Nagoya Protocol: Response to Biopiracy Becomes Effective October 2014

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The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization became effective on July 14, 2014, with its 50th ratification.  The Nagoya Protocol will begin to have a direct impact on the personal care and cosmetics industry on October 12, 2014.

With the increased consumer demand for natural and organic products, a growing number of companies in the beauty industry are drawing on biodiversity for its rich variety of native ingredients and as a way to differentiate their products.  The use of exotic ingredients sourced from countries rich in biodiversity means that companies need to be aware of the Nagoya Protocol and the country-specific “Access and Benefit Sharing” laws and regulations that exist and are being enacted.  The use of indigenous ingredients in hair care, skincare and cosmetics formulations – such as baobab oil extracted from the fruits of the baobab trees found across Africa or katafray bark extract from the katafray trees of Madagascar – may be a violation of the Nagoya Protocol if Access and Benefit Sharing requirements are not met.

The Nagoya Protocol is an international treaty focused on Access and Benefit-Sharing, which was adopted in 2010 by the United Nations’ Nagoya, Japan Convention on Biological Diversity.  The Nagoya Protocol arose from the interest of national governments to conserve and promote sustainable use of their countries’ biodiversity and protect against commercial biopiracy.  The purpose of the Nagoya Protocol is to support fair and equitable sharing of benefits arising from the utilization of genetic resources and associated traditional knowledge.

Generally, the Nagoya Protocol requires that access to a participating country’s genetic resources and associated traditional knowledge be subject to the “prior informed consent” of the party providing such resources.  The Nagoya Protocol also requires the sharing of the benefits arising from the commercialization of genetic resources and associated traditional knowledge with the owners of biodiversity, including the local communities and the indigenous people, on “mutually agreed terms.”

The Nagoya Protocol itself establishes only international norms and a framework for Access and Benefit Sharing measures, and does not impose Access and Benefit Sharing laws itself.  That is left to national legislation, and requires the contracting parties to implement their own Access and Benefit Sharing measures and to designate a competent national authority on ABS.  Many countries, including Brazil, Chile, Colombia, Costa Rica and India, already have national enabling laws and regulations.

Personal care product companies in particular also should be aware that their marketing and advertising of the products as containing native ingredients or drawing on traditional knowledge could subject them to a claim of biopiracy by national governments, local communities, and even non-governmental organizations.

Although the United States is not a contracting party to the Convention on Biological Diversity or the Nagoya Protocol, companies in the United States whose products utilize genetic resources or traditional knowledge from a member state, or are sold in a member state, must comply with the access and benefit sharing requirements.  It is imperative for companies to exercise due diligence to ensure that their raw material or ingredient suppliers have obtained prior informed consent for access to genetic resources or associated traditional knowledge used in their products, and mutually agreed terms for the sharing of benefits.

As a leader in providing legal services to the personal care products industry, CK&E can assist companies in instituting internal policies and procedures to help ensure compliance with the Nagoya Protocol.  CK&E will continue to monitor and provide updates about developments in the Nagoya Protocol.  The first meeting of the Conference of the Parties to the Nagoya Protocol will be held in October 2014 in Pyeongchang, South Korea, concurrently with the Conference of the Parties to the Convention on Biological Diversity.

Full text of the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization.  The countries that have ratified or acceded to the Nagoya Protocol to date are:

  • Albania
  • Belarus
  • Benin
  • Bhutan
  • Botswana
  • Burkina Faso
  • Burundi
  • Comoros
  • Côte d’Ivoire
  • Denmark
  • Egypt
  • Ethiopia
  • European Union
  • Fiji
  • Gabon
  • Gambia
  • Guatemala
  • Guinea-Bissau
  • Guyana
  • Honduras
  • Hungary
  • India
  • Indonesia
  • Jordan
  • Kenya
  • Lao People’s Democratic Republic
  • Madagascar
  • Mauritius
  • Mexico
  • Micronesia (Federated States of)
  • Mongolia
  • Mozambique
  • Myanmar
  • Namibia
  • Niger
  • Norway
  • Panama
  • Peru
  • Rwanda
  • Samoa
  • Seychelles
  • South Africa
  • Spain
  • Sudan
  • Switzerland
  • Syrian Arab Republic
  • Tajikistan
  • Uganda
  • Uruguay
  • Vanuatu
  • Vietnam

 

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The Conkle Firm Helps MANA Evict Domain Name Cybersquatter

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What do you do when someone else has taken your trademark and used it in an Internet domain name?  Just accept it, even if they’re offering competing products and services?  Do you have to go to court and file a trademark infringement lawsuit?  Fortunately, these questions all have the same answer: No.   You don’t have to accept it, and there are faster and less expensive ways to force the cybersquatter to give up the infringing domain name.

