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Massachusetts Court Holds DTSA Does Not Apply to the Government



As we’ve discussed here before, there is tension and confusion at the intersection of trade secrets law and public contracting/public disclosure law. Contractors dealing with public entities need to be especially alert to the danger of their confidential and trade secret information entering the public domain. That danger was illustrated again by a recent case out of Massachusetts.

Although Massachusetts recently adopted the Uniform Trade Secrets Act, it did not do so in time to potentially protect the trade secrets of Fast Enterprises, LLC from disclosure. Instead, faced with a public records request from its competitors and the press seeking to have the Massachusetts Department of Transportation release Fast Enterprises’ bid proposal for replacement of a core computer system, Fast Enterprises instead sued in federal court under the Federal Defend Trade Secrets Act. Unfortunately for Fast Enterprises, the DTSA exempts “any otherwise lawful activity conducted by a governmental entity of . . . a State." 18 U.S.C. s. 1833(a)(1). Although the federal district court initially enjoined the disclosure, the district court eventually reversed course, found it had no jurisdiction and dissolved the injunction. And while the district court was sympathetic to Fast Enterprises’ plight, ultimately its hands were tied: “Although the Court fully sympathizes with FAST and cannot help but wonder why the state would require disclosure of proprietary bid information given the impact that it could have on future bid solicitations, it is constrained by the applicable statutes. Ultimately, the federal statute does not provide for a cause of action in these circumstances, the issue must be resolved by the state courts or the state legislature.”

When dealing with the government, different rules apply, so make sure you know those before you submit your information. And if you don’t know what the rules are, we are here to help!

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