Consumer Products Law Blog

Welcome to Dorsey's Consumer Products Law blog. This blog provides visitors with informative, up-to-date and easy-to-understand commentary on consumer products matters. Our purpose is to help manufacturers, importers, warehousers, retailers, e-tailers, consumers, and lenders better understand the legal issues impacting the consumer products industry.

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Chinese Drywall Prompts CPSC Guidance

The Consumer Product Safety Commission has received over 3,000 reports from homeowners in 37 states who believe they have problem drywall in their homes. The drywall, which has all come from Chinese manufacturers, has been linked to health problems and corrosion of certain metal components, wiring, air conditioning units, computers, doorknobs and jewelry. On April 2, 2010, the CPSC released remediation guidelines to help homeowners rid their homes of this tainted drywall. The guidelines recommend homeowners remove all possible problem drywall from their homes, and replace electrical components, wiring, gas service piping, fire suppression sprinkler systems, smoke alarms and carbon monoxide alarms.
Drywall

ABC News reports that preliminary studies have found that high levels of hydrogen sulfide gas (emitted from problem drywall) together with formaldehyde (which is common in many homes) may be linked to throat, nose and lung irritation. CPSC reports that the top ten sulfur-emitting drywall samples were all produced in China and certain samples had emission rates of hydrogen sulfide 100 times greater than non-Chinese drywall samples.

A lawsuit has been filed in federal court in New Orleans by about 2,100 homeowners against Chinese manufacturers and U.S. companies that sold problem drywall. There are thousands more homeowners who have filed separate claims against Chinese manufacturers still pending.

The CPSC has been active in investigating this problem drywall. For more information, visit CPSC’s Drywall Information Center.

Valerie Paula is an Associate in the Regulatory Affairs Department at Dorsey & Whitney, LLP. Please see our web site at www.dorsey.com.

What is a Children’s Product?

The Consumer Product Safety Commission (CPSC) this week proposed a new interpretive rule setting forth the factors the agency will use to determine if a consumer product is a “children's product.” This guidance is needed so that companies will know what safety standards and regulations apply to their products.

Background

The Consumer Product Safety Act defines the term children's product as “a consumer product designed or intended primarily for children 12 years of age or younger.” There has been significant uncertainty about this definition and whether general use products (e.g., pens) as well as specialty products (e.g., musical instruments and sporting equipment) are children’s products that are subject to greater safety regulation.

Proposed Interpretive Rule

The CPSC staff will rely on four specific factors to determine if a product is designed or intended primarily for a child 12 years of age or younger. These factor are:

1. Manufacturer's Statement

The CPSC will look at a manufacturer’s statement regarding its product to determine if the product is primarily intended for a child 12 year of age or younger. A manufacturer's statement about a product's intended use, including the product's label, should be reasonably consistent with the expected use patterns for a product. A manufacturer's statement that the product is not intended for children does not preclude a product from being regulated as a children's product if the primary appeal of the product is to children 12 years of age or younger.

2. Product Presentation

The CPSC will consider whether a product is represented in its packaging, display, promotion, or advertising as appropriate for use by children 12 years of age or younger. These representations can be express (such as product advertising declaring that the product is for use by children 12 years of age or younger) or implied (such as product advertising showing the product being used by young children). These representations may be found in packaging, text, illustrations and/or photographs depicting consumers using the product, instructions, assembly manuals, or advertising media used to market the product.

The prominence, conspicuousness and other portrayal of a product's uses or intended users on packaging or in advertising media will be evaluated as well as how such messages or images are present at the point of purchase. For example, labeling in large, high contrast letters on the front of a package sends a stronger message than block letters in a small box on the package's side panel.

The CPSC will also consider a product's physical location in a retail outlet or visual associations in the pages of an online retailer. The close association of a product in a store or on a web site with other products that are clearly intended for children 12 years of age or younger could affect consumer perceptions of the intended age group for that product. However, the retail location of a product will not be dispositive of a children's product determination. For example, if an electronic media device, such as a video game console, were sold at toy stores, but were also sold in electronics stores or department stores and marketed to consumers older than 12 years of age, then that video game console likely would be considered a general use product rather than a children's product.

