Do you know which chemical ingredients create that complex smell in your favorite deodorant, cologne, or perfume? For years, the answer has been a resounding no. Historically, the consumer products industry has relied on trade secret protection to avoid disclosing natural and synthetic chemical "fragrance" ingredients in its products. However, in the last two months, several multinational companies, including the Clorox Co. and SC Johnson, have voluntarily disclosed the "fragrance" ingredients in their products. These affirmative steps signal that companies are increasingly trying to balance consumer safety concerns with trade secret protection.
In an age of strict regulation, how have companies avoided disclosing information about the ingredients that make up their fragrances? Though the U.S. Fair Packaging and Labeling Act (FPLA) requires the disclosure of ingredients for consumer products, the FPLA does not force companies to disclose any "trade secret" information. Consumer products manufacturers have relied upon this exception to avoid disclosing specific formulas and ingredients in fragrances.
Indeed, as we previously discussed, companies often go to great lengths to prevent disclosure of fragrance trade secrets, even in the midst of protracted and costly litigation. In Givaudan v. Krivdai, Givaudan Fragrances Corporation, the world's largest flavor and fragrance manufacturer, resisted full disclosure during litigation of ingredient lists and percentages for the majority of its allegedly stolen formulas. Even though Givaudan filed the lawsuit that initially put these trade secrets at issue, the company did not trust the protective order issued by the court. Because of Givaudan's reluctance to disclose proprietary information for the majority of fragrances at issue, the trial judge found no misappropriation for 582 of the 616 allegedly stolen formulas. The case proceeded to trial on the remaining 34 claims, and a New Jersey federal jury found the defendants not liable.
Though companies are reluctant to share their top-secret formulas and ingredients, the tide may be starting to turn. A growing trend in the industry is increased consumer demand for transparency regarding fragrance ingredients for products.
Companies and manufacturers appear to be responding to these trends. In 2009, Clorox and SC Johnson launched websites that voluntarily disclosed ingredient information used in a variety of products. In 2009, the International Fragrance Association disclosed all 3,000 chemicals used in consumer goods by fragrance consumers worldwide. More recently, Clorox and SC Johnson separately announced efforts in 2015 to expand disclosure initiatives by listing specific fragrance components for additional product lines.
What does this all mean? Companies engaging in disclosure are likely hoping that the benefit from increased consumer trust will drive brand loyalty and boost revenues—and that the cost in terms of competitors and the general public gaining knowledge of specific fragrance ingredients will be minor, compared with the potential gains from disclosure.
Fragrance companies (and makers of other products with ingredients that might be prone to public inquiry) aren't left rudderless in terms of their ability to protect trade secrets and intellectual property. In addition to patent and trademark protection, a variety of trade secret protections, including those for client lists, market research, business plans, manufacturing processes, and various technologies all remain on the table. Finally, companies should also be aware of state and local laws and regulations that might require certain disclosures—such as California's Green Chemistry Initiative, which we blogged about earlier this year.
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