CK&E recently demonstrated this by helping its client, the Manufacturers’ Agents National Association (commonly known as MANA) defeat a cybersquatter and force the squatter to transfer the “manaonline.com” domain name to MANA.

All domains ending in a generic Top Level Domain (gTLD) – such as .com, .org or .net – are automatically subject to ICANN’s Uniform Domain Name Dispute Resolution Policy, an streamlined arbitration process referred to as UDRP.  UDRP provides an efficient method for a trademark owner to resolve its rights to a domain name that uses a substantial part of the trademark or is otherwise confusingly similar to the trademark.  Instead of going to court to sue for trademark infringement, the business owner can file a complaint online with one of several authorized arbitration providers, such as the National Arbitration Forum (NAF) or the Arbitration and Mediation Center of the World Intellectual Property Organization (WIPO).  Through a process that is conducted entirely online, these arbitration providers are empowered to force a domain name registrar to transfer a domain to its rightful owner.  This is especially useful if the cybersquatter is in some remote offshore location and cannot be reached by regular legal process, because the domain name registrars are always available and can be directed to transfer the domain name.

To force the transfer of a domain through UDRP, the business owner must show:  (1) the domain name is confusingly similar to a trademark owned by the business;  (2) the current registrant has no rights or legitimate interests in the domain name; and  (3) the domain name has been registered and is being used in bad faith.

In the case in which CK&E helped MANA, another company called “Dvlpmnt Marketing” based out of Saint Kitts and Nevis, in the Caribbean, had registered the “manaonline.com” domain name – which was essentially identical to MANA’s “manaonline.org”   Dvlpmnt had used the domain name to park a webpage featuring “pay-per-click” links to other websites offering services competing with those offered by MANA.  Dvlpmnt owns tens of thousands of domains, and has been the subject of several NAF and WIPO proceedings in the past.

CK&E attorney Zachary Page initiated a Complaint with NAF on behalf of MANA, charging Dvlpmnt with cybersquatting by registering and maintaining in bad faith, and with no legitimate rights, the manaonline.com domain name that was confusingly similar to MANA, whose genuine website is found at manaonline.org.  The different gTLD extensions, .com and .org, are legally insignificant in the UDRP process – effectively, the domain names were regarded as identical.  After the UDRP hearing, the NAF Panel held:

“Considering the totality of the circumstances present here—including the similarity between the disputed domain name and Complainant’s domain name, and the content of the website to which the disputed domain name resolves—the Panel infers that Respondent was aware of Complainant when it registered the domain name and that Respondent is using the domain name in a manner intended to exploit confusion with Complainant’s website and service mark.  These inferences are indicative of bad faith.”

Manufacturers’ Agents National Association v. Domain Administrator / DVLPMNT MARKETING, INC., National Arbitration Forum Claim Number FA1404001553434

A successful UDRP claimant generally has a choice to have the domain registration cancelled or to have the domain name transferred to the claimant.  It is almost always better to have the domain name transferred, so that it cannot be taken by another cybersquatter in the future.  CK&E is proud to have helped its client, MANA, successfully force the cybersquatter to transfer the manaonline.com domain name to MANA.

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Smells Like Trademark Registration

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Brand owners are increasingly tapping into the powerful realm of olfactory memory by using scent as a brand identifier.  Conkle, Kremer & Engel, a pioneer in brand protection strategies, registered one of the only three fragrance trademarks ever on the U.S. Patent and Trademark Office Principal Register.  In fact, CK&E registered the first ever U.S. fragrance trademark for personal care products.

