Archive for the ‘Greenwashing’ category

Class Action Alleges Ford Fusion Fuel Figure Fudge

June 23rd, 2015

In a recent lawsuit, a Ford Fusion owner has accused the automaker of misrepresenting the fuel efficiency of the hybrid vehicle and distributing a software update that displays false mileage figures.

In the proposed class action complaint filed in California Superior Court in Los Angeles, named plaintiff Dave DeLuca says that, not long after purchasing the vehicle, he realized its actual performance didn’t match the advertised performance.

Mr. DeLuca tested the car under “optimal conditions” as described by a Ford technician.  More particularly, he tested the car with the windows up, the air conditioner and stereo turned off, and driving at a speed of 62 miles per hour or less, and the car allegedly underperformed.

When Mr. DeLuca took the car into the dealership, the Ford technician tested the car under the same conditions, got the same results, but told Mr. DeLuca nothing could be done to fix the car because it wasn’t broken.

Up to this point, the allegations are pretty common for this type of lawsuit.  Most greenwashing cases against automakers include claims that the hybrid or electric vehicles fail to achieve the advertised fuel efficiency (see, e.g., previous posts here and here).

What’s new here is the software piece.  The DeLuca complaint also alleges that Ford issued a software update for the Fusion Hybrid, claiming the update would increase performance and mileage.  After the dealer installed the update in his car, Mr. DeLuca tested its performance again.

On a road trip to Sin City (Viva Las Vegas!), he drove the car under optimal conditions again and observed that the car’s monitor was indeed displaying better mileage and less gas usage.  But Mr DeLuca alleges, that was just smoke and mirrors:

[W]hen Mr. DeLuca filled his gas tank at a gas station, he realized the vehicle’s software relayed inaccurate mileage and use of gasoline.

The mileage had not really increased, according the complaint:

[A]lthough Ford’s software update displays a higher mileage, the vehicle’s mileage has not increased.

Mr. DeLuca performed one final test, doing comparative driving runs with gas-only Ford Fusion.  He found that the gas-only Fusion displayed accurate numbers while Fusion Hybrid displayed inaccurate figures.

It will be interesting to watch this case and see what, if anything, we learn about the alleged software greenwash.

Clean Tech in Court: Green Patent Complaint Update

March 24th, 2015

In January and February, there were a number of green patent infringement lawsuits filed in the areas of biofuels, hybrid vehicles, LEDs, smart grid, advanced batteries, solar power, and water meters.

Advanced Batteries

BASF Corporation et al. v. Umicore N.V. et al.

In this lawsuit BASF and UChicago Argonne, LLC accuse Umicore and Makita Corporation of unfair trade practices, antitrust violations, and infringement of two patents relating to cathode materials for lithium-ion batteries.

The patents-in-suit are U.S. Patent Nos. 6,677,082 (’082 Patent) and 6,680,143 (’143 Patent), both entitled “Lithium metal oxide electrodes for lithium cells and batteries” and directed to a lithium metal oxide positive electrode for a non-aqueous lithium cell.

The cell is prepared in its initial discharged state and has a general formula xLiMO2.(1−x)Li2M′Oin which 0<x<1, and where M is one or more ion with an average trivalent oxidation state and with at least one ion being Mn or Ni, and where M′ is one or more ion with an average tetravalent oxidation state.

According to the complaint, Umicore is selling cathode materials that infringe the ’082 and ’143 Patents, and Makita is one of the companies importing and selling batteries incorporating the materials.  The lawsuit was filed February 20, 2015 in the U.S. District Court for the District of Delaware.

Biofuels

C T E Global, Inc. v. Novozymes A/S

In a complaint filed January 9, 2015 in the U.S. District Court for the Northern District of Illinois, C T E Global seeks a declaratory judgment of invalidity and non-infringement of two Novozymes patents relating to an enzyme used in biofuel production.  The patents are U.S. Patent Nos. 6,255,084 (’084 Patent) and 7,060,468 (’468 Patent).

The ’084 and ’468 Patents are entitled “Thermostable glucoamylase” and are directed to an isolated glucoamylase enzyme which has higher thermal stability than prior glucoamylases.  The patents also claim starch conversion processes using the enzyme.  Glucoamylases are used to convert hydrolyzed corn starch to glucose, particularly in production of ethanol.

Novozymes and C T E previously litigated these patents and settled the case in 2012.  According to C T E, the ’084 and ’468 Patents are invalid in light of the U.S. Supreme Court Myriad Genetics decision holding that isolated natural products are not patent eligible subject matter.

Superior Oil Company, Inc. v. Solenis Technologies L.P.

This is not a patent infringement suit, but rather a priority /ownership dispute in which Superior Oil claims that the inventors of its patent for a method for recovering oil from the byproducts of ethanol production using various surfactants were the first to invent the technology.

