The Public History of Trade Secrets

Abstract

Rising inequality and increasing concentration of corporate power have brought renewed attention to questions of political economy, and to how law helps to construct private power and encase it from democratic rearrangement. This Article brings a political economy perspective to the law of commercial secrets, to show that changes in the scope and justification for trade secret law, operating in a context of rising importance of data and information, have set this law on a collision course with our democracy. An area of law that was once understood as focused on fair competition and commercial morality has been retheorized as a kind of "intellectual property," following prevailing neoliberal arguments about the economics of information. Earlier limits on the scope of the law have been dissolved, so that companies today can claim that almost any confidential corporate information is a trade secret. The law has also been constitutionalized, so that a legislature disclosing corporate information -- from the ingredients in cigarettes to the price of a drug -- now face powerful challenges from corporations on the basis of the Takings Clause. Some of the most basic functions of the modern regulatory state, including many mandated disclosures about commercial products to the public, would not have been possible if this view had reigned in earlier decades. Unsurprisingly, it did not. Several Supreme Court cases that have largely been forgotten show that courts even at the height of laissez faire were clear about the categorical priority of the public, and rejected trade secret claims when they conflicted with the public's right to know. These cases, and earlier logics of trade secrecy that see it as an expression of values of fair competition and commercial morality, together form what I call the "public history of trade secrets." Recalling this history can help us to defend a more democratic relation between the political and the economic in our age of informational capitalism. These cases also point to a clear legal principle that would, if recovered, reshape what legislatures and regulators are able to reveal to the public: The disclosure of corporate secrets can be made a condition of participation in markets whenever the information helps illuminate the nature of a product or service. Recognizing this would enable vastly more public insight into companies and their products -- for example, enabling states to mandate disclosure of the algorithms that shape our social media feeds, and the secret data companies hold about the risks and benefits of consumer products.