Podcast: How to Protect Trade Secrets with Karen Walker and Tiffany Roddenberry

Nathan Adams: Welcome to our Florida Capital Conversations podcast series. Today, our subject is "protecting trade secrets when doing business with Florida government." And our guests are Karen Walker and Tiffany Roddenberry. My name is Nathan Adams. My co-host is Mia McKown. We are so pleased that you have joined us today to consider another important issue touching on state government affecting the business community and our daily lives as Floridians. There's none better than Karen Walker and Tiffany Roddenberry to kick off our discussion. So let me begin by asking you both to tell us a little bit more about your practices.

Karen Walker: I'll be glad to start. This is Karen Walker. So I lead Holland & Knight's Government Section, which is about 145 lawyers and professionals throughout the country who represent clients before governmental entities, before the executive and legislative branches, and deal with legal issues affecting the government. My personal practice is primarily representing clients that contract with state and local entities all over the country and also in Florida, obviously. And as part of that practice, we represent clients that have issues involving the intersection of the open records or public records laws in various jurisdictions and trying to protect their confidential, proprietary and trade secret information.

Nathan Adams: Great. What about you, Tiffany?

Tiffany Roddenberry: Yeah, thanks for having me, Nate. I am Tiffany Roddenberry. I'm a partner in the Tallahassee office, and I work closely with Karen doing very similar things involving state and local government procurement and also dealing with or helping clients that are dealing with issues where public entities are requiring them to produce information that they might deem trade secret. So this topic is very close to my daily practice.

Nathan Adams: Well, great. Well, I know in this world of public procurement, dealing with the government, the sunshine law is a constant framework for litigation, for interaction, for communication. And commonly the question arises, what is a public record? So let me start there. And either one of you feels free to answer that question.

Karen Walker: And I'll answer that question. So basically, under Florida law, a public record is you should assume it's anything that can be reported that is made or received pursuant to law or ordinance in connection with the transaction of official business by any agency. And say it doesn't have to be a written document. It can be an email, it can be a text message, it can be a voicemail message, it can be an audio recording. It could be a podcast. It could be anything that can be recorded. And the term agency, in terms of, you know, when you're talking about involving the transaction of business by an agency, agency is going to include basically any governmental entity, state counties, municipal entities, but it also includes other public or private agencies, persons, partnerships, corporations or businesses that are acting on behalf of a public agency. And we'll talk about that a little bit later because there are certain circumstances where private sector entities can be subject to Florida's public records law.

Tiffany Roddenberry: And just to follow up on what Karen said, on how broad public record is defined in state law, it's really not, you know, the means of how it's transmitted. It's the nature of the communication. And if it's something that's being received by an agency, there's a good chance it could be a public record. It could be even just personal emails between agency employees if those emails are about official agency business.

Mia McKown: I just have a couple of questions I often deal with, Tiffany and Karen, as you know, with this issue, too. When does, for our audience, when does Florida public records law apply to a private business? In a little bit, I know you touched on it both a little bit, but a little bit more detail.

Karen Walker: First of all, anyone who is doing business, whether it's contracting with a governmental entity or is regulated by a governmental entity in Florida, should assume any time you're providing any information to that agency that the information is a public record unless you're confident it's subject to a statutory exemption. So anything you give to an agency, you should assume it's a public record.

There are circumstances where a private entity that contracts with the government can itself become subject to the public records law. And when that occurs is when that private entity that contracts with the public entity is deemed to be acting on behalf of the public entity. And so what, when you're in that situation, it's not only the information that you provide to the governmental agency that can become subject to disclosure under the Public Records Act. It may also be information in your possession that you haven't given to the agency yet, but that relates to your contract with them. So the courts have said in Florida and the attorney general's office, which the attorney general's office has a big role in interpreting Florida's sunshine laws, which include both the open meetings law, the Sunshine Law, and the open records law, which is the Public Records Act. And what the courts in the AG's office have said is a private entity can become subject to the Public Records Act under one of two circumstances. One, if you're deemed to be performing what would otherwise be a governmental function. So if the government has a duty to provide some type of service to its constituents, its residents, and you perform that via contract, chances are you're going to be subject to the public records.

