said part of its mission is, in SEIPO’s own words, ‘challenging’ since the exercise of public authority by the office must remain legally ‘neutral’. Swedish public authorities are constitutionally obligated to adhere to a principle of objectivity in their exercise of power pursuant to Chapter 1 Section 9 of the Swedish Instrument of Government (SFS 1974:152). An example of an action contrary to said principle is if an authority makes immaterial considerations in its decision-making.¹⁷ Accordingly, any material changes to the law would diminish the risk of a public authority making immaterial considerations. Although not explicitly stated by SEIPO, a legislative change might be appropriate in this regard to allow differentiated treatment of IP based on sustainability performance. Additionally, SEIPO is legally bound by the government’s instruction concerning, e.g., application fees for IP rights. All applicants are, pursuant to the government’s current instructions, treated equally and there is no differentiation of fees based on sustainability or size of the business.¹⁸ The lack of public incentives in terms of IP application fees does not impede public financial incentives entirely. Sweden has an innovation agency named Vinnova with the adapted vision to make Sweden ‘an innovative force in a sustainable world’. The public authority invests approximately three billion SEK annually in research and innovation.¹⁹ Its issued instructions include to contribute to sustainable growth and the strengthening of Sweden’s power to compete by facilitating the use of research and promotion of innovation.²⁰ Therefore, even if SEIPO cannot incentivise sustainable business models in Sweden, there might be public funding available for such businesses.

SEIPO has itself defined some of its sustainability undertakings. Notably, the Swedish authority considers patent information to be a valuable tool for the monitoring of the Sustainable Development Goals. It can for instance, in SEIPO’s words, be used as basis for prioritisation and follow-up on progress (at a macro level).²¹ One project by SEIPO where IP meets sustainability is a particular collaboration with the Swedish Chemicals Agency. The project involves the processing of patent data with the help of artificial intelligence to, for instance, detect potential hazardous exposure and to monitor trends in different technical fields. If successful, the Swedish Chemicals Agency’s aspiration is to ensure more accurate forecasting and to detect potentially new chemical hazards earlier than before. Both SEIPO and the Swedish Chemical Agency can benefit from the implementation of the assessed artificial intelligence methods in their operations according to the description of the joint project.²²

The international contributions of Sweden in terms of foreign aid to countries and organisations are explicitly mentioned as a sustainability undertaking by SEIPO. The global contribution by SEIPO mainly evolves around the initiative ‘WIPO Green’.²³ The World Intellectual Property Organization (WIPO) considers technology solutions for greener growth to already exist. In WIPO’s view, that technology must be scaled up and investments must be channelled into the most promising inventions. According to WIPO, technology must also be transferred to those who can use it on the ground and WIPO is altogether working for the promotion of an efficient global market for environmentally friendly technologies. WIPO has under these conditions launched the initiative ‘WIPO Green’—a marketplace and ‘networking forum’. It holds a database of green technologies and network of partners and experts to help parties looking to commercialise, license, access, or distribute green technology.²⁴ WIPO Green is an example of IP being used for sustainability according to SEIPO. Moreover, SEIPO, similar to WIPO, argues that patents can facilitate technology transfer since the patents themselves provide a defined scope of transfer.²⁵ On a final note, it can be mentioned that SEIPO regularly promotes sustainable businesses in its communication as examples of successful utilisation of IP rights.²⁶

2.2 European Public Policy on Sustainability

The European Commission has made similar considerations as the Swedish government in its action plan for the Circular Economy. The Commissions states that ‘the choices made by millions of consumers can support or hamper the circular economy’. In addition, the Commission considers price to be a key factor affecting purchasing decisions and thereby encourages Member States to incentivise, using economic instruments such as taxation, to ensure that product prices reflect environmental costs.²⁷ Importantly, the Commission’s action plan of 2015 does not mention IP at all. According to the Commission’s later action plan of 2020, the regime for intellectual property needs to be fit for the digital age and the green transition and support EU businesses’ competitiveness. The Commission will propose an Intellectual Property Strategy to ensure that intellectual property remains a key enabling factor for the circular economy and the emergence of new business models.²⁸

It can be noted that, although the Commissions emphasises the role of IP in the green transition, there is no evaluation whether IP is fit for that purpose. The Intellectual Property Strategy, as mentioned in the introduction above, is yet to be proposed at the time of writing and its content is not publicly known.

