October 19, 2021

The Defend Trade Secrets Act Has Returned

Freedom to Tinker readers may recall that I’ve previously warned about legislation to create a federal private cause of action for trade secret misappropriation in the name of fighting cyber-espionage against United States businesses. Titled the Defend Trade Secrets Act (DTSA), it failed to move last year. Well, the concerning legislation has returned, and, although it has some changes, it is little better than its predecessor. In fact, it may be worse.

Therefore, Sharon Sandeen and I have authored a new letter to Congress. In it, we point out that our previously-stated concerns remain, both stated by a previous letter and in a law review article entitled Here Come The Trade Secret Trolls. In sum, we argue that  combined “with an ex parte seizure remedy, embedded assumption of harm, and ambiguous language about the inevitable disclosure doctrine, the new DTSA appears to not only remain legislation with significant downsides, but those downsides may actually be even more pronounced.” Moreover, we assert that “the DTSA still does not do much, if anything, to address the problem of cyber-espionage that cannot already be done under existing state and federal law.”

In the letter, we call on Congress to abandon the DTSA. In addition, we ask that “there be public hearings on (a) the benefits and drawbacks of the DTSA, and (b) the specific question of whether the DTSA addresses the threat of cyber-espionage.” Finally, we encourage Congress to consider alternatives in dealing with cyber-espionage, including much-needed amendment of the Computer Fraud and Abuse Act.

The Chilling Effects of Confidentiality Creep

Today, North Carolina’s Governor Pat McCrory has a bill on his desk that would make it impossible for the public to find out what entities are supplying the chemical cocktail – the drugs – to be used for lethal injections in North Carolina. Known as the Restoring Proper Justice Act (the “Act”), it defines  “confidential information” as including the “name, address, qualifications, and other identifying information of any person or entity that manufactures, compounds, prepares, prescribes, dispenses, supplies, or administers the drugs or supplies” used in lethal injections, thereby shutting down mandatory public access to basic information involved in extinguishing life in the name of justice. Secret suppliers are but one effect of this legislation; the Act also allows executions to resume in North Carolina and permits a wide range of medical professionals (not just a doctor) to assist in executions.

Call this an example of “confidentiality creep” – quiet, under-scrutinized expansion of the kinds of information deemed inappropriate for public consumption. The Act does not call this information a “trade secret” – information that is valuable because it is not known by a competitor – even though some of it could conceivably be that. Nor is it defined as the “property” of a private person or entity, even though “qualifications” might be deemed such. No; this information is designated “confidential” simply because the Legislature says that it is. It’s a new category in the law.

Before you stop reading, consider that confidentiality creep is not an abstraction, of interest merely to commercial law, freedom of information, and privacy nerds. Regardless of your personal views about the death penalty, whenever the government designates any information secret, we should all take a close look.

The expansion of confidentiality could have repercussions beyond mere access to information. To the extent that we untether legal confidentiality from any clear theoretical grounding – privacy, property, commercial ethics, contract – it runs the risk of being a powerful catch-all, subject to abuse. Slowly, if unchecked, we might expect that the work of cybersecurity researchers, journalists, civil society groups, and anyone else who accesses information deemed “confidential” would be threatened. Those “chilling effects” so prevalent in copyright could become even more powerful where information is used in a way unflattering to those who wave the confidentiality wand, backed by a rudderless law.

As to this particular case of confidentiality creep, there are very real and pernicious impacts. For example, if the Act becomes law, cruel and unusual punishment challenges in North Carolina would be subject to drug manufacturers’ preference not to be bothered. Investigators of gruesome botched executions, which have occurred in other states, would now have to jump an unknown hurdle so as to gather information about the drugs used. After all, the public might want to know how a drug was manufactured, where, under what conditions, and the like. But under the Act – if enforcedall identifying information would have to be gathered by leak, a whistleblower, or by exploiting a mistaken release of information, which might then render the information excluded from evidence.

But wait: the Act’s title suggests that it is supposed to be “restoring proper justice.” Surely there must be a good reason for this confidentiality? According to press reports, the best (and perhaps only) apparent reason is a concern that, if identified, these manufacturers will choose not to provide the drugs out of fear of litigation by death penalty opponents, or be forced not to by a court. North Carolina Policy Watch reported that Sen. Buck Newton explained that confidentiality is needed “so that they aren’t litigated to death in order to prevent them from selling these drugs to the state.” Additionally, Rep. Leo Daughtry, a sponsor of the Act, noted that “if you tell [opponents] where the drug comes from, there will be 300 people outside the building.”

