|||SUPREME COURT OF THE UNITED STATES
467 U.S. 986, 104 S. Ct. 2862, 81 L. Ed. 2d 815, 52 U.S.L.W. 4886
|||June 26, 1984
|||RUCKELSHAUS, ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
|||APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT
|||Deputy Solicitor General Wallace argued the cause for appellant. With
him on the briefs were Solicitor General Lee, Acting Assistant Attorney
General Liotta, Deputy Assistant Attorney General Walker, Jerrold J. Ganzfried,
Raymond N. Zagone, Anne S. Almy, and John A. Bryson.
|||A. Raymond Randolph, Jr., argued the cause for appellee. With him on the
briefs were David G. Norrell, Thomas O. Kuhns, W. Wayne Withers, Frederick
A. Provorny, Gary S. Dyer, C. David Barrier, and Kenneth R. Heineman.*
|||Blackmun, J., delivered the opinion of the Court, in which Burger, C.
J., and Brennan, Marshall, Powell, Rehnquist, and Stevens, JJ., joined,
and in which O'connor, J., joined, except for Part IV-B and a statement
on p. 1013. O'connor, J., filed an opinion Concurring in part and Dissenting
in part, post, p. 1021. White, J., took no part in the consideration or
decision of the case.
|||The opinion of the court was delivered by: Blackmun
|||The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) authorizes
the Environmental Protection Agency (EPA) to use data submitted by an applicant
for registration of a covered product (hereinafter pesticide) in evaluating
the application of a subsequent applicant, and to disclose publicly some
of the submitted data. Under the data-consideration provisions of § 3, as
amended in 1978, applicants now are granted a 10-year period of exclusive
use for data on new active ingredients contained in pesticides registered
after September 30, 1978, while all other data submitted after December
31, 1969, may be cited and considered in support of another application
for 15 years after the original submission if the applicant offers to compensate
the original submitter. If the parties cannot agree on the amount of compensation,
either may initiate a binding arbitration proceeding, and if an original
submitter refuses to participate in negotiations or arbitration, he forfeits
his claim for compensation. Data that do not qualify for either the 10-year
period of exclusive use or the 15-year period of compensation may be considered
by EPA without limitation. Section 10, as amended in 1978, authorizes, in
general, public disclosure of all health, safety, and environmental data
even though it may result in disclosure of trade secrets. Appellee, a company
headquartered in Missouri, is an inventor, producer, and seller of pesticides,
and invests substantial sums in developing active ingredients for pesticides
and in producing end-use products that combine such ingredients with inert
ingredients. Appellee brought suit in Federal District Court for injunctive
and declaratory relief, alleging, inter alia, that the data-consideration
and data-disclosure provisions of FIFRA effected a "taking" of
property without just compensation, in violation of the Fifth Amendment,
and that the data-consideration provisions violated the Amendment because
they effected a taking of property for a private, rather than a public,
purpose. The District Court held that the challenged provisions of FIFRA
are unconstitutional, and permanently enjoined EPA from implementing or
enforcing those provisions.
|||1. To the extent that appellee has an interest in its health, safety,
and environmental data cognizable as a trade-secret property right under
Missouri law, that property right is protected by the Taking Clause of the
Fifth Amendment. Despite their intangible nature, trade secrets have many
of the characteristics of more traditional forms of property. Moreover,
this Court has found other kinds of intangible interests to be property
for purposes of the Clause. Pp. 1000-1004.
|||2. EPA's consideration or disclosure of data submitted by appellee prior
to October 22, 1972, or after September 30, 1978, does not effect a taking,
but EPA's consideration or disclosure of certain health, safety, and environmental
data constituting a trade secret under state law and submitted by appellee
between those two dates may constitute a taking under certain conditions.
|||(a) A factor for consideration in determining whether a governmental action
short of acquisition or destruction of property has gone beyond proper "regulation"
and effects a "taking" is whether the action interferes with reasonable
investment-backed expectations. With respect to any health, safety, and
environmental data that appellee submitted to EPA after the effective date
of the 1978 FIFRA amendments (October 1, 1978), appellee could not have
had a reasonable, investment-backed expectation that EPA would keep the
data confidential beyond the limits prescribed in the amended statute itself.
As long as appellee is aware of the conditions under which the data are
submitted, and the conditions are rationally related to a legitimate Government
interest, a voluntary submission of data in exchange for the economic advantages
of a registration can hardly be called a taking. Pp. 1005-1008.
|||(b) Prior to its amendment in 1972 (effective October 22, 1972), FIFRA
was silent with respect to EPA's authorized use and disclosure of data submitted
to it in connection with an application for registration. Although the Trade
Secrets Act provides a criminal penalty for a Government employee who discloses,
in a manner not authorized by law, any trade-secret information revealed
to him during the course of his official duties, it is not a guarantee of
confidentiality to submitters of data, and, absent an express promise, appellee
had no reasonable, investment-backed expectation that its information submitted
to EPA before October 22, 1972, would remain inviolate in the EPA's hands.
The possibility was substantial that the Federal Government at some future
time would find disclosure to be in the public interest. A fortiori, the
Trade Secrets Act, which penalizes only unauthorized disclosure, cannot
be construed as any sort of assurance against internal agency use of submitted
data during consideration of the application of a subsequent applicant for
registration. Pp. 1008-1010.
|||(c) However, under the statutory scheme in effect between October 22,
1972, and September 30, 1978, a submitter was given an opportunity to protect
its trade secrets from disclosure by designating them as trade secrets at
the time of submission. The explicit governmental guarantee to registration
applicants of confidentiality and exclusive use with respect to trade secrets
during this period formed the basis of a reasonable investment-backed expectation.
If EPA, consistent with current provisions of FIFRA, were now to disclose
such trade-secret data or consider those data in evaluating the application
of a subsequent applicant in a manner not authorized by the version of FIFRA
in effect between 1972 and 1978, its actions would frustrate appellee's
reasonable investment-backed expectation. If, however, arbitration pursuant
to FIFRA were to yield just compensation for the loss in the market value
of appellee's trade-secret data suffered because of EPA's consideration
of the data in connection with another application (no arbitration having
yet occurred), then appellee would have no claim against the Government
for a taking. Pp. 1010-1014.
|||3. Any taking of private property that may occur in connection with EPA's
use of data submitted to it by appellee between October 22, 1972, and September
30, 1978, is a taking for a "public use," rather than for a "private
use," even though subsequent applicants may be the most direct beneficiaries.
So long as a taking has a conceivable public character, the means by which
it will be attained is for Congress to determine. Congress believed that
the data-consideration provisions would eliminate costly duplication of
research and streamline the registration process, making new end-use products
available to consumers more quickly. Such a procompetitive purpose is within
Congress' police power. With regard to FIFRA's data-disclosure provisions,
the optimum amount of disclosure to assure the public that a product is
safe and effective is to be determined by Congress, not the courts. Pp.
|||4. A Tucker Act remedy is available to provide appellee with just compensation
for any taking of property that may occur as a result of FIFRA's data-consideration
and data-disclosure provisions, and thus the District Court erred in enjoining
EPA from acting under those provisions. Neither FIFRA nor its legislative
history discusses the interaction between FIFRA and the Tucker Act, and
inferring a withdrawal of Tucker Act jurisdiction would amount to a disfavored
partial repeal by implication of the Tucker Act. FIFRA's provision that
an original submitter of data forfeits his right to compensation from a
later submitter for the use of the original submitter's data if he fails
to participate in, or comply with the terms of, a negotiated or arbitrated
compensation settlement merely requires a claimant to first seek satisfaction
through FIFRA's procedure before asserting a Tucker Act claim. Pp. 1016-1019.
|||5. Because the Tucker Act is available as a remedy for any uncompensated
taking appellee may suffer as a result of the operation of the challenged
provisions of FIFRA, appellee's challenges to the constitutionality of the
arbitration and compensation scheme of FIFRA are not ripe for resolution.
|||JUSTICE BLACKMUN delivered the opinion of the Court.
|||In this case, we are asked to review a United States District Court's
determination that several provisions of the Federal Insecticide, Fungicide,
and Rodenticide Act (FIFRA), 61 Stat. 163, as amended, 7 U. S. C. § 136
et seq., are unconstitutional. The provisions at issue authorize the Environmental
Protection Agency (EPA) to use data submitted by an applicant for registration
of a pesticide *fn1 in evaluating
the application of a subsequent applicant, and to disclose publicly some
of the submitted data.
|||Over the past century, the use of pesticides to control weeds and minimize
crop damage caused by insects, disease, and animals has become increasingly
more important for American agriculture. See S. Rep. No. 95-334, p. 32 (1977);
S. Rep. No. 92-838, pp. 3-4, 6-7 (1972); H. R. Rep. No. 92-511, pp. 3-7
(1971). While pesticide use has led to improvements in productivity, it
has also led to increased risk of harm to humans and the environment. See
S. Rep. No. 92-838, at 3-4, 6-7; H. R. Rep. No. 92-511, at 3-7. Although
the Federal Government has regulated pesticide use for nearly 75 years,
*fn2 FIFRA was first adopted in
1947. 61 Stat. 163.
|||As first enacted, FIFRA was primarily a licensing and labeling statute.
