Using FOIA Requests for a Competitive Edge
Many people are aware of the Freedom of Information Act, known by its acronym, FOIA. It’s the kind of thing that might be described as “government trade secrets, inside out.”
In essence, it means that you can get “private” information from the government by filing a request. Think the government has a file on you? Well, you can file and they will tell you if they do or don’t, or that “they don’t want to confirm or deny” the existence of such a file.
FOIA files can be very fascinating to read, and while sensitive information may be redacted, there’s always a certain excitement to reading things that are officially out of the public’s reach. (Think about any email sent to or by a government employee.)
Let’s explore how entrepreneurs can use FOIA’s, for profit.
Say there’s a sealed bidding process for a contract on which your company bid—and lost. Wouldn’t knowing how much the winning bidder actually bid help your company the next time around?
Sounds incredible, but it’s true. And while the information may be denied (as a trade secret of a competitor), you’ll never know if you don’t ask. And many folks have in fact gotten that kind of information, powerful business intelligence there just for the asking.
Why does this work so?
Well, it’s complicated. Basically (and I’m not an attorney) what really happens is that since the bid of the competitor that won a government contract is now a government contractor, filing a FOIA request about that contract might just give you the edge you seek. (The same is true for public companies by the way. Want to know if the FTC is investigating a company, or what might be going on in the investigation? FOIAs can help. Want to know more about a public companies internal financial details that are not shared in the annual or quarterly reports? Think FOIA Sarbanes-Oxley filings, for example. How about the draft versions of talking points for a government policy speech on a particular hot potato subject?)
For example, consider the case of two modular homes companies, Patriot Homes, Inc. v. Forest River Housing, Inc., which was argued before the U.S. Seventh Circuit. In that case, the defendants had taken information (see my important article on why LinkedIn has stolen your book of business), which (incredibly!) the defendant freely admitted that the plaintiff’s former employees had taken the information with them from their old place of employment to their new place of employment after being hired by the defendant. However, they argued that the information they took with them did not qualify as trade secrets, since it was available to them anyway via FOIA requests. (They lost, ultimately, for several reasons, including the fact that FOIA would have given them a paper version of the house plans as approved by government, not digital copies. This would make it much more expensive for them to duplicate and use.)
In the modular-housing industry, every city and state where homes are sold would need approvals from the local and state governments in order to have a company’s homes certified for “construction” in that area. (Modular homes are homes that are pre-built in a factory and then brought to the site and put together like puzzle pieces.)
In essence, the claim being made was (and then proven via FOIA requests to those government agencies, which promptly produced most of the same information that the employees had brought with them) since it was available via the government, it was, by definition, not a trade secret, and not stealing. FOIA requests are a journalists dream, but are available to anyone, with no regard to who you are and why you need it.
For the marketing consultant or healthcare exec: Want to understand how Obamacare is being marketed? Whether you are a Republican or a Democrat, you might want to understand how the Administration undertook the project to sell it to the American people. If you were involved in the insurance business, understanding this in depth could mean millions of dollars to your business.
FOIA is just one particular tool in the Swiss army knife of tools available to the entrepreneur. It’s one of those that is not well understood, and which has tremendous amount of power, ripe for the picking. It’s certainly worth being aware of for anyone doing business or involved in competitive bidding on a government contract. Even if you never plan on filing one, being aware of how to ensure that your bids and other filing information and emails with government don’t become freely available to your competition.