Secrecy and Innovation in Tort Law and Regulation

Abstract

Secrecy about negative technological impacts is claimed as an entitlement in a variety of situations, though the practice is coming into question. In the environmental arena, where firms claim exemption from disclosure requirements, the law is developing along a fault line that runs between familiar intellectual property and tort categories. The current resolution -- simply transplanting traditional trade secrecy practice into the regulatory context -- is inadequate.

Knowledge about technological effects, such as pollution, has two separate personae. It may be commercially valuable if its distribution is limited, yet it also may be the key to identifying a disease or ecological harm if it is distributed freely in medical and research settings. The two functions of such data -- commercial and scientific -- operate in very different frameworks of meaning. A claim of entitlement in one sphere has effects in the other, but the legal language necessary to compare the two has not been developed. This article attempts to outline a basis for understanding the issues by examining trade secrecy in the context of regulation of chemical pollution.

Secrecy is an ambiguous concept and covers a wide range of behaviors. Legal doctrine usually starts from the position that a privilege of secrecy must be justified, perhaps because information is so flexible and productive. Once it is released, information may travel far and quickly. This characteristic itself may explain our ambivalence about secrecy and the fact that, in practice, the law's treatment of claims to information is somewhat uneven. The legal decisionmaker who is called upon to decide whether a secret shall be revealed is placed in a difficult position; as an outsider one cannot fully appreciate the value of the secret or measure the risks of releasing it. The structure of the situation lends rhetorical power -- a “Pandora’s Box” effect -- to claims of entitlements to secrecy. Courts, agencies, and legislatures may respond to secrecy issues in distinct ways, since secrets and the risks of revealing them will be presented differently in litigation, administrative, and legislative settings. Trade secrecy has one meaning in a common law setting and very different implications when it is grafted onto regulation.