Businesses now using the Freedom of Information Act to glean useful date about competitors could face new constraints because of a recent appeals court ruling offering guidance on what information may be withheld as a trade secret.
A group of air compressor manufacturers had sued the Environmental Protection Agency to prevent it from giving a competitor reports detailing how some compressors had been retooled to comply with the Noise Control Act. The EPA and the District Court said the competitor could get the same information by buying the compressors and taking them apart.
But the D.C. Circuit Court of Appeals said the agency and the lower court wrongly failed to consider that the cost of reverse engineering may be substantially more than the cost of an FOIA request.
"Because competition in business is charged only the minimal FOIA retrieval costs for the information, rather than teh considerable costs of private reproduction, they may be getting quite a bargain," the ruling said.
Freedom of Information Act experts said this ruling further refines the case law involving trade secret exemptions from the FOIA. The case (Worthington Compressors Inc. v. Administrator, 80-1010), which was sent back to the lower court, could provide an opportunity to resolve another knotty question: What bearing does the Trade Secrets Act have on the FOIA?