August 25, 2009

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In July, CPSC announced that it would not impose a "one size fits all" system on companies subject to the tracking label provisions for toys and children's products in CPSIA Section 103(a). The agency explained that congressional intent was to bring problematic companies into compliance not to create extra burdens for all companies, so it will leave the specifics up to each company (although it reserved the right to dictate a more uniform system in the future if technology made that appropriate). More on the agency's thinking on this matter is in the July 27 edition of our premium sister service, Product Safety Letter. Meanwhile, below, verbatim, is an excerpt from CPSC's July guidance on tracking labels ... nine answers around which companies should build their tracking systems.

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Format and Content of the "Tracking Label"

1. What is a "tracking label"?

While the title of Section 103 references "tracking labels," the focus of the statutory text is "distinguishing marks." As such, manufacturers should look at the totality of the information permanently marked on the product and packaging and not interpret "label" to mean a singular collection of information in one discrete location.

The Commission believes that required information already permanently marked either to brand the product or otherwise to comply with other Commission or federal regulations, such as those promulgated under the Textile, Wool and Fur Acts or country of origin labeling rules, could be considered part of the "distinguishing marks" called for by Section 103(a). Any such marking would have to be permanent as required by Section 103(a).

2. What marks are required and what does it mean for information to be ascertainable?

Section 103(a) mandates distinguishing marks such that (1) the location of production (2) the date of production and (3) cohort information for that product is ascertainable. Any such marks should be visible and legible. Overall, the information should allow the manufacturer to determine the specific source of each product. The Commission expects a manufacturer to depart from these requirements only for considered and definable reasons. Each manufacturer is ultimately responsible for making a reasonable judgment about what information can be marked on their product and packaging, given the character and type of their product and packaging, and what required information can be ascertainable, given the character and type of their business. When considering the reasonableness of a manufacturer's decision regarding what information to include in its markings, the Commission intends to look at the individual manufacturer's situation along with the practices of peer manufacturers.

The question of what should be ascertainable is a different question than whether that specific information can be marked on the product or packaging. While there are foreseeable limitations of what a manufacturer might reasonably be able to mark on a product or packaging, the Commission expects the basic information referred to in Section 103(a) to be ultimately ascertainable by the manufacturer and the consumer.

Section 103(a) does not require codes, formats or numbering systems. A manufacturer may choose to employ a code or numbering system provided the required information remains ascertainable by the consumer. The manufacturer can also rely on code systems already provided through compliance with other federal regulations, again, provided the required information underlying that code is ascertainable by consumers.

3. What is a "permanent" mark?

The Commission considers a "permanent" mark on a product to be a mark that can reasonably be expected to remain on the product during the useful life of the product.

A mark on disposable packaging need only be permanent to the extent it is durable enough to reach the consumer. As such, an adhesive label on a piece of disposable packaging might be sufficient for a packaging mark. Further, if a mark is visible on the product through disposable packaging, there is no need for the mark to be on the packaging.

The Commission is aware that some voluntary standards, for example the ASTM standard for cribs, have provisions concerning the permanency of labels. Such standards may provide some guidance to manufacturers when determining whether a marking is permanent.

4. When can only the packaging be marked and not the product?

The Commission believes that Section 103(a) sets forth the expectation that, in most instances, both the packaging and the product will be marked. The statute recognizes, however, that this might not always be practicable. Some circumstances where the

Commission considers that marking the product itself might not be practicable include:

(1) If a product is too small to be marked. Legislative history recognizes that a product's size is a primary consideration in determining if marking only the packaging is feasible. See H.R. Rep. No. 501, 110th Cong., 1st Sess. 32 (2007).

(2) If a toy is meant to be stored in a box or other packaging, such as games with boards and small game pieces. There, the board and the box should be marked, but the individual game pieces do not need to be. This is another example recognized in the legislative history. See H.R. Rep. No. 501, 110th Cong., 1st Sess. 32 (2007). The Commission believes that this principle would similarly apply to arts and crafts kits for children. Again, only the storage box and one integral part of the kit needs to marked and not every item in the crafting kit. Where a number of small products such as marbles, buttons, beads, etc. are packaged together, the Commission believes that marking the package would be sufficient. For products that are meant to stay with or be contained in their original packaging, the packaging would be considered part of the "product."

(3) If a product is sold through a bulk vending machine, the item does not need to be individually marked but the package or carton in which such products are shipped to the retailer should be marked. The Conference Report recognized that marking each individual product in such circumstances may not be practical. See H.R. Rep. No. 787, 110th Cong., 2d Sess. 67 (2008).

(4) If a physical mark would weaken or damage the product or impair its utility.

(5) If a product surface would be impossible to mark permanently such as those made of elastics, beads, small pieces of fabric (such as jewelry, hair ornaments, etc.), or craft items like pipe stems, or natural rocks.

(6) If the aesthetics of the product would be ruined by a mark and a mark cannot be placed in an accessible but inconspicuous location.

5. Where should marks be placed for items sold in sets?

The Commission believes that for items meant to be sold as sets or pairs and that function only as sets or pairs, only one item of the pair, or an integral part of the set would need to be marked. Shoes are an example. This situation is similar to the circumstance recognized in legislative history of a game with small pieces not needing marking on all the small pieces. The Commission expects that items which can be separated and sold separately would need to be separately marked.

6. What entity is to be marked or ascertainable?

Section 103(a) requires that the name of the manufacturer or the name of the private labeler be ascertainable from the marking.

7. What is the location of production to be marked or ascertainable?

The Commission believes that the name of the country and the city and state (or administrative region, as appropriate) where the product was manufactured would be sufficient to provide the location of production. However, the manufacturer would be responsible for identifying the specific source of the product in the event of a compliance inquiry or other Commission action.

8. What date of production is to be marked or ascertainable?

The Commission recognizes that products may not always be started and completed in a single day. The Commission anticipates that the date of production could be a date range if the product is made over a period of time.

When the product is a group of disparate components or items assembled together or gathered into one package, the Commission interprets the date of manufacture to mean the date of assembly or placement into one package.

9. What cohort information is to be marked or ascertainable? Do small volume manufacturers or crafters need to create a system that includes batch, run or other numbers?

Although Section 103(a) does not require manufacturers that do not use lot, batch or run numbers to create such a system, the Commission believes that compliance with this Section generally will require that manufacturers have in place a reasonable means to ascertain detailed production information, including the means to distinguish products made from different factories, made with different components, at different times or have other material differences that make the product non-identical from previous products. The business and recordkeeping practices of peer manufacturers should be considered.

Small volume manufacturers and crafters may be unlikely to use lot, batch or run numbers, and, again, the Commission does not interpret Section 103(a) to require them to create such a system. Nevertheless, reasonable practices should be in place by such manufacturers to keep records of components used in their products.