Business Secrecy Expansion and FOIA

ABSTRACT

Expansive trade secrecy claims (such as those regarding voting machine software and government contractor pricing) can negatively impact government transparency and democratic accountability. In one important context—Freedom of Information Act (FOIA) cases—courts have addressed these concerns by imposing constraints on the definition of “trade secrets” and “confidential” commercial information that can be lawfully withheld from requesters, such as journalists and watchdog groups, under FOIA’s Exemption 4. But, the U.S. Supreme Court’s 2019 decision in Food Marketing Institute v. Argus Leader Media toppled these constraints. Wiping away four decades of circuit court precedent, the Court held that commercial information can be withheld under Exemption 4, provided that the submitter customarily treated it as private. Prior to this decision, such information typically could not be withheld unless its disclosure would cause the submitter substantial competitive harm. Food Marketing’s permissive new standard will dramatically expand the private sector’s ability to shield from public view information provided to the government.

This Article is the first to explore Food Marketing and its consequences through the lens of trade secrecy law. I demonstrate that Food Marketing’s expansion of exempt business secrets under FOIA is consistent with the broader pattern of trade secrecy expansion in common and statutory law. In both contexts—FOIA and civil trade secret litigation—courts have replaced strict constraints on the definition of proprietary secrets with a more open-ended analysis that focuses on a firm’s privacy practices and preferences. This newfound consistency is ironic, given that courts considering FOIA requests spent many decades rejecting the more expansive definition of trade secrecy in civil litigation and opting instead for a narrower definition that aligned with FOIA’s disclosure mandate. Ultimately, I suggest that Food Marketing’s new test may sweep even more broadly than its civil trade secrecy counterpart, for the latter’s focus on employee-defendants comes with inherent restrictions on firms’ overbroad claims that the FOIA context lacks. These differences and FOIA’s unique role in promoting government accountability suggest the need for additional constraints on firms’ assertions of business secrecy.

Varadarajan-68-2

About the Author

Assistant Professor of Legal Studies, Department of Risk Management and Insurance, J. Mack Robinson College of Business, Georgia State University; Secondary Appointment, Georgia State University College of Law.

By LRIRE