Steve McDaniel, Technology Litigators09.21.15
Regulations, regulations, and more regulations. Though we don’t claim to be experts in untangling and reading government red tape, we’ve done so now and then to keep up to date in our business dealings. And part of that is drafting and editing “Safety Data Sheets,” (SDS), a recently replacement for Material Safety Data Sheets, required by the Occupational Safety and Health Administration (OSHA). OSHA’s mandated SDSs are to be provided by chemical importers, distributors, and manufacturers regarding potentially harmful workplace materials to downstream users of the materials. Ready access to SDSs for employees is a must when handling your materials. One question that arises: Is how do we disclose what is needed for safe use of your paint and coating materials on an SDS while maintaining the secrecy of trade secrets?
Appendix E of section 1910.1200 of U.S Code of Federal Regulations (CFR) describes that a trade secret includes any formula, chemical compound, process of manufacturing, a pattern for a machine/device, a list of customers, a process for treating or preserving a material that gives an opportunity for advantage over competitors. Other things that can qualify include ongoing processes related to the business such as formula/machine(s) used in production, sales of goods, codes for determining discounts/rebates/concession in a catalogue/price lists, methods of office management/bookkeeping, and specialized lists of customers. Information related to ephemeral or single events are generally excluded. The criteria for “secrecy” used by OSHA to maintain a trade secret status as such is generally the same as previously discussed in this article series.
Section 3, of an SDS, which describes composition information on ingredients, is the place that you going to have problems with maintaining your trade secrets confidentiality. You must provide information on each substance’s chemical name, common name and synonyms, CAS no. and other unique identifiers; impurities and stabilizing additives; and the concentration or concentration range of each chemical in a mixture. Under CFR 1910.1200 a claim of trade secret may be made to withhold the specific chemical identity or the exact percentage-concentration of a substance in a mixture. But, the claim of the information being a trade secret must be supported, the SDS discloses the “properties and effects of the hazardous chemical,” and the SDS indicates that the withheld information is a trade secret. But Appendix D clarifies that “indicates” actually means “a statement that the specific chemical identity and/or exact percentage has been withheld as a trade secret.” Also of note, this section of the code clarifies that “nothing in this paragraph shall be construed as requiring the disclosure under any circumstances of process information which is a trade secret,” so the issues seem confined to chemical identity and/or concentration. In looking around for non-chemically identifying names that can be used, the term “trade secret ingredient” or “proprietary ingredient” seems acceptable.
Because the major purpose of a SDS is to provide guidance as to how to handle a hazardous material, and what to do medically, the lack of details on a hazardous trade secret material may be frustrating to medical professional. So, section 1910.1200(i)(iv)-(i)(2) specifies that the specific chemical identity and percentage “is made available to health professionals, employees, and designated representatives” when a “treating physician or nurse determines that a medical emergency exists and the specific chemical identity and/or specific percentage of composition of a hazardous chemical is necessary for emergency or first-aid treatment, the chemical manufacturer, importer, or employer shall immediately disclose the specific chemical identity or percentage composition of a trade secret chemical to that treating physician or nurse, regardless of the existence of a written statement of need or a confidentiality agreement.”
However, if the SDS lists a trade secret material that is very benign, then we can see scenarios where the treating physician or nurse will probably not hit the panic button and force the information out of you. Also, as “soon as circumstances permit” the trade secret holder “may require a written statement of need and confidentiality agreement….” OSHA publication 3084 perhaps clarified this situation by stating that “further disclosure of the trade secret can be effectively controlled” by the trade secret holder demanding “a written statement of need and a confidentiality agreement to be completed after the emergency is abated.”
Paragraph (i)(3) of section 1910.1200 addresses a non-panic situation, where a whole bunch of people can ask for your trade secret information for numerous health related reasons.
Specifically, the trade secret holder “shall, upon request disclose … to a health professional providing medical or other occupational health services to exposed employee(s), and to employees or designated representatives, if: the request is in writing” and “the request describes in reasonable detail” an occupational health need for the information. The possible occupational health needs include: “to assess the hazards of the chemicals to which employees will be exposed; to conduct or assess sampling of the workplace atmosphere to determine employee exposure levels; to conduct per-assignment or periodic medical surveillance of exposed employees; to provide medical treatment to exposed employees; to select or assess appropriate personal protective equipment for exposed employees; to design or assess engineering controls or other protective measures for exposed employees; and, to conduct studies to determine the health effects of exposure.” Finally, the request must explain “in detail why the disclosure of the specific chemical identity or percentage composition is essential and that …” the disclosure of alternative information including “the properties and effects of the chemical; measures for controlling exposure to the chemical; methods of monitoring and analyzing worker exposures to the chemical; and methods of diagnosing and treating harmful exposures to the chemical” would not be satisfactory for the purposes of the occupational health need.
