Companies that provide services to public agencies and entities are often put in a difficult position. To win business, they must include trade secrets as part of their bid. But most documents provided to public agencies are subject to disclosure under freedom-of-information laws. The New Hampshire Supreme Court recently addressed this issue in CaremarkPCS Health, LLC v. New Hampshire Department of Administrative Services (the opinion can be downloaded here).
Caremark submitted a bid for providing pharmacy benefit management services for New Hampshire’s health plan. As part of its bid, Caremark stated that certain information provided contained trade secrets. After Caremark won the bid, the final contract also indicated that Caremark had provided the department with trade secrets.
Soon after, two of Caremark’s competitors made public-records requests to inspect Caremark’s bid. Caremark filed suit and obtained an injunction prohibiting disclosure of the trade secrets (which were not identified in the opinion). The department appealed.
The New Hampshire Supreme Court addressed the question of “whether the [Uniform Trade Secrets Act] prohibits disclosure of trade secrets[.]” They answered this question in the affirmative and upheld the injunction.
The court focused on the portion of the UTSA providing that misappropriation occurs when someone discloses a trade secret without consent, if the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. The court ruled that the department had acquired Caremark’s trade secrets under such circumstances, for three reasons:
- The request for proposal provided that the department would endeavor to maintain the confidentiality of those portions of the proposal “clearly and properly marked confidential”;
- Caremark marked the information at issue as confidential and proprietary; and
- The final contract provided that both parties were under a duty not to disclose trade secrets.
These three factors provide guidance if your company is in a similar circumstance. You need to have your attorneys carefully examine the RFP language, as well as the applicable state law, prior to submitting a bid. Then, you should mark any documents containing proprietary information and trade secrets. I would prominently affix “CONFIDENTIAL — TRADE SECRETS” on each page containing trade secrets.
Finally, do your best to negotiate the inclusion of confidentiality language in the final contract, as well as language requiring the governmental agency to inform you of any public records request that calls for the trade-secret documents (provided that those provisions are permissible under applicable law).
There is always risk when submitting trade secrets as part of a bid for a government contract. Not only could a court find that the documents are public records, but you are also relying on the government employees to recognize that requested documents were marked as containing trade secrets. Working with an attorney to implement protections like those discussed above can help minimize this risk. But in the end, you will need to make a business decision as to whether the chance of winning the contract is worth this risk.