It required that all pesticides be registered with the Secretary of Agriculture
prior to their sale in interstate or foreign commerce. §§ 3(a) and 4(a)
of the 1947 Act, 61 Stat. 166-167. The 1947 legislation also contained general
standards setting forth the types of information necessary for proper labeling
of a registered pesticide, including directions for use; warnings to prevent
harm to people, animals, and plants; and claims made about the efficacy
of the product. §§ 2(u)(2) and 3(a)(3).
|||Upon request of the Secretary, an applicant was required to submit test
data supporting the claims on the label, including the formula for the pesticide.
§§ 4(a) and (b). The 1947 version of FIFRA specifically prohibited disclosure
of "any information relative to formulas of products," §§ 3(c)(4)
and 8(c), but was silent with respect to the disclosure of any of the health
and safety data submitted with an application. *fn3
|||In 1970, the Department of Agriculture's FIFRA responsibilities were transferred
to the then newly created Environmental Protection Agency, whose Administrator
is the appellant in this case. See Reorganization Plan No. 3 of 1970, 35
Fed. Reg. 15623 (1970), 5 U. S. C. App., p. 1132.
|||Because of mounting public concern about the safety of pesticides and
their effect on the environment and because of a growing perception that
the existing legislation was not equal to the task of safeguarding the public
interest, see S. Rep. No. 92-838, at 3-9; S. Rep. No. 92-970, p. 9 (1972);
H. R. Rep. No. 92-511, at 5-13, Congress undertook a comprehensive revision
of FIFRA through the adoption of the Federal Environmental Pesticide Control
Act of 1972, 86 Stat. 973. The amendments transformed FIFRA from a labeling
law into a comprehensive regulatory statute. H. R. Rep. No. 92-511, at 1.
As amended, FIFRA regulated the use, as well as the sale and labeling, of
pesticides; regulated pesticides produced and sold in both intrastate and
interstate commerce; provided for review, cancellation, and suspension of
registration; and gave EPA greater enforcement authority. Congress also
added a new criterion for registration: that EPA determine that the pesticide
will not cause "unreasonable adverse effects on the environment."
§§ 3(c)(5)(C) and (D), 86 Stat. 980-981.
|||For purposes of this litigation, the most significant of the 1972 amendments
pertained to the pesticide-registration procedure and the public disclosure
of information learned through that procedure. Congress added to FIFRA a
new section governing public disclosure of data submitted in support of
an application for registration. Under that section, the submitter of data
could designate any portions of the submitted material it believed to be
"trade secrets or commercial or financial information." § 10(a),
86 Stat. 989. Another section prohibited EPA from publicly disclosing information
which, in its judgment, contained or related to "trade secrets or commercial
or financial information." § 10(b). In the event that EPA disagreed
with a submitter's designation of certain information as "trade secrets
or commercial or financial information" and proposed to disclose that
information, the original submitter could institute a declaratory judgment
action in federal district court. § 10(c).
|||The 1972 amendments also included a provision that allowed EPA to consider
data submitted by one applicant for registration in support of another application
pertaining to a similar chemical, provided the subsequent applicant offered
to compensate the applicant who originally submitted the data. § 3(c)(1)(D).
In effect, the provision instituted a mandatory data-licensing scheme. The
amount of compensation was to be negotiated by the parties, or, in the event
negotiations failed, was to be determined by EPA, subject to judicial review
upon the instigation of the original data submitter. The scope of the 1972
data-consideration provision, however, was limited, for any data designated
as "trade secrets or commercial or financial information" exempt
from disclosure under § 10 could not be considered at all by EPA to support
another registration application unless the original submitter consented.
|||The 1972 amendments did not specify standards for the designation of submitted
data as "trade secrets or commercial or financial information."
In addition, Congress failed to designate an effective date for the data-consideration
and disclosure schemes. In 1975, Congress amended § 3(c)(1)(D) to provide
that the data-consideration and data-disclosure provisions applied only
to data submitted on or after January 1, 1970, 89 Stat. 755, but left the
definitional question unanswered.
|||Much litigation centered around the definition of "trade secrets
or commercial or financial information" for the purposes of the data-consideration
and data-disclosure provisions of FIFRA. EPA maintained that the exemption
from consideration or disclosure applied only to a narrow range of information,
principally statements of formulae and manufacturing processes. In a series
of lawsuits, however, data-submitting firms challenged EPA's interpretation
and obtained several decisions to the effect that the term "trade secrets"
applied to any data, including health, safety, and environmental data, that
met the definition of trade secrets set forth in Restatement of Torts §
757 (1939). See, e. g., Mobay Chemical Corp. v. Costle, 447 F.Supp. 811
(WD Mo. 1978); Chevron Chemical Co. v. Costle, 443 F.Supp. 1024 (ND Cal.
1978). These decisions prevented EPA from disclosing much of the data on
which it based its decision to register pesticides and from considering
the data submitted by one applicant in reviewing the application of a later
applicant. See S. Rep. No. 95-334, at 7; H. R. Rep. No. 95-663, p. 18 (1977).
|||Because of these and other problems with the regulatory scheme embodied
in FIFRA as amended in 1972, see S. Rep. No. 95-334, at 2-5; H. R. Rep.
No. 95-663, at 15-21; see generally EPA Office of Pesticide Programs, FIFRA:
Impact on the Industry (1977), reprinted in S. Rep. No. 95-334, at 34-68,
Congress enacted other amendments to FIFRA in 1978. These were effected
by the Federal Pesticide Act of 1978, 92 Stat. 819. The new amendments included
a series of revisions in the data-consideration and data-disclosure provisions
of FIFRA's §§ 3 and 10, 7 U. S. C. §§ 136a and 136h.
|||Under FIFRA, as amended in 1978, applicants are granted a 10-year period
of exclusive use for data on new active ingredients contained in pesticides
registered after September 30, 1978. § 3(c)(1)(D)(i). All other data submitted
after December 31, 1969, may be cited and considered in support of another
application for 15 years after the original submission if the applicant
offers to compensate the original submitter. § 3(c)(1)(D)(ii). *fn4
If the parties cannot agree on the amount of compensation, either may initiate
a binding arbitration proceeding. The results of the arbitration proceeding
are not subject to judicial review, absent fraud or misrepresentation. The
same statute provides that an original submitter who refuses to participate
in negotiations or in the arbitration proceeding forfeits his claim for
compensation. Data that do not qualify for either the 10-year period of
exclusive use or the 15-year period of compensation may be considered by
EPA without limitation. § 3(c)(1)(D)(iii).
|||Also in 1978, Congress added a new subsection, § 10(d), 7 U. S. C. § 136h(d),
that provides for disclosure of all health, safety, and environmental data
to qualified requesters, notwithstanding the prohibition against disclosure
of trade secrets contained in § 10(b). The provision, however, does not
authorize disclosure of information that would reveal "manufacturing
or quality control processes" or certain details about deliberately
added inert ingredients unless "the Administrator has first determined
that the disclosure is necessary to protect against an unreasonable risk
of injury to health or the environment." §§ 10(d)(1)(A) to (C). *fn5
EPA may not disclose data to representatives of foreign or multi-national
pesticide companies unless the original submitter of the data consents to
the disclosure. § 10(g). Another subsection establishes a criminal penalty
for wrongful disclosure by a Government employee or contractor of confidential
or trade secret data. § 10(f).
|||Appellee Monsanto Company (Monsanto) is an inventor, developer, and producer
of various kinds of chemical products, including pesticides. Monsanto, headquartered
in St. Louis County, Mo., sells in both domestic and foreign markets. It
is one of a relatively small group of companies that invent and develop
new active ingredients for pesticides and conduct most of the research and
testing with respect to those ingredients. *fn6
|||These active ingredients are sometimes referred to as "manufacturing-use
products" because they are not generally sold directly to users of
pesticides. Rather, they must first be combined with "inert ingredients"
-- chemicals that dissolve, dilute, or stabilize the active components.
The results of this process are sometimes called "end-use products,"
and the firms that produce end-use products are called "formulators."
See the opinion of the District Court in this case, Monsanto Co. v. Acting
Administrator, United States Environmental Protection Agency, 564 F.Supp.
