IP Report
Unfair Competition Law

The "klimaneutral" decision of the German Federal Court ofJustice dated June 27, 2024, and its impact on advertisingwith climate neutrality
Reported by Dr. Philipe Kutschke and Dr. Jan Lersch
On June 27, 2024, the German Federal Court of Justice handed down its “klimaneutral” (“climate neutral”) judgment, which had been eagerly awaited bysome (docket no. I ZR 98/23). This judgment is one of a series of decisions andthe first supreme-court ruling on “climate-neutral fruit gums” to be added tothe case law of the lower courts relating to “climate-neutral meat products”(Regional Court of Oldenburg, 15 O 1469/21), “climate-neutral jam” (HigherRegional Court of Düsseldorf, 20 U 72/22), and “climate-neutral garbage bags”(Higher Regional Court of Schleswig, 6 U 46/21). Even though the clarification
now provided by the supreme court offers companies the opportunity to bringmore clarity to the question of whether advertising using the term “climate neutral” is admissible, some questions still remain unanswered. This applies notleast to cases in which entire companies, rather than specific products, claim tobe climate neutral.

1. Facts
The subject of the decision is an advertisement for sweets published by the Defendantin the print edition of the Lebensmittel
Zeitung on February 19, 2021, which was
headlined with the statement “K* schmeckt
auch unserem Klima” (“K* has a good taste
for our climate too”). Directly below this,in slightly smaller font, was the sentence„Seit 2021 produziert K* alle Produkte
klimaneutral. Jetzt auch gut sichtbar auf
jedem Beutel!” (“Since 2021, K* has been
producing all products climate-neutrally.
Now also clearly visible on every bag!”) and alabel with the terms “klimaneutral” (“climateneutral”) and “Produkt” (“product”).
In addition, the QR code printed there
also provided access to a website withfurther information on the claimed climate

neutrality. This website was operated by a“environmental certifier”, i.e. a company thatdraws up carbon footprints for companies,works out possible improvements and, ifnecessary, ensures that carbon emissions areoffset via “climate protection projects”.

Dr. Philipe Kutschke
Attorney-at-Law, Certified IPLawyer, Commercial Mediator(MuCDR), Partner

Dr. Jan Lersch
Attorney-at-Law

2. The decisions of the lower courts
Both the Regional Court of Kleve (8 O 44/21)
and the Higher Regional Court of Düsseldorf(20 U 152/22) considered the advertisingin question to be permissible under unfair
competition law. However, the reasons weredifferent:

BARDEHLE PAGENBERG
Partnerschaft mbB
Patentanwälte Rechtsanwälte
Prinzregentenplatz 781675 München
T +49.(0)89.928 05-0

The Regional Court of Kleve ruled that theuse of the term “klimaneutral” in advertising
aimed at a specialist audience is not misleading, even without explanatory information. The Court argues that the specialist

F +49.(0)89.928 05-444
info@bardehle.dewww.bardehle.com
ISO 9001 certified

IP Report
Unfair Competition Law

audience at which the Lebensmittel Zeitungis aimed was aware that climate neutrality
can also be achieved through compensation,
so that there was no misleading practiceunder Sec. 5 German Act Against Unfair
Competition (UWG) in its old version. TheRegional Court also found that there wasno withholding of essential information andtherefore no misleading omission pursuant
to Sec. 5a (1) UWG (old version). It wassufficient for the specialist audience that thewebsite of the environmental certifier could
be accessed via the URL provided in theadvertisement and that further information
was available there.
The Higher Regional Court of Düsseldorf, on
the other hand, referred to the fact that not
only a false statement can fulfill the requirements of Sec. 5 (1) UWG (i.e. misleading byactive practice), but also a statement that
leads the target public to an understandingthat does not correspond to the actual circumstances. Contrary to what the Regional
Court of Kleve had assumed, the Higher
Regional Court reasoned that the relevantpublic is not a specialist audience, but areasonably observant average consumer.
The Court further argued that the experts
addressed by the Lebensmittel Zeitung havesuch a “range” that it was far-fetched that
their understanding would differ from that ofthe average consumer. However, the average
consumer would also be aware that “climateneutrality” could be achieved through both
avoidance and compensation measures.
Cooperation with a “climate partner” also
indicates, in the Court’s opinion, that there
is a compensation. According to the Higher
Regional Court, the indication “klimaneutral” therefore does not lead to an understanding which does not correspond to theactual circumstances.

