California’s Green Initiative has raised some concerns among manufacturers, not the least of which is the protection of confidential information. Under California’s Health and Safety Code Sections 57018 – 57020, manufacturers are required to submit information regarding nanomaterials in their products, such as the source, the end user, measurements and detection procedures, as well as assessments regarding the safety of such materials, including workplace protection measures, the environmental impact of the nanomaterials, and whether the nanomaterial is “hazardous”.

Although the disclosures are mandatory, the statute provides some (albeit extremely limited) protection for a manufacturer looking to protect trade secrets which might fall under one of the mandatory disclosure categories.

First, although a manufacturer cannot refuse to disclose information, when a manufacturer submits information to a state agency it must identify any trade secrets it wishes to protect. If the state agency receives a request for disclosure of the information identified as a trade secret, it must notify the manufacturer in writing by certified mail. The manufacturer then has 30 days to file a court action seeking to block the disclosure. Furthermore, the manufacturer must obtain a judgment (or preliminary injunction) in its favor within 30 days of filing the action. Once the judgment or preliminary injunction has been secured, the state agency is barred from disclosing the trade secret information.

However, there is an exception. If the state agency believes disclosure of the trade secret information is necessary and required for the satisfactory performance of a contract, for the performance of work, or to protect the health and safety of employees of the contractor, it may disclose the information despite the judgment or preliminary injunction. This means that despite a court ruling protecting the information, the state agency may still disclose the information to an officer or employee of a city, county, state, or federal government, or to a contractor.

Manufacturers should consider preparations for  necessary judicial action at the time they make disclosures of confidential business information as part of compliance with the California data call-ins.  If court orders prove insufficient to safeguard important trade-secret information, manufacturers may soon be forced to find creative ways to comply with the new legislation while maintaining some level of confidentiality regarding trade secret information. For now, however, the risk of disclosure in California cannot be eliminated.