The CPSC also commented on joint products. If a manufacturer includes a general use product as one of several items packaged together with a children’s product, the general use product would have to meet child safety standards. For example, if a paper clip were included in a children’s magnet set, the paper clip would need to be tested to the applicable children's product safety rules.

Similarly, some products commonly recognized as primarily intended for children may be packaged with an adult product. For example, the CPSC commented on a product pairing such as a stuffed animal packaged with a candle as a Valentine's gift. The candle is not a children's product and need not comply with the requirements for children's products. The stuffed animal, on the other hand, is likely to be considered a children's product even though it has been combined in a promotion with a general use or adult product. The stuffed animal must meet all the applicable children's safety rules for the stuffed animal (i.e., small parts and sharp edges under 16 CFR 1500.49 through 1500.53, the lead content or lead paint limits under section 101 of the CPSIA and 16 CFR part 1303). The manufacturer should expect that an adult will use the candle, but likely might give the stuffed animal to a child. In other words, a children's product that is packaged with a general use product is likely to remain a children's product.

3. Common Recognition by Consumers

The CPSC will evaluate whether a product is commonly recognized by consumers as being intended for use by a child 12 years of age or younger. To assess whether a product is commonly recognized by consumers as being primarily intended for a child, the evaluation must consider reasonably foreseeable uses and misuses of a product to determine how the product will be perceived and used by consumers of the product. A consumer product will commonly be recognized by consumers as being intended for use by a child 12 years of age or younger based on (i) product features, (ii) principal perceived uses, (iii) cost, and (iv) interaction with the product.

(i) The CPSC will consider relative features such as small sizes, exaggerated features (large buttons, bright indicators); safety features that are not found on similar products intended for adults; colors commonly associated with childhood (pinks, blues, bright primary colors); decorative motifs commonly associated with childhood (such as animals, insects, small vehicles, alphabets, dolls, clowns, and puppets); features that do not enhance the product's utility, (such as cartoons), but contribute to its attractiveness to children 12 years of age or younger; and play value, i.e., features primarily attractive to children 12 years of age or younger that promote interactive exploration and imagination for fanciful purposes (whimsical activities lacking utility for accomplishing mundane tasks; actions performed for entertainment and amusement).

The more of these types of characteristics that a product has, the greater the likelihood that the product is a children's product.

For example, board and table games like chess, checkers, backgammon, playing cards are recognized as equally attractive to children and adults because the level of difficulty increases or decreases depending on the player's skill. Versions of these games, and similar games commonly considered by consumers to appeal to a general audience, are not considered children's products. However, where the board game exists in junior and regular versions, the junior version likely would be considered a children's product and the regular version likely would be considered a general use product.

(ii) The CPSC will evaluate consumer perception about a product. For example, the principal use for a broom is floor cleaning, but a broom may also be used as an imaginary knight's lance, a horse, a magical flying vehicle, or another role-playing prop. In the age determination analysis, the principal uses take precedence over other actions that are less likely to be performed with a product, so even though a product could present some uses that appeal to children, like the broom being used as an imagined magical flying vehicle, that fact does not mean that the broom is a children's product. The individual features of a product may be weighted in the analysis with more obvious uses given a greater weight than less obvious uses.

(iii) The CPSC will make a product cost analysis to determine whether a product is primarily intended for use by a child or an adult. The cost of a given product may influence the determination of the age of intended users. Very expensive items are less likely to be given to children 12 years of age or younger, depending on the product.

(iv) The CPSC will consider whether the product has play value where there is physical interaction with the product.

4. The CPSC's Existing Age Determination Guidelines

The CPSC intends to continue to use the Age Determination Guidelines (``Guidelines'') issued by the CPSC staff in 2002 to determine is a product is intended for children under the age of 12. The Guidelines can be downloaded here

The Guidelines describe the capabilities and skills that children of various age groups can be reasonably expected to use in interactions with consumer products.

Specific Examples of Product Categories Where Questions May Persist.