Mia McKown: So for example, Karen, a lot of things in our government have become privatized, such as prisons and things of that nature. That doesn't mean just because the government has contracted that out to a private company and they're providing the prison services, that doesn't make those records non, you know, they're still public records. Is that right?

Karen Walker: Yes, that's correct. Whether they're in the possession of the private sector entity or they've actually provided that to the governmental entity with which they contract. And then there's also more of a gray area. The Florida Supreme Court years ago articulated a test which is called the totality of factors test to determine certain situations where you may have a private sector contractor that is not actually performing a governmental function, but there are so many connections between the government and the private sector contractor that that private sector contractor could become subject to the public records law. Things like are they performing it, their services, on public property? Are they, do they have access to public funds to do it besides just being paid under the contract? What resources are they using? What services are they providing? It looks at a variety of factors to determine if even though you're a private sector entity, you're operating more like the public sector would, even though you may not be performing a service that the government would be have some type of legal obligation to provide.

Mia McKown: You know, because of the work that we do all over the country, Florida's public records law is really very broad and even, I think, sometimes more intense or tougher than other states. When your company is dealing with a governmental body and they do have highly sensitive or trade secret information, are there things that the company can do or steps that they can take to protect their information?

Tiffany Roddenberry: Yes. If you are submitting, a private entity is submit[ting] information that it deems confidential or commercially sensitive, there are definite steps that they should take. I mean, if you're submitting information to a governmental entity, the first step is going to be finding a pertinent exemption. If it's truly trade secret information, we in Florida, there are two statutory exemptions from the public records law for trade secrets. However, there may be more. There are lots of little exemptions that have been added over the years. There might be one that's specific to the context or the record at issue. So you're going to have to find exemptions, and typically, depending on the circumstance, there might even, if, there might be a procedure in place for the agency or entity is saying, you know, if you're going to assert that this is trade secret, you have to take these steps. You might have to submit two versions of the document, one that redacts the trade secret information and one that does not. So if there are instructions like that, find those. But even if there's nothing, if there's no guidance provided, you're always going to want to mark what you deem trade secret at the time you submit it. Because if you don't do that, there is a risk that the agency or court later could say, you know, because you provided this information without asserting that exemption and asserting its trade secret, you've waived the application of the exemption. If you would, talk about specific exemptions.

So there are two trade secret exemptions in Florida law. The first is Section 815.045 Florida Statutes, which technically appears in the statutory chapter on computer-related crimes. But it's been interpreted for probably two decades now as providing a public records exemption for information that meets the definition of trade secret that's incorporated into that statute. The other trade secret exemption was more recently adopted by the Florida Legislature, and it's in Chapter 119 Florida Statutes, which is the Public Records Act, and that is Section 119.0715. So if you have information you think is a trade secret, you're going to be looking at those two exemptions and potentially using both to argue that the record that you're producing or a portion of that record that you're producing to the governmental entity should be protected from disclosure if it's later sought through a public records request.

Nathan Adams: So I think oftentimes when we think about a secret, you know, we think of it as the Coke formula or we think about some, you know, highly protected confidential information. Is that really the only kinds of information that are going to fall within the definition of a trade secret, or can it be a little bit more broadly?

Karen Walker: No, it can be broader. I mean, certainly anything like the formula for Coke or something that is scientific, very technical that your competitors don't know about, that is secret, that if your competitors found out would cause you harm, those things are clearly trade secrets. But there are cases in Florida and elsewhere that find things like client or customer lists can be trade secret. Again, I mean, it's whether they meet the statutory definition of trade secret. And key to that is whether that information is actually secret. The definition talks about a compilation of data. So you see that you use a lot where if you have information that one piece of information standing alone that may not be helpful to your competitor, but when you look at it as a compilation of data, for example, a list of all your competitors or all your clients, that could be helpful to a competitor, that can do the trade secret. Any information that talks about your market share or market data that is useful to you and would be useful to your competitor can be trade secret. Certain types of financial information that's not publicly available. And again, one of the more critical aspects of the definition is whether the information is actually secret. So if you have shared it with others outside of a nondisclosure agreement or confidentiality agreement, if you've published it on your website, it's not going to be a trade secret. It actually has to be secret.