Superior Oil’s patent is U.S. Patent No. 8,962,059, entitled “Bio-based oil composition and method for producing the same” (’059 Patent).  In its complaint, Superior Oil requests that the court declare that an interference-in-fact exists between the ’059 Patent and U.S. Patent No. 8,841,469 (’469 Patent), entitled “Chemical additives and use thereof in stillage processing operations” and owned by Solenis Technologies.

The complaint was filed February 24, 2015 in the U.S. District Court for the District of Delaware.

Hybrid Vehicles

Somaltus LLC v. Ford Motor Company

Somaltus filed this complaint for patent infringement in the U.S. District Court for the Eastern District of Texas on February 12, 2015.  Somaltus alleges that Ford infringes U.S. Patent No. 7,657,386 (’386 Patent) by selling vehicles equipped with an infringing hybrid battery system.

The ’386 Patent is entitled “Integrated battery service system” and directed to an integrated battery service system that performs a plurality of services related to a battery, such as battery testing, battery charging, and the like. In addition, the integrated service system provides services to devices/components that are coupled to the battery, such as starters, alternators, etc.

Somaltus, a non-practicing entity, has also sued Nissan, Bosch Automotive Service Solutions, Auto Meter Products, and Cadex Electronics.

LEDs

Cree, Inc. v. Feit Electric Company, Inc. et al.

North Carolina LED manufacturer Cree sued Feit for alleged infringement of ten utility and design patents relating to LED technologies.  The complaint also alleges that Feit has engaged in false advertising in connection with marketing its LED products.

The patents-in-suit are:

U.S. Patent No. 6,657,236, entitled “Enhanced light extraction in LEDs through the use of internal and external optical elements”

U.S. Patent No. 6,885,036, entitled “Scalable LED with improved current spreading structures”

U.S. Patent No. 6,614,056, entitled “Scalable led with improved current spreading structures”

U.S. Patent No. 7,312,474, entitled “Group III nitride based superlattice structures”

U.S. Patent No. 7,976,187, entitled “Uniform intensity LED lighting system”

U.S. Patent No. 8,766,298, entitled “Encapsulant profile for light emitting diodes”

U.S. Patent No. 8,596,819, entitled “Lighting device and method of lighting”

U.S. Patent No. 8,628,214, entitled “Lighting device and lighting method”

U.S. Design Patent No. D653,366, entitled “LED lamp”

U.S. Design Patent No. D660,990, entitled “LED lamp”

The complaint includes greenwashing allegations as well, specifically that Feit’s advertising falsely suggests that some of its LED products meet the Energy Star standard relating to Luminous Energy Distribution when the products actually fail to meet this requirement.

Smart Grid

Allure Energy, Inc. v. Honeywell International, Inc. 

On January 29, 2015, Allure Energy sued Honeywell in federal court in Austin, Texas, alleging false advertising and infringement of two patents relating to smart thermostat technology.

The complaint asserts U.S. Patent Nos. 8,626,344 and 8,457,797, both entitled “Energy management system and method” and directed to a wireless thermostat responsive to control action data communicated via a mobile app and other home energy management systems.

The accused device is Honeywell’s Lyric smart thermostat product.

Emerson Electric Co. et al. v. SIPCo LLC et al.

Previous posts (e.g., here and here) reported on SIPCo’s patent enforcement activities.

In this declaratory judgment (DJ) action, filed January 30, 2015 in federal court in Atlanta, Emerson, one of the defendants in SIPCo’s patent infringement suits, seeks a declaratory judgment that the claims of two SIPCo patents are invalid and not infringed.

The patents listed in Emerson’s complaint are U.S. Patent No. 6,044,062, entitled “Wireless network gateway and method for providing same,” and directed to certain wireless network systems having a server providing a gateway between two networks, and U.S. Patent No. 7,103,511, which relates to remote monitoring and control systems.

In 2013, Emerson filed a similar DJ suit against SIPCo targeting several patents.

Solar Power

Beacon Power, LLC v. SolarEdge Technologies, Inc. et al.

Beacon Power sued SolarEdge for patent infringement on January 9, 2015 in federal court in San Antonio, Texas.  The complaint asserts U.S. Patent Nos. 8,102,144 (’144 Patent) and 8,669,675 (’675 Patent), each entitled “Power converter for a solar panel.”

The ’144 Patent is directed to a solar power generation system including a DC-to-DC power converter configured and arranged to convert the raw power output for each solar module to a high voltage and low current output.

The ’675 Patent is directed to a solar power generation system wherein each DC-to-DC power converter is configured and arranged to convert the solar module output power (SOP) for each solar module to a converted solar module output power (COP) having a converted output voltage (COV) that is higher than the SOV and a converted output current (COI) that is lower than the SOI.

The accused products are SolarEdge’s P Series Power Optimizers.

Water Meters

Flow Dynamics, LLC v. Green4All Energy Solutions Inc. et al.

Filed February 20, 2015 in federal court in Palm Beach, Florida, Flow Dynamics’ complaint accuses Green4All of infringing U.S. Patent No. 8,707,981 (’981 Patent).