The Higher Regional Court also examined
whether the advertising constituted amisleading omission, Sec. 5a (2) UWG (oldversion). First of all, it confirmed that theinformation on how climate neutrality isachieved (i.e. through reduction or compensation) is essential information. Climate protection is an increasingly important topic forconsumers, not only dominating the news,
but also everyday life. The Higher Regional
Court of Düsseldorf argued that advertising
a company or its products as supposedly
climate neutral could have a considerable
influence. Consumers also have an interestin being informed about how the claimed
climate neutrality is achieved. According to
the judgment, it therefore has to be disclosed
whether the claimed climate neutrality isachieved through reduction or compensation,
and whether certain emissions are excluded
from carbon accounting.
The advertising at issue was found tohave met these requirements. The Higher
Regional Court ruled that—against thebackground of the spatial limitations of thechosen means of communication (Sec. 5a(3) UWG)—the provision of the necessary
information by indicating a URL or a QR
code is sufficient.
3. The decision of the German Federal
Court of Justice
Following the Plaintiff’s appeal on points oflaw, the judgment of the Higher Regional
Court of Düsseldorf dated July 6, 2023, wasreversed and the judgment of the Regional
Court of Kleve dated June 22, 2022, wasamended. The German Federal Court of Justice prohibits the Defendant from advertisingwith the statement “Seit 2021 produziert K*
alle Produkte klimaneutral” and/or with the2IP Report
Unfair Competition Lawlabel containing the terms “klimaneutral”
and “Produkt” in the context of the advertisement at issue.
However, the German Federal Court of Justice only ruled on the question of whether theadvertising was actively misleading pursuant
to Sec. 5 UWG. It did not decide on the question of whether there was also a misleadingomission, Sec. 5a (2) UWG (old version).
First of all, the German Federal Court ofJustice clarifies that special legal standards
also apply to the assessment of environmentally-related advertising claims—justas they do to health-related claims. Even at
the end of the 1980s, the Senate assumed
that the public prefers goods and services
that refer to a particular environmental
sustainability. According to the Senate, thisis a consequence of the general recognition of
the environment as a valuable asset in needof protection. In the opinion of the German
Federal Court of Justice, advertising measures relating to environmental protection
also especially address emotional spheres,
although the general public usually has only
a low level of factual knowledge about thescientific correlations and interactions.
Since there is an increased need for information about the meaning and content of theterms and symbols used, strict requirements
must be placed on the necessary explanatory

information. They are determined on a caseby-case basis according to the type of productand the degree and extent of the “environmental friendliness” being advertised. If theexplanatory information required accordingly
is missing from the advertisement or is notclearly and visibly highlighted, there is aparticularly high risk that the targeted public
will be misled about the nature of the productbeing offered and will thus be influenced intheir purchasing decision.
It is true that the German Federal Court ofJustice confirms that the term “klimaneutral” can in principle be understood to mean
both that carbon emissions are avoided andthat carbon emissions are offset. However,
if a term is ambiguous, the advertising itself
must clearly and unambiguously explain
which meaning is relevant. In case of the term
“klimaneutral”, one reason for this is that
reduction and compensation are not equivalent measures for achieving climate neutrality.
The explanatory information on the environmental certifier’s website was not deemedsufficient by the Court. Information which isprovided separately from the advertisement
itself and which consumers have to find out
for themselves is not sufficient. However,the German Federal Court of Justice did not
answer the question of whether the linked
website was even capable of providing consumers with sufficient information.

