Cases from DC Circuit

D.C. Cir.
Dog Breeders Lose Reverse FOIA Suit

Missouri dog breeders sued the U.S. Department of Agriculture (USDA) to prevent the release of business information to the Humane Society. The Humane Society had filed a Freedom of Information Act (FOIA) request in 2009 and the USDA made the decision to release the information in March, 2011. At that point, the Missouri dog breeders sued in a reverse FOIA action to prevent the release of the information.

The business information (known as block 8 from the form in which it is filed with the USDA) consists of: "(1) the total number of animals purchased and sold in the last year; (2) the gross revenue from regulated activities; and (3) for dealers that are not breeders, the difference between the purchase price and sale price of the animals sold."

The only trade secrets issue raised was 5 U.S.C.A. § 552b(c)(4) (West), which forbids an agency from releasing information that is "trade secrets and commercial or financial information obtained from a person that is privileged or confidential." This exemption is broader than the definition of trade secrets under UTSA or the common law. But once the USDA had determined that it could release the information, the agency's decision was subject only to arbitrary or capricious review by the court. The court noted that 1) Humane Society is not a competitor of the dog breeders, 2) that the information was stale and incomplete, and 3) that release would not significantly assist competitors in gauging the scale of a licensee’s operation because similar information was already in the public domain.

United States Court of Appeals for the district of Columbia Circuit
FCC Can't Require Merger Applicants to Disclose Trade Secrets to Non-Parties

The D.C. Circuit’s decision in CBS indicates that federal courts acknowledge the critical implications of trade secret disclosure and trade secret law’s increasing significance in the protection of business practices. The D.C. Circuit held that it was improper for the Federal Communications Commission (FCC) to require merger applicants to submit proprietary documents for review and make them available for examination by industry participants not a party to the action, on an expedited basis.

Typically when reviewing cable company mergers, the FCC requires disclosure of information including key affiliate contracts and negotiation documents. Within the cable industry, these documents are kept highly confidential. The disclosure of these documents would expose not only the cable company parties involved in the merger, but also the content providers which they do business with. The Plaintiffs in this case, a group of content providers, utilized the Trade Secret Act to resist disclosure of their proprietary information to third party examiners. The Trade Secret Act prohibits disclosing sensitive business information unless “authorized by law.” The Plaintiffs successfully argued that this disclosure of sensitive business information was not authorized by the law because the Commission’s own regulations and internal policies did not authorize the disclosure which the FCC sought. The FCC’s internal policies provide that “a persuasive showing as to the reasons for inspection will be required [for disclosure]” and that the underlying documents must be “necessary” to the review process. The D.C. Circuit held that the affiliate contracts and negotiation documents were merely relevant, but not necessary to the FCC’s merger review. Thus, the required disclosure of proprietary documents involving third party content providers was not authorized by law and prohibited by the Trade Secrets Act.