The ’981 Patent is entitled “System for increasing the efficiency of a water meter” and directed to a system and an associated valve assembly adapted to increase the efficiency of an upstream water meter. The valve assembly removes entrained water bubbles from the water supply, increasing the density of the water running through the water meter. This ensures that the water meter is not inaccurately including entrained air as metered water so water readings are more accurate.

Flow Dynamics alleges that Green4All’s H2minusO system infringes the ’981 Patent.

The Top Green IP Stories of 2014

January 20th, 2015

Before we get into the new news, let’s take a quick look back at the top green IP stories of 2014.

 

5.  GE Wins Ownership of Key Wind Patent

In what was something of a sideshow, but with major implications for the main event, the Court of Appeals for the Federal Circuit effectively ended a dispute between GE and a former employee, Thomas Wilkins, over ownership of one of the patents involved in larger litigation with Mitsubishi.

After Wilkins brought a lawsuit to correct inventorship of U.S. Patent No. 6,921,985 (’985 Patent), Mitsubishi intervened in the suit.   The Federal Circuit ultimately ruled for GE because the document Wilkins argued demonstrated his conception of the invention did not disclose any elements of the claimed invention.

In fact, the court held, the document in question “does not even depict the key feature Wilkins claims to have invented, i.e., a UPS powering the wind turbine’s three controllers.”

 

4.  Tesla’s Chinese Trademark Troubles

Tesla’s eco-mark issues in China were resolved, renewed, and resolved again in 2014.  Early in the year, Tesla said it had obtained a court decision granting it the right to use the TESLA mark in China over a cybersquatter and prior registrant of the TESLA mark named Zhan Baosheng.

A few months later, Mr. Zhan sued Tesla for trademark infringement in China, demanding the American electric car maker stop all sales and marketing activities in China, shut down showrooms and charging facilities, and pay him 23.9 million yuan ($3.85 million) in compensation.

Shortly thereafter, Zhan apparently got his pay day when Tesla resolved the dispute – this time via a direct settlement rather than relying on the Chinese court system. Zhan agreed to settle the dispute “completely and amicably” including consenting to cancellation of his Tesla trademark registrations and applications.   He also agreed to transfer his domain names, including tesla.cn and teslamotors.cn to Tesla.

 

3.  GreenShift Loses Big in Ethanol Patent Case

2014 saw a major decision in the patent infringement litigation between GreenShift (with its New York subsidiary, GS Cleantech) and a host of ethanol producers across the midwestern United States over patented ethanol production processes.

After multiple actions were consolidated in the Southern District of Indiana and the claims of the key patent family were construed and re-construed, the court issued a sweeping 233-page decision ruling on all of the pending motions for summary judgment brought by the original parties to the suit.

GreenShift lost big, with the court making several rulings on infringement, all for defendants.  Worse yet for GreenShift, the court held three of the four patents in the key patent family invalid because of the company’s commercial offer to sell the technology more than a year before the August 17, 2004 filing date of the initial provisional patent application that led to the other applications in the family.

 

2.  Record Settlement Under Clean Air Act for Alleged Greenwashing

After their reputations took a beating in 2012 under a barrage of consumer class actions alleging false or misleading fuel efficiency claims, last year the Korean automakers entered into a record settlement with the U.S. government amid additional allegations of greenwashing.

The Environment and Natural Resources Division of the U.S. Department of Justice (DOJ) and the California Air Resources Board (CARB) sued Hyundai and Kia, alleging they sold over a million vehicles that did not meet the requirements of the Clean Air Act because the automakers used improper testing procedures and analysis and submitted faulty fuel economy data to the U.S. Environmental Protection Agency.

Hyundai and Kia quickly settled with the DOJ and CARB.  Under the settlement, the automakers did not have to admit the truth of the allegations but agreed to pay about $100 million, about $93.6 million to the DOJ and about $6.4 million to the CARB.  This is the largest penalty ever imposed under the Clean Air Act.

The car companies also forfeited 4.75 million greenhouse emission credits – earned for building vehicle emissions under the legal limit – which they had previously claimed and are estimated to be worth over $200 million.

 

1.  The Tesla-Patent Commons

The biggest green IP story of 2014 was Elon Musk’s announcement that Tesla would “donate” its entire patent portfolio.  Specifically, Musk’s post on the company blog said “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

In the wake of the announcement, more details emerged about Tesla’s patents and the technologies covered.  Reaction to the move was mixed, with some arguing it was a public relations stunt that would ultimately hurt Tesla.

In my post on the announcement, I wondered whether the temptation of exploiting Tesla’s technology would outweigh exclusivity concerns:

Ultimately, the impact of Musk’s decision may turn on to what extent other such players will be motivated to invest in manufacturing vehicles, batteries, etc. using Tesla’s patented and patent-pending technology with the obvious upside being the proven innovation that technology brings and the down side being no exclusivity, instead of investing in their own R&D and patent protection where the upside may be exclusivity and the down side may be inferior or unproven technologies.

