Trade secrets help your business thrive. They are the “special sauce” that allows you to show customers that you and your business provide something different from the competition. It is not an understatement to say that your trade secrets are the “keys to the kingdom” and worthy of substantial protection.
In our last blog, we covered the basic dilemma that many businesses face when dealing with the government: the inherent tension between the need to protect trade secrets and the fact that the government, once in possession of company information, has an obligation under the Freedom of Information Act (FOIA) to disclose that information when an appropriate request is made.
Accordingly, in this blog, we are going to take the discussion one step further. We will focus on a number of binding decisions from the Illinois Attorney General that are directly focused on the “FOIA vs. trade secret” issue.
If, after reading these blogs, you would like more guidance on how you can protect your trade secrets and confidential information, you need to speak to an experienced attorney who understands the parameters of FOIA. We invite you to contact us at 1818 Legal. We are attorneys, and registered lobbyists, who put our government experience to work for businesses and individuals in Illinois. Call today at (312) 584-5444 or fill out our online contact form.
To remind you of the foundation we provided in our previous blog, the Illinois FOIA law provides that “all records in the custody or possession of a public body are presumed to be open to inspection or copying.” 5 ILCS 140/1.2. This means that the government’s default position is to disclose information in its possession, including confidential information that it may receive as a result of a Request for Proposal or other interaction with the government.
There is, however, a trade secret exception whereby the government will not disclose trade secrets or other confidential information that “would cause competitive harm to a business” at Section 7(1)(g) of the Illinois FOIA. The key, however, is that a business must make a claim that the information is confidential. Thus, businesses must be vigilant in making sure that they claim upfront that the confidential information provided to the government should be always treated as such.
With that backdrop, let us look at some real-world examples, and the Illinois Attorney General’s position in those circumstances.
Toward the end of 2014, singer/songwriter Garth Brooks was slated to come to Allstate Arena in the Village of Rosemont to give a concert. In anticipation of the concert, a Chicago Tribune reporter made a FOIA request for all contracts between the Village and the representatives of Garth Brooks, including correspondence, emails and other documents. The Village, in response, held back certain documents that it believed were proprietary and confidential under a number of FOIA exceptions, including the trade secret exception.
The crux of the Village’s position with regard to the trade secret exception was that, in the context of the arena-sized venue market, any financial and revenue information would be considered trade secrets. In particular, the Village was very concerned that a competitor, like the United Center, would gain an unwarranted competitive advantage over the Allstate Arena if it knew what the Allstate Arena charged to rent the space.
The Attorney General ultimately determined, however, that the Village was wrong to hold back the requested information. It stated that a public body cannot withhold information about the funds it receives from agreements with private entities. It also employed a highly technical reading of the trade secret exception to find that a negotiated term between the parties is different from financial terms “obtained from a person or business” as specified in the trade secret exception to FOIA. (Public Access Opinion 15-002)
An intrepid reporter with the Associated Press wanted to know precisely how much the taxpayers spend on marketing the state lottery. Accordingly, he made a FOIA request to the Illinois Department of the Lottery, seeking a copy of the Illinois Lottery marketing contract.
In response, the Lottery Department provided two contracts with its private lottery manager, Northstar Lottery Group, which had substantial redactions. The Lottery Department defended the redactions as exempt from disclosure under two FOIA exceptions, including the trade secret exception. Northstar further claimed that disclosure of the requested information would cause competitive harm by enabling other entities to develop pricing models or proposals to compete for business.
The Attorney General disagreed, however, stating that “records documenting the publicly funded cost of services purchased by a State agency do not constitute trade secrets.” The AG added that entities which enter into contracts with the government simply “do not enjoy the same ability to withhold information that they do with respect to their private contracts.”
In addition, the AG noted that Northstar did not demonstrate how disclosure would result in substantial competitive harm to its business. Any allegation of competitive harm needs to be substantiated. As a final blow, the AG stated that any confidential agreements that Northstar had with its own contractors to keep information secret must bend to a court or government order, and that the confidentiality agreements themselves allow for disclosure under FOIA, if required.
In sum, the Attorney General stated that the Lottery Department was wrong to withhold the requested information in the contracts.
In a third case, a reporter at the Chicago Sun-Times made a FOIA request to find out how much it cost to rent space at the Metropolitan Pier and Exposition Authority’s (MPEA’s) McCormick Place for conventions and trade shows.
The MPEA declined to respond to the request because there were 243 different license agreements covered by the FOIA request, and because it believed the trade secret exception applied. The MPEA argued that financial and square footage information would cause the MPEA’s customers to suffer competitive harm and would hurt McCormick Place when competing for conventions and trade shows in the future.
You should not be surprised by now that the Attorney General found that the trade secret exception did not apply. Similar to the Garth Brooks example above, the AG relied on the technical reading of the trade secret exception language to find that a negotiated term between the parties is different from financial terms “obtained from a person or business.” In addition, the AG found that the MPEA fears about competitive harm were only speculation.
From the three cases above, it is clear that the State of Illinois reads the trade secret exception to FOIA very narrowly. Further, it is clear that unless a party has some tangible proof of competitive harm, the AG will likely find any unsubstantiated allegation of harm to be unpersuasive.
Accordingly, if you do business with the government, you need to make sure that you claim with specificity the information you deem to be a trade secret and/or confidential. Further, be sure to have some tangible evidence to show that disclosure of the claimed trade secrets would, in fact, result in substantial competitive harm.
It is not enough to try mightily on your own to keep trade secrets from the public eye when working with and for the government. Having a seasoned attorney at your side from day one is essential. We welcome you to call 1818 Legal to help you with your efforts. We are experienced attorneys who are ready to help you guard your businesses competitive advantage. Call us today at (312) 584-5444 or fill out our online contact form. 1818 knows government.
The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.
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