The written request must also include “a description of procedures to be used to maintain the confidentiality of the disclosed information” and “agree in a written confidentiality agreement that the health professional, employee, or designated representative, will not use the trade secret information for any purpose other than the health need(s) asserted and agree not to release the information under any circumstance other to” OSHA. We have previously discussed that disclosure of a trade secret to any federal government agency creates more opportunities of additional disclosures that can result in you losing your trade secret, so this is a situation you want to avoid. So, when can the “health professional, employee, or designated representative” make a disclosure of your trade secret to OSHA. We have not yet found a definition of what the criteria is for deciding there is a need to disclose to OSHA, so we are assuming that there is a wide latitude. But, because the regulations state the receiver of the trade secret “shall” inform the person who conveyed the trade secret (you) prior to or at the same time as the disclosure to OSHA. Additionally, you can stipulate in the confidentiality agreement that the receiver can disclose the information to other parties on terms of your choosing. We opt for no disclosure.
Paragraph (i)(4) of section 1910.1200 addresses the confidentially agreement. The agreement may limit the information’s use to the “health purposes indicated in the written statement of need” and “provide for the appropriate legal remedies in the event of breach of the agreement, including a reasonable pre-estimate of the likely damages,” but “may not include requirements for the posting of a penalty bond.” These requirements of this sub-section don’t prevent the “parties from pursuing non-contractual remedies to the extent permitted by law.” At this point, you should see that long before you get one of these requests, you will want to have your legal team calculate potential damages, and draft the default provisions of the confidentiality agreement accordingly, as well as contemplate strategies in advance for non-contractual solutions if things get heated.
You do have some room to argue about how and if the trade secret is disclosed based on these standards of a non-crisis situation. A denial to the request must be in writing, and “provided” to the requester within “30 days of the request.” Of course, the requester has an appeal process to the denial. First, the request and denial must be submitted to OSHA for review. OSHA will evaluate whether the denier has supported the claim that the information is a trade secret, and that the requester supported both the claim that there is a medical or occupational health need for the information and demonstrated adequate means to protect the confidentially. If OSHA determines that the specific chemical identity or percentage composition is not a trade secret, then the “chemical manufacturer, importer, or employer will be subject to citation” by OSHA. Alternatively, if OSHA determines the information is a trade secret, but that the requester has executed a written confidentiality agreement, shown “adequate means to protect the confidentiality of the information, and shown a legitimate need for the information, you are again subject to an OSHA citation.
Kicking the ball into your court, if the trade secret holder demonstrates the execution of the confidentiality agreement “would not provide sufficient protection against the potential harm from the unauthorized disclosure of a trade secret, the Assistant Secretary may issue such orders or impose such additional limitations or conditions upon the disclosure of the requested chemical information as may be appropriate to assure that the occupational health services are provided without an undue risk of harm to the” trade secret holder.
If you get a citation from OSHA for not releasing your trade secret information, you may contest it “before the Occupational Safety and Health Review Commission in accordance with the Act’s enforcement scheme and the applicable Commission rules of procedure.” If you continue “to withhold the information during the contest, the Administrative Law Judge may review the citation and supporting documentation ‘in camera’ or issue appropriate orders to protect the confidentiality of such matters.”
The trump card that OSHA gives itself is that you must disclose the trade secret or any other SDS information to the Assistant Secretary, but “where there is a trade secret claim, such claim shall be made no later than at the time the information is provided to the Assistant Secretary so that suitable determinations of the trade secret status can be made and the necessary protections can be implemented.” Section 664 of USC 29 states “All information … obtained by the Secretary or his representative … which contains or which might reveal a trade secret … may be disclosed to other officers or employees concerned with carrying out this Act or when relevant in any proceedings.” However, the TPTB “shall issue orders as may be appropriate to protect the confidentiality of such trade secrets.” Seems ambiguous and the protection of your trade secrets’ disclosure (whether appropriate or not) is in the hands of the Assistant Secretary in the end.
Section 1910.1020 allows an employer to delete from a medical record “requested by a health professional, employee, or designated representative any trade secret data which discloses manufacturing processes, or discloses the percentage of a chemical substance in mixture, as long as the health professional, employee, or designated representative is notified that information has been deleted.” An employer is also able to withhold a specific chemical identity, using the pretty much the same/similar arguments, procedures and paperwork as described for a SDS in dealing with requests of trade secret information.
