Post-Argus Leader Exemption 4: Using Trade Secrets Law to Tackle Issues in FOIA Litigation
FOIA plaintiffs may be able to better gain access to redacted material using Trade Secrets law in the face of Argus Leader.
Attribution
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Trade secrets law has long been used by companies to protect intellectual property and proprietary information from their competitors. The Freedom of Information Act, however, stresses the importance of broad disclosure. It may seem then that Trade Secrets law and FOIA directly contradict. However, FOIA not only holds that Trade Secrets be categorized under specific guidelines closely aligned with both federal and state Trade Secret law, but allows government agencies to redact certain pieces of information from FOIA requests if they fit into one of nine categories - exemption 4 specifically pertains to “"trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential." In an exemption 4 FOIA suit, the government must demonstrate that the information is “commercial or financial” in nature, obtained from a “person” (including private business entities), and is “privileged or confidential.” This intersection and the similarity between the tests to establish if information has been correctly redacted under exemption 4 and whether information qualifies as a Trade Secret may allow plaintiffs to weave and dodge precedence not in their favor and gain further access to competitor information.
Before 2019, courts relied on the test set forth in National Parks and Critical Mass to establish what information was “privileged or confidential” in FOIA cases. However, in Argus Leader, the Supreme Court abandoned nearly 40 years of established precedence and created a new “privileged or confidential,” test for the exemption 4 prong. Now, plaintiffs and defendants alike must show that the "information communicated to another remains confidential whenever it is customarily kept private, or at least closely held, by the person imparting it… [and/or the] information might be considered confidential only if the party receiving it provides some assurance that it will remain secret." While this new test is relatively straight forward, it proves difficult for plaintiffs to win on those grounds because all the government or company intervenor must show is that the company itself keeps those records as confidential in order to redact the specific information.
For Trade Secrets specifically, this may seem impossible to overcome; a Trade Secret is a secret, and therefore confidential. However, The Trade Secrets Act and Trade Secrets state litigation may provide a path forward for those plaintiffs who find themselves unable to gain access to information they seek through FOIA.
In Trade Secrets litigation, a common strategy to defend oneself from an accusation of misappropriation is to demonstrate that the information in question was never a Trade Secret to begin with. In Rockwell Graphic Systems v. DEV, the defendants were able to succeed in defeating a misappropriation suit at the summary justice stage because they showed that the trade “secret” in question was not closely kept enough to warrant protection. In essence, the defendants were free to disseminate those pieces of proprietary and financial information to whomever they pleased because Rockwell Graphics did not do enough to protect its information. The path sought by the defendants is a common one in Trade Secrets litigation as the negation of a Trade Secret means there could be no misappropriation of that information.
Applying this principle to FOIA may provide plaintiffs some more room to pursue the information they seek. Many exemption 4 FOIA suits come in the form of a “reverse FOIA” suit in which a company seeks to prevent the government from releasing the information. For Trade Secrets, this often means one company attempts to prevent a competitor from gaining access to their Trade Secret that may have been provided to the government. By scrutinizing the first prong of the exemption 4 test, “trade secrets and commercial or financial information,” plaintiffs may be able to avoid being stuck in the mire of proving that information is not “privileged or confidential” under the pro-defendant Argus Leader test.
Ultimately, proving whether sets of information are “Trade Secrets” or not boils down to a question of to what extent those sets of information are privileged or confidential. The same is true for information under the exemption 4 and Argus Leader tests. In situations where a plaintiff’s Argus Leader test argument may not be as strong, using Trade Secret misappropriation standards to demonstrate that the information itself cannot be considered a “Trade Secret,” and therefore unavailable to exemption 4 protections, allows plaintiffs to dodge the difficult Argus Leader questions while focusing on negating the defense’s posture that the information is a Trade Secret.
A major issue with this concept falls to the pleadings of the defense: if something is not a Trade Secret, a defendant may switch to calling it “commercial or financial.” While changing pleadings of what information may be considered by the court in theory could be possible, it is unlikely given the fact that the government, always a defendant in a FOIA case, is initially required to make a determination of what the information being redacted is before a plaintiff would be able to bring suit. Once the government decides, as a matter of record, that it is redacting information from a FOIA response because it is a Trade Secret, it cannot arbitrarily change that decision simply because it is now in litigation. For example, if in its FOIA request response the government redacts information under exemption 4 as a Trade Secret, the FOIA litigation must run with that record. Additionally, this method is not a dispositive catch-all; some information redacted by the government or through reverse FOIA suits are genuinely Trade Secrets.
Where this strategy may find its best place is in those scenarios where the Trade Secrets misappropriation case law is more defendant-friendly than Argus Leader is anti-plaintiff. Conversely, for defendants in Trade Secrets misappropriation cases, applying the Argus Leader and FOIA standard, if relevant, may help in showing that no genuine harm would come from the release of the information and/or the information is not the type which even the government could keep from the public eye. Whether this strategy is a hole to be patched in the law or a work-around of existing structures depends on the stance of the litigator and whether they believe unorthodox strategies are beneficial to establishing precedence and ultimately achieving justice.
Special thanks to William Snape for inspiring this blog as well as being a dedicated professor and excellent mentor.