Furnishings and Fixtures. General home furnishings and fixtures, such as rocking chairs, shelving units, televisions, digital music players, ceiling fans, humidifiers, air purifiers, window curtains, tissue boxes, clothing hooks and racks, often are found in children's rooms or schools. The CPSC will generally consider such furnishings and fixtures to be intended for adult use even if they happen to be used in a children's room or classroom, as they would be considered general use products.

Collectibles. Adult collectibles have features that preclude use by children during play, such as high costs, limited production, and display features like hooks or pedestals, and are not marketed alongside children's products.

Jewelry. Jewelry intended for children is sized, themed, and marketed to children. Many features of adult jewelry may be attractive to children 12 years old or younger, but potential attractiveness to children alone, does not make a piece of jewelry into a product intended for children. Consider the following to determine if jewelry is a children’s product: cost, marketing, play value; sale at an entertainment or educational event, use of childish themes, sale at a store containing mostly children's products; and sale in a vending machine. Also look at requirements for wearing; appearance (coloring, textures, materials, design themes, licensing, level of realism).

DVDs, Video Games, and Computers. Most computer products and electronic media devices, such as CDs, DVDs, and DVD players, are considered general use products. However, some CDs and DVDs may have encoded content that is intended for and marketed to children, such as children's movies, games or educational software.

Video game consoles also are considered general use products because a significant portion of the market for such items consists of teenagers and young adults. However, handheld video games with software intended for children 12 years of age or younger would fall within the scope of a children's product if the products are produced without software available that is appealing to older children and adults.

Likewise, keyboards, computer input devices, and other peripherals that are sized, decorated, or otherwise marketed for children 12 years of age or younger would be considered children's products, even though the computer itself is a general use item. Art Materials. Materials sized, decorated, and marketed to children 12 years of age or younger, such as crayons, finger paints and modeling dough, would be considered children's products. Crafting kits and supplies that are not specifically marketed to children 12 years of age or younger would likely be considered products intended for general use.

Books. The content of a book can determine its intended audience.

Science Equipment. Microscopes, telescopes, and other scientific equipment that would be used by an adult, as well as a child, are considered general use products. Equipment with a marketing strategy that targets schools, such as scientific instrument rentals, would not convert such products into children's products if such products are intended for general use. Toy versions of such items are considered children's products. Sporting Goods and Recreational Equipment. Sporting goods that are primarily intended for consumers older than 12 years of age are considered general use items. Regulation-sized sporting equipment, such as basketballs, baseballs, bats, racquets, and hockey pucks, are general use items even though some children 12 years of age or younger will use them. Sporting goods become children's products when they are sized to fit children or are otherwise decorated with childish features that are intended to attract child consumers. Similarly, recreational equipment, such as roller blades, skateboards, bicycles, camping gear, and fitness equipment, are considered general use products unless they are sized to fit children 12 years of age or younger and/or are decorated with childish features.

Musical Instruments. Musical instruments suited for an adult musician as well as a child are general use products. Instruments primarily intended for children can be distinguished from adult instruments by their size and marketing. Products with a marketing strategy that targets schools, such as instrument rentals, would not convert such products into children's products if such products are intended for general use, regardless of how the instruments are leased, rented, or sold. These instruments are intended by the manufacturer for use primarily by adults, although there also may be incidental use by children through such programs. However, products that produce music or sounds in a manner that simplifies the process so that children can pretend to play an instrument are considered toys primarily intended for children 12 years of age or younger. In general, instruments that are specifically sized for children and/or have childish themes or decorations intended to attract children are considered children's products.

The CPSC is providing a 60 day public comment period on the interpretive rule, before issuing a final rule. Comments must be submitted by June 21, 2010 to Docket No. CPSC-2010-0029.

European Commission Adopts Revised Competition Rules

The European Commission has adopted revised competition rules that “block exempt” distribution and supply agreements at different levels of the production and distribution chain. The Regulation and accompanying Guidelines take into account the development, in the last 10 years, of the Internet as a force for online sales and for cross-border commerce, something that the Commission wants to promote as it increases consumer choice and price competition.

Manufacturers remain free to decide how to distribute their products. But in order to benefit from the block exemption, they cannot have a market share in excess of 30% and their distribution or supply agreements must not contain any hardcore restrictions of competition, such as fixing the resale price or re-creating barriers to the European Union’s single market.