All this means is, at the end of the day, you can try to protect the identity of your additive or formulation ranges, but depending upon the disposition of a treating medical professional and/or OSHA, and the skills of your legal and regulatory experts, it is a dice roll as to whether you can maintain secrecy in light of these regulations in the U.S. The rest of the world’s various national/jurisdiction recognition and handling of SDS trade secrets is a different ball of wax.
Appendix E of section 1910.1200 of U.S Code of Federal Regulations (CFR) describes that a trade secret includes any formula, chemical compound, process of manufacturing, a pattern for a machine/device, a list of customers, a process for treating or preserving a material that gives an opportunity for advantage over competitors. Other things that can qualify include ongoing processes related to the business such as formula/machine(s) used in production, sales of goods, codes for determining discounts/rebates/concession in a catalogue/price lists, methods of office management/bookkeeping, and specialized lists of customers. Information related to ephemeral or single events are generally excluded. The criteria for “secrecy” used by OSHA to maintain a trade secret status as such is generally the same as previously discussed in this article series.
Section 3, of an SDS, which describes composition information on ingredients, is the place that you going to have problems with maintaining your trade secrets confidentiality. You must provide information on each substance’s chemical name, common name and synonyms, CAS no. and other unique identifiers; impurities and stabilizing additives; and the concentration or concentration range of each chemical in a mixture. Under CFR 1910.1200 a claim of trade secret may be made to withhold the specific chemical identity or the exact percentage-concentration of a substance in a mixture. But, the claim of the information being a trade secret must be supported, the SDS discloses the “properties and effects of the hazardous chemical,” and the SDS indicates that the withheld information is a trade secret. But Appendix D clarifies that “indicates” actually means “a statement that the specific chemical identity and/or exact percentage has been withheld as a trade secret.” Also of note, this section of the code clarifies that “nothing in this paragraph shall be construed as requiring the disclosure under any circumstances of process information which is a trade secret,” so the issues seem confined to chemical identity and/or concentration. In looking around for non-chemically identifying names that can be used, the term “trade secret ingredient” or “proprietary ingredient” seems acceptable.
Because the major purpose of a SDS is to provide guidance as to how to handle a hazardous material, and what to do medically, the lack of details on a hazardous trade secret material may be frustrating to medical professional. So, section 1910.1200(i)(iv)-(i)(2) specifies that the specific chemical identity and percentage “is made available to health professionals, employees, and designated representatives” when a “treating physician or nurse determines that a medical emergency exists and the specific chemical identity and/or specific percentage of composition of a hazardous chemical is necessary for emergency or first-aid treatment, the chemical manufacturer, importer, or employer shall immediately disclose the specific chemical identity or percentage composition of a trade secret chemical to that treating physician or nurse, regardless of the existence of a written statement of need or a confidentiality agreement.”
However, if the SDS lists a trade secret material that is very benign, then we can see scenarios where the treating physician or nurse will probably not hit the panic button and force the information out of you. Also, as “soon as circumstances permit” the trade secret holder “may require a written statement of need and confidentiality agreement….” OSHA publication 3084 perhaps clarified this situation by stating that “further disclosure of the trade secret can be effectively controlled” by the trade secret holder demanding “a written statement of need and a confidentiality agreement to be completed after the emergency is abated.”
Paragraph (i)(3) of section 1910.1200 addresses a non-panic situation, where a whole bunch of people can ask for your trade secret information for numerous health related reasons.
Specifically, the trade secret holder “shall, upon request disclose … to a health professional providing medical or other occupational health services to exposed employee(s), and to employees or designated representatives, if: the request is in writing” and “the request describes in reasonable detail” an occupational health need for the information. The possible occupational health needs include: “to assess the hazards of the chemicals to which employees will be exposed; to conduct or assess sampling of the workplace atmosphere to determine employee exposure levels; to conduct per-assignment or periodic medical surveillance of exposed employees; to provide medical treatment to exposed employees; to select or assess appropriate personal protective equipment for exposed employees; to design or assess engineering controls or other protective measures for exposed employees; and, to conduct studies to determine the health effects of exposure.” Finally, the request must explain “in detail why the disclosure of the specific chemical identity or percentage composition is essential and that …” the disclosure of alternative information including “the properties and effects of the chemical; measures for controlling exposure to the chemical; methods of monitoring and analyzing worker exposures to the chemical; and methods of diagnosing and treating harmful exposures to the chemical” would not be satisfactory for the purposes of the occupational health need.
