Companies Need to Protect their Trade Secrets when Responding to the Department of Toxic Substances Control’s ‘Call-In’ of Nanotechnology Information

Starting early this year the Department of Toxic Substances Control (DTSC) is requiring manufacturers and importers of nanotechnology to provide certain information regarding their nanomaterials. DTSC refers to this process as a chemical “call-in.” This new requirement applies not just to pure nanomaterials but also to products that include nanomaterial as an ingredient.

Nanotechnology is the design, production, and application of material at the nanometer scale. A nanometer (nm) is one billionth of a meter^[1]. Why is DTSC interested in nanomaterials? DTSC believes it needs to understand if workers making nanomaterials may be exposed to these new structures and what the potential adverse effects of such exposure might be. How might nanomaterials affect human health and the environment during their manufacture? Does the small size of these materials facilitate their entry into the human body and perhaps result in higher exposure compared to larger-sized particles? What waste products may be produced in manufacturing nanomaterials and how to deal with them? Once these products are in commerce and introduced into the environment, DTSC wants to determine what chemical reactions take place and whether any potentially toxic by-products are formed. DTSC is trying to understand how nanomaterials move through the environment, and how they react with air, water, and soil, whether they degrade, and whether they bioaccumulate.

California Health and Safety Code Section 57019 provides DTSC with the authority to require a manufacturer (including an importer) to provide this information.

Of critical importance in responding to DTSC’s call-in is the protection of a company’s trade secrets in this cutting edge field. California Health and Safety Code Section 57020 allows the protection of trade secrets in the call-in process. However, a company cannot simply declare information a trade secret and expect that declaration to be honored. There are specific and detailed requirements for protecting trade secrets in this regulatory context. Without adequate supporting documentation the trade secret protection may be lost.

The term “trade secret” is broader than most people envision. It is not just the formula to Coca Cola or the design schematic from a bio-medical research lab. While the California Uniform Trade Secrets Act (“UTSA”) certainly protects such information, the UTSA also affords protection to much more common pieces of information. If a company takes reasonable measures to protect its information, and if the information is valuable because it is kept secret, California courts will recognize that common, every-day pieces of data can be afforded protection as a trade secret. For example, customer lists, business plans, spreadsheets, corporate minutes and agendas, and bid specifications can be afforded protection as trade secrets. Consequently, the scope of what a nanotechnology company will want to protect and what it can protect can be broad if done properly.

Companies are strongly advised to obtain the assistance of counsel in responding to this call-in to protect their nanotechnology trade secrets.

DTSC’s current call-in is for carbon nanotubes (CNT). DTSC has already issued follow-up letters to those companieswho failed to respond to that call-in.

DTSC will be issuing call-ins for additional products in the future, including: methyl siloxanes (decamethylcyclopentasiloxane); brominated flame retardants; and other nanomaterials.DTSC is currently focusing on nanometal oxides such as nano titanium dioxide and nano zinc oxide, and nanometals such asnano silver andnano zerovalent iron. DTSC has also said it will be looking into quantum dots and is seeking further information on carbon nanotubes.

In addition to protecting its trade secrets, companies must consider the call-in’s request for information on how the company is dealing with worker health and safety, fate and transport (how nanomaterials move through the environment and where they end up), disposal and labeling. Nano is a new area lacking detailed regulatory guidance. Nonetheless, what the company presents, or fails to present, in its response to the call-in now may create the basis for long term liability. The history of the ruinous asbestos litigation demonstrates that the questions of: “what did you know” and “when did you know it,” will be asked if nanomaterials turn out to be hazardous. Developing and documenting present good practices will be a critical shield in defending a company down the road.

Now is the time for companies to develop and benchmark their nanomaterials handling protocols, and develop standards for protecting their trade secrets. Companies manufacturing or importing nanomaterials should institute and document appropriate worker health and safety and disposal protocols.

[1] For comparison, a single human hair is about 80,000 nm wide, a red blood cell is approximately 7,000 nm wide, and a water molecule is almost 0.3 nm across. Nanotechnology is generally defined to be from 100 nm down to the size of atoms (approximately 0.2 nm).