552, 554 (ED Mo. 1983). A firm that produces an active ingredient may use
it for incorporation into its own end-use products, may sell it to formulators,
or may do both. Monsanto produces both active ingredients and end-use products.
|||The District Court found that development of a potential commercial pesticide
candidate typically requires the expenditure of $5 million to $15 million
annually for several years. The development process may take between 14
and 22 years, and it is usually that long before a company can expect any
return on its investment. Id., at 555. For every manufacturing-use pesticide
the average company finally markets, it will have screened and tested 20,000
others. Monsanto has a significantly better-than-average success rate; it
successfully markets 1 out of every 10,000 chemicals tested. Ibid.
|||Monsanto, like any other applicant for registration of a pesticide, must
present research and test data supporting its application. The District
Court found that Monsanto had incurred costs in excess of $23.6 million
in developing the health, safety, and environmental data submitted by it
under FIFRA. Id., at 560. The information submitted with an application
usually has value to Monsanto beyond its instrumentality in gaining that
particular application. Monsanto uses this information to develop additional
end-use products and to expand the uses of its registered products. The
information would also be valuable to Monsanto's competitors. For that reason,
Monsanto has instituted stringent security measures to ensure the secrecy
of the data. Ibid.
|||It is this health, safety, and environmental data that Monsanto sought
to protect by bringing this suit. The District Court found that much of
these data " or to trade secrets as defined by the Restatement of Torts
and Confidential, commercial information." Id., at 562.
|||Monsanto brought suit in District Court, seeking injunctive and declaratory
relief from the operation of the data-consideration provisions of FIFRA's
§ 3(c)(1)(D), and the data-disclosure provisions of FIFRA's § 10 and the
related § 3(c)(2)(A). Monsanto alleged that all of the challenged provisions
effected a "taking" of property without just compensation, in
violation of the Fifth Amendment. In addition, Monsanto alleged that the
data-consideration provisions violated the Amendment because they effected
a taking of property for a private, rather than a public, purpose. Finally,
Monsanto alleged that the arbitration scheme provided by § 3(c)(1)(D)(ii)
violates the original submitter's due process rights and constitutes an
unconstitutional delegation of judicial power.
|||After a bench trial, the District Court concluded that Monsanto possessed
property rights in its submitted data, specifically including the right
to exclude others from the enjoyment of such data by preventing their unauthorized
use and by prohibiting their disclosure. 564 F.Supp., at 566. The court
found that the challenged data-consideration provisions "give Monsanto's
competitors a free ride at Monsanto's expense." Ibid. The District
Court reasoned that § 3(c)(1)(D) appropriated Monsanto's fundamental right
to exclude, and that the effect of that appropriation is substantial. The
court further found that Monsanto's property was being appropriated for
a private purpose and that this interference was much more significant than
the public good that the appropriation might serve. 564 F.Supp., at 566-567.
|||The District Court also found that operation of the disclosure provisions
of FIFRA constituted a taking of Monsanto's property. The cost incurred
by Monsanto when its property is "permanently committed to the public
domain and thus effectively destroyed" was viewed by the District Court
as significantly outweighing any benefit to the general public from having
the ability to scrutinize the data, for the court seemed to believe that
the general public could derive all the assurance it needed about the safety
and effectiveness of a pesticide from EPA's decision to register the product
and to approve the label. Id., at 567, and n. 4.
|||After finding that the data-consideration provisions operated to effect
a taking of property, the District Court found that the compulsory binding-arbitration
scheme set forth in § 3(c)(1)(D)(ii) did not adequately provide compensation
for the property taken. The court found the arbitration provision to be
arbitrary and vague, reasoning that the statute does not give arbitrators
guidance as to the factors that enter into the concept of just compensation,
and that judicial review is foreclosed except in cases of fraud. 564 F.Supp.,
at 567. The District Court also found that the arbitration scheme was infirm
because it did not meet the requirements of Art. III of the Constitution.
Ibid. Finally, the court found that a remedy under the Tucker Act was not
available for the deprivations of property effected by §§ 3 and 10. 564
F.Supp., at 567-568.
|||The District Court therefore declared §§ 3(c)(1)(D), 3(c)(2)(A), 10(b),
and 10(d) of FIFRA, as amended by the Federal Pesticide Act of 1978, to
be unconstitutional, and permanently enjoined EPA from implementing or enforcing
those sections. See Amended Judgment, App. to Juris. Statement 41a. *fn7
|||We noted probable jurisdiction. 464 U.S. 890 (1983).
|||In deciding this case, we are faced with four questions: (1) Does Monsanto
have a property interest protected by the Fifth Amendment's Taking Clause
in the health, safety, and environmental data it has submitted to EPA? (2)
If so, does EPA's use of the data to evaluate the applications of others
or EPA's disclosure of the data to qualified members of the public effect
a taking of that property interest? (3) If there is a taking, is it a taking
for a public use? (4) If there is a taking for a public use, does the statute
adequately provide for just compensation?
|||For purposes of this case, EPA has stipulated that "Monsanto has
certain property rights in its information, research and test data that
it has submitted under FIFRA to EPA and its predecessor agencies which may
be protected by the Fifth Amendment to the Constitution of the United States."
App. 36. Since the exact import of that stipulation is not clear, we address
the question whether the data at issue here can be considered property for
the purposes of the Taking Clause of the Fifth Amendment.
|||This Court never has squarely addressed the applicability of the protections
of the Taking Clause of the Fifth Amendment to commercial data of the kind
involved in this case. In answering the question now, we are mindful of
the basic axiom that "' interests . . . are not created by the Constitution.
Rather, they are created and their dimensions are defined by existing rules
or understandings that stem from an independent source such as state law.'"
Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 161 (1980),
quoting Board of Regents v. Roth, 408 U.S. 564, 577 (1972). Monsanto asserts
that the health, safety, and environmental data it has submitted to EPA
are property under Missouri law, which recognizes trade secrets, as defined
in § 757, Comment b, of the Restatement of Torts, as property. See Reddi-Wip,
Inc. v. Lemay Valve Co., 354 S. W. 2d 913, 917 (Mo. App. 1962); Harrington
v. National Outdoor Advertising Co., 355 Mo. 524, 532, 196 S. W. 2d 786,
791 (1946); Luckett v. Orange Julep Co., 271 Mo. 289, 302-304, 196 S. W.
740, 743 (1917). The Restatement defines a trade secret as "any formula,
pattern, device or compilation of information which is used in one's business,
and which gives him an opportunity to obtain an advantage over competitors
who do not know or use it." § 757, Comment b. And the parties have
stipulated that much of the information, research, and test data that Monsanto
has submitted under FIFRA to EPA "contains or relates to trade secrets
as defined by the Restatement of Torts." App. 36.
|||Because of the intangible nature of a trade secret, the extent of the
property right therein is defined by the extent to which the owner of the
secret protects his interest from disclosure to others. See Harrington,
supra; Reddi-Wip, supra ; Restatement of Torts, (supra) ; see also Kewanee
Oil Co. v. Bicron Corp., 416 U.S. 470, 474-476 (1974). Information that
is public knowledge or that is generally known in an industry cannot be
a trade secret. Restatement of Torts, (supra) . If an individual discloses
his trade secret to others who are under no obligation to protect the confidentiality
of the information, or otherwise publicly discloses the secret, his property
right is extinguished. See Harrington, supra ; 1 R. Milgrim, Trade Secrets
§ 1.01 (1983).
|||Trade secrets have many of the characteristics of more tangible forms
of property. A trade secret is assignable. See, e. g., Dr. Miles Medical
Co. v. John D. Park & Sons Co., 220 U.S. 373, 401-402 (1911); Painton
& Co. v. Bourns, Inc., 442 F.2d 216, 225 (CA2 1971). A trade secret
can form the res of a trust, Restatement (Second) of Trusts § 82, Comment
e (1959); 1 A. Scott, Law of Trusts § 82.5, p. 703 (3d ed. 1967), and it
passes to a trustee in bankruptcy. See In re Uniservices, Inc., 517 F.2d
492, 496-497 (CA7 1975).
|||Even the manner in which Congress referred to trade secrets in the legislative
history of FIFRA supports the general perception of their property-like
nature. In discussing the 1978 amendments to FIFRA, Congress recognized
that data developers like Monsanto have a "proprietary interest"
in their data. S. Rep. No. 95-334, at 31. Further, Congress reasoned that
submitters of data are "entitled" to "compensation"
because they "have legal ownership of the data." H. R. Conf. Rep.
No. 95-1560, p. 29 (1978). *fn8
This general perception of trade secrets as property is consonant with a
notion of "property" that extends beyond land and tangible goods
and includes the products of an individual's "labour and invention."
2 W. Blackstone, Commentaries * 405; see generally J. Locke, The Second
Treatise of Civil Government, ch. 5 (J. Gough ed. 1947).
|||Although this Court never has squarely addressed the question whether
a person can have a property interest in a trade secret, which is admittedly
intangible, the Court has found other kinds of intangible interests to be
property for purposes of the Fifth Amendment's Taking Clause. See, e. g.,
Armstrong v. United States, 364 U.S. 40, 44, 46 (1960) (materialman's lien
provided for under Maine law protected by Taking Clause); Louisville Joint
Stock Land Bank v. Radford, 295 U.S. 555, 596-602 (1935) (real estate lien
protected); Lynch v. United States, 292 U.S. 571, 579 (1934) (valid contracts
are property within meaning of the Taking Clause). That intangible property
rights protected by state law are deserving of the protection of the Taking
Clause has long been implicit in the thinking of this Court:
|||"It is conceivable that [the term 'property' in the Taking Clause]
was used in its vulgar and untechnical sense of the physical thing with
respect to which the citizen exercises rights recognized by law. On the
other hand, it may have been employed in a more accurate sense to denote
the group of rights inhering in the citizen's relation to the physical thing,
as the right to possess, use and dispose of it. In point of fact, the construction
given the phrase has been the latter." United States v. General Motors
Corp., 323 U.S. 373, 377-378 (1945).
|||We therefore hold that to the extent that Monsanto has an interest in
its health, safety, and environmental data cognizable as a trade-secret
property right under Missouri law, that property right is protected by the
Taking Clause of the Fifth Amendment. *fn9
|||Having determined that Monsanto has a property interest in the data it
has submitted to EPA, we confront the difficult question whether a "taking"
will occur when EPA discloses those data or considers the data in evaluating
another application for registration. The question of what constitutes a
"taking" is one with which this Court has wrestled on many occasions.