The written request must also include “a description of procedures to be used to maintain the confidentiality of the disclosed information” and “agree in a written confidentiality agreement that the health professional, employee, or designated representative, will not use the trade secret information for any purpose other than the health need(s) asserted and agree not to release the information under any circumstance other to” OSHA. We have previously discussed that disclosure of a trade secret to any federal government agency creates more opportunities of additional disclosures that can result in you losing your trade secret, so this is a situation you want to avoid. So, when can the “health professional, employee, or designated representative” make a disclosure of your trade secret to OSHA. We have not yet found a definition of what the criteria is for deciding there is a need to disclose to OSHA, so we are assuming that there is a wide latitude. But, because the regulations state the receiver of the trade secret “shall” inform the person who conveyed the trade secret (you) prior to or at the same time as the disclosure to OSHA. Additionally, you can stipulate in the confidentiality agreement that the receiver can disclose the information to other parties on terms of your choosing. We opt for no disclosure.
Paragraph (i)(4) of section 1910.1200 addresses the confidentially agreement. The agreement may limit the information’s use to the “health purposes indicated in the written statement of need” and “provide for the appropriate legal remedies in the event of breach of the agreement, including a reasonable pre-estimate of the likely damages,” but “may not include requirements for the posting of a penalty bond.” These requirements of this sub-section don’t prevent the “parties from pursuing non-contractual remedies to the extent permitted by law.” At this point, you should see that long before you get one of these requests, you will want to have your legal team calculate potential damages, and draft the default provisions of the confidentiality agreement accordingly, as well as contemplate strategies in advance for non-contractual solutions if things get heated.
You do have some room to argue about how and if the trade secret is disclosed based on these standards of a non-crisis situation. A denial to the request must be in writing, and “provided” to the requester within “30 days of the request.” Of course, the requester has an appeal process to the denial. First, the request and denial must be submitted to OSHA for review. OSHA will evaluate whether the denier has supported the claim that the information is a trade secret, and that the requester supported both the claim that there is a medical or occupational health need for the information and demonstrated adequate means to protect the confidentially. If OSHA determines that the specific chemical identity or percentage composition is not a trade secret, then the “chemical manufacturer, importer, or employer will be subject to citation” by OSHA. Alternatively, if OSHA determines the information is a trade secret, but that the requester has executed a written confidentiality agreement, shown “adequate means to protect the confidentiality of the information, and shown a legitimate need for the information, you are again subject to an OSHA citation.
Kicking the ball into your court, if the trade secret holder demonstrates the execution of the confidentiality agreement “would not provide sufficient protection against the potential harm from the unauthorized disclosure of a trade secret, the Assistant Secretary may issue such orders or impose such additional limitations or conditions upon the disclosure of the requested chemical information as may be appropriate to assure that the occupational health services are provided without an undue risk of harm to the” trade secret holder.
If you get a citation from OSHA for not releasing your trade secret information, you may contest it “before the Occupational Safety and Health Review Commission in accordance with the Act’s enforcement scheme and the applicable Commission rules of procedure.” If you continue “to withhold the information during the contest, the Administrative Law Judge may review the citation and supporting documentation ‘in camera’ or issue appropriate orders to protect the confidentiality of such matters.”
The trump card that OSHA gives itself is that you must disclose the trade secret or any other SDS information to the Assistant Secretary, but “where there is a trade secret claim, such claim shall be made no later than at the time the information is provided to the Assistant Secretary so that suitable determinations of the trade secret status can be made and the necessary protections can be implemented.” Section 664 of USC 29 states “All information … obtained by the Secretary or his representative … which contains or which might reveal a trade secret … may be disclosed to other officers or employees concerned with carrying out this Act or when relevant in any proceedings.” However, the TPTB “shall issue orders as may be appropriate to protect the confidentiality of such trade secrets.” Seems ambiguous and the protection of your trade secrets’ disclosure (whether appropriate or not) is in the hands of the Assistant Secretary in the end.
Section 1910.1020 allows an employer to delete from a medical record “requested by a health professional, employee, or designated representative any trade secret data which discloses manufacturing processes, or discloses the percentage of a chemical substance in mixture, as long as the health professional, employee, or designated representative is notified that information has been deleted.” An employer is also able to withhold a specific chemical identity, using the pretty much the same/similar arguments, procedures and paperwork as described for a SDS in dealing with requests of trade secret information.
All this means is, at the end of the day, you can try to protect the identity of your additive or formulation ranges, but depending upon the disposition of a treating medical professional and/or OSHA, and the skills of your legal and regulatory experts, it is a dice roll as to whether you can maintain secrecy in light of these regulations in the U.S. The rest of the world’s various national/jurisdiction recognition and handling of SDS trade secrets is a different ball of wax.