Scent can evoke strong emotional reactions and create long-lasting memories, so a signature scent can be a critical element of an overall brand identity.  As recently reported in The Los Angeles Times, retail clothing stores and hotels are beginning to use scent diffusers to greet consumers with their custom-made fragrances.  Signature scents can also be introduced with products, such as Brazilian designer Melissa’s bubblegum scented plastic shoes or GM’s use of semisweet scented leather in Cadillac automobiles.

While brand owners often focus on traditional trademarks like brand names (word marks and stylized word marks) and logos (design marks), nontraditional trademarks like scent, sound and color may also be eligible for protection.  In the United States, a scent mark can be registered as a trademark if it is used as a brand identifier, but only if it is neither functional nor naturally occurring in the goods or services.  For example, the scent of elderflower cannot be protected as a trademark for use with perfume, as it would be functional, or for use with elderflower cordial, as it is naturally occurring.  However, the scent of elderflower could be used as a trademark with stationery.

The next hurdle to registration on the Principal Register is secondary meaning.  A brand owner must show that consumers associate the scent with the source of goods or services through evidence such as extensive use of the scent in commerce, advertising expenditure, affidavits from consumers, or surveys.  In order to establish a signature scent as a registrable trademark, it is especially useful to provide evidence of advertising that specifically identifies the scent in connection with the goods or services (e.g., “stationery distinguished by its unique elderflower scent” or “always with our signature fragrance”).

As noted in Gilson on Trademarks, CK&E presented the USPTO with strong evidence that its client’s fragrance mark was not functional when used with hair care products, and CK&E submitted substantial, well-focused evidence of secondary meaning.  As signature scents continue to develop as key elements of brand identities, more brand owners will seek trademark protection for their chosen fragrances.  Brand owners should consider methods of protecting and enforcing their rights in nontraditional trademarks such as fragrance, color and sound.

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The Conkle Firm Participates in California Pavilion at Cosmoprof Bologna

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CK&E attended Cosmoprof Worldwide in Bologna, Italy, the international professional beauty industry trade show, in April 2014.  Cosmoprof Bologna is a preeminent global conference for the personal care products industry, with over 207,000 visitors and 2,450 exhibitors from 69 countries, and participation by manufacturers, distributors and industry organizations.  Highlights included the dynamic USA Pavilion and California Pavilion, orchestrated by the California Trade Alliance.  CK&E joined Beauty Industry Market Access (BIMA) directors Patty Schmucker and Cesar Arellanes, and several graduates of the BIMA program, as they put into practice the concepts taught at the intense educational program designed for entrepreneurs entering international markets.  To learn more about the BIMA program in which CK&E attorneys participated, click here.

As developed in discussions at Cosmoprof, a critical issue for many U.S. exhibitors entering the EU market is the July 2013 Cosmetics Regulation (EU Reg. 1223/2009) that overhauled the European Union’s regulatory landscape for personal care products.  The Regulations introduced a number of new requirements, including labeling for nanomaterials such as titanium dioxide, claim verification standards and an EU-wide ban on animal testing.  As a brief introduction to the new requirements, the EU distilled the July 2013 Cosmetics Regulation into the simplified infographic shown here.

Under the new Regulation, each manufacturer selling cosmetic products into the EU must designate a person or business entity physically located in the EU that will serve as the manufacturer’s designated “responsible person” for compliance with the Regulation.   CK&E has strong working relationships and regularly works with such “responsible persons” who can be engaged to assist businesses seeking to expand into the EU.  CK&E is pleased to participate in industry events such as Cosmoprof Bologna and programs such as BIMA, to help U.S. entrepreneurs expand into the EU and to assist foreign manufacturers develop and secure markets for their products in California and throughout the United States.

 

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gTLDs are Already Causing Confusion – Just Ask Wayne Knight and TMZ

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UPDATED July 15, 2015

Actor Wayne Knight (best known as Newman on Seinfeld) was forced to tweet his “proof of life” on Twitter, after a website that uses the domain name TMZ.today reported that he was killed in a traffic accident and the story went viral.  It has been reported that many users credited the story of the death of Wayne Knight because it was circulated with attribution to the website TMZ.today.  TMZ is well known as a major source of real entertainment news and celebrity gossip.  TMZ uses the domain name TMZ.com, but the domain name TMZ.today links to an entirely different website called ebuzzd.com that is actually an unrelated, deliberately fake news website – a website dedicated to hoaxes.