It has never been the rule that only governmental acquisition or destruction
of the property of an individual constitutes a taking, for
|||"courts have held that the deprivation of the former owner rather
than the accretion of a right or interest to the sovereign constitutes the
taking. Governmental action short of acquisition of title or occupancy has
been held, if its effects are so complete as to deprive the owner of all
or most of his interest in the subject matter, to amount to a taking."
United States v. General Motors Corp., 323 U.S., at 378.
|||See also PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980); Pennsylvania
Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).
|||As has been admitted on numerous occasions, "this Court has generally
'been unable to develop any "set formula" for determining when
"Justice and fairness" require that economic injuries caused by
public action'" must be deemed a compensable taking. Kaiser Aetna v.
United States, 444 U.S. 164, 175 (1979), quoting Penn Central Transportation
Co. v. New York City, 438 U.S. 104, 124 (1978); accord, Hodel v. Virginia
Surface Mining & Reclamation Assn., Inc., 452 U.S. 264, 295 (1981).
The inquiry into whether a taking has occurred is essentially an "ad
hoc, factual" inquiry. Kaiser Aetna, 444 U.S., at 175. The Court, however,
has identified several factors that should be taken into account when determining
whether a governmental action has gone beyond "regulation" and
effects a "taking." Among those factors are: "the character
of the governmental action, its economic impact, and its interference with
reasonable investment-backed expectations." PruneYard Shopping Center
v. Robins, 447 U.S., at 83; see Kaiser Aetna, 444 U.S., at 175; Penn Central,
438 U.S., at 124. It is to the last of these three factors that we now direct
our attention, for we find that the force of this factor is so overwhelming,
at least with respect to certain of the data submitted by Monsanto to EPA,
that it disposes of the taking question regarding those data.
|||A "reasonable investment-backed expectation" must be more than
a "unilateral expectation or an abstract need." Webb's Fabulous
Pharmacies, 449 U.S., at 161. We find that with respect to any health, safety,
and environmental data that Monsanto submitted to EPA after the effective
date of the 1978 FIFRA amendments -- that is, on or after October 1, 1978
*fn10 -- Monsanto could not have
had a reasonable, investment-backed expectation that EPA would keep the
data confidential beyond the limits prescribed in the amended statute itself.
Monsanto was on notice of the manner in which EPA was authorized to use
and disclose any data turned over to it by an applicant for registration.
|||Thus, with respect to any data submitted to EPA on or after October 1,
1978, Monsanto knew that, for a period of 10 years from the date of submission,
EPA would not consider those data in evaluating the application of another
without Monsanto's permission. § 3(c)(1)(D)(i). It was also aware, however,
that once the 10-year period had expired, EPA could use the data without
Monsanto's permission. §§ 3(c)(1)(D)(ii) and (iii). Monsanto was further
aware that it was entitled to an offer of compensation from the subsequent
applicant only until the end of the 15th year from the date of submission.
§ 3(c)(1)(D)(iii). In addition, Monsanto was aware that information relating
to formulae of products could be revealed by EPA to "any Federal agency
consulted and be revealed at a public hearing or in findings of fact"
issued by EPA "when necessary to carry out" EPA's duties under
FIFRA. § 10(b). The statute also gave Monsanto notice that much of the health,
safety, and efficacy data provided by it could be disclosed to the general
public at any time. § 10(d). If, despite the data-consideration and data-disclosure
provisions in the statute, Monsanto chose to submit the requisite data in
order to receive a registration, it can hardly argue that its reasonable
investment-backed expectations are disturbed when EPA acts to use or disclose
the data in a manner that was authorized by law at the time of the submission.
|||Monsanto argues that the statute's requirement that a submitter give up
its property interest in the data constitutes placing an unconstitutional
condition on the right to a valuable Government benefit. See Brief for Appellee
29. But Monsanto has not challenged the ability of the Federal Government
to regulate the marketing and use of pesticides. Nor could Monsanto successfully
make such a challenge, for such restrictions are the burdens we all must
bear in exchange for "'the advantage of living and doing business in
a civilized community.'" Andrus v. Allard, 444 U.S. 51, 67 (1979),
quoting Pennsylvania Coal Co. v. Mahon, 260 U.S., at 422 (Brandeis, J.,
Dissenting); see Day-Brite Lighting, Inc. v. Missouri, 342 U.S. 421, 424
(1952). This is particularly true in an area, such as pesticide sale and
use, that has long been the source of public concern and the subject of
government regulation. That Monsanto is willing to bear this burden in exchange
for the ability to market pesticides in this country is evidenced by the
fact that it has continued to expand its research and development and to
submit data to EPA despite the enactment of the 1978 amendments to FIFRA.
*fn11 564 F.Supp., at 561.
|||Thus, as long as Monsanto is aware of the conditions under which the data
are submitted, and the conditions are rationally related to a legitimate
Government interest, a voluntary submission of data by an applicant in exchange
for the economic advantages of a registration can hardly be called a taking.
See Corn Products Refining Co. v. Eddy, 249 U.S. 427, 431-432 (1919) ("The
right of a manufacturer to maintain secrecy as to his compounds and processes
must be held subject to the right of the State, in the exercise of its police
power and in promotion of fair dealing, to require that the nature of the
product be fairly set forth"); see also Westinghouse Electric Corp.
v. United States Nuclear Regulatory Comm'n, 555 F.2d 82, 95 (CA3 1977).
|||Prior to the 1972 amendments, FIFRA was silent with respect to EPA's authorized
use and disclosure of data submitted to it in connection with an application
for registration. Another statute, the Trade Secrets Act, 18 U. S. C. §
1905, however, arguably is relevant. That Act is a general criminal statute
that provides a penalty for any employee of the United States Government
who discloses, in a manner not authorized by law, any trade-secret information
that is revealed to him during the course of his official duties. This Court
has determined that § 1905 is more than an "antileak" statute
aimed at deterring Government employees from profiting by information they
receive in their official capacities. See Chrysler Corp. v. Brown, 441 U.S.
281, 298-301 (1979). Rather, § 1905 also applies to formal agency action,
i. e., action approved by the agency or department head. Ibid.
|||It is true that, prior to the 1972 amendments, neither FIFRA nor any other
provision of law gave EPA authority to disclose data obtained from Monsanto.
But the Trade Secrets Act is not a guarantee of confidentiality to submitters
of data, and, absent an express promise, Monsanto had no reasonable, investment-backed
expectation that its information would remain inviolate in the hands of
EPA. In an industry that long has been the focus of great public concern
and significant government regulation, the possibility was substantial that
the Federal Government, which had thus far taken no position on disclosure
of health, safety, and environmental data concerning pesticides, upon focusing
on the issue, would find disclosure to be in the public interest. Thus,
with respect to data submitted to EPA in connection with an application
for registration prior to October 22, 1972, *fn12
the Trade Secrets Act provided no basis for a reasonable investment-backed
expectation that data submitted to EPA would remain confidential.
|||A fortiori, the Trade Secrets Act cannot be construed as any sort of assurance
against internal agency use of submitted data during consideration of the
application of a subsequent applicant for registration. *fn13
Indeed, there is some evidence that the practice of using data submitted
by one company during consideration of the application of a subsequent applicant
was widespread and well known. *fn14
Thus, with respect to any data that Monsanto submitted to EPA prior to the
effective date of the 1972 amendments to FIFRA, we hold that Monsanto could
not have had a "reasonable investment-backed expectation" that
EPA would maintain those data in strictest confidence and would use them
exclusively for the purpose of considering the Monsanto application in connection
with which the data were submitted.
|||The situation may be different, however, with respect to data submitted
by Monsanto to EPA during the period from October 22, 1972, through September
30, 1978. Under the statutory scheme then in effect, a submitter was given
an opportunity to protect its trade secrets from disclosure by designating
them as trade secrets at the time of submission. When Monsanto provided
data to EPA during this period, it was with the understanding, embodied
in FIFRA, that EPA was free to use any of the submitted data that were not
trade secrets in considering the application of another, provided that EPA
required the subsequent applicant to pay "reasonable compensation"
to the original submitter. § 3(c)(1)(D), 86 Stat. 979. But the statute also
gave Monsanto explicit assurance that EPA was prohibited from disclosing
publicly, or considering in connection with the application of another,
any data submitted by an applicant if both the applicant and EPA determined
the data to constitute trade secrets. § 10, 86 Stat. 989. Thus, with respect
to trade secrets submitted under the statutory regime in force between the
time of the adoption of the 1972 amendments and the adoption of the 1978
amendments, the Federal Government had explicitly guaranteed to Monsanto
and other registration applicants an extensive measure of confidentiality
and exclusive use. This explicit governmental guarantee formed the basis
of a reasonable investment-backed expectation. If EPA, consistent with the
authority granted it by the 1978 FIFRA amendments, were now to disclose
trade-secret data or consider those data in evaluating the application of
a subsequent applicant in a manner not authorized by the version of FIFRA
in effect between 1972 and 1978, EPA's actions would frustrate Monsanto's
reasonable investment-backed expectation with respect to its control over
the use and dissemination of the data it had submitted.
|||The right to exclude others is generally "one of the most essential
sticks in the bundle of rights that are commonly characterized as property."
