Cleaning Up With Trade Secrets Under California’s Right to Know Act
By: Jonathan Kepko
Companies who make cleaning products sold in California should take note of a new law coming into effect on January 1, 2020, especially if their products are made from proprietary formulas or include ingredient mixtures that may qualify as company trade secrets.
In 2017, the California legislature passed SB 258, known as the California Cleaning Product Right to Know Act. The law was created to protect consumers from unknowing exposure to chemicals that the legislature considered potentially harmful by requiring that all intentionally added chemicals within the designated products be listed either on the product label or the manufacturer’s website by January 1, 2020.
Recognizing that many companies derive economic value from intentionally added ingredients considered to be “confidential business information,” (i.e. protected under California’s Uniform Trade Secrets Act because the information is valuable due to being kept secret, not generally known, and subject to reasonable measures to keep it secret), the legislature provided for a series of protections for manufacturers and suppliers of the designated products to protect such economically beneficial “confidential business information.”
Specifically, the Act provides that if an intentionally added ingredient does not fall under two broad, and one specific, categories of intentionally added ingredients that require disclosure, manufacturers and suppliers do not have to list the intentionally added ingredient if it is considered “confidential business information.” These categories include the following:
- California’s “designated list” – this list contains 22 specifically defined chemicals detailed in Section 108950(g) which range from “Chemicals known to the State of California to cause cancer or reproductive toxicity that are listed pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986” to “Chemicals that are identified on Part A of the list of Chemicals for Priority Action prepared by the Oslo and Paris Conventions for the Protection of the Marine Environment of the North-East Atlantic”;
- “Nonfunctional constituents” that also may not be considered “confidential business information” for the purposes of labeling; and
- Ingredients which are not included within either the “designated list,” considered to be a “nonfunctional constituent”, or included as a fragrance allergen at a concentration above 0.01%, then the Code allows for it to be left off the labeling of the product, as long as the manufacturer or supplier treats the intentionally added ingredient as a trade secret as defined by the California Uniform Trade Secrets Act.
Further, if the intentionally added ingredient does fall within one of the designated categories of intentionally added ingredients that require disclosure, the Act allows disclosure under a generic name without indicating the amount of the ingredient actually contained within the product. It is therefore necessary that those with knowledge of the chemical composition of such intentionally added ingredients be aware of and understand the contours of those required categories of the Act in order to determine whether the ingredients must be listed on product labeling.
Compliance with the California Cleaning Product Right to Know Act of 2017 will require evaluation of the intentionally added ingredient(s) seeking to be protected by those with knowledge of the chemical composition to determine whether it is covered by the designated exclusionary categories, along with an attorney review of the proposed labeling to ensure compliance with the Code. To ensure compliance and protect their trade secrets, companies whose products may come within the mandates of this law should evaluate its complex provisions with counsel.