The Privacy Hierarchy: Trade Secret and Fourth Amendment Expectations

• Author: Matthew B. Kugler & Thomas H. Rousse
• Position: Assistant Professor, Northwestern University Pritzker School of Law/Law and Science Fellow, J.D./Ph.D. Candidate, Northwestern University Pritzker School of Law
• Pages: 1223-1289

1223

The Privacy Hierarchy: Trade Secret and

Fourth Amendment Expectations

Matthew B. Kugler* & Thomas H. Rousse**

ABSTRACT: This Article examines public expectations of privacy in trade

secret and the Fourth Amendment. Using an original, nationally

representative survey of over a thousand respondents, we identify two privacy

hierarchies. The first hierarchy is between domains: The public believes that

surveillance conducted by commercial entities for competitive advantage is a

greater violation of privacy than the same surveillance conducted by law

enforcement without a warrant for criminal investigations. The second

hierarchy involves types of surveillance: The same searches are rated as large

(or small) privacy violations regardless of whether they are performed by law

enforcement or a private company.

From these empirical findings and an analysis of prior doctrine, we argue

that Fourth Amendment restrictions on police surveillance should be viewed

as a “floor” for trade secret restrictions on commercial surveillance. This

approach reverses the relationship between public and private surveillance

recently advocated by several prominent scholars and by Justice Gorsuch in

his dissent in Carpenter v. United States, yet is consistent with

longstanding trade secret doctrine. We argue further that this position

provides practical benefits and is normatively justifiable given the differing

objectives of trade secret and the Fourth Amendment. Practically, our

framework provides guidance to courts that wish to draw upon the larger and

more thorough case law of the Fourth Amendment when addressing issues

that are novel to trade secret. Normatively, there is less public interest in

*

Assistant Professor, Northwestern University Pritzker School of Law.

** Law and Science Fellow, J.D./Ph.D. Candidate, N orthwestern University Pritzker School

of Law.

The authors thank Michael Birnhack, Erin Delaney, Shari Diamond, Ahmed Ghappour, Laura

Pedraza-Fariña, Janice Nadler, David Schwartz, Nadav Shoked, Matthew Spitzer, Lior Strahilevitz,

Rory Van Loo, Rebecca Wexler, and participants of the Tel Aviv University Law and Technology

Workshop, the Intellectual Property Scholars Conference, the Chicago IP Colloqui um, the

Privacy Law Scholars Conference, and Northwestern University’s Pritzker School of Law’s

J.D./Ph.D. seminar for comments on earlier drafts, as well as Myriam Bloom, Eva Derzic,

Alexander Ogren, and Conor Tucker for helpful research assistance.

1224 IOWA LAW REVIEW [Vol. 104:1223

exposing the trade secrets of companies than there is in investigating crimes.

As a result, we believe there should be greater privacy protection in trade secret.

I.INTRODUCTION ........................................................................... 1224

II.PRIVACY IN THE TRADE SECRET AND FOURTH

AMENDMENT CONTEXTS ............................................................. 1229

A.TRADE SECRET LAW AND THE AMBIGUITY OF

“IMPROPER MEANS” .............................................................. 1230

B.COMPARATIVE CLARITY IN THE FOURTH AMENDMENT ............ 1235

C.A FOURTH AMENDMENT FLOOR FOR TRADE SECRET ............... 1239

III.EMPIRICALLY DEMONSTRATING PRIVACY HIERARCHIES .............. 1249

A.STUDY SAMPLE AND PROCEDURE ............................................ 1250

B.SEARCH VIGNETTES ............................................................... 1254

C.RESULTS ............................................................................... 1258

IV. TRADE SECRET AND FOURTH AMENDMENT PERSPECTIVES

ON COMPETITIVE INTELLIGENCE TECHNIQUES........................... 1263

A.INDEPENDENT LEGAL WRONGS ............................................... 1263

1.Wiretap ......................................................................... 1263

2.Trespass ........................................................................ 1265