Kaiser Aetna, 444 U.S., at 176. With respect to a trade secret, the right
to exclude others is central to the very definition of the property interest.
Once the data that constitute a trade secret are disclosed to others, or
others are allowed to use those data, the holder of the trade secret has
lost his property interest in the data. *fn15
That the data retain usefulness for Monsanto even after they are disclosed
-- for example, as bases from which to develop new products or refine old
products, as marketing and advertising tools, or as information necessary
to obtain registration in foreign countries -- is irrelevant to the determination
of the economic impact of the EPA action on Monsanto's property right. The
economic value of that property right lies in the competitive advantage
over others that Monsanto enjoys by virtue of its exclusive access to the
data, and disclosure or use by others of the data would destroy that competitive
|||EPA encourages us to view the situation not as a taking of Monsanto's
property interest in the trade secrets, but as a "pre-emption"
of whatever property rights Monsanto may have had in those trade secrets.
Brief for Appellant 27-28. The agency argues that the proper functioning
of the comprehensive FIFRA registration scheme depends upon its uniform
application to all data. Thus, it is said, the Supremacy Clause dictates
that the scheme not vary depending on the property law of the State in which
the submitter is located. Id., at 28. This argument proves too much. If
Congress can "pre-empt" state property law in the manner advocated
by EPA, then the Taking Clause has lost all vitality. This Court has stated
that a sovereign, "by ipse dixit, may not transform private property
into public property without compensation. . . . This is the very kind of
thing that the Taking Clause of the Fifth Amendment was meant to prevent."
Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S., at 164.
|||If a negotiation or arbitration pursuant to § 3(c)(1)(D)(ii) were to yield
just compensation to Monsanto for the loss in the market value of its trade-secret
data suffered because of EPA's consideration of the data in connection with
another application, then Monsanto would have no claim against the Government
for a taking. Since no arbitration has yet occurred with respect to any
use of Monsanto's data, any finding that there has been an actual taking
would be premature. See (infra), at 1019-1020. *fn16
|||In summary, we hold that EPA's consideration or disclosure of data submitted
by Monsanto to the agency prior to October 22, 1972, or after September
30, 1978, does not effect a taking. We further hold that EPA consideration
or disclosure of health, safety, and environmental data will constitute
a taking if Monsanto submitted the data to EPA between October 22, 1972,
and September 30, 1978; *fn17
the data constituted trade secrets under Missouri law; Monsanto had designated
the data as trade secrets at the time of its submission; the use or disclosure
conflicts with the explicit assurance of confidentiality or exclusive use
contained in the statute during that period; and the operation of the arbitration
provision does not adequately compensate for the loss in market value of
the data that Monsanto suffers because of EPA's use or disclosure of the
|||We must next consider whether any taking of private property that may
occur by operation of the data-disclosure and data-consideration provisions
of FIFRA is a taking for a "public use." We have recently stated
that the scope of the "public use" requirement of the Taking Clause
is "coterminous with the scope of a sovereign's police powers."
Hawaii Housing Authority v. Midkiff, ante, at 240; see Berman v. Parker,
348 U.S. 26, 33 (1954). The role of the courts in second-guessing the legislature's
judgment of what constitutes a public use is extremely narrow. Midkiff,
supra; Berman, supra, at 32.
|||The District Court found that EPA's action pursuant to the data-consideration
provisions of FIFRA would effect a taking for a private use, rather than
a public use, because such action benefits subsequent applicants by forcing
original submitters to share their data with later applicants. 564 F.Supp.,
at 566. It is true that the most direct beneficiaries of EPA actions under
the data-consideration provisions of FIFRA will be the later applicants
who will support their applications by citation to data submitted by Monsanto
or some other original submitter. Because of the data-consideration provisions,
later applicants will not have to replicate the sometimes intensive and
complex research necessary to produce the requisite data. This Court, however,
has rejected the notion that a use is a public use only if the property
taken is put to use for the general public. Midkiff, ante, at 243-244; Rindge
Co. v. Los Angeles, 262 U.S. 700, 707 (1923); Block v. Hirsh, 256 U.S. 135,
|||So long as the taking has a conceivable public character, "the means
by which it will be attained is . . . for Congress to determine." Berman,
348 U.S., at 33. Here, the public purpose behind the data-consideration
provisions is clear from the legislative history. Congress believed that
the provisions would eliminate costly duplication of research and streamline
the registration process, making new end-use products available to consumers
more quickly. Allowing applicants for registration, upon payment of compensation,
to use data already accumulated by others, rather than forcing them to go
through the time-consuming process of repeating the research, would eliminate
a significant barrier to entry into the pesticide market, thereby allowing
greater competition among producers of end-use products. S. Rep. No. 95-334,
at 30-31, 40-41; 124 Cong. Rec. 29756-29757 (1978) (remarks of Sen. Leahy).
Such a procompetitive purpose is well within the police power of Congress.
See Midkiff, ante, at 241-242. *fn18
|||Because the data-disclosure provisions of FIFRA provide for disclosure
to the general public, the District Court did not find that those provisions
constituted a taking for a private use. Instead, the court found that the
data-disclosure provisions served no use. It reasoned that because EPA,
before registration, must determine that a product is safe and effective,
and because the label on a pesticide, by statute, must set forth the nature,
contents, and purpose of the pesticide, the label provided the public with
all the assurance it needed that the product is safe and effective. 564
F.Supp., at 567, and n. 4. It is enough for us to state that the optimum
amount of disclosure to the public is for Congress, not the courts, to decide,
and that the statute embodies Congress' judgment on that question. See 123
Cong. Rec., at 25706 (remarks of Sen. Leahy). We further observe, however,
that public disclosure can provide an effective check on the decisionmaking
processes of EPA and allows members of the public to determine the likelihood
of individualized risks peculiar to their use of the product. See H. R.
Rep. No. 95-343, p. 8 (1977) (remarks of Douglas M. Costle); S. Rep. No.
95-334, at 13.
|||We therefore hold that any taking of private property that may occur in
connection with EPA's use or disclosure of data submitted to it by Monsanto
between October 22, 1972, and September 30, 1978, is a taking for a public
|||Equitable relief is not available to enjoin an alleged taking of private
property for a public use, duly authorized by law, *fn19
when a suit for compensation can be brought against the sovereign subsequent
to the taking. Larson v. Domestic & Foreign Commerce Corp., 337 U.S.
682, 697, n. 18 (1949). The Fifth Amendment does not require that compensation
precede the taking. Hurley v. Kincaid, 285 U.S. 95, 104 (1932). Generally,
an individual claiming that the United States has taken his property can
seek just compensation under the Tucker Act, 28 U. S. C. § 1491. *fn20
United States v. Causby, 328 U.S. 256, 267 (1946) ("If there is a taking,
the claim is 'founded upon the Constitution' and within the jurisdiction
of the Court of Claims to hear and determine"); Yearsley v. Ross Construction
Co., 309 U.S. 18, 21 (1940).
|||In this case, however, the District Court enjoined EPA action under the
data-consideration and data-disclosure provisions of FIFRA, finding that
a Tucker Act remedy is not available for any taking of property that may
occur as a result of the operation of those provisions. We do not agree
with the District Court's assessment that no Tucker Act remedy will lie
for whatever taking may occur due to EPA activity pursuant to FIFRA.
|||In determining whether a Tucker Act remedy is available for claims arising
out of a taking pursuant to a federal statute, the proper inquiry is not
whether the statute "expresses an affirmative showing of congressional
intent to permit recourse to a Tucker Act remedy," but "whether
Congress has in the withdrawn the Tucker Act grant of jurisdiction to the
Court of Claims to hear a suit involving the 'founded . . . upon the Constitution.'"
Regional Rail Reorganization Act Cases, 419 U.S. 102, 126 (1974) (emphasis
|||Nowhere in FIFRA or in its legislative history is there Discussion of
the interaction between FIFRA and the Tucker Act. Since the Tucker Act grants
what is now the Claims Court "jurisdiction to render judgment upon
any claim against the United States founded . . . upon the Constitution,"
we would have to infer a withdrawal of jurisdiction with respect to takings
under FIFRA from the structure of the statute or from its legislative history.