Wayne Knight’s concerns aside, this story presents important lessons for trademark holders and domain name registrants:  New generic Top Level Domains (gTLDs) are here and must be reckoned with.  TMZ.com is not TMZ.today, but it’s a good bet that a substantial portion of the consuming public does not know that.  Will the consuming public realize that your company website “XYZ.com” is not affiliated with XYZ.Today, XYZ.News, XYZ.Info, XYZ.Web, XYZ.Blog, XYZ.Corp, XYZ.Inc, XYZ.London, XYZ.Charity or XYZ.Porn, or any of the 600+ other non-branded gTLDs that are available now and coming online within the next two years?

For a trademark holder, it can be a daunting prospect to try to police that many possible confusing domain names, but there are cost-effective brand protection strategies and solutions.  They begin with recognizing the issue, and making sure that you have taken all appropriate steps to protect your trademarks and domain names.  The most basic step is to obtain U.S. trademark registrations for your important trademarks – especially for your primary brand.  That is the key to many of the solutions that are offered at http://trademark-clearinghouse.com/, the administrative service established by ICANN to help control issuance of gTLDs.   Then, set a strategy that includes monitoring the “Sunrise Periods,” during which registered trademark holders can take the most efficient steps to protect against spurious registrations of confusingly similar domain names with the new gTLDs.

The best and most cost-effective methods of protection against gTLD infringers and domain name cybersquatters will be discussed in future blog posts.  Available methods include preemptive registration, blocking and various forms of policing.  Conkle, Kremer & Engel routinely guides its clients to protect their valuable intellectual property and domain names, including taking proactive steps to address the new threats to trademarks posed by gTLDs.  Contact us if you have questions and need assistance.


 

UPDATE July 15, 2015:  Another example of misuse of gTLD domain extensions happened again and demonstrates that real money can change hands when gTLD domain name extensions are abused.  Twitter stock jumped on July 14, 2015 after what appeared to be the Bloomberg Business website posted a news article reporting that Twitter had received a $31 billion buyout offer.  The story was fake, but it passed for real news by being posted on a website designed as a counterfeit of the Bloomberg Business website and using a new gTLD:  www.bloomberg.market.  The real Bloomberg website is actually found at www.bloomberg.com.  To help make a convincing appearance, the www.bloomberg.market website included links back to the real www.bloomberg.com website.  Enough readers were fooled that Twitter stock price spiked after news of the purported buyout offer was picked up in legitimate media.  gTLD confusion may continue to be a problem for trademark holders until they take affirmative steps to limit the possibilities of confusion and abuse.

 

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Protecting Your Company When a Top Executive Leaves to Join a Competitor

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What do you do when a key member of your team goes to work for a rival firm? Or, perhaps worse, how do you react when you receive a competitor’s demand that your latest hire, a new sales manager, stop working for you?

John Conkle recently participated in a discussion of experienced practitioners which looked at these and related topics at the 2014 American Bar Association (ABA) Section of Litigation, Corporate Counsel Committee’s Continuing Legal Education Seminar held in Rancho Mirage, California. The topic of the presentation was what actions inside and outside counsel need to take when a top executive of the company leaves to joins a competitor, when the company’s reputation, confidential information, and business could all be at risk. The panel addressed practical and legal strategies to help navigate the pitfalls presented by this high-stakes dilemma.

Protecting Your Company - ABA 2014

John was joined on the panel by the Hon. Gail Andler, Judge of the Orange County California Superior Court; Elizabeth K. Deardorff, Associate General Counsel of Hewlett-Packard Company; and Steven A. Weiss, of Schopf & Weiss LLP, a Chicago litigation boutique firm. More than 300 attorneys from law firms and law departments throughout the United States and from several foreign countries attended this year’s seminar.