3.Dumpster-Diving ......................................................... 1266

B.FALSE FRIENDS AND PRETEXTS ............................................... 1270

C.VISUAL SURVEILLANCE ........................................................... 1273

1.Drones .......................................................................... 1274

2.Camera Across Street .................................................. 1277

3.Lens Through Window ............................................... 1279

V.CONCLUSION .............................................................................. 1282

APPENDIX .................................................................................... 1286

I. INTRODUCTION

Common to both trade secret law and the Fourth Amendment are

questions of what is and is not private. Is trash private when left in a dumpster

behind an office building, or is it abandoned—free for the first taker? There

is a fairly clear answer if you are a law enforcement officer: You are free to put

on your rubber gloves and start digging.1 But what about private investigators,

1. See infra Section IV.A.3.

2019] THE PRIVACY HIERARCHY 1225

corporate spies or competitive intelligence professionals?2 Companies often

have commercially sensible, if morally debatable, reasons to check up on their

competitors. Where is the line for them?

This question hits on a fundamental tension in American privacy law.

“Suspicion of the state has always stood at the foundation of American privacy

thinking, and American scholarly writing and court doctrine continue to take

it for granted that the state is the prime enemy of our privacy.”3 One would

think, given this widely shared sentiment, that the state is uniquely

constrained in its ability to surveil. Yet, as our trash-searching government

agent would be quick to point out, this is rarely the case. Quite often, the

government can conduct searches that would be forbidden to private parties.4

So, can corporate investigators search the trash like the government, or

are the rules different for them? This brings us to trade secret law. Trade

secret allows for a cause of action when one person or company obtains secret

and valuable commercial information from another by “improper means.”5

The critical question, then, is whether a particular means is proper. Some

means of investigation are obviously improper because they violate other legal

rules. For example, physical trespasses and conversion give rise to simple

torts,6 and wiretaps and computer hacks violate state and federal statutes.7

Not all cases are that clear, however. The comments to the Uniform

Trade Secret Act (“UTSA”)8 tell us that “[i]mproper means could include

otherwise lawful conduct which is improper under the circumstances” and

that “[a] complete catalogue of improper means is not possible.”9 So there is

a set of forbidden techniques that cannot be readily deduced by consulting

other laws, and there is no definitive list of those techniques. This creates a

2. The organization of Strategic and Competitive Intelligence Professionals differentiat es

“competitive intelligence” from “corporate spying” by pointing out that the latter s ounds illegal.

Code of Ethics, SCIP, http://web.archive.org/web/20171016065453/https://www.scip.org/

page/CodeofEthics (last visited Jan. 2, 2019) (“Competitive intelligence is the process of legally

and ethically gathering and analyzing information . . . . Corporate spying often implies illegal

activities . . . .”).

3. James Q. Whitman, The Two Western Cultures of Privacy: Dignity Ve rsus Liberty, 113 YALE

L.J. 1151, 1211 (2004).

4. See infra Part IV.

5. See infra Section II.A.

6. See, e.g., RESTATE MENT (SECOND) OF TORTS § 158 (AM. LAW INST. 1965) (describing

liability for intentional intrusions on land); id. §§ 221–242 (describing, defining, and clarifying

conversion of chattels).

7. See, e.g., 18 U.S.C. § 1030 (2012) (defining “[f]raud and related activity in connection

with computers”); Electronic Communications Privacy Act of 1986, 18 U.S.C. §§ 2510–2512

(describing prohibitions against electronic interception of communication); see also Orin S.

Kerr, Cybercrime’s Scope: Interpreting “Access” and “Authorization” in Computer Misuse Statutes,

78 N.Y.U. L. REV. 1596, 1615 (2003) (describing the prevalence of computer misuse legislation).

8. See UNIF. TRADE SECRETS ACT § 1 cmt. (UNIF. LAW COMM’N 1985).

9. Id. § 1 cmt. at 5–6; see also RESTATEMENT (FIRST) OF TORTS § 757 (AM. LAW INST. 1939)

(detailing improper means of discovery for another party’s trade secret).