Media Shield Law Could Adversely Affect Trade Secrets And IP, NAM Says

NAM testifies before Senate Judiciary Committee; concerned proposed legislation would impact privacy rights for businesess.

The National Association of Manufacturers testified Wednesday before the Senate Committee on the Judiciary that The Free Flow Of Information Act (S. 2831) as drafted is overly broad and could lead to violations of trade secrets, intellectual property and other types of legitimately proprietary documents.

The legislation was introduced after a reporter for The New York Times was jailed for refusing to reveal the identity of a news source.
Victor E. Schwartz of Shook, Hardy & Bacon LLP, who represented the NAM, said that the purpose of his testimony was outside the perimeter of that debate and focused on the bill’s possible inadvertent, adverse affect on the ability of people and companies to protect private information and trade secrets.

“When the confidential information leaked to a reporter is a trade secret, from the secret recipe of a drink to pre-patent innovations, an entire business or product line can be undermined. In these situations, the privilege is not protecting the public’s ‘right to know.’  It is protecting wrongdoing,” said Schwartz, who compared S. 2831 to the Freedom of Information Act, which is one of the most important “public right to know” statutes and includes exceptions for trade secrets and other types of proprietary and personal information.

“Sources who steal and leak information from the private sector that is protected by federal or state laws or judicial orders should be prosecuted or fined, not protected by reporter privilege,” Schwartz said. “This conduct is completely different from whistle-blowing, which deserves protection. By legitimizing the illegal activity of leaking trade secrets and other types of proprietary and personal information, Congress would be creating an incentive, even a roadmap, for people to engage in corporate espionage or invasion of an individual’s privacy, and avoid legitimate, needed prosecutions.”

Schwartz also noted that S. 2831 would provide reporters with a broader privilege than the other, more traditional privileges in evidence law, such as the attorney-client privilege. 

Schwartz added that because a reporter privilege exists to expose confidential information to the world, Congress should be careful not to impact legitimate privacy rights.

“This bill is overly broad, and unlike all of the traditional privileges, does not have appropriate exceptions, such as to safeguard corporate trade secrets and people’s privacy rights,” he said.  “Not even lawyers, doctors, or priests have this kind of near-absolute protection.”

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