Assessment, open questions and outlook
The German Federal Court’s decision now
provides a little more clarity on the circumstances under which advertising products as“klimaneutral” is not admissible. This does

not, however, allow any direct conclusions
to be drawn as to the circumstances underwhich “climate neutral” advertising would beadmissible.

3

IP Report
Unfair Competition Law

Unsurprisingly, the German Federal Courtof Justice continues its case law that strict
requirements must be placed on the fairnessof environmental advertising. This view had
already been taken in some of the decisionsof the lower courts (see, for example, Higher
Regional Court of Schleswig, 6 U 46/21
marginal no. 22 – Klimaneutrale MüllbeutelII). The German Federal Court of Justice’s
statement that the term “klimaneutral” canbe understood both as avoiding carbon emissions and in the sense of balancing the company’s carbon emissions is also not new (asalready held by the Higher Regional Courtof Schleswig, 6 U 46/21 marginal nos. 26 etseq. – Klimaneutrale Müllbeutel II; HigherRegional Court of Frankfurt am Main, 6 U
104/22, marginal no. 29 – Klimaneutral).
What is new is that the assessment of theadmissibility of such advertising is based
solely on Sec. 5 (1), (2) No. 1 UWG. This is significant because in the case of a misleadingomission (Sec. 5a UWG), the limitations ofspace imposed by the communication meanschosen for the advertising must be taken into
account, but not when assessing active misleading practices in accordance with Sec. 5UWG. Irrespective of this, companies should
assume that strict requirements will always
be placed on the admissibility of environmental advertising. One of the consequencesof this is that if an ambiguous term is usedin advertising, its intended meaning must be
explained in the advertisement itself.
Overall, this decision by the German Federal
Court of Justice unfortunately provides only
limited clarity regarding the admissibilityof using the term “klimaneutral” for advertising purposes, especially when it comes tothe supposed climate neutrality of an entirecompany.

It is still unclear which specific requirements
have to be met to ensure that the advertisingitself provides sufficient information. Thismay be relatively straightforward in the caseof a one-page print advertisement, which
was the subject of the controversy at hand,but it is likely to be more difficult to answer
in the case of more extensive advertisingmeasures, e.g. multi-page advertisements,
promotional videos, or audio advertising.
The advertising medium also plays a role
here: Is the information in a multi-pagebrochure still provided in the advertisement
if it is provided at the end of the brochure? Is
the information in an Internet advertisement
still included in the advertisement if theinformation is provided on another specifically linked website, albeit with a different
sub-domain or third-party domain? What if
other content is shown between the “climateneutral” statement and the explanation of
how climate neutrality is achieved on theweb page in question, so that there is a lotof space between the advertising slogan andthe explanatory information? We will have to
wait for further case law to be issued on all ofthese questions.
Companies should also keep an eye on
further developments regarding the “Directive on empowering consumers for the green
transition through better protection against
unfair practices and through better information” (EU) 2024/825), or “EmpCo” for short.
One of its aims is to ban general environmental claims such as “environmentallyfriendly”, “eco-friendly”, “green”, “ecological”,“climate-friendly” or similar claims where
no recognized outstanding environmental
performance can be demonstrated. Recital
9 of the Directive refers to the “specification of the environmental claim [...] on thesame medium” and specifies this as “such4IP Report
Unfair Competition Law

as the same advertising spot, the product’spackaging or online selling interface”.
The EmpCo Directive came into force onMarch 26, 2024, but has yet to be transposed
into national law by the EU member states.
The deadline for transposition is not until
March 27, 2026.

Additionally, there is another European
Union directive waiting in the wings: the“Green Claims Directive”.
For the time being, it therefore remains
largely unclear under which precise conditions advertising with green claims will begiven the green light.

5