News and Events
Washington Supreme Court Raises Bar for Companies Seeking to Protect Trade Secrets from Public Disclosure
On May 31, 2018, the Washington Supreme Court issued a decision in Lyft, Inc. v. City of Seattle setting a higher bar to protect trade secret information from disclosure by public agencies. In a 5-4 decision, the Court concluded trade secrets are not “categorically excluded from public disclosure under the Public Records Act….” Instead of blanket protection for trade secret information provided to a public agency, the Court found that those seeking to protect their trade secrets must show that the disclosure “would clearly not be in the public interest, and would substantially and irreparably damage any person or would substantially and irreparably damage vital government functions.”
This case grew out of the City of Seattle’s efforts to regulate the fast-growing industry of car-hailing services, including Uber and Lyft. As part of a compromise of a previous lawsuit, the companies agreed to provide certain data to the City, including information about passenger pick-up and drop-off zip codes, and the percentage of rides completed in each zip code. This is information the companies consider confidential, and do not typically share with each other or the public. The information was provided to the City in quarterly reports, and a researcher requested the information pursuant to Washington’s Public Records Act, RCW 42.56.
The private companies sought an injunction to prevent public disclosure. The Washington Supreme Court concluded that it was not enough for the companies to show the information qualified as a trade secret. The private companies must also satisfy the Public Records Act’s higher standard by proving the public disclosure would not be in the public interest, and would substantially and irreparably damage a person or vital government function. The case was sent back to the trial court level to determine whether the companies could meet this higher standard.
Application to Other Businesses
Businesses submit their private information to public agencies for a variety of reasons, such as to obtain permits or licenses, bid on public projects, and, as was the case with Lyft and Uber, to comply with public regulations. Once private information is submitted to a public agency, it becomes subject to the Public Record Act and may be requested by individuals, the media, and other businesses.
The Act has many exceptions to protect certain types of information from disclosure, for example, certain law enforcement records and certain private information about public employees can be protected. However, when the sole basis to protect the information is the Uniform Trade Secrets Act, RCW 19.108, the Lyft decision sets a high bar for companies to show their information should be protected once it is in the hands of a public agency.
While the higher bar to obtain protection from disclosure may create burdens for some, it could be an opportunity for others to seek competitor data that may have previously been kept confidential.
Contact HCMP for more information
The best time to seek legal advice is before providing trade secret or otherwise confidential information to a public agency, because once the information is in the agency’s hands the options are more limited. Mary Peterson in HCMP’s litigation group counsels clients regarding Public Records Act issues, including legal issues surrounding protection and disclosure of trade secrets and other confidential material.