– Draeke Weseman, Weseman Law Office, PLLC
A benefit corporation is the term used when a company is created under corporate law and should not be confused with a “B Corp,” which refers to a company that is certified by B Lab to meet specific standards for social and environmental performance.
Why Consider a Benefit Corporation? Doug Bend and Alex King, Forbes.com (May 30, 2014)
Starting on January 1, 2015, Minnesota businesses will have the option to incorporate in Minnesota as benefit corporations, a new type of for-profit entity that commits to pursue social goals. More than half of the states in the United States have enacted some type of legislation allowing for benefit corporations (Maryland was the first in 2010).
Benefit corporations arose in response to the growing demand for socially conscious businesses. The group largely responsible for the benefit corporation movement is B Lab, a 501(c)(3) non-profit formed in 2007 that evaluates and certifies businesses according to a stakeholder and environmental impact scorecard, while also acting as a public promoter and supporter of such businesses.
B Lab (through B Lab IP, LLC) owns several trademark registrations or pending applications for benefit corporation related marks, including the following:
On its website, B Lab describes its role as follows: “B Corps are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Today there is a growing community of over 1,000 Certified B Corps . . . .”
Despite this clear statement about B Corps and the certification provided by B Lab, no trademark applications or registrations exist for the truncated marks “B Corp” or “B Corps,” or for the certification mark “Certified B Corps.” Instead, the marks registered by B Lab are service marks applied to “association services,” business “testing, analysis, and evaluation,” and “quality assurance” services.
This is surprising because both B Lab and the companies adopting the B Corp certification routinely use variations on the B Lab marks while mentioning certification. For example, below is a screenshot from the B Lab home page, followed by a screenshot from Patagonia’s website, both using the truncated B Corp mark and both prominently using the unregistered “Certified B Corporation” mark:
Below the fold on its website, Patagonia explains its benefit corporation status as follows:
B Lab is a nonprofit organization based in Pennsylvania that certifies B Corporations, in the way TransFair certifies Fair Trade coffee or USGBC certifies LEED buildings. The B stands for “benefit,” and refers to benefiting workers, the community and the environment. Patagonia was the first California company to sign up for B certification, in January, 2012, joining over 500 certified B Corporations in 60 different industries. To qualify as a B Corp, a firm must have an explicit social or environmental mission, and a legally binding fiduciary responsibility to take into account the interests of workers, the community and the environment as well as its shareholders. . . . ‘Patagonia is trying to build a company that could last 100 years,’ said founder Yvon Chouinard on the day Patagonia signed up. ‘Benefit corporation legislation creates the legal framework to enable mission-driven companies like Patagonia to stay mission-driven . . . .’
Compare that image and text with the following, taken from the website of another certified B Corporation, Method:
In the copy below this image on Method’s website, Method states that “being a b corporation allows method to build [a socially conscious] ethos into the legal backbone of the company so that those values will never be compromised.”
These examples reveal some potentially serious trademark issues arising from the use and non-use of the B Lab marks.
In the B Lab example, B Lab appears to have adopted widespread use of the truncated forms of its registered marks and is using the unregistered “Certified B Corporation” mark on its home page, instead of its registered “B Corporation” mark.
In the Patagonia example, Patagonia is using the same unregistered “Certified B Corporation” mark that appears on B Lab’s website, calling it “B certification” in the copy without a trademark symbol and invoking the dreaded D-word, describing “B” as meaning “benefit” and identify the quality of “benefiting” various stakeholders, all while blurring the relationship between B Corporation certification and benefit corporation legislation.
Lastly, in the Method example, Method is using the registered “B Corporation” design mark with no reference to certification, and using “b corporation” in the copy without any trademark symbol. And, like Patagonia, Method refers to the relationship between its B Corporation status and a “legal backbone” for the company, also blurring the relationship between B Corporation certification and benefit corporation legislation.
It seems B Labs and the benefit corporation movement would benefit from some good housekeeping.
Trademark types, if you were advising B Labs, would you be concerned? If the term “benefit corporation” is generic for socially conscious corporations, what concerns do you have about the registered “B Corporation” standard character mark? Is B Lab at risk of having “b corporation” join “benefit corporation” as merely just another invented generic term?
Furthermore, how would you strengthen and add clarity to B Lab’s trademark portfolio? Would you recommend a certification mark? Note that the T.M.E.P. is very clear about the distinctions between trademarks and certification marks:
Trademarks or service marks and certification marks are different and distinct types of marks, which serve different purposes. A trademark or service mark is used by the owner of the mark on his or her goods or services, whereas a certification mark is used by persons other than the owner of the mark. A certification mark does not distinguish between producers, but represents a certification regarding some characteristic that is common to the goods or services of many persons. Using the same mark for two contradictory purposes would result in confusion and uncertainty about the meaning of the mark and would invalidate the mark for either purpose.
T.M.E.P. § 1306.05(a) (bold emphasis added).
Should B Lab be more careful about using the “Certified B Corporation” logo on the homepage header of its own website? Should it be concerned when the registered B Corporation mark is used by benefit corporations, rather than the unregistered “Certified B Corporation” mark? How are the more than 1,000 Certified B Corporation companies supposed to know what to do? Would you also recommend increased diligence in monitoring use of the B Lab marks, and educating Certified B Corporations about correct usage?
Marketing types, how attractive is the Certified B Corporation mark for building recognition as a socially conscious business? Does it matter that companies like Patagonia, Etsy, Seventh Generation, Method, and Sunrise Banks have adopted the B Lab certification? Do you think the level of corporate commitment required to get certified will prevent greenwashing?
And, finally, if you are interested in learning more about benefit corporations, consider joining me for an event I will be hosting at CoCo Minneapolis, on Monday, November 3, 2014 at 7:00 PM. Tickets are free thanks to sponsorship from Google for Entrepreneurs, but registration is limited to 50 people!