Can Government and Industry Conspire to Thwart FOIA? A Critical Analysis of Critical Mass III
Long, Patrick, The Journal of High Technology Law
Cite as 13 J. High. Tech. L. 136 (2012)
There are multiple reasons the government may have access to a private entity's trade secrets. Trade secrets may be acquired from government contractors as part of a purchase (e.g. military technology which must remain classified and thus cannot be patented). (1) Research where the government is a grantor or partner may allow government personnel to become aware of confidential information. (2) Regulators or legislators may request confidential information in making decisions about what the law should be. (3) Information may be required by regulators in order to approve certain conduct (e.g. mergers, drug sales). (4) And the list goes on. Most of these types of disclosure are voluntary, at least in a sense. Refusal to disclose military technology forecloses the possibility of selling it to the government, but does not cause government retaliation. (5) Refusal to disclose secret information to regulators such as the Food and Drug Administration, however, can result in total inability to sell a regulated product in the United States. (6)
Cases dealing with disclosure have reached conflicting results. The Supreme Court held, in Ruckelshaus v. Monsanto (Monsanto), (7) that disclosure of a trade secret may be an unconstitutional taking if the trade secret owner was forced to give the trade secret information to the government or gave it subject to a promise that it would not be disclosed. (8) But the D.C. Circuit held in a later case that information the trade secret owner is forced to give to the government is not entitled to as much protection as information given to the government voluntarily. (9) Further, it held that although an agency could compel a regulated company to submit information, and would then be required to disclose it to the public, nothing in the law prevents industry and government from conspiring together to protect companies from disclosure of embarrassing information through voluntary submission of information that the government would otherwise compel submission of. (10) The result is a system where many regulatory bodies, including the Nuclear Regulatory Commission, do exactly that. (11) In some situations, the D.C. Circuit's principle cannot be squared with the Supreme Court's Monsanto decision.
This note looks at the legal conflicts involved when demands for government transparency clash with the need to protect trade secrets. Section II describes the development of two occasionally conflicting strands of the law. Subsection A discusses the development of trade secrets law, especially as applied when the government possesses trade secrets. Subsection B covers the evolution of laws promoting government transparency. Section III takes a closer look at the conflict between Monsanto and Critical Mass III, two of the foundational cases dealing with the conflict between trade secrets and government transparency. Section IV looks for ways to address the conflicts between these disparate rulings. Section V concludes the note by reaffirming the fundamental conflict between Monsanto and Critical Mass III.
A. Definitions of Trade Secrets
In Monsanto, the Supreme Court for the first time held that trade secrets are property, with the specific rights property rights the owner is entitled to being dependent on the relevant state law in the absence of a federal definition of trade secrets. (12) Under the Fifth Amendment, trade secrets' status as property rights means they cannot be disclosed by the government without due process of law. (13) When it comes to intangible property whose value lies in the fact that it is a secret, disclosure, by virtue of destroying the economic value of the property, would be a taking (14) and thus a violation of the takings clause. (15) Protecting property rights first requires understanding what those rights are. (16) Federal law is unclear on what is a trade secret. …