A withdrawal of jurisdiction would amount to a partial repeal of the Tucker
Act. This Court has recognized, however, that "repeals by implication
are disfavored." Regional Rail Reorganization Act Cases, 419 U.S.,
at 133. See, e. g., Amell v. United States, 384 U.S. 158, 165-166 (1966);
Mercantile National Bank v. Langdeau, 371 U.S. 555, 565 (1963); United States
v. Borden Co., 308 U.S. 188, 198-199 (1939).
|||Monsanto argues that FIFRA's provision that an original submitter of data
who fails to participate in a procedure for reaching an agreement or in
an arbitration proceeding, or fails to comply with the terms of an agreement
or arbitration decision, "shall forfeit the right to compensation for
the use of the data in support of the application," § 3(c)(1)(D)(ii),
indicates Congress' intent that there be no Tucker Act remedy. But where
two statutes are "'capable of co-existence, it is the duty of the courts,
absent a clearly expressed congressional intention to the contrary, to regard
each as effective.'" Regional Rail Reorganization Act Cases, 419 U.S.,
at 133-134, quoting Morton v. Mancari, 417 U.S. 535, 551 (1974). Here, contrary
to Monsanto's claim, it is entirely possible for the Tucker Act and FIFRA
to co-exist. The better interpretation, therefore, of the FIFRA language
on forfeiture, which gives force to both the Tucker Act and the FIFRA provision,
is to read FIFRA as implementing an exhaustion requirement as a precondition
to a Tucker Act claim. That is, FIFRA does not withdraw the possibility
of a Tucker Act remedy, but merely requires that a claimant first seek satisfaction
through the statutory procedure. Cf. Regional Rail Reorganization Act Cases,
419 U.S., at 154-156 (viewing Tucker Act remedy as covering any shortfall
between statutory remedy and just compensation). *fn21
|||With respect to data disclosure to the general public, FIFRA provides
for no compensation whatsoever. Thus, Monsanto's argument that Congress
intended the compensation scheme provided in FIFRA to be exclusive has no
relevance to the data-disclosure provisions of § 10.
|||Congress in FIFRA did not address the liability of the Government to pay
just compensation should a taking occur. Congress' failure specifically
to mention or provide for recourse against the Government may reflect a
congressional belief that use of data by EPA in the ways authorized by FIFRA
effects no Fifth Amendment taking or it may reflect Congress' assumption
that the general grant of jurisdiction under the Tucker Act would provide
the necessary remedy for any taking that may occur. In any event, the failure
cannot be construed to reflect an unambiguous intention to withdraw the
Tucker Act remedy. " or not the United States so intended," any
taking claim under FIFRA is one "founded . . . upon the Constitution,"
and is thus remediable under the Tucker Act. Regional Rail Reorganization
Act Cases, 419 U.S., at 126. Therefore, where the operation of the data-consideration
and data-disclosure provisions of FIFRA effect a taking of property belonging
to Monsanto, an adequate remedy for the taking exists under the Tucker Act.
The District Court erred in enjoining the taking.
|||Because we hold that the Tucker Act is available as a remedy for any uncompensated
taking Monsanto may suffer as a result of the operation of the challenged
provisions of FIFRA, we conclude that Monsanto's challenges to the constitutionality
of the arbitration and compensation scheme are not ripe for our resolution.
Because of the availability of the Tucker Act, Monsanto's ability to obtain
just compensation does not depend solely on the validity of the statutory
compensation scheme. The operation of the arbitration procedure affects
only Monsanto's ability to vindicate its statutory right to obtain compensation
from a subsequent applicant whose registration application relies on data
originally submitted by Monsanto, not its ability to vindicate its constitutional
right to just compensation.
|||Monsanto did not allege or establish that it had been injured by actual
arbitration under the statute. While the District Court acknowledged that
Monsanto had received several offers of compensation from applicants for
registration, 564 F.Supp., at 561, it did not find that EPA had considered
Monsanto's data in considering another application. Further, Monsanto and
any subsequent applicant may negotiate and reach agreement concerning an
outstanding offer. If they do not reach agreement, then the controversy
must go to arbitration. Only after EPA has considered data submitted by
Monsanto in evaluating another application and an arbitrator has made an
award will Monsanto's claims with respect to the constitutionality of the
arbitration scheme become ripe. See Duke Power Co. v. Carolina Environmental
Study Group, Inc., 438 U.S. 59, 81 (1978); Regional Rail Reorganization
Act Cases, 419 U.S., at 138.
|||We find no constitutional infirmity in the challenged provisions of FIFRA.
Operation of the provisions may effect a taking with respect to certain
health, safety, and environmental data constituting trade secrets under
state law and designated by Monsanto as trade secrets upon submission to
EPA between October 22, 1972, and September 30, 1978. *fn22
But whatever taking may occur is one for a public use, and a Tucker Act
remedy is available to provide Monsanto with just compensation. Once a taking
has occurred, the proper forum for Monsanto's claim is the Claims Court.
Monsanto's challenges to the constitutionality of the arbitration procedure
are not yet ripe for review. The judgment of the District Court is therefore
vacated, and the case is remanded for further proceedings consistent with
|||It is so ordered.
|||JUSTICE WHITE took no part in the consideration or decision of this case.
|||Justice O'CONNOR, Concurring in part and Dissenting in part.
|||I join all of the Court's opinion except for Part IV-B and the Court's
Conclusion, ante, at 1013, that "EPA's consideration or disclosure
of data submitted by Monsanto to the agency prior to October 22, 1972 .
. . does not effect a taking." In my view public disclosure of pre-1972
data would effect a taking. As to consideration of this information within
EPA in connection with other license applications not submitted by Monsanto,
I believe we should remand to the District Court for further factual findings
concerning Monsanto's expectations regarding interagency uses of trade secret
information prior to 1972.
|||It is important to distinguish at the outset public disclosure of trade
secrets from use of those secrets entirely within EPA. Internal use may
undermine Monsanto's competitive position within the United States, but
it leaves Monsanto's position in foreign markets undisturbed. As the Court
notes, ante, at 1007, n. 11, the likely impact on foreign market position
is one that Monsanto would weigh when deciding whether to submit trade secrets
to EPA. Thus a submission of trade secrets to EPA that implicitly consented
to further use of the information within the agency is not necessarily the
same as one that implicitly consented to public disclosure.
|||It seems quite clear -- indeed the Court scarcely disputes -- that public
disclosure of trade secrets submitted to the Federal Government before 1972
was neither permitted by law, nor customary agency practice before 1972,
nor expected by applicants for pesticide registrations. The Court correctly
notes that the Trade Secrets Act, 18 U. S. C. § 1905, flatly proscribed
such disclosures. The District Court expressly found that until 1970 it
was Government "policy that the data developed and submitted by companies
such as be maintained confidentially by the [administrative agency] and
was not to be disclosed without the permission of the data submitter."
Monsanto Co. v. Acting Administrator, EPA, 564 F.Supp. 552, 564 (1983).
Finally, the Court, ante, at 1009, n. 14, quotes from a 1972 statement by
the National Agricultural Chemicals Association that "registration
information submitted to the Administrator has not routinely been made available
for public inspection." It is hard to imagine how a pre-1972 applicant
for a pesticide license would not, under these circumstances, have formed
a very firm expectation that its trade secrets submitted in connection with
a pesticide registration would not be disclosed to the public.
|||The Court's analysis of this question appears in a single sentence: an
"industry that long has been the focus of great public concern and
significant government regulation" can have no reasonable expectation
that the Government will not later find public disclosure of trade secrets
to be in the public interest. Ante, at 1008. I am frankly puzzled to read
this statement in the broader context of the Court's otherwise convincing
opinion. If the degree of Government regulation determines the reasonableness
of an expectation of confidentiality, Monsanto had as little reason to expect
confidentiality after 1972 as before, since the 1972 amendments were not
deregulatory in intent or effect. And the Court entirely fails to explain
why the nondisclosure provision of the 1972 Act, § 10, 86 Stat. 989, created
any greater expectation of confidentiality than the Trade Secrets Act. Section
10 prohibited EPA from disclosing "trade secrets or commercial or financial
information." No penalty for disclosure was prescribed, unless disclosure
was with the intent to defraud. The Trade Secrets Act, 18 U. S. C. § 1905,
prohibited and still prohibits Government disclosure of trade secrets and
other commercial or financial information revealed during the course of
official duties, on pain of substantial criminal sanctions. The Court acknowledges
that this prohibition has always extended to formal and official agency
action. Chrysler Corp. v. Brown, 441 U.S. 281, 298-301 (1979). It seems
to me that the criminal sanctions in the Trade Secrets Act therefore created
at least as strong an expectation of privacy before 1972 as the precatory
language of § 10 created after 1972.
|||The Court's tacit analysis seems to be this: an expectation of confidentiality
can be grounded only on a statutory nondisclosure provision situated in
close physical proximity, in the pages of the United States Code, to the
provisions pursuant to which information is submitted to the Government.
