From Trade Secrecy to Seclusion

From Trade Secrecy to Seclusion

CHARLES TAIT GRAVES* & SONIA K. KATYAL**

By all accounts, trade secret law is now recognized as one of the major

categories of intellectual property law. Less recognized, however, is the

degree to which private actors are pushing the law past its traditional, mar-

ket-competitive boundaries and toward an all-purpose seclusion doctrine.

We argue that trade secret law today is increasingly functioning not merely

as a tool to protect intellectual property against misappropriation, but often

as a tool for open-ended concealment. The law is moving from trade secrecy

to trade seclusion. This shift raises serious concerns, ultimately distorting

the f‌low of information that should be available to the public.

Confronting these disparate claims of trade secrecy or conf‌identiality—

which can crop up in civil litigation, criminal law, open records disputes,

and elsewhere—requires, f‌irst of all, a common vocabulary. In this Article,

we collect and identify a variety of nontraditional cases to demon-

strate the alarming extension of trade secrecy arguments in a host of

different areas of law. We classify these scattered claims into three

categories: investigatory concerns involving journalists and whistle-

blowers; delegative concerns where the government relies on private

technologies, such as automated decisionmaking and artif‌icial intelli-

gence; and dignitary concerns where employers seek control over em-

ployee attributes, such as diversity data and workplace harms, beyond

the normal context of employer/employee trade secret lawsuits.

In our f‌inal Section, we present a range of solutions. Some suggest

ways to recuperate trade secret law’s traditional architecture and

thus pay heed to its intrinsic boundaries. As we argue, some nontradi-

tional trade secrecy claims involve information that is not a trade se-

cret at all. And, even where information qualif‌ies as secret (or as

conf‌idential, in open-records parlance), we draw upon recent schol-

arly efforts to def‌ine doctrinal limits to trade secrecy and similar

* Partner, Wilson Sonsini Goodrich & Rosati; Adjunct Professor, Hastings College of the Law,

University of California. © 2021, Charles Tait Graves & Sonia K. Katyal.

** Haas Distinguished Chair and Co-Associate Dean for Research, University of California,

Berkeley, School of Law. We are grateful to Catherine Fisk, Neal Katyal, Rebecca Wexler, Vicki

Cundiff, Sharon Sandeen, Camilla Hrdy, Deepa Varadarajan, Rebecca Tushnet, Jeanne Fromer,

Margaret Chon, Margaret Kwoka, Michael Risch, David Levine, Mark Lemley, Elizabeth Rowe,

Victoria Baranetsky, Simone Ross, Pamela Samuelson, Felix Wu, Robin Feldman, Helen Norton, and

Karina Condra for their comments, conversation, and input on drafts of this Article, including at the July

2020 Trade Secrets Scholars Workshop and the August 2020 IP Scholars Conference. We offer

tremendous thanks to our wonderful research assistants, Madeeha Dean and Calvin Hannagan, who

gathered much of the material we discuss, and to Stephanie Dorton for her helpful assistance in

preparing this draft.

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claims in both litigation and open-records disputes where there is a

pressing public interest. Finally, drawing from the lessons of #MeToo

and other workplace protection statutes, we examine potential legislative

enactments in order to achieve an appropriate balance between secrecy

and the public interest.

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1339

I. THE TRADITIONAL TRADE SECRECY CONTEXT AND NEW DEMANDS FOR

SECLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1345

A. THE ORIGINS OF TRADE SECRET LAW AND ITS MARKETPLACE

CONTEXT... ............................................ 1345

B. STRUCTURAL FACTORS IN THE MOVE TO NONTRADITIONAL

CONTEXTS.............................................. 1350

II. FROM RELATIVE TO ABSOLUTE SECRECY . . . . . . . . . . . . . . . . . . . . . . . . . . 1351

A. ANTI-INVESTIGATIVE CONCERNS IN CASES INVOLVING THE PUBLIC

INTEREST............................................... 1352

1. Data Secrecy in the Health and Environmental Contexts . 1353

a. Trade Secrecy and Access to Environmental

Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1354

b. Chemical Data Secrecy and Fracking . . . . . . . . . . . 1358

2. Freedom of Information Act Cases after Argus Leader . . 1362

3. Challenging the Whistleblower. . . . . . . . . . . . . . . . . . . . 1365

B. DELEGATIVE CONCERNS REGARDING GOVERNMENT

INFRASTRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1368

1. Criminal Justice and the Secret Algorithm . . . . . . . . . . . 1370

2. Private Contracts, Public Infrastructure, and Due Process 1376

3. Government Secrecy, Public Functions, and Disclosure . 1381

C. DIGNITARY CONCERNS REGARDING EMPLOYEES . . . . . . . . . . . . . . . . 1385

1. Nontraditional Claims in Employee Mobility Cases . . . . 1386

2. Diversity Data as Secrecy. . . . . . . . . . . . . . . . . . . . . . . . 1390

3. Harms as Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1393

1338 THE GEORGETOWN LAW JOURNAL [Vol. 109:1337

III. RECUPERATING SECRECY FROM SECLUSION . . . . . . . . . . . . . . . . . . . . . . . . . 1397

A. NAMING THE PROBLEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1399

1. The Tangled—and Instrumental—Justif‌ications of Trade

Secret Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1399

2. Contemporary Causes of Overbreadth. . . . . . . . . . . . . . . 1401

B. QUESTIONING DEFERENCE TO THE TRADE SECRET CLAIMANT . . . . . . 1403

1. Standing to Claim Rights in Nontraditional Information . 1404

2. Revisiting the Economic Value and Reasonable

Measures Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 1406

3. Challenging the Ubiquitous “Compilation” or

“Combination” Argument. . . . . . . . . . . . . . . . . . . . . . . . 1408

4. Pressing for Specif‌ic Identif‌ication . . . . . . . . . . . . . . . . . 1409

5. Challenging “Conf‌idential” Information Claims Under

FOIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1411

C. LIMITING TRADE SECRECY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1412

1. Overarching Defenses and Limits on Trade Secrecy

Assertions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1412

2. Situationally Specif‌ic Solutions . . . . . . . . . . . . . . . . . . . 1415

IV. PROPOSALS FOR LEGISLATIVE SOLUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1417

A. A BROAD, MULTIPURPOSE ENACTMENT. . . . . . . . . . . . . . . . . . . . . . . . 1419

B. NARROWER, ISSUE-SPECIFIC ENACTMENTS . . . . . . . . . . . . . . . . . . . . . 1420

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1420

INTRODUCTION

In March 2020, facing a pandemic of epic proportion, Congress enacted the

Paycheck Protection Program (PPP) to administer government loans to busi-

nesses to help them stay af‌loat. The program was based on an earlier loan pro-

gram provided by the Small Business Administration (SBA). Except for one

signif‌icant difference. Although loans administered by the SBA are typically

made public, the PPP loans—and the identities of their recipients—were

designed to be entirely secret, even though dozens of publicly traded companies

received them. “We believe that that’s proprietary information,” Treasury

Secretary Steven Mnuchin testif‌ied, justifying this decision, “and in many cases

2021] FROM TRADE SECRECY TO SECLUSION 1339