Managing the Risks of FOIA-able Trade Secrets

Abstract

The primary purpose of the Federal Freedom of Information Act (FOIA) is to provide federal agency records and information to the public and thereby open the inner workings of federal government to public review. Although the goal of open government is certainly laudable, it can have unintended consequences when businesses dealing with the government have their trade secrets or confidential information “FOIAed” by and then revealed to a competitor. It is, therefore, the aim of this article to synthesize the legal framework created by the intersection of FOIA and trade secret law and to apply this framework to the strategic and tactical decisions businesses pursuing a federal government contract would likely face. The resulting reference point in these areas of diverging law and the proposed recommendations are intended to assist business executives and legal counsel in their decision-making process and thereby limit their own personal liability under the business judgment rule.

Keywords: FOIA, trade secrets, intellectual property, torts, misappropriation, business judgment rule, competitive advantage, cost advantage, differentiation advantage

JEL Classification: O34, O38, L74, K11,K 23