Written materials distributed at the seminar included an article written by John and Bill Garcia, Director of Legal Project Management at Thompson Hine LLP:    First Response to Surprise Departure of Top Executive to Marketplace Rival.  The article outlines first response actions to be taken by counsel in response to an executive’s departure. Bill Garcia had been scheduled to moderate the panel, which he helped conceive and orchestrate, but he was unfortunately snowed in and unable to leave Washington, D.C.

Losing a key executive to a competitor can be a serious and sensitive matter. CK&E is well versed in the options available to a company whose top executive leaves. CK&E has also represented the interests of the company acquiring the executive and employs various strategies and defenses to help resolve disputes over such hirings. CK&E lawyers have represented both sides of these issues, from recruitment of an entire sales team to competition by a former owner of an acquired business or product line.  CK&E’s vast experience in the area of employment law, non-competition and protection of trade secrets allows the firm to efficiently assist in-house counsel to reach a desired objective with a minimum of business disruption.

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Organic products? Really?

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Are your personal care products really organic? There is no federal regulation of cosmetics sold as “organic,” other than a voluntary USDA certification process, but California takes use of the term “organic” seriously.

The California Organic Products Act (COPA), requires that multi-ingredient cosmetics labeled or sold as organic contain at least 70% organically produced ingredients.  The Center for Environmental Health (CEH) sued 40 cosmetics manufacturers in 2011 and 2012 in Alameda County for violating COPA. One of the defendants in CEH’s first lawsuit was Todd Christopher International, dba Vogue International, (Vogue) the manufacturer of Organix brand products.  While the Organix products contained less than 10% organic ingredients, Vogue contended that the “active” ingredients in its products were organic.  Vogue argued that COPA did not apply to its Organix hair care products because hair care products are not “cosmetics” and that “Organix” is not a grammatical variation of the term “organic.”  The court rejected Vogue’s arguments.  In September 2012, Vogue agreed to either change its packaging and stop using “Organix,” or change the ingredients of its products to comply with COPA.

CEH then brought another lawsuit against Vogue.   This time, it was a class action aimed at stopping Vogue’s use of “Organix” nationwide – not just in California.  CEH claimed that Vogue’s labeling is unfair and deceptive under each state’s consumer protection laws because Vogue’s Organix products are not composed of predominately organic ingredients.  In October 2013, the federal court for the Northern District of California preliminarily approved a settlement of the class action in which Vogue would pay $6.5 million and stop using “Organix” for cosmetics that did not contain at least 70% organic ingredients.  The final approval hearing is set for April 3, 2014.  Vogue has already begun to transition its packaging and advertising to the more defensible “Ogx”.

Conkle, Kremer & Engel stays current on federal and state regulatory issues and helps its clients avoid the kind of labeling problem that befell Vogue.

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National Article Profiles the Conkle Firm’s $6.2 million Judgment for Unpaid Sales Commissions

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Conkle, Kremer & Engel’s $6.2 million judgment against an electronics manufacturer is the subject of a feature article in the monthly publication of Manufacturers’ Agents National Association (MANA).  The article, Fallout From an Oral Contract, appears in the January 2014 issue of Agency Sales Magazine.

The article profiles Plaintiff Peter Reilly, a sales representative who was denied his commissions.  Author Jack Foster chronicles how CK&E lawyers Eric S. Engel and H. Kim Sim marshaled the facts and developed the law of the California’s Independent Wholesale Sales Representatives Contractual Relations Act to win a treble damages judgment for Mr. Reilly.

The Independent Wholesale Sales Representatives Contractual Relations Act is a little-known statute that requires a signed written contract containing specific terms in some commission agreements between manufacturers and sales representatives.  A willful failure to have a written contract that complies with the Act, or to account for and pay commissions as required by the written contract, can result in an award to the sales rep of three times the amount proved at trial, in addition to attorney fees.  In the Reilly v. Inquest case, the jury awarded the sales representative $2.1 million for unpaid commissions, which was trebled by the Court to more than $6.2 million.

The California Court of Appeal affirmed the award in full.  The Reilly v. Inquest Technology decision was unprecedented, because it is the first published decision to endorse the full scope of remedies available under the Independent Wholesale Sales Representatives Contractual Relations Act.

The Agency Sales Magazine article follows an article about Reilly v Inquest that appeared in the Los Angeles Daily Journal.