Mia McKown: And I mean, those are a couple of examples. Are there some other examples that you might think are trade secrets that might surprise some of the people listening that the courts have found or, you know, that are not trade secret, such as maybe staffing or different things like that?

Karen Walker: Tiffany and I know we have clients all the time trying to claim that their staffing information they may put in a proposal is trade secret. I mean, that's harder to protect in a lot of cases because who your employees are is not necessarily secret. Again, sometimes we have situations where we have a private sector client that is submitting a proposal in response to an RFP from a governmental entity that wants to try to claim their customer list is confidential and trade secret, even though the customers are other public entities. But some cases have found that that type of compilation, having all that in one place, is helpful. So that could be trade secret. We also get the question a lot, you know, is the pricing under my government contract, can I keep that secret? Generally, the courts have found the ultimate price paid by the governmental entity is not trade secret. I mean, the whole purpose between the public records law is the public's right to know about what the government is doing. And most of the courts that look at that find that the public has a right to know about how much the government is paying for products or services. But sometimes you'll see cases in situations where there may be aspects of component pricing or how the price is broken down that you can't protect under the trade secret exemptions.

Nathan Adams: So what happens if a company submits something that they think is a trade secret, but the government disagrees that it, in fact, constitutes one?

Tiffany Roddenberry: So unless there's a specific procedure in place, in our experience, — which what we try to do to avoid this situation is to negotiate something upfront, if there's not a specific procedure in place as to what happens, we try to negotiate something in the contract. So the government entity will even notify you that a request has been made for the information. Or, you know, maybe we can. Even if the governmental entity disagrees with this point, maybe we can agree we're not going to go down the road of whether this satisfies the definition until a public records request is made. But if the governmental entity is truly pushing back and saying, you know, we deem as a public record, really the only thing you can do at that point is unless you can get the governmental entity to back down, is to potentially file a declaratory judgment action or something like that, to get a court to weigh in on whether it's a trade secret and to get even potentially an injunction to stop the governmental entity from releasing the information you deem trade secret.

Mia McKown: I have often found that if you're really pushing for the trade secret and want to protect that, even when we've negotiated that in contract, the governmental agency kind of expects the business to carry the weight in proving that. Is that right? I think that’s your answer as well.

Tiffany Roddenberry: Yes. That's just in a situation where there's not a procedure. I can't recall the statute right now. But if it's, there's actually a statute that governs this exact situation for information that you deem trade secret submitted to the Office of Insurance Regulation. There’s a procedure in place where essentially the same thing happens to actually protect it and to get it, to get that information deemed trade secrets still have to go to court. But there's a set process so you know exactly what happens and what you need to do to prove that up.

Mia McKown: Well, and I think the process makes sense, and I think it's similar in a lot of different states that may have it codified or worded differently, But it does give the businesses an opportunity to go back and, you know, rethink that and make sure that that is something that they want to, you know, spend the legal fees, take the court action to protect. So I think those procedures are really important for a business to make sure that, Tiffany, as you mentioned, to put in their contract so that they know what the process is.

Tiffany Roddenberry: In a lot of situations, a governmental entity will really allow the business to make the assertion of trade secret and then essentially kick the can down the road as to whether we have to prove that up. They'll wait for public records requests to be made. But I have had a situation recently where governmental entities say, no, we need to make this determination now. We're going to go through the steps of figuring out if we believe your assertion of trade secret, which is, I don't know if that's a trend or not, but that's something I've experienced recently.

Nathan Adams: You alluded to a situation where the government kicks the can down the road, waits for a public records request, kind of play that out. Who, you know, besides the governmental entity, potentially raising a question about whether the trade secret has been properly asserted, who are the other persons that could potentially do that?