For my part, I see no reason why Congress should not be able to give effective
protection to all trade secrets submitted to the Federal Government by means
of a single, overarching, trade secrets provision. We routinely assume that
wrongdoers are put on notice of the entire contents of the Code, though
in all likelihood most of them have never owned a copy or opened a single
page of it. It seems strange to assume, on the other hand, that a company
like Monsanto, well served by lawyers who undoubtedly do read the Code,
could build an expectation of privacy in pesticide trade secrets only if
the assurance of confidentiality appeared in Title 7 itself.
|||The question of interagency use of trade secrets before 1972 is more difficult
because the Trade Secrets Act most likely does not extend to such uses.
The District Court found that prior to October 1972 only two competitors'
registrations were granted on the basis of data submitted by Monsanto, and
that Monsanto had no knowledge of either of these registrations prior to
their being granted. 564 F.Supp., at 564. The District Court also found
that before 1970 it was agency policy "that the data developed and
submitted by companies such as could not be used to support the registration
of another's product without the permission of the data submitter."
Ibid. This Court, however, concludes on the basis of two cited fragments
of evidence that "the evidence against the District Court's finding
seems overwhelming." Ante, at 1010, n. 14. The Court nevertheless wisely
declines to label the District Court's findings of fact on this matter clearly
erroneous. Instead, the Court notes that the "District Court did not
find that the policy of the Department [of Agriculture] was publicly known
at the time [before 1970] or that there was any explicit guarantee of exclusive
use." Ibid. This begs exactly the right question, but the Court firmly
declines to answer it. The Court simply states that "there is some
evidence that the practice of using data submitted by one company during
consideration of the application of a subsequent applicant was widespread
and well known." Ante, at 1009 (footnote omitted). And then, without
more ado, the Court declares that with respect to pre-1972 data Monsanto
"could not have had a 'reasonable investment-backed expectation' that
EPA would . . . use [the data] exclusively for the purpose of considering
the Monsanto application in connection with which the data were submitted."
Ante, at 1010.
|||If one thing is quite clear it is that the extent of Monsanto's pre-1972
expectations, whether reasonable and investment-backed or otherwise, is
a heavily factual question. It is fairly clear that the District Court found
that those expectations existed as a matter of fact and were reasonable
as a matter of law. But if the factual findings of the District Court on
this precise question were not as explicit as they might have been, the
appropriate Disposition is to remand to the District Court for further factfinding.
That is the course I would follow with respect to interagency use of trade
secrets submitted by Monsanto before 1972.
|||* Briefs of amici curiae urging reversal were filed for the American Association
for the Advancement of Science et al. by Thomas O. McGarity; for the American
Federation of Labor and Congress of Industrial Organizations et al. by Marsha
S. Berzon, Michael Rubin, Laurence Gold, Albert H. Meyerhoff, and J. Albert
Woll; for the Pesticide Producers Association et al. by David B. Weinberg
and William R. Weissman; and for PPG Industries, Inc., by Thomas H. Truitt,
David R. Berz, and Jeffrey F. Liss.
|||Briefs of amici curiae urging affirmance were filed for Abbott Laboratories
et al. by Kenneth W. Weinstein and Lawrence S. Ebner; for the American Chemical
Society et al. by William J. Butler, Jr., and Arthur D. McKey; for the American
Patent Law Association, Inc., by Donald S. Chisum; for Avco Corp. by Alvin
D. Shapiro; for Sathon, Inc., by Ralph E. Brown and Mark E. Singer; for
SDS Biotech Corp. et al. by Harold Himmelman and Cynthia A. Lewis; and for
Stauffer Chemical Co. by Lawrence S. Ebner, John T. Ronan III, and John
|||*fn1 For purposes of our Discussion
of FIFRA, the term "pesticides" includes herbicides, insecticides,
fungicides, rodenticides, and plant regulators. See §§ 2(t) and (u) of FIFRA,
as amended, 7 U. S. C. §§ 136(t) and (u).
|||*fn2 The first federal legislation
in this area was the Insecticide Act of 1910, 36 Stat. 331, which made it
unlawful to manufacture and sell insecticides that were adulterated or misbranded.
In 1947, the 1910 legislation was repealed and replaced with FIFRA. 61 Stat.
|||Some States had undertaken to regulate pesticide use before there was
federal legislation, and many more continued to do so after federal legislation
was enacted. In 1946, the Council of State Governments recommended for adoption
a model state statute, the Uniform State Insecticide, Fungicide, and Rodenticide
Act. See S. Rep. No. 92-838, p. 7 (1972); H. R. Rep. No. 313, 80th Cong.,
1st Sess., 3 (1947).
|||*fn3 Appellant here concedes,
however, that as a matter of practice, the Department of Agriculture did
not publicly disclose the health and safety information. Brief for Appellant
5, n. 5.
|||*fn4 Section 3(c)(1)(D), 92 Stat.
820-822, 7 U. S. C. § 136a(c)(1)(D), reads in relevant part:
|||"(i) With respect to pesticides containing active ingredients that
are initially registered under this Act after [September 30, 1978], data
submitted to support the application for the original registration of the
pesticide, or an application for an amendment adding any new use to the
registration and that pertains solely to such new use, shall not, without
the written permission of the original data submitter, be considered by
the Administrator to support an application by another person during a period
of ten years following the date the Administrator first registers the pesticide
. . . ;
|||"(ii) except as otherwise provided in subparagraph (D)(i) of this
paragraph, with respect to data submitted after December 31, 1969, by an
applicant or registrant to support an application for registration, experimental
use permit, or amendment adding a new use to an existing registration, to
support or maintain in effect an existing registration, or for reregistration,
the Administrator may, without the permission of the original data submitter,
consider any such item of data in support of an application by any other
person . . . within the fifteen-year period following the date the data
were originally submitted only if the applicant has made an offer to compensate
the original data submitter and submitted such offer to the Administrator
accompanied by evidence of delivery to the original data submitter of the
offer. The terms and amount of compensation may be fixed by agreement between
the original data submitter and the applicant, or, failing such agreement,
binding arbitration under this subparagraph. If, at the end of ninety days
after the date of delivery to the original data submitter of the offer to
compensate, the original data submitter and the applicant have neither agreed
on the amount and terms of compensation nor on a procedure for reaching
an agreement on the amount and terms of compensation, either person may
initiate binding arbitration proceedings by requesting the Federal Mediation
and Conciliation Service to appoint an arbitrator from the roster of arbitrators
maintained by such Service. . . . findings and determination of the arbitrator
shall be final and conclusive, and no official or court of the United States
shall have power or jurisdiction to review any such findings and determination,
except for fraud, misrepresentation, or other misconduct by one of the parties
to the arbitration or the arbitrator where there is a verified complaint
with supporting affidavits attesting to specific instances of such fraud,
misrepresentation, or other misconduct. . . . If the Administrator determines
that an original data submitter has failed to participate in a procedure
for reaching an agreement or in an arbitration proceeding as required by
this subparagraph, or failed to comply with the terms of an agreement or
arbitration decision concerning compensation under this subparagraph, the
original data submitter shall forfeit the right to compensation for the
use of the data in support of the application. . . . Registration action
by the Administrator shall not be delayed pending the fixing of compensation;
|||"(iii) after expiration of any period of exclusive use and any period
for which compensation is required for the use of an item of data under
subparagraphs (D)(i) and (D)(ii) of this paragraph, the Administrator may
consider such item of data in support of an application by any other applicant
without the permission of the original data submitter and without an offer
having been received to compensate the original data submitter for the use
of such item of data."
|||*fn5 Section 10(d), 92 Stat.
830, reads in relevant part:
|||"(1) All information concerning the objectives, methodology, results,
or significance of any test or experiment performed on or with a registered
or previously registered pesticide or its separate ingredients, impurities,
or degradation products and any information concerning the effects of such
pesticide on any organism or the behavior of such pesticide in the environment,
including, but not limited to, data on safety to fish and wildlife, humans,
and other mammals, plants, animals, and soil, and studies on persistence,
translocation and fate in the environment, and metabolism, shall be available
for disclosure to the public: Provided, That the use of such data for any
registration purpose shall be governed by section 3 of this Act: Provided
further, That this paragraph does not authorize the disclosure of any information
|||"(A) discloses manufacturing or quality control processes,
|||"(B) discloses the details of any methods for testing, detecting,
or measuring the quantity of any deliberately added inert ingredients of
a pesticide, or
|||"(C) discloses the identity or percentage quantity of any deliberately
added inert ingredient of a pesticide, unless the Administrator has first
determined that disclosure is necessary to protect against an unreasonable
risk of injury to health or the environment.
|||"(2) Information concerning production, distribution, sale, or inventories
of a pesticide that is otherwise entitled to confidential treatment under
subsection (b) of this section may be publicly disclosed in connection with
a public proceeding to determine whether a pesticide, or any ingredient
of a pesticide, causes unreasonable adverse effects on health or the environment,
if the Administrator determines that such disclosure is necessary in the
|||*fn6 A study by the Office of
Pesticide Programs of the EPA showed that in 1977 approximately 400 firms
were registered to produce manufacturing-use products. S. Rep. No. 95-334,
p. 34 (1977). It was estimated that the 10 largest firms account for 75%
of this country's pesticide production. Id., at 60. A correspondingly small
number of new pesticides are marketed each year. In 1974, only 10 new pesticides
were introduced. See Goring, The Costs of Commercializing Pesticides, International
Conference of Entomology, Aug. 20, 1976, reprinted in Hearings on Extension
of the Federal Insecticide, Fungicide, and Rodenticide Act before the Subcommittee
on Agricultural Research and General Legislation of the Senate Committee
on Agriculture, Nutrition, and Forestry, 95th Cong., 1st Sess., 250, 254
|||*fn7 The District Court's judgment
in this case is in conflict with the holdings of other federal courts. See,
e. g., Petrolite Corp. v. United States Environmental Protection Agency,
519 F.Supp. 966 (DC 1981); Mobay Chemical Corp. v. Costle, 517 F.Supp. 252,
and 517 F.Supp. 254 (WD Pa. 1981), aff'd sub nom. Mobay Chemical Co. v.
