Protecting Your Chemical Trade Secrets vs. OSHA Compliance: What You Must Disclose and What You Can Keep Confidential

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Scenario: You are a chemical manufacturer and have created a chemical formulation that you intend to keep secret, to keep others from copying your product. The new formulation is hazardous and therefore must be handled with care in order to prevent incidents arising from improper transportation (e.g., cannot be exposed to heat or will explode), improper handling (e.g., will burn when in contact with skin), and improper use (e.g., cannot be ingested). You know that OSHA requires chemical manufacturers to provide Safety Data Sheets (SDSs) (formerly known as Material Safety Data Sheets or MSDSs) to communicate the risks of hazardous materials and disclose the formulation, but you don't want to disclose your trade secret. So what does that mean for your formulation and labeling requirements under OSHA?

Requirements Under OSHA

Fortunately for chemical manufacturers, OSHA's hazard communication standard still enables chemical manufacturers to withhold the identification of chemical components from disclosure in an SDS by simply stating that a specific chemical identity "is being withheld as a trade secret", continuing previous allowances prior to the 2012 alignment with the United Nations' Globally Harmonized System of Classification and Labelling of Chemicals (GHS), known as HazCom 2012. However, some exclusions do apply. Under HazCom 2012, a manufacturer can claim trade secret protection for the exact percentage (concentration) of the substance in a mixture. This means that in addition to or as an alternative to withholding the exact chemical identity, a manufacturer can withhold the exact concentration of a substance in the mixture. Where a manufacturer chooses to withhold the exact percentage of a substance as a trade secret, a range for that component is provided instead.

What Constitutes (and Substantiates) a Trade Secret?

While it is not required that a pre-determination be made by OSHA as to whether the withheld information is, in fact, a bona fide trade secret before the statement can be set forth on a SDS, it is important for a trade secret claim to be able to be supported. A trade secret may consist of any formula, pattern, device, or compilation of information which is used in one's business, and which provides an opportunity to obtain an advantage over competitors who do not know or use it.

While an exact definition of a trade secret is not possible, some factors taken into consideration to determine whether a trade secret exists are:

  • The extent to which the information is known outside of his business
  • The extent to which it is known by employees and others involved in his business
  • The extent of measures taken by him to guard the secrecy of the information
  • The value of the information to him and his competitors
  • The amount of effort or money expended by him in developing the information
  • The ease or difficulty with which the information could be properly acquired or duplicated by others.

From the perspective of a chemical manufacturer, this is good news. It is not necessary to disclose to the world the exact make-up of your chemical formulation and you can continue to enjoy your large slice of market share. However, what does this mean for the people who handle your formulation, whether in transport, handling or use? Wouldn't they want to or even need to know what exactly is in the formulation so they know how to deal with spills, or worse yet, accidents?

What Happens if Your Trade Secret Causes Injury?

In order to strike a balance between the need to protect the public and a manufacturer's need to maintain the confidentiality of a trade secret, OSHA requires a chemical manufacturer to immediately disclose the specific chemical identity of a hazardous chemical to a treating physician or nurse when the information is needed for prompt emergency or first-aid treatment. Companies can request the treating physician or nurse prepare a written statement of need and to complete a confidentiality agreement after the emergency has subsided.

Challenging Trade Secret Status

When the case is a non-emergency, the issue becomes more difficult. A request for disclosure of a withheld chemical identity can be made to the company, but the company is not required to disclose the trade secret information. The requesting company can then challenge the denial by asking OSHA to determine whether the withheld information is, in fact, a trade secret. This is where it becomes important to make sure that decisions to withhold trade secret information in a SDS are only made after careful examination, preferably with counsel.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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