2.3 International IP Policy on Sustainability

The basis for the modern IP system can be found in two international agreements; the Paris Convention for the Protection of Industrial Property of 1883, last amended on 28 September 1979 (the Paris Convention) and the Agreement on Trade-Related Aspects of Intellectual Property Rights, adopted in Marrakesh on 15 April 1994 (the TRIPS Agreement). Article 1 of the Paris Convention defines ‘Industrial Property’ (i.e. IP). From the wording of said article, IP should be understood in the broadest sense and encompasses patents, utility models, industrial designs, trademarks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition. All of the mentioned rights except for repression of unfair competition are fundamentally proprietary rights. Neither the preamble nor any article of the Convention contains any reference to sustainability. It can easily be concluded that the creation of the foundation of the IP system did not describe any form of IP as having a role in sustainability.

The TRIPS Agreement does, unlike the Paris Convention, contain one reference to the environment. Under Article 27(2) of the TRIPS Agreement, it is possible to exclude inventions from patentability if the exclusion is necessary to, inter alia, avoid serious prejudice to the environment. The notion of ‘prejudice to the environment’ in this regard can be seen as a clarification that such acts constitute an infringement of ordre public.²⁹ The exclusion of inventions contrary to ordre public and public moral from patentability is also stipulated in Chapter 1 Section 1 c of the Swedish Patent Act (SFS 1967:837). The environment is not mentioned as an example of ordre public although the list is considered non-exhaustive.³⁰ The general exclusion from patentability under Swedish law does not entail that SEIPO shall examine the practical use of a certain patent. Instead, the exception can only be applied to inventions that per se cannot be used in any other way than contrary to law and public morality. A widely cited example of this exception from patentability under Swedish law is equipment for conducting torture.³¹ There is no example in Swedish case law of an invention being deemed non-patentable due to its severe environmental impact. Nevertheless, it is clear that the TRIPS Agreement indeed does enable such considerations by patent offices.

2.3.1 Technology Transfers

The signatories to the TRIPS Agreement consist of countries across all continents with profound differences in welfare. It is already from the preamble of the TRIPS Agreement apparent that IP right are ‘private rights’ and that the agreement must recognise the ‘special needs’ of least-developed member countries. Under Article 66(2) of the TRIPS Agreement: Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.

Technology transfers are, in other words, encouraged to less developed countries subject to the TRIPS Agreement. The issue of the TRIPS Agreement and transfer of technology specifically for the benefit of the environment was first raised by Ecuador to the Council for Trade-Related Aspects of Intellectual Property Rights:³² For the assertion that ‘intellectual property rights’ guarantee the promotion of innovation and promote the timely and widespread dissemination of the industrial applications of such innovations is questionable:^{24 [sic!]} What is clear, however, is that for many countries, especially the most vulnerable countries in which ESTs (environmentally-sound technology) are most needed for adaptation and/or mitigation of climate change, it may plausibly be asserted that the patent system as currently designed can restrict the dissemination of such technologies through monopolisation or abuse of exploitation rights by right holders or excessive additional costs resulting from payment of royalties for voluntary licensing of ESTs.³³

Since Ecuador raised the issue before the TRIPS Council, it has been discussed on several occasions. The WTO emphasises in this regard that the TRIPS Agreement aims to contribute to promoting technological innovation and its transfer and dissemination.³⁴ Nonetheless, the criticism by Ecuador concerning IP being used for monopolisation is highly relevant and a recurring topic of debate. Similar criticism of the monopolisation of inventions particularly due to patents have been expressed by countries in relation to equipment necessary to combat the COVID-19 pandemic.³⁵ One role of IP accordingly appears to be the facilitation of transfer of vital technology—especially between countries with different economic capabilities.