Only time will tell what, if any, impact Tesla-Patent Commons will have on the electric vehicle market.

Non-Conformist Korean Car Companies Quickly Settle Gov’t Greenwash Suit for $100 Million

November 29th, 2014

A previous post discussed a host of class action lawsuits against Kia and/or Hyundai accusing the Korean automakers of making false or misleading fuel efficiency claims in their advertising and marketing materials.

Those suits allege that the automakers built advertising campaigns around representations that a number of their vehicles achieved gas mileage in the 40 mile per gallon range when the companies knew or should have known the actual mileage was significantly lower.  One major problem, it seemed, was flawed fuel economy testing by the car makers.

A recent lawsuit brought by the Environment and Natural Resources Division of the U.S. Department of Justice (DOJ) and the California Air Resources Board (CARB) provides more revelations about the automakers’ faulty testing (and led to a prompt settlement by Hyundai and Kia including a substantial monetary penalty).

Filed November 3, 2014 in federal court in Washington, DC, the complaint alleges that Hyundai and Kia sold over a million vehicles that did not meet the requirements of the Clean Air Act because the automakers used improper testing procedures and analysis and submitted faulty fuel economy data to the U.S. Environmental Protection Agency (EPA).

The subject vehicles include the 2012 and 2013 Hyundai Accent, Elantra, Veloster and Santa Fe and 2012 and 2013 Kia Rio and Soul.

Under the Clean Air Act, any new motor vehicle sold in the United States must be covered by a Certificate of Conformity issued by the EPA.  To obtain a Certificate of Conformity, a manufacturer must submit an application for motor vehicles it intends to sell in the United States.

One of the metrics a manufacturer must test and include in the application is a vehicle’s road load force, a measure of the internal and external forces that cause a vehicle to lose speed, such as driveline friction and wind resistance.  The road load force can be calculated by performing a “coastdown” test on the vehicle.

A vehicle’s fuel economy depends, in part, on its road load force.  The complaint explains the relationship between road load force and greenhouse gas emissions as follows:

A vehicle with a low road load force has relatively higher fuel economy and emits lower amounts of greenhouse gases because the vehicle efficiently maintains its momentum.  Conversely, a vehicle with a higher road load force has lower fuel economy and emits more greenhouse gases because it needs to burn more fuel to counteract that road load force and maintain speed.

According to the complaint, Hyundai and Kia, which worked together on testing of the subject vehicles for the Certificate of Conformity applications, used improper testing procedures and analysis, including cherry-picking results, leading to inaccurately low reported road load forces:

Defendants improperly selected results from test runs that were aided by a tailwind rather than correctly using the results of test runs in both directions, Defendants selected favorable results from test runs rather than average the results from the larger set of tests, Defendants restricted their testing times to periods when the temperature allowed vehicles to coast farther and faster, and Defendants specially prepared vehicle tires for optimized test results.

As a result, the EPA’s investigation and audit testing determined that the actual road load forces for the tested vehicles were about 14-54% higher than the automakers provided in their applications for Certificates of Conformity.

Hyundai and Kia quickly settled with the DOJ and CARB.  Under the settlement, the automakers did not have to admit the truth of the allegations but will have to pay about $100 million, about $93.6 million to the DOJ and about $6.4 million to the CARB.  This is the largest penalty ever imposed under the Clean Air Act.

The car companies will also forfeit 4.75 million greenhouse emission credits – earned for building vehicle emissions under the legal limit – which they had previously claimed and are estimated to be worth over $200 million.

Sometimes it’s better – for the environment and for the bottom line – to conform.

In Eco-mark Examination USPTO Getting into Anti-Greenwashing

October 24th, 2014

A recent article in the the New York Law Journal caught my attention for an interesting development in examination of eco-mark applications in the U.S. Patent and Trademark Office (USPTO).  We’ve known for some time that marks containing terms such as “green,” “clean,” “eco-” or “enviro-” are very likely to be rejected as merely descriptive of environmentally friendly products or services.

In “Changing Climate for ‘Green’ Trademarks,” Robert Scheinfeld of the Baker Botts firm notes that the USPTO has very recently begun to reject eco-marks on the basis of deceptiveness.

This is almost the opposite of a descriptiveness rejection:  where a descriptive eco-mark immediately communicates to consumers the environmentally friendly nature of the goods or services, a deceptive eco-mark is one that signals environmentally friendly characteristics while the goods or services do not actually confer an environmental benefit.

The piece cites a 2013 decision by the USPTO Trademark Trial and Appeal Board (Board) as a case in point.  In re Kitaru Innovations Inc. involved an application to register the mark GREEN SEAL (shown above) for adhesive tape and tape dispensers.

