The Texas Public Information Act (the "Act" or "PIA") permits public access to government records and encourages open government through transparency. However, astute and enterprising companies and consultants have realized that open access to government records can also reveal a treasure trove of competitive intelligence and information otherwise unavailable from their competitors. You need to consider now how to protect your company's information from the prying eyes of your competitors.
The TPIA was created by the 63rd Texas Legislature in 1973 to permit the public to seek access to information held by government entities. The preamble of the Act, found at Tex. Gov’t Code § 552.001, reflects a goal of creating an informed public, stating:
it is the policy of this state that each person is entitled, unless otherwise expressly provided by law, at all times to complete information about the affairs of government and the official acts of public officials and employees. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created. The provisions of this chapter shall be liberally construed to implement this policy.
In light of this policy, the Act requires every governmental body to make any public information available to the public. For example, this means that a father concerned about his child's education can seek records from his local school district in order to find out what his district is doing behind otherwise closed doors. Likewise, the Act is frequently used by news media companies in order to provide the public with information about how the government is using tax dollars.
However, the concerned citizen or local newspaper are not the only ones seeking information under the Act. Instead, corporations have discovered the power of the Act as a tool for discovery of competitive intelligence. While not necessarily within the intended scope of the Act, these requests for a competitor's information can serve as an inexpensive tool for any company to beat their competition.
For example, suppose that a large School District issued a competitive Request for Proposals ("RFP") for a health care insurance plan. In response, the District would likely receive detailed and in-depth packets of information from all of the major health care insurance benefit providers, which would almost certainly include detailed descriptions of methodology for providing the services at issue, pricing and discount information, and provider network information. Once the District has collected all of this information, they will likely spend significant time compiling, comparing, and contrasting the merits of the different proposals in order to select the best fit for the District. Once that process is done, a competitor in the health care benefits market needs only send an e-mailed request and pay for copies to receive a massive amount of highly useful information about how each of its competitors does business, what they charge, and who they use to provide services. The requestor basically gets a blueprint for meeting or beating its competitors in the next bid for those same services.
Protection of Your Information
Fortunately, the Legislature has provided a number of exceptions to the Act's requirement for disclosure of government records. While this article is not intended to provide an exhaustive description of all potentially useful exceptions to disclosure, the two exceptions found in Texas Government Code 552.110 are key to the protection of your company's sensitive information. Section 552.110 provides protection for two types of information: (1) trade secret; and (2) confidential commercial or financial information which would cause substantial competitive harm upon release. Using those exceptions to disclosure, here are a few tips for protecting your information and maintaining your competitive advantage:
1) First and foremost, think before you hand out information. When your company is preparing its response to an RFP (or otherwise providing information to a governmental entity), make sure that you consider whether the information you are providing is necessary. If the agency did not request it, consider holding the information back. Do you really want to provide contact information for your key employees or component pricing for the parts that go into your product? While you may think that more information is better to fully inform the agency about your capabilities and strengths, know that your competition might later get its hands on this information and seek to woo away your key employees or lock up exclusive deals with your suppliers.
2) Prepare for your objection. Once you have finalized your RFP response (or other submission to a government entity), figure out now what is protected from disclosure under the Act. Carefully consider the factors of trade secret1 and mark the trade secret information to be disclosed to the government entity as protected and not to be disclosed under the TPIA.2
Next, imagine that you sent this information directly to your closest competitor. Would your competitor's possession of that information likely cause substantial competitive injury to your company? If the information is truly competitively sensitive, then mark it as such.3
For example, in Open Records Decision 669 (2000), a company complained that it had competitors in its market, and that if its competitors were provided access to its proprietary data through a TPIA request, those competitors could create or enhance their own products and market those products to the company's detriment. The Decision found that Texas Government Code Section 552.110(b) therefore applied to protect the information at issue from public disclosure.
3) Act quickly. The Act requires a governmental entity to attempt to notify a person whose proprietary information may be subject to Section 552.110 within ten days of the entity's receipt of a TPIA request. Once your company receives that notice, you have ten business days to provide a detailed memorandum to the Attorney General describing each reason why the information should be withheld and which exceptions to disclosure apply. This compressed timeline can be a serious issue for the unwary. Unless all of your employees are trained on what to do with such a notice, the notice will invariably wait in an inbox or two and then circulate around the office for days before the proper person realizes that important information may be disclosed to the public. At that point, your counsel may have very little time to analyze the information at issue and prepare a detailed objection letter describing the protections necessary for your key information. Provide your employees with training regarding the importance of acting quickly on TPIA requests, and get your counsel involved as soon as possible.
4) Prepare for the worst. The Attorney General will issue an opinion regarding your objection to release in approximately forty-five business days. While this is a considerable amount of time, do yourself a favor and use this time to consider whether the information at issue is worth the time and expense of a lawsuit to stop its release to the public. You will also want to make a business decision within your company regarding whether you want to potentially sue the Texas Attorney General and/or the government agency at issue.4 When the attorney general issues the opinion regarding your information, the governmental agency will produce the information to the requestor, usually in less than ten days.5 Before that deadline is bearing down on your organization, consider the pros and cons of a lawsuit to protect your information.
If your company is submitting information to a state agency or other governmental entity, you ought to be aware of the competitive uses of the Texas Public Information Act. As always, your organization will be best suited by being prepared and proactive.
1See, e.g.,Tex. Att'y Gen. OR2013-07208, p.3 (available here) (last visited May 14, 2013). However, understand now that trade secret designation is a difficult bar to pass – the heightened level of protection available to trade secret is only available in limited circumstances.
2Marking information as trade secret cannot magically transform non-trade secret information for protection, but can be useful to show: (1) the extent of measures taken to protect secrecy of the information; and (2) can be useful later when your company is on a tight timeline to object to production and needs to be reminded of the key information to potentially be disclosed.
3Be judicious in marking information as protected. If you mark every page or obviously non-competitively sensitive information, you lose credibility in your subsequent objection to disclosure. For example, if your corporate website lists your key customers, do not mark those customer lists as protected information. Doing so diminishes the impact of your argument that the information at issue is truly key competitively sensitive information.
4The Government Code is unclear as to whether a third-party seeking protection for its information should sue both the Attorney General and the government entity holding the information. The safe path would be to include the government entity as a party, so that the government entity can enjoy the protection of a temporary injunction order barring them from producing the information at issue until the lawsuit can be resolved. However, the government entity may be your company's business partner or customer, and filing suit against them may be a bad business decision. Thoughtful consideration of the issue will be important before the deadline for filing suit.
5The agency will have an affirmative defense to prosecution for failure to produce requested information if it sues the attorney general to block production within ten business days of the attorney general position. See Tex. Gov't Code 552.353(b).