2.4 The Current Role of IP in Sustainability

In light of the above, the discussions on IP in relation to sustainability appears to be nearly non-existent in Sweden, a bit more prevalent in the European context, and mostly discussed in the international context with reference to technology transfer. One way of assessing the matter of IP’s role is to conclude that the regulators do not appear to treat IP as having a specified role in the green transition other than as a facilitation of innovation. As such, technology transfers are clearly emphasised as being of pertinence in relation to sustainability. Technology transfers pertain to the exercise of IP rights rather than the holding of IP rights. This distinction is vital in the way that the holding itself is neutral although the application may not be. IP rights (except for unfair competition) are ultimately, as clearly stated in the Paris Convention, proprietary rights of exclusive nature. It cannot be assumed that the holding of proprietary rights per definition entails an enforcement of such rights in a way that precludes others from exploiting such rights. As such, it is rather the exercise of IP rather than the holding of IP that affects the facilitation of technology transfer. Derived from the perspective that IP rights are proprietary rights (i.e. awarded to a holder), IP rights are neither created nor construed as having any certain role in sustainability. This is further supported by the fact that if an invention is detrimental to the environment, it may nonetheless be patented and when the patent protection ultimately expires, the invention will remain detrimental to the environment. In other words, the existence of IP is in this regard completely immaterial—it neither enhances nor decreases the sustainability of the invention. It is also immaterial whether the holder of the IP is the original owner or controller (e.g. exclusive licensor).

On a final note, the issue raised in relation to the TRIPS Agreement regarding the monopolisation of innovation due to IP could be further addressed. When the monopolising aspect of IP generally is questioned, it is not the proprietary nature itself that is criticised but rather the abuse or exploitation of IP in the way that it limits access to innovation. This inherent conflict and the need for balancing competing interests thereof is indeed relevant. However, within the Swedish perspective, access to IP is overall well-functioning. This can likely be attributed to the Sweden’s relative affluence. From a national level, the monopolising aspect of IP is not a significant issue in terms of sustainability in Sweden. Even if the monopolisation can be criticised for possibly inhibiting the transfer of technology, it should be emphasised that IP itself consolidates information that enables effective transfers of technology. Also, the way IP consolidates information enables for data insights and monitoring of environmental performance as is the case with the collaboration between SEIPO and the Swedish Chemicals Agency mentioned above. Without the existence of patents and the patent registry thereof, such extensive collaboration would not be possible.

3 IP’s Contribution to Unsustainability

Since IP rights, as described above, are considered to contribute to innovation and thereby to sustainability, it can be questioned if IP also could pose as a barrier to innovation. This could, for instance, be the case if the characteristics of certain IP per se hinders transfer of technology in some regard.

3.1 Barriers to Innovation

The effective transfer of technology and innovation is a pillar of the modern IP system and a possible and inherent obstacle to technology transfer is trade secrets. Trade secrets are protected under the Trade Secrets Act (SFS 2018:558) in Sweden. Swedish law does not stipulate any date of expiry for trade secrets.³⁶ The act transposes the European Directive (EU) 2016/943 which also does not stipulate any date of expiry.³⁷ Before the directive was transposed, Swedish law stipulated that trade secrets that have been subject to any form of litigation could only be kept secret for a period of 20 years. Under the current law, there is no such limitation at all.³⁸ Trade secrets are not mentioned per se in the Paris Convention although the provisions on unfair competition (Article 10^bis) include trade secrets in a broad sense.³⁹ The characteristics of trade secrets deviate from traditional IP rights in the way that it is not an exclusive proprietary right since several companies may hold the same trade secrets independently. Furthermore, the information constituting trade secrets is not exclusive although the holding of trade secrets entails a protection from unlawful acquisition, use, and disclosure.⁴⁰ Trade secrets are nevertheless largely treated as a proprietary right—at least in the sense that trade secrets are licensed and accounted for as valuable IP. Trade secrets are in principle valid in perpetuity and can effectively hinder technology transfer—which is a prerequisite for spreading innovation in many cases. If a patent expires, the transfer of the protected invention to third parties may not occur in the absence of technology transfer (as widely seen in the pharmaceutical sector). In other cases, the publication of patents can limit the possible scope of trade secrets thus warranting the transfer of technology once the patent expires. There is nevertheless a risk that a perpetual protection of trade secrets is far-reaching and can constitute a barrier to technology transfers.