The USPTO examining attorney refused registration on the ground that the mark was deceptively misdescriptive under Section 2(e)(1) of the Lanham Act and comprises deceptive matter under Section 2(a) in that it falsely and materially indicates that the applicant’s goods are environmentally friendly when, in fact, they are not.  The Board affirmed the refusal.

For deceptive misdescriptiveness under Section 2(e)(1), the Board’s starting point, by now a very familiar one, was that the word “‘green’ directly conveys information to potential consumers that the tape products are environmentally friendly.”

To be misdescriptive, a mark must be merely descriptive of a significant aspect of the goods which they could plausibly possess but in fact do not.  The Board concluded that the GREEN SEAL mark could be merely descriptive if the products were, indeed, green:

The two word composite term, “Green Seal,” would be merely descriptive if applicant’s goods were made of eco-friendly materials. Green would convey information about the environmental claims that the tape possessed, and a most important feature of adhesive tape or adhesive packaging tape is that it “seals,” or “tightly or completely closes or secures a thing.”  

Interestingly, but immaterial to the Board’s decision, the applicant made no claim that its products are eco-friendly.  Rather, the “Green Seal” mark is just one in a line of color-coded adhesive tape products that also includes “Black Seal,” “Blue Seal” and “Double Blue Seal.”

Nevertheless, the Board concluded that many of the affected consumers would be likely to believe that the term “Green” in the GREEN SEAL mark describes the adhesive tapes as being environmentally friendly.  The Board noted evidence of record showing that adhesive tape products in particular are increasingly the subject of environmentally friendly claims, and consumers would expect the applicant’s tape to be eco-friendly:

As seen above in the pages of blogs and advertisements from the Internet, an increasingly common feature of adhesive and packaging tape is that it is ecologically sound. Sometimes the focus is on how the tape deteriorates over time, and others times it has to do with the use of recycled materials. The term “Green” is frequently used to capture this idea. Accordingly, consumers encountering applicant’s mark with the term “Green” will likely understand the term in context to refer to the fact that this tape is an environmentally-friendly product.

To be deceptive matter under Section 2(a), the misdescription must be likely to affect the relevant consumers’ decision to purchase the products.  Here, the Board noted the “urgency” for consumers to recycle and purchase products made of recycled or biodegradable materials.  The evidence of record showed that there is a segment of purchasers that would be more inclined to buy eco-friendly adhesive tape products.

Accordingly, the Board concluded that the perceived green quality of the tape products would be likely to affect the purchasing decisions of relevant consumers:

The level of excitement on the part of consumers reflected above over the availability of environmentally friendly / green tape products demonstrates that this characteristic would be material to the decision of consumers to purchase applicant’s goods. Accordingly, we find on this record that such a misdescription is likely to affect the decision to purchase the goods, and the third and final prong of the Section 2(a) deceptiveness test has also been satisfied.

This is the first decision I’ve seen where an eco-mark was refused registration by the USPTO for being deceptively misdescriptive and/or deceptive matter.  It’s unclear whether or not this is actually a trend.  I plan to conduct some research on this topic and discuss my findings in this space.

What is clear, though, is that the USPTO has made an initial foray into the subject of greenwashing and has at least begun to use deceptive misdescriptiveness and deceptive matter as tools for combating the problem.

Burning Ring of Fire: Greenwashing Case Alleging Fried Solar Panels to Move Forward

October 6th, 2014

In February, three individuals filed a proposed class action lawsuit against BP Solar and Home Depot accusing the solar panel maker and retailer of greenwashing in connection with certain solar panels (see the complaint here).

Plaintiffs Michael Allagas, Arthur Ray, and Brett Mohrman alleged that there is a latent defect in the junction box of the BP solar panels that causes the box to fail and results in a total loss of functionality of the solar panels.

Specifically, the plaintiffs allege that the defect in the junction box and solder joints between connecting cables makes the solder joint overheat, which causes electrical arcing that generates temperatures of 2000-3000 degrees.  According to the plaintiffs, the heat melts the junction box, burns the cables and solar panels, and shatters the glass cover of the panels.

The plaintiffs also alleged that BP’s advertising and marketing materials about the solar panels are false or misleading.

While the northern California federal court hearing the case previously dismissed some of the plaintiffs’ claims, a recent decision denied BP and Home Depot’s motion to dismiss the remaining claims.

The court found the pleadings sufficient to support plaintiffs’ express warranty claims for breach of the express defect and power warranties because they stated that a latent defect existed at the time the product was sold and that they relied upon BP Solar’s power warranty in purchasing the solar panels.

Similarly, the implied warranty claims were held to be sufficient because plaintiffs clearly alleged a latent defect in the solar panels that renders them unmerchantable and unfit for their intended use.

With respect to the advertising and marketing materials, the plaintiffs cited various sweeping representations made by BP Solar, including:

Promises that the solar panels will “drastically reduce or eliminate your electric bills . . . forever,” and will “increase the value of your home.”

A statement that “No other system can operate at a higher level of safety than those offered by BP Solar.”

