For Immediate Release February 10, 1997

Trade Secrets Should Stay Secret

By Tom Tancredo

Should businesses be forced by law to give up their trade secrets? That’s the question that the Colorado legislature is facing, in the form of House Bill 1091. The bill, which requires that tobacco companies make trade secrets public, would establish the principle that the legislature can force any company to disclose the trade secrets which are the foundation of the company’s success.

The bill, sponsored by Rep. Martha Kreutz (R-Littleton) would order tobacco companies to turn over to the Colorado state government, for public view, information far beyond the requirements of current law.

For example, tobacco companies would be forced to list every single ingredient, no matter how small the quantity, included in each particular brand of cigarettes. As a result, makers of off-brand cigarettes would be able to duplicate the unique taste of popular brands.

The specific formulas for certain brands of cigarettes, cigars and chewing tobacco are what have made them popular. People smoke a Marlboro, for example, rather than a generic brand because they like the Marlboro’s taste better. Small ingredients can make all the difference in taste; Coke and Pepsi, for example, use the same major ingredients, but different minor ones, to achieve their unique taste.

Every person—even a person who makes politically incorrect products like cigarettes—has a right to profit from her own ingenuity. If trade secrets were required by law to no longer be secret, human invention and creativity would suffer greatly and we could discourage the economic benefits of mankind’s fertile imagination. Indeed, this is why Colorado enacted the Uniform Trade Secrets Act in 1986.

Other provisions of the proposed anti-tobacco bill simply make no sense scientifically. For decades, cigarette manufacturers have been required by federal law to disclose the nicotine levels in each brand of cigarettes. This allows consumers to chose a low-nicotine cigarette, if that is their preference.

But HB 1091 would take this good idea to an illogical extreme. The bill would also tell each company to list the amount of nicotine each product deposits in an individual’s body. But different people absorb nicotine at very different rates, depending on their metabolism, genetic structures, and physiques. An active 110-pound, 21-year-old female will obviously absorb nicotine at a far different rate than a sedentary 220-pound, 50-year-old, male.

The ostensible purpose of HB 1091 is not to destroy tobacco companies by disclosing their trade secrets, or to create nicotine disclosure laws that are impossible to comply with. Rather, the stated purpose is to educate tobacco users.

But tobacco is already the subject of more coercive "education" than any other product in American history. Under the Federal Cigarette Labeling and Advertising Act (FCLAA), tobacco companies must print specific health warnings on all packaging and advertising, such as on billboards and in magazines. The number of Americans who have not been bombarded by information about the health risks of tobacco use is probably smaller than the number who have never heard of O.J. Simpson.

If there is a need to make consumers aware of particular small-quantity tobacco additives which pose a scientifically demonstrated health risk in those small quantities, then specific legislation should address those particular additives. Forced disclosure of all ingredients is an overbroad approach.

Strangely, the trade secrets violation bill has no enforcement clause. As a legislative matter, this is good strategy, since it means that the bill does not need to be approved by appropriations or finance committees. Yet as a practical matter, the lack of an enforcement clause makes the bill ridiculous; the state would not be able to impose any penalty on companies that refused to comply with the law.

To the extent that tobacco companies do comply (perhaps for fear of some kind of private lawsuit), there will of course be a fiscal impact on the state of Colorado. Employees of the Colorado Department of Health and Environment will have to allocate time, materials and machinery (computer space, telephones, copiers, faxes, etc.) to store the tobacco information and to comply with public requests for information.

A similar bill, passed last year in Massachusetts, was challenged under the theory that federal law preempts state laws on tobacco disclosure; the federal court rejected the challenge, finding no explicit intent to preempt, and no reason to infer such an intent.

The question for Colorado, however, is not whether the legislature has the authority to enact such a law, but whether the proposal is a reasonable effort to improve consumer information, or amounts instead to harassment of a lawful business selling a lawful product.

Tom Tancredo is President of the Independence Institute, a free-market think tank in Golden, Colorado.

This article, from the Independence Institute staff, fellows and research network, is offered for your use at no charge. Independence Feature Syndicate articles are published for educational purposes only, and the authors speak for themselves. Nothing written here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.
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