Although technology and innovation underpin the modern IP framework, there is one apparent exception to that form of reasoning. Protected geographical indications are basically, especially in the European context, treated as IP.⁴¹ The current European Regulation on protected geographical indications for agricultural products and foodstuff as of today effectively protects the commercial value of traditional means of production.⁴² These types of rights protect local traditions rather than innovation. Protected geographical indications can in that regard be viewed as the antithesis of otherwise innovation-friendly IP. From the perspective of the environment, it can be emphasised that there are no environmental requirements imposed for eligibility for protection as geographical indication.⁴³ If a producer would deviate from any specified traditional method of production in favour of a more environmentally sound alternative, the protected geographical indication cannot be used.

3.2 Corrective Measures in Cases of Infringement

Aside from the holding of IP, the enforcement of IP may in a limited regard cause detriment to the environment. In the event of infringement, IP rights can pursuant to EU law result in the destruction of fully functional goods if it is ordered as a corrective measure due to the infringement.⁴⁴ Destruction as a corrective measure is also warranted by the TRIPS Agreement.⁴⁵ When the EU directive was transposed in Sweden, no environmental considerations were made in relation to destruction of infringing goods.⁴⁶ From an environmental point-of-view, it can easily be argued that the destruction of fully functional goods is a major waste of resources and such destruction would have been impossible without IP law. As the law is implemented in Sweden, there is no clear legal foundation for any court to make any environmental considerations while determining whether to order the destruction of infringing goods. It could possibly be argued that such considerations can be made within the framework of proportionality. Furthermore, whenever destruction as a corrective measure is ordered by a Swedish court, the form of destruction is not decided by the court. Instead, the court has to decide whether the infringing party shall bear the costs for the destruction.⁴⁷ Accordingly, there are no rules in place ensuring that infringing goods are recycled or otherwise destroyed in a way that is most gentle on the environment.

3.3 The Neutrality of IP vis-à-vis Sustainability

As already stated above, the holding of IP itself is immaterial to environmental considerations. Some aspects of the exercise of IP may per se be at risk hampering innovation (which, as already described, appears to be premier role of IP in sustainability). Trade secrets can restrict the transfer of technology and are not limited in time. At the same time, trade secrets are not exclusive proprietary rights and do not preclude reverse engineering thus enabling competitors to utilise the same protected know-how. Moreover, the existence of patents entails that some know-how inevitably becomes excluded from the scope of trade secrets. Know-how that is not patented and constitutes trade secret can be protected in perpetuity which may be questioned in terms of facilitating transfer of technology. In that sense, there is a risk that the lack of date of expiry for trade secrets may impair transfer of technology and accordingly being negative for innovation and sustainability. Aside from this point, IP must be considered welcoming towards innovation in the way that progress and improvements are never foreign to protection. Innovation is not per se positive for sustainability. However, the introduction of cross-industry environmental improvements while preserving industrial production necessitates innovation in some form. The one exception where IP intrinsically is not welcoming towards innovation is protected geographical indications. If innovation in the conservative sector of agricultural products and foodstuff should be incentivised, the legislative framework should accommodate environmental improvements in production. As of today, it cannot be ruled out that protected geographical innovations impair the possibility of improvements in production methods hence becomes a vivid example of how IP can be negative for sustainability. Another example of IP being negative for sustainability is the destruction of infringing goods. Such negative environmental effects associated with the destruction of infringing goods could easily be mitigated if the courts would be obligated to, at least to some extent, adhere to the European waste hierarchy.⁴⁸

4 Empowerment of Consumer Choices

Even if the holding of IP itself is neutral on the topic of sustainability, the exercise of IP may nonetheless be subject to legal consequences at least indirectly promoting sustainability. Based on the considerations of both the Swedish government and the European commission, the choices of consumers have an incredible potential to contribute to the green transition. In this regard, the practice of greenwashing can be detrimental to the consumers’ abilities to make informed decisions and to the consumers’ role in the green transition entirely. Greenwashing raises the issue of unfair competition which is not a regular IP right of proprietary nature. Notwithstanding, it is indeed often treated as IP and is also mentioned in both the Paris Convention and TRIPS Agreement.