BP Solar also made some specific representations about the output and life of the solar panels, including product data sheets warranting 80% power output for a 25-year period and a 90% power output for a 12-year period with a 5-year warranty of materials and workmanship.

The court held that plaintiffs’ claims under the Consumer Legal Remedies Act could go forward because the statements include “factual representations” that could be “likely to deceive a reasonable consumer.”  The court concluded:

A reasonable consumer could have relied on these statements as descriptions of the quality and power capabilities of the solar panels.

The court maintained the plaintiffs’ fraud claims because they allege that BP knew of and concealed the defect:

The amended complaint also alleges BP’s knowledge of the latent defect in the solar panels, BP’s concealment of the defect, particular instances when information regarding the defect and risk of fire could have been revealed, and the warranties all three plaintiffs relied upon that failed to include the concealed information.

The court also denied the defendants’ motion to strike the class allegations, but left the door open for BP and Home Depot to contest those upon a subsequent motion by the plaintiffs for class certification.

More Greenwashing 2.0: Another Biofuels Credit Fraud Scheme Exposed

July 21st, 2014

In previous posts (e.g., here and here), I’ve discussed cases of fraudulent renewable energy credits and other environmental crimes and argued they ought to be considered greenwashing.

A recent indictment is another case in point.  The U.S. Department of Justice (DOJ) recently announced that a federal grand jury in Houston, Texas indicted an individual for allegedly selling fraudulent renewable identification numbers (RINs).

The indictment alleges that an individual using the name Philip Joseph Rivkin operated and controlled several Houston-based fuel companies including Green Diesel LLC, Fuel Streamers Inc. and Petro Constructors LLC.

The defendant allegedly claimed that Green Diesel produced millions of gallons of biodiesel at its Houston facility then generated and sold about 45 million RINs based on the claim.  However, according to the indictment, Green Diesel did not actually produce any biodiesel at its facility.  The defendant allegedly made millions of dollars selling the fraudulent RINs.

This type of fraudulent activity undermines the policy goal of RINs – to ensure a certain level of renewable fuel in U.S. gasoline – by damaging the market for valid RINs and ultimately reducing the actual volume of biofuels in circulation.

According to a spokesman for a biodiesel trade group quoted in this StarTribune article, the RIN scam has hurt the biofuels industry by making obligated parties more wary of purchasing the credits from biodiesel producers.

The fraud and resulting damage are recognizable when we view the putative RIN purchasers as green consumers, albeit commercial consumers instead of individuals, falling victim to false representations about the validity of renewable energy-based financial products.

In apparent recognition of the damage caused by fraudulent RINs, Biofuels Digest reported that the U.S. Environmental Protection Agency recently finalized additional regulations to ensure oversight of RIN generation and improve the RIN market.

As FTC Revises Rules for Fuel Economy Ads Green Guides Can Guide

May 8th, 2014

A piece published this week on Green Car Reports starts this way:

No one wants to buy a brand-new car, only to find out that its real-world fuel economy doesn’t match the numbers on the window sticker.

It struck me that this statement describes the plaintiffs in a number of greenwashing lawsuits filed (and covered in this space) over the last several years.  The suits against Ford, Hyundai and KiaToyota, and Honda are notable examples where the actual miles-per-gallon allegedly did not match the sticker and/or the advertising.

Turns out the Federal Trade Commission will be  revising its fuel-economy advertising guidelines and is seeking comments relating to ”information that helps marketers avoid deceptive or unfair claims,” among other things. Entitled the “Guide Concerning Fuel Economy Advertising for New Automobiles,” the guidelines were first issued in 1975.

One specific issue the FTC will consider is whether marketing material that makes a ”general fuel economy” claim should include a specific mile-per-gallon figure.  Another question is whether an ad that specifies the fuel-economy rating in one EPA category or lists a specific mpg rating without specifying the category is deceptive.

For anyone familiar with the FTC’s Green Guides, these questions will be very familiar.  The Guides for the Use of Environmental Marketing Claims were first published by the FTC in 1992 and have undergone at least three revisions, most recently in 2012.

The Green Guides states that claims of general environmental benefits are deceptive:

It is deceptive to misrepresent, directly or by implication, that a product, package or service offers a general environmental benefit.

Why?  Because, the guides explain:

Unqualified general environmental benefit claims are difficult to interpret and likely to convey a wide range of meanings.  In many cases, such claims likely convey that the product, package, or service has specific and far-reaching environmental benefits and may convey that the item or service has no negative environmental impact.  Because it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims, marketers should not make unqualified general environmental benefit claims.

It would be logical, I think, to extend this rule and its rationale to general fuel economy claims.  Fuel economy ratings fall into different categories.  They can be broken down into city and highway driving, for example, and many factors, such as how the car is tested, can determine the results.

Also, the Green Guides provide that marketing statements about recycling, for example, must specify exactly what percentage and which element of the product (the product itself, the packaging, or both) is recyclable or made from recycled material.