Tiffany Roddenberry: I think it commonly comes up when a third party has made a request, the public records request to that governmental entity. And so I think they have even rights under Florida's Public Records Act to contest if the governmental entity says, you know, we can't produce this because it's a trade secret. So how it typically plays out is, you know, someone's going to court. Either the business is trying to protect its information or the third party requester to get a court to weigh in. And even if, even if the situation just occurs that it's just, it's the business who says, OK, I'm going to court to get a declaration that this information is a trade secret and cannot be disclosed, typically, the, or often the third-party requester might even step in to intervene to try to make the case that it should not be heard, that information should not be protected from disclosure.

Mia McKown: We've talked about trade secrets, and I know that's the main purpose of the podcast, but are there any other exemptions that a business should serve during this process?

Karen Walker: I mean, there are a ton of exemptions to the public records laws in Florida, and some of them are very specific to certain types of information. And there's some new cybersecurity exemptions. There are some IT-related exemptions. So I think it's important if you have information that you want to protect and keep confidential, that you get proper legal counsel to help you analyze whether, number one, it falls in the trade secret exemption and if not, if there's other exemptions that may apply. Now, one question we get asks a lot is, you know, is there a general privacy exemption? And there are some privacy exemptions for certain information, you know, bank account numbers, certain types of personal identifying information. But there is not a general privacy exemption from the public records law in Florida. It's like a catch-all.

Nathan Adams: I know your practice not only in Florida but in other states. I've heard it said many times that Florida's sunshine laws are among the most, most liberal, the most encompassing. But I'm curious, in your practice in other states, comparatively speaking, are the procedures similar for protecting trade secrets from disclosure, or how would you characterize that?

Karen Walker: It depends on the jurisdiction. Some states have a trade secret exemption similar to Florida's. Some states don't have any exemption at all. And so it's just going to depend on the open records law of that particular state. Florida does have some of the broadest public records laws in the country. But on the trade secret exemption, it's better than some. For example, in California, they have a trade secret exemption. But it's at the option of the agency whether to actually withhold information on that exemption. So simply because your information meets the statutory definition of trade secret doesn't mean there's a legal obligation for the agency to withhold it. So that one's broader than Florida has, actually. So it just depends. Again, it's important if you've got information you want to protect that you got somebody to help you analyze what the applicable laws are, what exemptions might apply, and then how you go about taking the proper steps to try to protect the information as best possible.

Mia McKown: And Karen, a lot of that, too, is kind of pre-planning where the businesses should probably have systems in place so that the businesspeople that are working on the accounts know how to protect that information because they have duties to protect public records. And so I know you and Tiffany also help clients develop those type of policies and practices. Is that accurate?

Karen Walker: That's exactly right, Mia. And it's really frustrating for companies when they call us and, you know, someone has sent a public records request to an agency that they've provided information to, and they say, well, we want to protect this, but they didn't mark it as confidential trade secret. And it's too late. And, you know, and it's frustrating because if they had called us beforehand, it's pretty easy for us to help walk them through the process and mark it. So you at least preserve that argument. But if you send information in Florida to a governmental entity and you don't mark it at all, there's case law directly on point that says you can't claim the trade secret exemption. And so again, that pre-planning and taking those steps upfront is really important.

Nathan Adams: Clearly the most important implication of submitting documents that are trade secrets that you can't protect are losing that protection of that information. But to the extent a lawsuit is filed and information has been withheld as a trade secret, that is not, in fact, a trade secret, according to a court, what happens then?

Karen Walker: So there's a statutory provision that allows the recovery of attorney's fees. So if a court looked at an argument that someone was withholding records on the basis of trade secret and looks at that and says, we disagree, it's not a trade secret, the court would order the information disclosed and then they could award attorney's fees. And, you know, oftentimes you get agencies that will require the private sector entity that's claiming the trade secret protection to indemnify them. So you can get hit if you're wrong with the attorney's fees for the requester that we're seeking, the information as well as having to cover any attorney's fees and costs of the agency and defending the action.

Nathan Adams: All right. Well, thanks so much to Karen Walker and Tiffany Roddenberry for informative and interesting comments about protecting trade secrets when doing business with Florida government. And thanks to my co-host, Mia McKown. Most of all, thanks to you for joining us today. Please plan to join us for our next Florida Capital Conversations podcast. Have a great day.