4.1 Sustainability in Unfair Competition

Greenwashing has become a highly relevant topic lately. The European Commission has in a recent proposal decided to define greenwashing as the making of a misleading environmental claim.⁴⁹ In Article 1 of the Commission’s proposed directive, the following definition is provided: ‘(o) “environmental claim” means any message or representation, which is not mandatory under Union law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication, which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time’.

A few observations should be made from the mentioned proposal. First, it is evident that the EU regulator views greenwashing as an issue necessitating legislative attention. Second, it should be noted that ‘environmental claim’ is a term encompassing the use of elements that also may constitute proprietary IP rights (such as labels, brand names, etc.). In other words, the exercise of IP rights may be restricted if the exercise is considered to misleadingly communicate an environmental benefit. In Sweden, this is not only the case with reference to the proposed EU legislation. For instance, the Swedish Patent and Market Court held in 2021 that the use of the prefix ‘ECO’ in a registered trademark used in marketing is considered an environmental claim. The court found the defendant’s explanation that the prefix ‘eco’ referred to economic benefits to be immaterial in relation to the average consumer’s perception of the marketing as implying environmental benefits.⁵⁰ The European Commission has also stressed that trademarks cannot be used to circumvent the requirements when communicating environmental claims.⁵¹ This is of particular significance since the amount of trademarks containing environmental references is clearly increasing.⁵²

With reference to the above, the utilisation of trademark rights may in practice be inhibited when used in marketing based within the scope of unfair commercial practices (also known as unfair competition law or marketing law). The Unfair Commercial Practices Directive⁵³ is transposed in the Swedish Marketing Act (SFS 2008:486). Contrary to the Unfair Commercial Practices Directive, the Marketing Act does not only apply to commercial practices unfair towards consumers only, as stipulated in Article 3(1) of the Directive, but also to practices unfair towards other businesses, i.e. as a rule competitors.⁵⁴ In Sweden, any trader affected by the unfair business practice has locus standi and competitors may accordingly bring proceedings against each other due to unfair business practice.⁵⁵

4.1.1 Environmental Benchmarking and Labels

The environmental footprints of goods and services are highly difficult to assess in the absence of impartial benchmarking to facilitate comparisons. One way of benchmarking is through the use of independent third-party audits and authorisations that use a standardised benchmarking framework to assess environmental impacts of goods and services. Any misappropriation of such authorisations may constitute infringement of the third party’s trademark rights. SEIPO has explicitly mentioned such use of trademark rights as a way that IP may be used to support the commercialisation of sustainable goods and services.⁵⁶ Aside from trademark law, such misappropriation can easily be remedied as an unfair commercial practice. Under Section 10 para 2 of the Swedish Marketing Act, a trader may not, among other things, mislead consumers with reference to its own or any other trader’s qualifications. This includes the use of independent authorisations. For instance, if an authorisation is revoked and is nevertheless subsequently used by a trader, such marketing is misleading.⁵⁷ Annex 1 to the Unfair Commercial Practices Directive contains commercial practices which in all circumstances are considered unfair. Section 4 of the Swedish Marketing Act stipulates that said Annex 1 is directly applicable under Swedish law. Articles 3 and 4 of the Annex clearly prohibit false use of approvals, endorsements, or authorisations. An overall purpose of the directive in this regard is to prevent traders from unduly exploiting the trust which consumers may have in self-regulatory codes.⁵⁸ In other words, environmental authorisations are duly protected under unfair competition law. Misleading use of environmental claims are considered particularly serious violations of unfair competition law.⁵⁹