This required granularity should lend itself to rules that marketing statements about fuel economy benefits need to specify, among other things, the EPA category being touted.

Of course it was inevitable that regulators in particular fields would contemplate promulgating or revising their rules to take into account deceptive environmental marketing claims.  They are fortunate to have the Green Guides to guide them.

 

 

The Top Green IP Stories of 2013

January 13th, 2014

Before we turn to new green IP issues as they unfold in 2014, here is a look back at some of the top stories from 2013.

 

No. 7:  Green Patent PR

Clean tech is competitive, and PR is one of the tools used to stand out in a competitive industry.  But who would have thought PR around green patents could be so prevalent and contentious?  After DuPont sued Heraeus for alleged infringement of a patent directed to solar paste, the chemical giant put out a press release about filing the suit and the problem of IP theft in clean tech.

Heraeus counterclaimed for unfair competition and later threatened a separate lawsuit over the press release.  DuPont then filed a declaratory judgment action asking an Oregon federal court to declare that the company’s press release and customer letters about its patent infringement suit against Heraeus do not violate unfair competition laws.

My research indicates that clean tech companies engage in a substantial amount of PR around patent matters, with the clean tech industry generating the fifth highest number of patent-focused press releases.  DuPont’s disputed press release notwithstanding, the vast majority of clean tech industry press releases relate to patent prosecution.

 

No. 6:  Boston University Leads LED Lit

LED patent litigation continued to grow in 2013.  Leading the way this past year was the Trustees of Boston University, which sued dozens of defendants including AU Optronics, BlackBerry Corporation, Dell, Fujifilm, HTC, Eastman Kodak, Olympus, Sharp, and Sony.

The patent in these suits is U.S. Patent No. 5,686,738, entitled “Highly insulated monocrystalline gallium nitride thin films” and directed to gallium nitride semiconductor devices and methods of preparing highly insulating GaN single crystal films in a molecular beam epitaxial growth chamber.

 

No. 5:  Criminalizing Greenwashing 2.0

As discussed in this space, a new greenwashing paradigm has emerged where cases are brought by or on behalf of commercial consumers and involve B-to-B communications and misrepresentations (as opposed to advertising of consumer products directed to individual consumers).

In 2013 we began to see a new species of greenwashing 2.0 case:  criminal actions brought by governmental authorities for environmental crimes and fraud (see, e.g., here and here).

In one case a Colorado company called Executive Recycling and some of its officers were sentenced to imprisonment and fines for falsely representing that the company would dispose of all electronic waste (mostly cathode ray tubes) in an environmentally friendly manner in the United States when it instead sold the electronic waste it received to brokers for export overseas to China and other countries.

In another, the feds prosecuted companies for allegedly generating and selling fraudulent Renewable Energy Credits (RINs), and Cargill separately brought a civil action involving similar allegations.

 

No. 4:  Sinovel Faces Criminal Indictment in US

The AMSC- Sinovel copyright and trade secret dispute involving wind turbine control systems was big news in 2012, but legally speaking, mostly civil.

That changed in 2013 when the U.S. Department of Justice filed an indictment in federal court in Wisconsin alleging that Sinovel, two of its employees, and a former AMSC employee conspired to commit trade secret theft and criminal copyright infringement.

The indictment said the purpose of the alleged conspiracy was to illegally obtain proprietary source code, software, equipment designs and technical drawings relating to AMSC’s wind turbine control systems., thereby cheating AMSC out of more than $800,000,000.

 

No. 3:  Greenwashing Costs LED Maker $21 Million

In an indication of how seriously the American justice system may now be taking greenwashing, a Los Angeles federal court enjoined LED maker Lights of America (LOA) and ordered the company to pay $21,165,863.47.

This followed a decision holding that LOA violated Section 5 of the FTC Act by making false claims about LED lamps replacing certain wattage incandescent lamps and about the lifetime of the company’s LED lamps.

The case was brought by the FTC, America’s competition and consumer watchdog agency.  The FTC was to receive the $21 million, and the court directed the FTC to deposit the money into a redress fund to be used for consumer redress.

 

No 2:  Burgeoning Biofuels Battles

While The Gevo-Butamax litigation was a major story of 2012, notable both for its size and as the first foray of big oil into biofuels patent suits, biofuels patent litigation in general makes the 2013 list.

Not only did Gevo and Butamax continue their “patent war over who can make biobutanol,” with big decisions starting to come down, but Danish enzyme maker Novozymes also was active in the courts, Danisco scored a big summary judgment win against Novozymes, GreenShift expanded its ethanol production patent enforcement campaign, and Neste’s biodiesel patent suits changed direction with the court staying the suits pending reexamination of the asserted patents.

 

No. 1:  Solar Patent Surge

Since the start of green patent history (admittedly a very brief era in the cosmic scheme of things), as recorded by the Clean Energy Patent Growth Index (CEPGI), fuel cells dominated other technologies and perennially led the green patent rankings.