CK&E’s lawyers are well versed in issues affecting manufacturers and sales representatives.  CK&E lawyers litigate and resolve disputes over sales commissions and terminations, and use that knowledge to help manufacturers and sales representatives draft more effective contracts.  CK&E is a member of MANA and the Electronics Representatives Association (ERA).

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CK&E Attorneys Speak at ERA Owners Forum

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CK&E attorneys Eric Engel and Kim Sim were pleased to be invited to speak at ERA So Cal’s January 28, 2014 Owners Forum.  ERA is the international association of professional sales representatives and electronics industry manufacturers who use independent sales reps.  ERA’s member rep firms sell more than $40 billion annually in electronics products for thousands of manufacturers.

The ERA roundtable forum included lively and thoughtful questions and comments by business owners and managers, directed toward improving their ability to collect commissions owed for their sales representatives’ work promoting sales for manufacturers.  In addition to outlining important terms that should be included in written contracts, much of the discussion concerned the application of the Independent Wholesale Sales Representatives Contractual Relations Act, California Civil Code §§ 1738.10 et seq.  Under the Act, a manufacturer must have a signed written contract with the sales rep containing particular terms required by the Act, and the manufacturer must provide a written accounting with every payment of commissions.  When a manufacturer willfully fails to comply with the requirements of the Act, the sales rep is entitled to three times his or her unpaid commissions and other damages, plus attorney fees.

Eric Engel and Kim Sim were the trial attorneys in Reilly v. Inquest Technology, the first precedent in California that enforced the full remedy of treble damages under the Act.  In Reilly, application of the Act led to a $2.1 million jury verdict becoming a judgment for $6.2 million, plus attorney fees and interest.  ERA and its partner organization, Manufacturers’ Agents National Association (MANA), were important sponsors of the Act and similar legislation enacted in about 36 other states to protect the rights of independent wholesale sales representatives.  CK&E is proud to be able to help sales representatives create contracts that protect their rights to be paid for their services, and to help them enforce their rights when disputes arise.

 

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California Safe Cosmetics Act of 2005: A Sleeper That May Awake in 2014

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California has a well deserved reputation for extraordinary efforts to protect consumers.  While the goals behind the regulations may be laudable, California’s many requirements impose enormous burdens on companies doing business in the state, often with questionable public benefit.  Proposition 65 is a familiar example of a regulation that requires elaborate warnings, but does not actually regulate the use of any chemicals.

There are many other examples, including a “sleeper” called the Safe Cosmetics Act.  Enacted in 2005, the Safe Cosmetics Act was heralded by its supporters as a landmark law that would protect the health of millions of Californians who use cosmetics.  In reality, the Safe Cosmetics Act is just another glorified reporting statute, requiring manufacturers of cosmetic products sold in California to file with the California Department of Public Health (CDPH) reports of information that is already on product ingredient labels.

But the Safe Cosmetics Act takes the idea of the consumers’ “right to know” to an extreme by imposing a precautionary rather than risk-based approach.  Unlike Prop 65, the Safe Cosmetics Act requires manufacturers to report use of chemicals that are not just “known” to cause cancer or reproductive harm, but also chemicals that are “suspected” to cause cancer or reproductive harm.  In addition, the Safe Cosmetics Act does not recognize any “safe harbor” levels for reporting – any amount of a “suspect” chemical must be reported.  Finally, cosmetic products that contain a reportable chemical must be reported regardless of whether the likely mode of exposure to the chemical by use of the product differs from the route of exposure identified by the authoritative scientific body as a pathway likely to cause cancer or reproductive harm.  For example, a chemical that has only been identified as “suspected” of causing cancer or reproductive harm when ingested must be reported even if it is contained in a skincare product.

In future blog posts, we’ll address why the Safe Cosmetics Act could become much more significant to personal care products manufacturers beginning in 2014, the risks of liability to manufacturers posed by the Safe Cosmetics Act, and how manufacturers can know if their products contain the regulated  chemicals.  At Conkle, Kremer & Engel, we help our clients meet compliance requirements, despite constantly changing state and federal laws.  With proper counseling, clients can avoid potential liability and minimize disruption to their businesses.

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