COURTESY / PRETI FLAHERTY
Benjamin S. Piper is a partner in Preti Flaherty’s litigation and environmental practice groups.
March 19, 2021
How to protect trade secrets in Maine state government contracting
By Benjamin S. Piper, Preti Flaherty
Establishing a contracting relationship with a government agency can provide a stable and lucrative opportunity for a business. But doing so comes with potential pitfalls that do not exist in business-to-business relationships.
Among those is Maine’s Freedom of Access Act (FOAA), under which information submitted to state or municipal entities is generally deemed subject to public disclosure. Businesses that ignore FOAA in responding to requests for proposals from state agencies could find their sensitive business information falling in the hands of their competitors. But with some foresight and basic planning, bidding parties can take steps to protect their trade secrets from unnecessary public disclosure.
Know what is and is not public record
Under Maine law, proposals for public contracts become public — and thus generally accessible under FOAA — once the contract has been awarded. But FOAA protects from disclosure records that would be subject to a privilege against discovery or use as evidence in state court proceedings. Because the Maine Rules of Evidence include a privilege for trade secrets, Maine’s highest court has applied that privilege under FOAA.
Not all sensitive business information qualifies as a trade secret. To qualify as a trade secret, information must meet two criteria: the information must (1) derive independent economic value from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure; and (2) be the subject of reasonable efforts to maintain its secrecy. A business claiming a trade secret has the burden of showing these criteria are met.
Review the RFP
A business concerned about submitting sensitive information in response to a state RFP should review the proposal to determine whether it addresses how the agency will treat FOAA requests to produce proposals. This may include notice and an opportunity for the bidder to object.
Engage with the agency
Often state agencies soliciting bids will entertain questions regarding their treatment of trade secret information. Upon request, agencies will sometimes agree to provide notice and an opportunity to object to a FOAA request to produce proposals even if not provided for in the RFP. State law neither requires agencies to nor prohibits them from providing bidders notice and an opportunity to object to FOAA requests.
What information should be included
Before submitting their proposals, businesses should consider what information needs to be included. Businesses will need to balance the value of including trade secrets in a proposal against the risk of public disclosure. Careful attention to the RFP and correspondence with the agency can inform this evaluation.
Identify trade secret information and request confidentiality
If it decides to include trade secret information in its proposal, the bidding business should clearly identify such information and request that it remain confidential. In the event of a FOAA request, the agency will decide which records to release, and it will be hard-pressed to identify trade secrets without help from the bidder. Every page of the proposal that contains trade secret information should be marked as such. Bidders should take care not to over-designate material as confidential, as that may overburden the agency and perhaps reduce the likelihood that it will give credence to the designations. Moreover, cover correspondence should explain that the proposal contains trade secrets, explain why the information fits a FOAA exception, and request that the information be kept confidential.
Legal action
In the event an agency decides to release trade secret information in response to a FOAA request, a final resort is to file a court action. A business taking this approach will need to act quickly — once the information is in the public domain, there is no clawing it back — and must be prepared to marshal evidence demonstrating why the information at issue constitutes trade secrets.
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