The federal government\u2019s two trillion dollar COVID stimulus package<\/a> was big news this past spring.\u00a0 It gave around 350 billion dollars in loans to (supposedly) small businesses through the Paycheck Protection Program<\/a> (PPP).\u00a0 I say \u201csupposedly\u201d because several big corporations<\/a> got the money (although many later returned it).\u00a0<\/p>\r\n\r\n\r\n\r\n How many big companies got money?\u00a0 Where are these companies?\u00a0 What is the money being spent on?\u00a0 The government initially refused to release<\/a> any information about the PPP and its recipients.\u00a0<\/p>\r\n\r\n\r\n\r\n This was a problem.\u00a0 Not only was the government not releasing which companies got money, but the loans could be forgiven<\/a> in their entirety.\u00a0 The huge amount of public dollars being given away without public knowledge about the recipients led to calls<\/a> for transparency and accountability.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n (Trade) Secrets, Secrets Hurt the Taxpayer.<\/strong><\/p>\r\n\r\n\r\n\r\n Queue the IP questions.\u00a0 As pressure started mounting for the government to release information about the PPP recipients, Senator Marco Rubio (R-FL) stated he heard<\/a> from businesses that this information was a \u201ctrade secret and a competitive disadvantage that can be used against you.\u201d\u00a0 At this point, I didn\u2019t know anything about trade secrets.\u00a0 But the idea that 350 billion dollars could be given away to businesses without the public knowing anything immediately made me interested.<\/p>\r\n\r\n\r\n\r\n My curiosity piqued, I attended a webinar hosted by the University of New Hampshire School of Law<\/a>. This webinar examined whether any of the PPP information could realistically treated as a trade secret.\u00a0 The webinar was moderated by Professor Ann Bartow<\/a> and three other professors served as panelists: Elizabeth Rowe<\/a>, Sharon Sandeen<\/a>, & Ryan Vacca<\/a>.\u00a0 The presentation was laid out as a three-part analysis.\u00a0 Part one looked at what information was at issue, part two examined legal arguments, and part three synthesized the public policy concerns.\u00a0 Let me explain what I learned.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n What\u2019s the Secret?<\/strong><\/p>\r\n\r\n\r\n\r\n Professor Vacca explained that one requirement<\/a> of a trade secret is that the secret information gives a competitive advantage to its owner, such as \u00a0a business.\u00a0 If PPP information was released, companies could deduce their competitors\u2019 salary information and poach employees \u2013 or so the argument<\/a> went.<\/p>\r\n\r\n\r\n\r\n When analyzing whether information could be protected as a trade secret, professor Vacca explained that you first have to consider the type of information you\u2019re talking about since that impacts the analysis.<\/p>\r\n\r\n\r\n\r\n In the case of PPP, there are two sets of information that the government has: (1) application information and (2) loan information.\u00a0 Professor Vacca pointed out that the application information is very detailed (11 pages long).\u00a0 Of the two sets of data, this one has a better chance of being considered a trade secret, especially since it originates from the company (as opposed to the government).\u00a0 Although he noted that the application contained a disclaimer that information would automatically be disclosed to the public.<\/p>\r\n\r\n\r\n\r\n According to professor Vacca, the other set of information \u2013 the loan information \u2013 would likely not be a trade secret.\u00a0 The level of information sought by the press (e.g.,<\/em> which companies received money, how much money was received, and what the money was used for) was too high-level to deduce competitors\u2019 salaries.\u00a0 He also highlighted that the loan information originated from the government, not the companies. This reduces the likelihood it could be a trade secret belonging to the companies.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n I Have a Right to Know What\u2019s Going on with [Redacted]!<\/strong><\/p>\r\n\r\n\r\n\r\n Professor Rowe followed up with a legal analysis of the issue, starting with the \u00a0Freedom of Information Act<\/a> (\u201cFOIA\u201d).\u00a0 The FOIA allows the public to obtain certain information held by the government.\u00a0 However, there are exemptions under the FOIA.<\/p>\r\n\r\n\r\n\r\n Professor Rowe went on to explain that the most frequently used exemption in the FOIA that is used to challenge requests is exemption four.\u00a0 This exemption<\/a> prevents the government from disclosing “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” \u00a0Rowe then pointed out that the 2019 Supreme Court case Food Marketing Institute v. Argus Leader Media<\/a> <\/em>provides a new framework<\/a> for analyzing this exemption.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n New Case, Who Dis<\/strong><\/p>\r\n\r\n\r\n\r\n In Argus Leader<\/em>, the press filed a FOIA suit against the government.