No Corporate Personal Privacy? That's a Competitive Problem

Yesterday, the U.S. Supreme Court unanimously ruled that corporations have no personal privacy rights so far as the Freedom of Information Act goes. But many writing about the case seem to misunderstand the real issues at play and the ultimate significance of the ruling.

The case of FCC v. AT&T (T) centered on whether AT&T could prevent disclosure of information to CompTel, a trade association of rivals, as "an unwarranted invasion of personal privacy." Because the Court ruled last year in Citizens United v. Federal Election Commission that corporate free speech rights trumped limits on political campaign donations, many assumed that yesterday's ruling would continue a trend of expanding the concept of corporate personhood. Some suggested that AT&T wanted to hide bad behavior.

FOIA as a competitive intelligence tool
The Court focused specifically on whether Congress had intended such an interpretation in 5 U. S. C. §552(b)(7)(C), the statute authorizing the Freedom of Information Act. According to a discussion I had with Jaime Bianchi, a litigation partner with White & Case and an expert on data privacy, the potential problem for companies is not whether the press or some special interest group would get hold of embarrassing information, but that competitors might gain business information.

A company being investigated by a federal agency "invariably gives lots of information." Much of the information that would be uninteresting to a critical public could give a competitor critical insight into what the company was doing.

There are trade secret limitations to FOIA requests, but "confidential business information is usually in the eye of the beholder," says Bianchi, and a government agency might decide that something the company sees as sensitive actually isn't. "Having talked with regulators, I can tell you that they draw [confidential information exclusions] narrowly."

According to Bianchi, if negotiation with the agency doesn't resolve satisfactorily resolve the issue, the company must get to court and seek a protective order to declare sensitive information proprietary and to prevent its release to competitors.

Related:

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• How the New Supreme Court Could Change the Way You Do Business