4.1.2 Burden of Proof in Marketing Communications

It is well established under Swedish law that a trader must be able to substantiate each communicated factual claim used in advertisements (also known as the reversed burden of proof). The principle is not explicitly laid out in Swedish law although it is by all means established in case law.⁶⁰ The reversed burden of proof can also be derived from Article 12(a) of the Unfair Commercial Practices Directive. When communicating environmental claims, the facts used by the trader must prevail under a particularly high degree of scrutiny to satisfy the reversed burden of proof.⁶¹ A trader’s communication of a general or vague environmental claim entails a burden of proof covering all interpretations of the marketing in the eyes of the average consumer.⁶² Documentation to substantiate an environmental claim should be available as soon as the claim is used in marketing.⁶³ Certain know-how underpinning a trader’s environmental performance can be subject to secrecy in court proceedings and records.⁶⁴ Under the basic principles of procedural law, the secrecy cannot limit the litigants’ access to information in an ongoing trial.⁶⁵ It could be feared that the transparency hereto can enable abuse of unfair competition law in the way that competitors may attempt to access each other’s trade secrets due to the reversed burden of proof. Even if information disclosed in litigation can be kept confidential by the courts, it is inevitable that the claimant will access the confidential information in the course of the proceedings and the adversarial process thereof. This could potentially incentivise abuse of litigation due to the claimant’s granted access to the defendant’s otherwise confidential information warranted by the reversed burden of proof. Such fears nevertheless appear to be unfounded in the Swedish context. Instead, the reversed burden of proof serves as a solid obstacle to greenwashing.

4.2 Facilitation of the Circular Economy

As mentioned above, consumption is inherently associated with the use of resources. The only way to circumvent the use of resources while maintaining consumption would be to reuse as much goods as possible instead of producing new ones. Restrictions on resale of used goods could limit consumers’ access to used goods in a way that could impair the circular economy. Luckily, the exclusive right to sale of goods subject to IP rights is exhausted after the goods have been put on the European market (with the consent of the rightholder). The exhaustion doctrine can be categorised as a demarcation of IP protection in favour of the free movement of goods and services. The underlying principle of Swedish law is, in accordance with EU law, that products or services that have been exhausted in relation to IP may also be sold and advertised in the European market.⁶⁶ The underlying reason for exhaustion is, rather self-explanatory, to diminish the risk of complete monopolisation with regards to production, sales, and repairs through the holding of IP.⁶⁷ Different licenses regarding use of IP rights in general may be in conflict with competition law if IP rights are exercised to an extent surpassing what is legally permissible.⁶⁸ Furthermore, the overall consumption by consumers may also be reduced if goods have a long lifespan. Inevitably, most goods break at some point. There is no explicit right to repair in Sweden and the issue has been acknowledged, inter alia, in a governmental inquiry on the advancement of the circular economy. The inquiry stated that it is common in the IT-sector to limit access to codes, instructions and the same, and to only permit access to authorised parties.⁶⁹ However, the inquiry did not make any suggestions for amendments to the current legislation in this regard. In addition to securing a right to repair, it would indeed be beneficial for the circular economy to facilitate a well-functioning market for spare parts for goods. Technological innovation such as 3D-printing enables cost efficient production of spare parts that arguably could prolong the lifespan of sold goods. The production of spare parts without the consent of the rightholder will in many cases constitute infringement of IP rights. This gives rise to the question whether restrictions on the enforcement of IP rights should be introduced as further discussed below.

4.3 Consumer Choices in a Successful Role for Sustainability

The green transition naturally necessitates investments and significant amount of the costs are incurred on businesses. Ultimately, the business of all businesses is business. If green investments are profitable, the green transmission is ultimately doable. However, if there is a general narrative dominated by greenwashing, the sincere green investments may go unnoticed among the consumers. Unfair competition can in this regard serve as a mechanism that hinders competitors from misappropriating the use of sustainability without the necessary investments being made. The fact that competitors may litigate unfair commercial practices can further safeguard the markets from greenwashing. An observation that can be made from Swedish case law is that litigation regarding misleading environmental claims to a large extent has been initiated by competitors. Unfair competition, if viewed as a form of IP, can ensure that unsustainable businesses do not misrepresent their own environmental performance hence incentivising businesses to address sustainability properly. This necessitates that unfair competition is duly enforced. The efficient enforcement of unfair competition is a clear example of how IP can contribute to sustainability. Moreover, the limitation of the exclusive rights associated with IP due to exhaustion ensures that goods can be re-used for the benefit of the circular economy. An explicit right to repair could benefit the circular economy further.

