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Component Part Manufacturers: Consumer Product Safety Laws May Apply to YouTuesday, July 12, 2011 > 09:01:21
(Lexology – Stacy K. Taylor, Nelson Mullins Riley & Scarborough LLP)
One of the big recurring questions in the consumer product arena is whether a manufacturer or importer of component parts must comply with the consumer product laws. The misconception is that, “because my company does not sell to consumers and has no control over the final product being sold, such requirements do not apply.” Although it might not make much sense, and, if you practice in this arena, creates a whole host of compliance questions, the reality is that the consumer protection laws can, and likely do, apply.
The Consumer Product Safety Commission (CPSC) has authority over consumer products, which is defined in 15 U.S.C. § 2052 as "any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise." (emphasis added). Thus, by statutory definition, a component part of a consumer product is a consumer product. At least one court of appeals has addressed this definition, explaining that "a product may be a 'consumer product' if it either is produced or distributed as a distinct article of commerce . . . or is produced and distributed as a component part of such a distinct article." Consumer Prod. Safety Comm’n v. Anaconda Co., 593 F.2d 1314, 1319–20 (D.C. Cir. 1979). Although dated, the CPSC's General Counsel also issued an Advisory Opinion in 1974 that states that "component parts of consumer products are subject to the requirements of the Consumer Product Safety Act."
Unfortunately, the CPSC failed to address this simple question in the guidance document that it issued in November 2009 to address the multitude of questions surrounding the 2008 Consumer Product Safety Improvement Act, but the guidance document does suggest that component parts are covered. See Guidance Document: Testing and Certification Requirements under the Consumer Product Safety Improvement Act of 2008. Specifically, the guidance document provides an example of a children's clothing manufacturer asking a button supplier to provide third-party testing results. If component parts such as buttons are not considered a consumer product, one would expect a simple response from the CPSC to this end. Instead, the CPSC embarks on the much more involved analysis of whether the buttons constitute a children's product. This suggests that the CPSC views components parts as consumer products.
Also, the CPSC issued a December 28, 2009, enforcement policy concerning component part testing that states, among other things, that one can rely on certifications from paint manufacturers and from the manufacturer or importer of component parts. The fact that the CPSC issued a policy allowing for certification of the final product based on testing or certification of the component parts is just another indication that the CPSC tends to look upstream in the production process.
"Well, I do not sell my products to consumers." This is a much more complicated issue and analysis and beyond the scope of this article, but suffice it to say that the end use of a component part, in terms of the final product, is what really matters in deciding what is a "consumer product," not to whom you may be selling your product. According to the court in Anaconda Co., the definition of "consumer product" addresses "the various modes of distribution through which consumers acquire products," including both direct sales to consumers and "situations in which a consumer acquires the use of the product other than through a direct sale transaction." The only difference is that the manufacturer or importer of a component part may have a stronger argument that their component is not manufactured or imported for use in consumer goods.
What does that mean for component part manufacturers and importers? It means that they are likely governed by the consumer product laws. It also creates a host of challenges and questions for such companies because they often have no control over the use of their components, including, for example, whether it goes into office furniture (typically not a consumer product) or home furniture or whether it is exposed or properly enclosed (which, depending on the use, dictates whether the lead limits apply). Ultimately, many of these issues will be sorted out through the marketplace because the CPSC has at least clarified that the manufacturer or importer of a final product can rely on certifications from the component part suppliers. This means that the manufacturers and importers of the final product will likely start looking upstream to their suppliers anyway. But until then, questions abound, and component part importers and manufacturers need to be aware that the consumer product laws can apply to their products.