Protecting Trade Secrets Under Pennsylvania’s Right-to-Know Law
The Pennsylvania Supreme Court has provided a road map for private entities to prevent public disclosure of sensitive business information contained in public records. The case of McKelvey v. Pennsylvania Department of Health, 255 A.3d 385 (Pa. 2021) has broad implications for any private entity that is regulated by or contracts with government agencies. Per McKelvey, government agencies may not withhold sensitive business information from public disclosure unless the private entity timely proves that such information constitutes trade secrets or confidential proprietary information.
LEGAL PROTECTIONS FOR TRADE SECRETS AND CONFIDENTIAL PROPRIETARY INFORMATION
The Pennsylvania Right-to-Know Law (RTKL) empowers people to inspect and copy public records. Any information documenting a transaction, activity, or business of a government agency is presumptively public. However, the RTKL contains exemptions preventing public disclosure of trade secrets and confidential proprietary information (i.e., information of a private entity that is maintained confidentially and that if disclosed would cause competitive harm).
NOTICE TO AGENCY AT TIME OF SUBMISSION
The first step for a private entity to ensure non-disclosure of sensitive business information is to notify the government agency of the non-public nature of the information at the time it is submitted to the agency. Section 707(b) of the RTKL requires private entities to provide the agency with a signed, written statement identifying trade secrets or confidential proprietary information. Most agencies provide standardized forms to identify such information.
RESPONSE TO NOTICE OF REQUEST FOR PUBLIC ACCESS
If the private entity provides timely notice discussed above, the government agency must notify the private entity within five business days of receipt of any request for public records. The private entity then has five business days to object to public disclosure. Within ten business days of notice to the private entity, the agency must determine whether to release the record. The agency must notify the private entity of its decision.
PARTICIPATION IN ADMINISTRATIVE AND JUDICIAL APPEALS
If a government agency denies a request for public records, the requester may file an administrative appeal with the Pennsylvania Office of Open Records (OOR). The OOR requires the agency to provide notice of the appeal to persons who have a direct interest in the requested records. The OOR typically establishes a schedule allowing participants seven business days to submit argument and evidence.
Within 30 calendar days of the appeal, the OOR issues a final determination granting or denying access to the requested records. If the OOR denies public disclosure, the requester may file a judicial appeal and the private entity may participate in that appeal. If the OOR orders public disclosure of sensitive business information, the private entity may file a judicial appeal.
LESSONS FROM McKELVEY v. PENNSYLVANIA DEPARTMENT OF HEALTH
McKelvey addressed whether the Department of Health (Department) could withhold sensitive business information received from private entities who applied for permits to manufacture and distribute medical marijuana. The applications contained extensive information about the private entities including their growing methods, security measures, diversity plans, and the names of their owners, operators, and financial backers.
At the time it received the applications, the Department instructed the entities to submit two copies – the first unredacted for agency review, and the second redacted for public disclosure. The Department asked the applicants to identify the legal basis for redactions but did not request any supporting evidence. This resulted in a vast disparity between the amount of information publicly available from application to application. Some entities made no redactions while others redacted nearly their entire application based on bald assertions of trade secrets.
A newspaper reporter appealed to the OOR, asserting five applicants overly redacted their applications. The OOR found only one of five applicants proved their application contained any trade secrets or confidential proprietary information. The Commonwealth Court and the Pennsylvania Supreme Court mostly affirmed the OOR’s findings. The result is that four of the five applicants had their sensitive business information publicly disclosed because they failed to timely provide evidence to justify nondisclosure.
WHAT McKELVEY MEANS FOR YOUR BUSINESS
- Take advantage of initial opportunities to protect sensitive business information
Per McKelvey, the government agency may not blindly defer to private entities that baldly assert trade secret protections. Private entities must be proactive to prevent disclosure of trade secrets. After losing in the OOR, most of the applicants requested to submit new evidence to the Commonwealth Court. The Commonwealth Court denied those requests and the Pennsylvania Supreme Court affirmed that private entities must present their entire case to the OOR.
- Produce actual evidence to support non-disclosure
Private entities must submit actual evidence to the OOR, in the form of sworn affidavits, to establish exemptions from public disclosure. In McKelvey, one applicant justified its redactions of trade secrets by submitting sworn affidavits from experts in marijuana cultivation, extraction process, and manufacturing of cannabis products. However, the Pennsylvania Supreme Court affirmed the other four applicants had individualized burdens to protect their own trade secrets and could not rely on other participants’ submissions.
- Obtain experienced legal counsel during the OOR proceedings
Corporate entities are not required to be represented by legal counsel in administrative proceedings before the OOR. However, McKelvey confirms this is a critical stage because failure to present sufficient evidence to the OOR cannot be cured in a later appeal. Private entities should thus retain an experienced public records attorney to ensure they make their best case to protect from unwarranted disclosure of trade secrets and confidential proprietary information.
 The author of this article represented Wallace McKelvey, PennLive.com, and The Patriot-News in this matter.