5 Discussion on Possible Improvements in IP for Encouraging Sustainability

This chapter has up to this point mainly discussed if IP has a role in sustainability and the proprietary nature of IP’s effects on sustainability. A closely related question hereto is whether IP should have any specific role at all in sustainability. Given that IP’s close relationship with innovation is established, the question regarding IP’s role in sustainability implies that sustainability in some regard deviates from the general concept of innovation. The existence of deviations in this regard is likely contingent on the nature of each industry sector. Different industries simply have different inherent challenges in relation to sustainability and the relationship between sustainability and IP is arguably equally affected by the nature of such inherent challenges. Additionally, the fact that innovation is closely associated with economic growth can itself serve to distinguish an inherent clash between IP and sustainability. This in the sense of a harsh reality where the modern economy basically necessitates growth and growth itself necessitates the consumption of natural resources and gives rise to emissions. Nonetheless, within the aspect of holding IP, there is no such clear reason to distinguish sustainability from innovation in general. If it were to be distinguished, it could be argued that a sui generis type of IP should be introduced specifically for the promotion of sustainability. However, since there is no need for such distinction, there is accordingly no vacuum that needs to be with the introduction of an additional proprietary right for the protection of sustainable innovation. As such, there is no clear need to introduce a sui generis IP right for sustainability.

IP rights may have contributed to environmental decay in the sense that the most damaging innovation at some points have been patented. When the patents have expired, the products created thereof continue to be damaging. In that sense, it could be argued that the exclusivity of the patents may have restricted the spread of innovation for some time thus slowing down its damaging effects. When there is a substitute to the invention, such improvements may again be patented. The patent for the substitute could restrict its distribution thus slowing down the introduction of the improved substitute. One might then argue that all IP rights in relation to substitutions and improvements having positive environmental impacts should be confined to allow a swifter green transmission. In this regard, the need for protection of IP rights as a driving force for innovation should be properly balanced with the growing need for transfer of sustainable innovation.

5.1 How IP Rights Can Better Contribute to Sustainability

The introduction of sustainability in IP entails new complexities and challenges to an already dynamic and complex area of the law. IP being neutral in relation to the subject-matter of innovation could herewith also be one of its virtues. The IP system is old and well-established and cannot be swiftly changed materially. Unfair competition does play a major role for IP in relation to sustainability and further enforcement serves to benefit the environment. The major inherent obstacles to sustainability identified in this chapter are protected geographical indications and the destruction of infringing goods without consideration of the waste hierarchy. Aside from this, any material changes to the IP system would entail changes to international law and require significant considerations. As described in the background above, sustainability cannot be easily defined and different aspects of sustainability may be in conflict in relation to each other. It is in this regard not appropriate to affix certain aspects of sustainability to IP when such aspects may prove to be less efficient or relevant in the future. Therefore, any direction of IP to support sustainable or to refrain from supporting unsustainable innovation should be considered with utmost concern. Such direction in terms of public policy is easily achieved with financial incentivisation which more effortlessly can be evaluated and tweaked than IP. Swedish public policy is falling behind in this regard due to lack of financial incentivisation. Moreover, the incentivisation of technology transfer and promotion of other instruments than IP such as open source could be introduced. If such progress is to be incentivised, the Swedish regulators would need, as a starting point, to promote and investigate the potential of IP for sustainable development. That is not the case as of today.

5.1.1 An Introduction of Conditions for Acquiring and Subsisting of IP

If any IP would need to be evaluated on sustainability before it is acquired, such requirement would in principle necessitate that IP offices assess a particular IP right a priori, i.e. during the examination procedure. It would be a heavily intricate task to assess whether specific goods or services in part or in whole can be considered sustainable. The workload of the offices would easily become extensive and likely give rise to a significant volume of litigation thereto. Therefore, it could be much more viable to examine IP a posteriori, i.e. once it has been created and commercially utilised. The effectiveness of imposing environmental conditions for subsisting IP rights can nevertheless be questioned. If, for instance, a patent is invalidated due to its environmental detriment, it does not effectively stop the use of the invention. It would be more efficient to prohibit the use of the invention itself rather than the IP underpinning it. Any invalidation or revocation could also backlash in the way that third parties could start utilising the invention without the risk of infringement hence contributing to a more widespread use of the environmentally detrimental invention. Accordingly, imposing conditions pertaining to sustainability on patents in order to subsist is likely not appropriate.

