Companies hoping to redact confidential information from Freedom of Information Act requests must now justify their arguments that release of that data would cause material commercial harm to the business after a precedent-setting decision in the Second Circuit this month.

The case, initiated by science reporter and New York University journalism professor Charles Seife in 2017 and which will force companies to give more explanation for withholding confidential data, sought the release of clinical trial data from the Food and Drug Administration following the controversial approval of a drug created by Sarepta to treat a form of muscular dystrophy. The FDA overruled a panel of outside experts to approve the drug.

Three law clinics worked pro bono alongside Seife during the five-year case: the Media Freedom & Information Access Clinic at Yale Law School, Cornell Law School First Amendment Clinic and SMU Dedman School of Law First Amendment Clinic.

While the FDA ultimately succeeded in keeping the clinical trial data private, the U.S. Court of Appeals for the Second Circuit ruled against the agency's reading of an amendment to the Freedom of Information Act enacted in 2016. Yale began working with Seife through staff attorney Cortelyou C. Kenney, who later moved to Cornell and got its First Amendment clinic involved as well. A team of pro bono lawyers at Vinson and Elkins, headed by Thomas Leatherbury, also assisted, with Leatherbury joining the SMU clinic during the case.

"I think the case set some very important precedent on the scope of the 2016 amendments to the FOIA," Leatherbury told Law360. "I'm disappointed we didn't win, but I think the precedent will be very useful going forward."

The focus centered on a recent amendment to the FOIA, particularly Exemption 4 of the act which protects trade secrets or financial information. The 2016 change said confidential information covered by the exemption still must be shared unless there's a likelihood that disclosure could cause commercial harm.

However, in a 2019 U.S. Supreme Court majority ruling written by Justice Neil Gorsuch, any business information deemed confidential, regardless of whether it would cause harm due to disclosure or not, would be covered by the exemption, significantly broadening its scope and rejecting previous case law that had construed the amendment differently.

"When drug companies can put data into the FDA and keep it secret, when it's being analyzed, they can cherry-pick the data," said David Schulz, director of Yale's law clinic. "Also there's been a long struggle that goes back more than a decade about picking and choosing studies. A company would do several studies on a drug and only submit to the FDA the studies that supported them."

Schulz argued that the ruling this month by the Second Circuit restores the construction of trade secrets within the FOIA as it had been understood for the past 50 years.

"You can't just withhold information to protect confidentiality for the sake of confidentiality," he said. "That would turn Exemption 4 into a loophole that would swallow the statute itself, because an agency could decide anything was confidential and wouldn't have to produce it."

Much of the challenge of the case was simply proving that the FDA was being overzealous with what it deemed controversial. According to Schulz, the team collected expert affidavits to show that the agency was pleading confidentiality over routine aspects of pharmaceutical work.

"They said, look, if we can show it's confidential, that's all we need to show, and if you release it, there'll be a harm to the confidentiality of that information because it has not been released before," Leatherbury said. "And the court said no, you [have to] show that it's going to unfavorably impact the commercial or the financial interests of the company that gave the information to the government."

While the clinics expressed disappointment over the ultimate loss, all three identified the Second Circuit's opinion as a significant win for FOIA advocates.

"This case sets a vital precedent," Kenney said in a press release following the decision. "The Second Circuit is the first Court of Appeals in the nation to take up the question of the meaning of the foreseeable harm standard under the 2016 amendments, and this ruling will have an important spillover effect as other circuits address the issue."

--Editing by Peter Rozovsky.