Public Agency Need Not Engage in a “Trade” to Protect Information as a Trade Secret

Addressing for the first time the issue of whether a public agency can create and maintain trade secrets that are exempt from disclosure under the Freedom of Information Act (FOIA), the Supreme Court of Connecticut affirmed the trial court’s holding that no requirement exists under FOIA that the entity creating and maintaining the information must be engaged in a ‘‘trade” to benefit from trade secret protection. University of Connecticut v. Freedom of Information Commission et al., Case No. SC 18772 (Conn. Supr. Ct., Feb. 21, 2012) (Harper, J.).

The owners of a public relations company made a FOIA request to the University of Connecticut seeking disclosure of information concerning persons who had paid to attend, donated to, inquired about or participated in certain educational, cultural or athletic activities of institutions within the university. The university refused to disclose four of its databases which identified such persons, alleging that the databases were trade secrets exempt under General Statutes § 1-210 (b) (5) (A)1 of FOIA. The Freedom of Information Commission determined that none of the databases at issue could be a trade secret despite finding the information to be consistent with the statutory definition of a trade secret, i.e., the databases could be of economic value to others and the university maintained secrecy of the databases, because the university was not principally engaged in a trade. The trial court sustained the administrative appeal of the university, holding that the university could, as a matter of law, create a trade secret exempt from disclosure under FOIA.

The Freedom of Information Commission appealed to the Appeal Court of Connecticut, which the Supreme Court transferred before itself. At the appeal, the commission took a somewhat narrower position that the trade secrets exemption to disclosure “must be construed to apply to public agencies only when they are engaged in a trade,” in view of the public policy of disclosure underlying the FOIA. The court rejected the commission’s interpretation, citing no basis for applying such criteria in case of a public agency in the definition of trade secret either under FOAI or under Trade Secret Act (TSA). The court found that the definition “focuses exclusively on the nature and accessibility of the information, not on the status or characteristics of the entity creating and maintaining that information.” The court also noted that the TSA expressly applied to both public and private entities, and a different construction under the FOIA would nullify the rights provided under the TSA. Citing other legislation providing for ownership of intellectual property by universities, and the desirability of the university and the state benefiting from and recouping their investment in research by procuring intellectual property rights, the court concluded that there was unambiguous legislative intent to afford trade secret protection to the university under the FOIA. Thus, the only criteria applicable for determining trade secret protection are those set out in the statutory definition.