Put aside, for the moment, the assertion that a cost of doing business with the government – especially when it involves something as serious and irreversible as the administration of the death penalty – might be public accountability and scrutiny. As argued by the North Carolina American Civil Liberties Union’s Sarah Preston, “Courts, lawyers and the public have a right to know basic details about how the government executes inmates in their name.” Instead, let’s take the above argument seriously and see where it leads.

Generally, the argument is that if [name your information] is made public, then [name your private manufacturer] won’t provide the [name your good or service] to the government. Well, we’ve heard it before, and it doesn’t pass muster. From voting machines to hydraulic fracturing, weakening commercial confidentiality has generally not resulted in private entities withdrawing from providing the good or service; rather, they’ve adjusted. Moreover, private entities can raise prices in order to hedge against the risk of litigation. Indeed, the threat of exposure might force such manufacturers to provide better goods that are less susceptible to challenge. In other words, the impact of publicity is not all bad – even for the private entities, like drug companies, potentially subject to public scrutiny.

So where does this leave us? As alluded to above, we often forget that doing the public’s business is not the same as private commerce, precisely because the customer is the public itself. We often wind up with confidentiality creep, expanding the definition of what we call “confidential” for underexplored or non-explored reasons, with little or no public discussion. If you’re not convinced, throw the efforts to gain public access to the basic negotiating text for the nearing-completion multilateral Trans Pacific Partnership Agreement into the mix, because that’s confidentiality creep also. It’s not publicly available, for unclear reasons.

We, the public, need to pay a lot more attention to these developments. If you’re concerned about the above, contact Governor McCrory’s office now and urge him to veto the Restoring Proper Justice Act. Aside from any other reasons that you might have, tell him that preventing the risk of a fleeing commercial provider, if it is a problem at all, comes at enormous public cost. Do it now as he could sign the Act at any moment.

More broadly, think critically when you hear arguments about the need for confidentiality. Admittedly, the press does not usually cover these issues, dismissing them as arcane or too complex. Nonetheless, I’ll do my best to document these issues as they arise, because they are too important to ignore. Let’s try to stop the quiet, baseless, under-explained creep.


Congress' Fast Track to Bad Law

Congress appears poised to pass Trade Promotion Authority, otherwise known as “fast track,” for the Trans Pacific Partnership Agreement (TPP). If this happens, it will likely close the door to any possibility of meaningful public input about TPP’s scope and contours. That’s a major problem, as this “21st century trade agreement” encompassing around 800 million people in the United States and eleven other countries, will impact areas ranging from access to medicine (who gets it) to digital privacy rights (who has them). But, unless you are a United States Trade Representative (USTR) “cleared advisor” (which almost always means that you represent an industry, like entertainment or pharmaceuticals), or, under certain limited circumstances, an elected official, your chief source of TPP information is WikiLeaks. In other words, if Julian Assange gets his hands on a draft TPP text, you might see it, once he decides that it should be made public. Of course, you’ll have to hope that the copy that you see is current and accurate.

There have been no – not one – formal releases of the TPP’s text. Thus, this 21st century agreement has been negotiated with 19th century standards of information access and flow. Indeed, TPP has been drafted with a degree of secrecy unprecedented for issues like intellectual property law and access to information. Some degree of secrecy and discretion is necessary in any negotiation, but the amount of secrecy here has left all but a few groups in the informational dark.

This process, if you want to call it that, defies logic. Margot Kaminski has labeled the entire process “transparency theater.” Perhaps most problematically, “transparency theater” has caused widespread opposition to TPP, like mine, that might otherwise not have materialized. Standing alone, the TPP’s negotiation process is sufficient to cause opposition. Additionally, the process has seemingly led to bad substance, which is a separate reason to oppose TPP. Imagine if bills in Congress were treated this way?

Meanwhile, fast track will mean that Congress will simply vote yes or no on the entire deal. Therefore, fast track will exacerbate that informational vacuum, and the public will not be able to do much more than accept whatever happens. In essence, an international agreement negotiated with no meaningful public input – and to some unknown degree written by a few industries —  is about to be rushed through the domestic legislative process. [Note: I submitted testimony in the case referenced in the previous hyperlink by Yale Law School’s Media Freedom and Information Access Clinic].

At this point, if you are at all concerned about the TPP’s process, the best thing that you can do is contact your Representatives and urge them to vote “no” on fast track. You could also join the call to formally release the TPP’s text before fast track is voted upon (i.e., right now). Finally, you could help assure that two other important international agreements currently in negotiation but in earlier stages – the Transatlantic Trade and Investment Partnership and Trade in Services Agreement – are negotiated more openly. How? By paying attention, and calling your elected officials and the USTR when things remain murky. I’ll have much more to say about these processes in the coming months.