The new rules introduce the same 30% market share threshold for distributors and retailers to take into account the fact that some buyers may also have market power with potentially negative effects on competition. This change is beneficial for small and medium-sized enterprises (SMEs), whether manufacturers or retailers, which could otherwise be excluded from the distribution market.

The new rules do not mean that agreements between companies with higher market shares are illegal; instead, it is necessary to determine whether the agreement complies with Article 101 of the EU Treaty.

The new rules also specifically address the question of online sales. Once authorized, distributors must be free to sell on their websites as they do in their traditional shops and physical points of sale. For selective distribution, this means that manufacturers cannot limit the quantities sold over the Internet or charge higher prices for products to be sold online. The Guidelines further clarify the concepts of “active” and “passive” sales for exclusive distribution. Terminating transactions or re-routing consumers after they have entered their credit card details showing a foreign address will not be accepted.

Critics of the rule note that the Commission has included several caveats in the rules that could restrict online sales growth. For example, manufacturers may decided to sell only to dealers that have one or more “brick and mortar” shops, which would prevent online-only retailers from selling the goods directly. In this regard, however, the Commission stated it will be particularly attentive to concentrated markets to which price-discounters either online only or traditional may not have access. The new Block Exemption Regulation and Guidance can be found at http://ec.europa.eu/competition/antitrust/legislation/vertical.html.

Sarah Kerbeshian is an Associate in the Regulatory Affairs Department at Dorsey & Whitney, LLP. Please see our web site at www.dorsey.com.

CPSC Issues Proposed Rule for Testing Component Parts of Consumer Products

On April 1, 2010, the Consumer Product Safety Commission (CPSC) released a draft notice of proposed rulemaking for a rule that would impose requirements for testing component parts of consumer products. Specifically, the proposed rule would establish requirements for how persons issuing certificates under section 14(a) of the Consumer Product Safety Act (CPSA), as amended by section 102(b) of the Consumer Product Safety Improvement Act of 2008 (CPSIA), that their products comply with applicable CPSC requirements may rely on tests obtained by suppliers of component parts, or others, as the basis for their certificates.
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Under section 14(a) of CPSA, manufacturers and private labelers of products are required to issue a certificate: (1) certifying, based on a test of each product or upon a reasonable testing program, that the product complies with all CPSC requirements and (2) specifying each rule, ban, standard, or regulation applicable to the product. Additionally, manufacturers and labelers of children’s products subject to children’s product safety rules must submit a sample of the product to a third party conformity assessment body accredited by CPSC to be tested for compliance.

The proposed rule, if adopted, will establish a new 16 C.F.R. Part 1109, setting forth conditions and requirements for testing of component parts of consumer products, including children’s products, where such testing is intended to demonstrate compliance with applicable CPSC rules. The proposed rule would also set out the conditions under which tests of component parts can be conducted by persons other than the manufacturer, such as the manufacturer or supplier of the component parts. The proposed rule is divided into two subparts: Subpart A sets forth generally applicable conditions and requirements while Subpart B sets forth conditions and requirements for specific consumer products, component parts, and chemicals. The Subpart B regulations are mostly concerned with lead testing and phthalate testing, particularly in children’s toys.

The proposed rule is consistent with various guidance documents issued by the Commission in the past, including the following:

1. Statement of Policy: Testing of Component Parts with Respect to Section 108 of the CPSIA;

2. Statement of Policy: Testing and Certification of Lead Content in Children’s Products;

3. Guidance Document: Testing and Certification Requirements Under the Consumer Product Safety Improvement Act of 2008;

4. A notice regarding a Commission workshop on testing and certification published in the Federal Register on November 13, 2009; and

5. Interim Enforcement Policy on Component Testing and Certification of Children’s Products and Other Consumer Products to the August 14, 2000 Lead Limits.

Parties may submit written comments on the draft rule within 75 days of publication in the Federal Register.

Kristin Stastny is an Associate in the Regulatory Affairs Department at Dorsey & Whitney, LLP. Please see our web site at www.dorsey.com.