There has long been great debate about the extent to which the public should have access to government-held information that concerns private businesses. Primarily sought through requests made under the Freedom of Information Act (FOIA), this type of information is often claimed exempt from mandatory disclosure under FOIA’s Exemption 4, which covers trade secrets and confidential commercial or financial information obtained from a third party. But the state of the law has been evolving in an unsatisfactory way. For example, Sonia Katyal and Charles Graves have a recent searing critique of the over-application of the trade secrets doctrine generally, and as I reviewed a couple of years ago, Deepa Varadarajan brilliantly takes apart the justifications for the sweeping expanse of Exemption 4 specifically. Both pieces, and others, have pointed out the expansion of commercial secrecy beyond the traditional justification to protect competitive innovations. Calls for reform, such as this recently proposed legislation, have typically centered on cabining the trade secrets protections to apply more narrowly, thus rebalancing the interests in public transparency against those of business secrecy.
This line of scholarship is rich and worthy, but Christopher Morten’s outstanding forthcoming article, Publishing Corporate Secrets, finds a fresh third angle to the problem, rejecting the idea that line drawing is even necessary and embracing as a solution a middle ground between full disclosure and guarded secret keeping. Are you intrigued by the idea that the government might be able to publish important information without first deciding whether it constitutes a trade secret? Or that there is a way to publish trade secrets for the social good without competitors profiting from it? So was I. Read on.
To begin, Professor Morten does a particularly cogent job at describing a complex backdrop for the current problems related to government held corporate secrets. First, drawing on a rich literature on the day to day work of the administrative state (including Rory Van Loo’s terrific piece that I also previously reviewed!), Professor Morten explains how government’s regular functions necessarily involve the collection of business information. Even more so, he details how agencies have sweeping powers to force businesses to produce information. Agencies need not rely on voluntary compliance, cooperative agreements, or close relationships with business. Inspections, monitoring, enforcement, and premarket approval procedures provide avenues for agencies to require the production of information by the private market. Second, Professor Morten describes how very few agencies proactively publish or otherwise provide information gleaned from private business, even when it poses grave threat to public health or safety (think software information related to the Boeing 737 MAX after the first of two deadly airline accidents). And third, he efficiently and effectively documents why FOIA requests are failing to fill the necessary gap, the sweeping interpretations of Exemption 4 as well as the more mundane problems of FOIA administration.
But it is in his proposed solutions and their legal justifications that Morten breaks exciting new ground. He documents how agencies already largely have the power to disclose information even when it is admittedly at the core of protected information under the trade secrets doctrine. FOIA itself authorizes withholding of protected commercial information, but does not require its withholding. Similarly, while the Trade Secrets Act does criminalize the disclosure of protected information, it does so only when disclosure is not “authorized by law.” And the “law” that might authorize disclosure includes legislative rules issued by an agency. Thus, through its regulatory power, an agency can designate what commercial information it intends to publish. In some sense this workaround to the Trade Secrets Act has been hiding in plain sight. Chrysler Corp. v. Brown—the Supreme Court’s seminal case authorizing so-called “reverse FOIA” cases (suits to prohibit an agency from disclosing records)—itself analyzed whether a particular regulation overcame the Trade Secrets Act’s presumption of confidentiality. Morten rounds out the analysis by demonstrating why neither agencies’ enabling acts nor the Takings Clause of the Constitution typically present significant hurdles to publication, either.
So if the government can publish trade secrets, assuming appropriate procedural steps have been taken, should it? Here Morten’s answer gets even more interesting. It’s a qualified “yes.” Morten proposes that agencies create information “bounded gardens,” or selective disclosure regimes that allow certain users or uses to be granted access to otherwise secret information without that information being published to all if such publication would harm competitive interests. These gardens would be bounded by techniques such as information use applications, information use agreements, and technical limits on access. Morten usefully provides examples of extant government databases that implement these very strategies—albeit more often in the case where privacy interests, rather than corporate interests, are at stake—as evidence of their success.
I love that this article represents a fresh take on an old seemingly zero-sum game that pits the public interest against competitive injury. This moves the conversation out of that playing field and proposes in some ways a radically different approach, and yet grounded in extant law and practice. Moreover, it contributes to the literature on the importance of and strategies for increasing proactive disclosure by government agencies, a topic I explored in my recent book, Saving the Freedom of Information Act. As information overload increases, and FOIA backlogs abound, the government using its platform to provide information that it knows serves the public interest is increasingly important. Of course, Morten’s strategy is not an alternative to the sensible strategies to limit the overreach of trade secrets doctrine—we should absolutely do both. But in a quest to ensure government does not ratify harmful corporate secrecy, Morten’s proposal represents an innovative path forward.