That changed in 2013.  In its first-quarter report the CEPGI noted that the 217 solar patents granted were just one behind fuel cells’ 218, “the smallest differential on record [suggesting] that Solar patents are poised to pass Fuel Cell patents.”

As predicted, the Q2 report showed solar patents beating out fuel cell patents for the first time, surging ahead with 246 solar patents granted in the second quarter, with fuel cell patents in second place at 209.

According to CEPGI, “Solar patents’ quarterly win makes clear that innovation in this sector continues at a rapid pace despite the failures and consolidations of solar firms across that board that dominate cleantech media reports.”

 

Correction:  The e-alerts for the previous post announcing the opening of Green Patent Law indicated that they were sent from my old email address.  I think that problem has been corrected.  My new email address is elane@greenpatentlaw.com. 

 

 

 

 

Does Use of a Certification Mark Constitute an Express Warranty?

November 26th, 2013

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Unlike ordinary trademarks, which indicate the commercial source of a product, certification marks communicate to the consumer that the products to which they are affixed meet certain manufacturing or quality standards.

One question that flows from this quality communication function is whether a manufacturer that affixes a certification mark to a product, by doing so, expressly warrants that the product meets the standards signaled by the certification mark.

This legal issue has begun to split the courts in the context of the Energy Star certification program for energy efficient appliances.  In the last year or so, an Ohio federal court dismissed a plaintiff’s express warranty claim based on affixation of the ENERGY STAR logo to a washing machine while a California federal court allowed a similar claim involving refrigerators to move forward.

The defendant was Whirlpool in both cases.  In the Ohio case, Savett v Whirlpool Corporation, the defendant moved to dismiss all of plaintiff’s claims, including a breach of express warranty.

The court granted Whirlpool’s motion on that claim because it found the ENERGY STAR logo does not in itself affirm any fact or promise:

[T]he Court finds that plaintiff fails to allege the existence of an express warranty because use of the ENERGY STAR logo is not an “affirmation of fact or promise” as alleged in this case . . . . the logo itself contains no assertion of fact or promise.  Unlike traditional express warranties where unambiguous promises or factual assertions are made, which are clearly understood on their own footing, any meaning conveyed by the logo requires independent knowledge.

The court also noted the lack of any precedent “in which a logo has . . . been held to constitute an express warranty.”

Contrast that with Dei Rossi v. Whirlpool Corporation, decided by the U.S. District Court for the Eastern District of California.  This case, discussed in a recent post, came out the other way.

The California court denied Whirlpool’s motion to dismiss the express warranty claim, holding that it was satisfied by affixation of the ENERGY STAR certification mark to the refrigerators.  This act by Whirlpool conferred a specific and express warranty because it communicated that the products met the Energy Star requirements:

Although Defendant alleges that this logo does not confer a specific and express warranty, Defendant does not provide any reason for affixing this logo to the product other than to signify that the product meets the Energy Star specifications.  Simply put, the Court cannot fathom any other reason for affixing the logo in such a manner. . . if Defendant’s intention was simply to signify that the product was energy efficient, it could have done so without affixing the Energy Star certification logo.  Thus, the Court finds that affixing this logo to the product satisfies the definition of an express warranty . . .

The court further found that the Plaintiffs adequately pleaded the exact terms of the warranty because the complaint noted that the Energy Star certification required the refrigerators to be at least 20% more efficient than minimum standard models.

Which is the better answer to this legal conundrum?  We may find some guidance by attempting to reconcile the conflicting results in these two cases.

It should be noted initially that we can’t reconcile these decisions based on any differences in the express warranty statutes in Ohio and California; the salient provision in each state is identical:

Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

One key factual difference is that the Ohio plaintiff apparently did not see the ENERGY STAR logo on the product or understand its meaning.  The Ohio court noted this in footnote 8 of its decision, stating it is notable that “plaintiff does not allege that he saw or understood any purported meaning of the logo.”

The California court did in fact distinguish its decision, at least in part, on this basis:

[U]nlike the plaintiff in Savett, in the instant case Plaintiffs have alleged that they independently understood the meaning of the logo and relied on it in deciding to purchase the products.

Ultimately, however, where a court comes out on this issue seems to depend on whether it attaches more importance to the motive of the manufacturer or the motive of the consumer.  That is, the California court found the manufacturer’s intention in affixing the ENERGY STAR logo to the product was to communicate that it meets the Energy Star specifications.

The Ohio court, by contrast, seemed swayed by the knowledge and purpose of the consumer, noting that “any meaning conveyed by the logo requires independent knowledge,” which the plaintiff in the suit notably lacked.

To be sure, there are a number of other causes of action consumers can bring against manufacturers that don’t satisfy green certification standards as advertised.  Nevertheless, I’m sure we’ll see more case law on this issue as green certification marks continue to proliferate and influence the purchasing decisions of environmentally conscious consumers.