Gorsuch, 682 F.2d 419 (CA3), cert. denied, 459 U.S. 988 (1982); Chevron
Chemical Co. v. Costle, 499 F.Supp. 732 (Del. 1980), aff'd, 641 F.2d 104
(CA3), cert. denied, 452 U.S. 961 (1981).
|||*fn8 Of course, it was not necessary
that Congress recognize the data at issue here as property in order for
the data to be protected by the Taking Clause. We mention the legislative
history merely as one more illustration of the general perception of the
property-like nature of trade secrets.
|||*fn9 Contrary to EPA's contention,
Brief for Appellant 29, Justice Holmes' dictum in E. I. du Pont de Nemours
Powder Co. v. Masland, 244 U.S. 100 (1917), does not undermine
our holding that a trade secret is property protected by the Fifth Amendment
Taking Clause. Masland arose from a dispute about the disclosure of trade
secrets during preparation for a trial. In his opinion for the Court, the
|||"The case has been considered as presenting a conflict between a
right of property and a right to make a full defence, and it is said that
if the disclosure is forbidden to one who denies that there is a trade secret,
the merits of his defence are adJudged against him before he has a chance
to be heard or to prove his case. We approach the question somewhat differently.
The word property as applied to trade-marks and trade secrets is an unanalyzed
expression of certain secondary consequences of the primary fact that the
law makes some rudimentary requirements of good faith. Whether the plaintiffs
have any valuable secret or not the defendant knows the facts, whatever
they are, through a special confidence that he accepted. The property may
be denied but the confidence cannot be. Therefore the starting point for
the present matter is not property or due process of law, but that the defendant
stood in confidential relations with the plaintiffs." Id., at 102.
|||Justice Holmes did not deny the existence of a property interest; he simply
deemed determination of the existence of that interest irrelevant to resolution
of the case. In a case decided prior to Masland, the Court had spoken of
trade secrets in property terms. Board of Trade v. Christie Grain &
Stock Co., 198 U.S. 236, 250-253 (1905) (Holmes, J., for the Court). See
generally 1 R. Milgrim, Trade Secrets § 1.01 (1983).
|||*fn10 The Federal Pesticide
Act of 1978 was approved on September 30, 1978. 92 Stat. 842. The new data-consideration
and data-disclosure provisions applied with full force to all data submitted
after that date.
|||*fn11 Because the market for
Monsanto's pesticide products is an international one, Monsanto could decide
to forgo registration in the United States and sell a pesticide only in
foreign markets. Presumably, it will do so in those situations where it
deems the data to be protected from disclosure more valuable than the right
to sell in the United States.
|||*fn12 The 1972 amendments to
FIFRA became effective at the close of the business day on October 21, 1972.
86 Stat. 998.
|||*fn13 The Trade Secrets Act
prohibits a Government employee from ", , or known" confidential
information received in his official capacity. 18 U. S. C. § 1905. In considering
the data of one applicant in connection with the application of another,
EPA does not violate any of these prohibitions.
|||*fn14 The District Court found:
"During the period that USDA administered FIFRA, it was also its policy
that the data developed and submitted by companies such as could not be
used to support the registration of another's product without the permission
of the data submitter." Monsanto Co. v. Acting Administrator, United
States Environmental Protection Agency, 564 F.Supp. 552, 564 (ED Mo. 1983)
(emphasis in original). The District Court apparently based this finding
on the testimony of two former Directors of the Pesticide Regulation Division,
who testified that they knew of no instance in which data submitted by one
applicant were subsequently considered in evaluating another application.
|||This finding is in marked conflict with the statement of the National
Agricultural Chemicals Association, presented before a Senate Subcommittee
in 1972, which advocated that the 1972 amendments to FIFRA should contain
an exclusive-use provision:
|||"Under the present law registration information submitted to the
Administrator has not routinely been made available for public inspection.
Such information has, however, as a matter of practice but without statutory
authority, been considered by the Administrator to support the registration
of the same or a similar product by another registrant." Federal Environmental
Pesticide Control Act: Hearings before the Subcommittee on Agricultural
Research and General Legislation of the Senate Committee on Agriculture
and Forestry, 92d Cong., 2d Sess., pt. 2, p. 245 (1972).
|||In addition, EPA points to the Department of Agriculture's Interpretation
with Respect to Warning, Caution and Antidote Statements Required to Appear
on Labels of Economic Poisons, 27 Fed. Reg. 2267 (1962), which presents
a list of pesticides that would require no additional toxicological data
for registration. The clear implication from the Interpretation is that
the Department determined that the data already submitted with respect to
those chemicals would be sufficient for purposes of evaluating any future
applications for registration of those chemicals.
|||Although the evidence against the District Court's finding seems overwhelming,
we need not determine that the finding was clearly erroneous in order to
find that a submitter had no reasonable expectation that the Department
or EPA would not use the data it had submitted when evaluating the application
of another. The District Court did not find that the policy of the Department
was publicly known at the time or that there was any explicit guarantee
of exclusive use.
|||*fn15 We emphasize that the
value of a trade secret lies in the competitive advantage it gives its owner
over competitors. Thus, it is the fact that operation of the data-consideration
or data-disclosure provisions will allow a competitor to register more easily
its product or to use the disclosed data to improve its own technology that
may constitute a taking. If, however, a public disclosure of data reveals,
for example, the harmful side effects of the submitter's product and causes
the submitter to suffer a decline in the potential profits from sales of
the product, that decline in profits stems from a decrease in the value
of the pesticide to consumers, rather than from the destruction of an edge
the submitter had over its competitors, and cannot constitute the taking
of a trade secret.
|||*fn16 Because the record contains
no findings with respect to the value of the trade-secret data at issue
and because no arbitration proceeding has yet been held to determine the
amount of recovery to be paid by a subsequent applicant to Monsanto, we
cannot preclude the possibility that the arbitration award will be sufficient
to provide Monsanto with just compensation, thus nullifying any claim against
the Government for a taking when EPA uses Monsanto's data in considering
another application. The statutory arbitration scheme, of course, provides
for compensation only in cases where the data are considered in connection
with a subsequent application, not in cases of disclosure of the data.
|||*fn17 While the 1975 amendments
to FIFRA purported to carry backward the protections against data consideration
and data disclosure to submissions of data made on or after January 1, 1970,
89 Stat. 751, the relevant consideration for our purposes is the nature
of the expectations of the submitter at the time the data were submitted.
We therefore do not extend our ruling as to a possible taking to data submitted
prior to October 22, 1972.
|||*fn18 Monsanto argues that
EPA and, by implication, Congress misapprehended the true "barriers
to entry" in the pesticide industry and that the challenged provisions
of the law create, rather than reduce, barriers to entry. Brief for Appellee
35, n. 48. Such economic arguments are better directed to Congress. The
proper inquiry before this Court is not whether the provisions in fact will
accomplish their stated objectives. Our review is limited to determining
that the purpose is legitimate and that Congress rationally could have believed
that the provisions would promote that objective. Midkiff, ante, at 242-243;
Western & Southern Life Ins. Co. v. State Bd. of Equalization, 451 U.S.
648, 671-672 (1981).
|||*fn19 Any taking of private
property that would occur as a result of EPA disclosure or consideration
of data submitted by Monsanto between October 22, 1972, and September 30,
1978, is, of course, duly authorized by FIFRA as amended in 1978.
|||*fn20 The Tucker Act, 28 U.
S. C. § 1491, reads, in relevant part:
|||"The United States Claims Court shall have jurisdiction to render
judgment upon any claim against the United States founded either upon the
Constitution, or any Act of Congress or any regulation of an executive department,
or upon any express or implied contract with the United States, or for liquidated
or unliquidated damages in cases not sounding in tort."
|||*fn21 Exhaustion of the statutory
remedy is necessary to determine the extent of the taking that has occurred.
To the extent that the operation of the statute provides compensation, no
taking has occurred and the original submitter of data has no claim against
|||*fn22 We emphasize that nothing
in our opinion prohibits EPA's consideration or disclosure, in a manner
authorized by FIFRA, of data submitted to it by Monsanto. Our decision merely
holds that, with respect to a certain limited class of data submitted by
Monsanto to EPA, EPA actions under the data-disclosure and data-consideration
provisions of the statute may give Monsanto a claim for just compensation.
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