The Constitution of the United States and all state Constitutions allow the government to take private property for pubic use. Common examples are when the government forces a property owner to sell land for a highway, bridge or light rail system. It's easy to see how tangible property like privately owned land can be subject to the Takings Clause.
Trade secrets are privately owned intangible property. Trade secrets can constitute private property under the Takings Clause and the owner of the trade secrets can obtain an injunction against the government to prohibit the government from allowing competitors to use the trade secrets.
This was the result of a 1983 case that made its way to the U.S. Supreme Court.
Here are the facts:
A federal statute required pesticide manufacturers to "register their products" with the Environmental Protection Agency (EPA). Part of the disclosure requirement was the submission of test data to the EPA that revealed the effectiveness and dangerousness of the pesticides. Competitors of the registering and disclosing manufacture could use this test data to create and then register with the EPA competitive products.
The test data constituted trade secrets under state law, and the lower court entered an injunction that prohibited the EPA from registering new products that were based on previously submitted test data.
At issue in the case was should the injunction be lifted.
Justice Blackburn allowed the injunction to remain in place: "If the District Court's injunction were lifted, the EPA would be free to use Monsanto's trade secrets for the benefit of its competitors and could disclose them to members of the public. Monsanto's trade secrets would become public knowledge, and could not be made secret again if the judgment below ultimately is affirmed."
Ruckelshaus v. Monsanto Co., 463 U.S. 1315 (1983).
Copyright 2016 | Mark D. Walters
Contact Mark D. Walters