\u00a0 They wanted information about SNAP (i.e. food stamp) benefits<\/a> \u2013 which stores were SNAP benefits being spent on and how much was being spent?\u00a0 Several grocery retailers challenged the request, and the case made its way to the Supreme Court (\u201cSCOTUS\u201d).\u00a0<\/p>\r\n\r\n\r\n\r\n SCOTUS laid out a two-pronged test to decide whether the information sought was privileged\/confidential. Both of the following prongs must be satisfied.\u00a0 Had the company kept the information confidential? \u00a0And had the government promised to keep the information confidential?\u00a0<\/p>\r\n\r\n\r\n\r\n In Argus Leader<\/em> SCOTUS found that FOIA exemption four was met because the government promised to keep the information secret and the companies had kept the information confidential.\u00a0 However, this is different from PPP loans.\u00a0 There was no government promise to keep the PPP information confidential.\u00a0 In fact, there was a legislative record discussing the need for transparency, along with a disclaimer on the application that the data would be automatically disclosed.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n Public Policy, Not Much Policy<\/strong><\/p>\r\n\r\n\r\n\r\n Last to talk was Professor Sandeen.\u00a0 She talked through public policy concerns about how limited the public\u2019s right to information is in the US. \u00a0The first thing she discussed were the possible, but very weak, sources of a right to information.\u00a0<\/p>\r\n\r\n\r\n\r\n The UN Bill of Human Rights<\/a> includes a right to information.\u00a0 Although the US pushed for that right to information language and is a signature on the Bill of Human Rights, the US has never passed domestic legislation promoting such a right.\u00a0 SCOTUS has found a very narrow right to data under the First Amendment, saying that the government has discretion to set this right as it chooses, which it has through the FOIA.<\/p>\r\n\r\n\r\n\r\n Another question raised was if this data can\u2019t be obtained through the FOIA, what options are there?\u00a0 A Small Business Administration (\u201cSBA\u201d) officer could whistleblow<\/a>, but professor Sandeen explained that this approach has its own problems.\u00a0 Whistleblower laws in the US are very industry-specific and only provide a patchwork of rights and protections.\u00a0 That makes it difficult for workers to tell if they would be protected under whistleblower laws, in turn making it unlikely for them to share the data with the public.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n Public Policy, Not Public Opinion<\/strong><\/p>\r\n\r\n\r\n\r\n The final takeaway I had was distinguishing between the arguments made by business owners and the above legal arguments for the disclosure.\u00a0 The big public policy argument against disclosure is that it will harm<\/a> businesses\u2019 brands and reputations.\u00a0 Some large corporations have already been publicly shamed when the public found out they received money.\u00a0<\/p>\r\n\r\n\r\n\r\n In my opinion, the businesses\u2019 argument is wrong; corporate abuse of a system should lead to reputational harm.\u00a0 This incentivizes better behavior.\u00a0 But ultimately the business argument doesn\u2019t matter for the legal question.\u00a0 Reputational harm is not a factor in determining whether information is a trade secret or exempt from the FOIA.\u00a0 All this does is distract from the real legal issue.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n [Second] Secrets Are No Fun.<\/strong><\/p>\r\n\r\n\r\n\r\n A couple of weeks ago, democrats and republicans reached a deal to release<\/a> the list of PPP recipients and loan amounts.\u00a0 Specific companies and amounts will be released if a company got more than $150,000.\u00a0 Companies getting less than $150,000 will be reported in aggregate by state.\u00a0 So it seems for now that a FOIA lawsuit is no longer imminent (there\u2019s less attention on finding out which companies got smaller loans). \u00a0<\/p>\r\n\r\n\r\n\r\n However, it\u2019s unlikely to be the last time we hear about this issue.\u00a0 Leaders on Capitol Hill are already talking about another stimulus package<\/a>.\u00a0 Giving money to private industry again will raise these same issues.\u00a0 Now with some more knowledge about trade secrets under my belt, I feel ready to talk about government accountability and transparency in the future.<\/p>\r\n <\/p>\r\n\r\n\r\n\r\n Scott Hulver<\/em> Scott is a rising 2L interested in the space where consumer advocacy meets public policy, from access to medicine to data privacy.\u00a0 Before law school, Scott was living in Chicago working in software development and playing a lot of board games.<\/p>\r\n","protected":false},"excerpt":{"rendered":"![\"\"](\"https:\/\/blogs.luc.edu\/ipbytes\/wp-content\/uploads\/2020\/08\/SectretLibrary.jpg\")
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Loyola University Chicago School of Law, J.D. 2022<\/em><\/p>\r\n\r\n\r\n\r\n