One IP right that appears to be more suitable for invalidation or revocation due to unsustainability is trademarks. As mentioned above, the use of green terms in trademarks is increasing. A feasible way of incentivising the proper use of environmental symbols and claims (thus mitigating greenwashing) could be to stipulate a requirement similar to the doctrine of genuine used in trademark law. Under Chapter 3 Section 2 of the Swedish Trademarks Act (SFS 2010:1877), a five year or older trademark may be invalidated if it has not been used for the goods and services it was registered for. The regulation transposes Articles 16 and 19 of the Trademarks Directive.⁷⁰ It is the trademark proprietor that bears the burden of proof concerning genuine use of the trademark.⁷¹ A similar requirement for the accurateness of environmental claims used in trademarks would not bestow any heavy administrative burden on the examining authority. It would also entail a grace period to properly implement and assess the environmental impact of the goods and services of the trademark. Such requirement would essentially be in line with the general burden of proof under Swedish marketing law concerning the use of environmental claims. Additionally, such requirement would be in line with the general aim of helping consumers make informed and conscious decisions. At the same time, it might be disproportional to add such ground for invalidity since the use of the trademark nevertheless would, in principle, be subject restrictions on environmental claims under unfair competition law. Adding an additional ground for invalidation or revocation can also be in conflict with the TRIPS Agreement and Paris Convention.⁷² Regardless, since unfair competition law already entails a burden of proof on the trader when communicating environmental claims, a case regarding unfair competition could be tried in conjunction with the use of environmental trademarks. Even if enforcement of unfair competition law has great potential in terms of facilitating sustainable development, the risk of losing a trademark may serve as an additional incentive for compliance and improve the consumers’ overall trust in environmental labels. In Sweden, cases of unfair competition and trademark law are both litigated before the patent and market courts.⁷³ Accordingly, there are well-founded reasons to introduce a new ground for invalidation or revocation specifically for trademarks misrepresenting environmental performance and to try such cases in conjunction with unfair competition law.

5.2 Possible Restrictions on Enforcement of IP in Favour of Sustainability

If an environmentally detrimental product is protected by IP, any improvements of the product could theoretically constitute infringement—particularly with regard to patents. Whenever an improvement of a pre-existing patented invention in terms environmental performance is assessed in terms of infringement, the assessment could incorporate a favourable perspective for the incentivisation of improvements. In other words, some forms of infringements could be justified based on the environmental improvement emanating thereof. This could incentivise research into improvements of innovation by mitigating the risk that such improvements would constitute infringement. This line of reason could perhaps also be applied to spare parts and substitutions of unsustainable parts of inventions. As already stated, the need for protection of IP rights as a driving force for innovation should be properly balanced with the growing need for transfer of sustainable innovation. Non-waivable provisions governing IP licensing in favour of the environment could be imposed. This could, for instance, be applied in relation to spare parts for the benefit of the circular economy. From a Swedish perspective, such legislative additions would need to be addressed within the context of the EU and also in the international arena to enable transfer of technology to less affluent countries. The extensive considerations necessary to draft a conclusive proposal with the proper balancing of interests thereto cannot be done to any satisfactory extent in this chapter. Nevertheless, these preliminary suggestions may be further assessed and serve as basis for further considerations.

6 Concluding Remarks

In this chapter, it is concluded that the standing of IP in relation to IP is a complicated issue as it is. Consequently, suggestions for improvements are equally—if not even more—complicated. The assessed room for improvement in this chapter and the suggestions thereto should be viewed as talking points for further discussions rather than anything of conclusive nature. The challenges of global warming and the green transition are truly global and pressing. To overcome these immense challenges, all of society should partake. The role of IP is not given and IP practitioners should seize the opportunity to construct a solid narrative concerning the role of IP. In all circumstances, the changes necessary for the green transition will affect IP and the absence of IP practitioners in the discourse risks resulting in unfavourable outcomes. The invitation to discuss this issue in this comparative context based on different jurisdictions is accordingly highly welcomed and needed.