Conflicts between the Sunshine Law and trade secret protection in public procurement: the legislature should create a Sunshine Law exemption for procurement meetings when trade secret documents are involved.

• Author: Bertron, Andy

Public officials have a duty to conduct meetings in the sunshine. They also have a duty to protect the trade secrets of the vendors with whom they do business. Doing both is not always easy.

Since 1967, F.S. [section] 286.011, Florida's Sunshine Law, has required state and local agencies to conduct their business in the sunshine.(1) In 1992, Florida voters reaffirmed the right to open government by approving an amendment adopting Article 1, [section] 24(b) of the Florida Constitution which "grant[ed] constitutional status to the public's right of access to all levels of government." (2) The obligation of state and local agencies to conduct open meetings becomes more challenging, however, when the topic for discussion concerns trade secret business information which is protected from public disclosure. (3)

The conflict between the Sunshine Law and trade secret protection is ripe in the area of public procurement. In contrast to the public's desire for government in the sunshine, private vendors seeking to do business with the state would prefer an eclipse when it comes to the trade secrets they reveal to agencies during the procurement process. With the current trend toward increased privatization, the level of public procurement can be expected to grow and, along with it, the opportunities for government to come into possession of trade secrets.

Trade Secrets in Public Procurement

Vendors are often required to provide vast amounts of information when responding to governmental requests for proposals, which, once in the hands of the state, are subject to disclosure under F.S. [section] 119.07, Florida's Public Records Law. In their proposals, vendors may be required to provide extensive details about their products, business operations, finances, employees, and customers. While striving to provide a complete description of their products and capabilities, vendors also want to guard against unnecessary disclosure of confidential business information. Vendors may find some comfort in the public records exemption for proposals, but not for long. The Public Records Law exempts sealed bids and proposals submitted to agencies from disclosure as public records, but only "until such time as the agency provides notice of a decision or intended decision pursuant to [section] 120.57(3) or within 10 days after bid or proposal opening, whichever is earlier." (4)

Vendors may find more lasting protection for confidential information in their proposals under the trade secret statutes. F.S. [section] 812.081 (2001) defines trade secrets in relevant part as "the whole or any portion or phase of any formula, pattern, device, combination of devices, or compilation of information which is for use, or is used, in the operation of a business and which provides the business an advantage, or an opportunity to obtain an advantage, over those who do not know or use it" and includes "any scientific, technical, or commercial information, including any design, process, procedure, list of suppliers, list of customers, business code, or improvement thereof." (5) Given this broad definition, vendors may consider much of the information in their proposals to constitute trade secrets under the statute, including supplier and customer lists, financial statements, and technical descriptions and drawings.

Unlike the temporary exemption for proposals, F.S. [section] 815.045 (2001) permanently exempts trade secrets from disclosure as public records. In addition, F.S. [subsection] 812.081 and 815.04 provide criminal penalties for un authorized disclosure, copying, or deprivation of trade secrets. In creating a public records exemption for trade secrets, the legislature recognized that public officials were put in a difficult, if not impossible, position by the conflicting demands of the Public Records Law and the requirements in [subsection] 812.081 and 815.04 to protect trade secrets. Section 815.045 provides that "[d]ue to the legal uncertainty as to whether a public employee would be protected from a felony conviction if otherwise complying with chapter 119, and with s. 24(a), Art. I of the State Constitution, it is imperative that a public records exemption be created." The legislature also recognized that vendors needed assurance that their trade secrets will be safe. Hence [section] 815.045 further provides that "[d]isclosing trade secrets in an agency's possession would negatively impact the business interests of those providing an agency such trade secrets by damaging them in the marketplace, and those entities and individuals disclosing such trade secrets would hesitate to cooperate with that agency, which would impair the effective and efficient administration of governmental functions."

Knowing they cannot depend on the exemption in [section] 119.07(3)(m) to protect their trade secrets indefinitely, some vendors put procuring...