## Facts

- Massachusetts enacted Mass. Gen. Laws ch. 94, § 307B requiring tobacco manufacturers to submit, for each brand sold in the state, a list of non-tobacco ingredients ranked by relative amount.
- The statute authorized state officials to publicly disclose submitted ingredient lists when they determined disclosure “could reduce risks to public health.”
- Manufacturers treated brand-specific ingredient lists as trade secrets, generally keeping them confidential or disclosing them only under confidentiality protections.
- Tobacco manufacturers sued state officials seeking declaratory and injunctive relief, alleging an uncompensated taking of trade secrets and lack of adequate pre-disclosure process.
- The district court granted summary judgment for the manufacturers and enjoined enforcement.
- A First Circuit panel reversed; the court granted rehearing en banc and reviewed the case again.

## Issues

1. Whether compelled submission and authorized public disclosure of brand-specific ingredient lists destroys trade-secret property and constitutes a taking without just compensation under the Fifth Amendment (as applied to the states).
2. Whether the statute’s disclosure mechanism deprives manufacturers of property without a meaningful opportunity to be heard before disclosure, violating procedural due process.

## Decision

- The en banc First Circuit affirmed summary judgment for the manufacturers and affirmed declaratory and injunctive relief.
- The court held that, to the extent the statute authorizes public disclosure that would extinguish trade-secret status, it effects an unconstitutional taking without just compensation.
- The court concluded that the loss of secrecy would substantially impair the economic value of the ingredient information and defeat the companies’ investment-backed expectations in confidentiality.
- Because the statute provided no compensation for the destruction of trade-secret value, enforcement of the disclosure regime in its existing form was barred.

## Legal Principles

- Trade secrets and other intellectual property interests can constitute “property” protected by the Takings Clause.
- Government action that compels public disclosure of trade secrets, thereby eliminating their secrecy and market value, can constitute a compensable taking.
- In assessing a regulatory taking of intangible property, courts may consider economic impact, interference with reasonable investment-backed expectations, and the character of the government action.
- A statutory scheme that authorizes disclosure based on broad administrative discretion, without compensation for extinguishing a trade secret, violates the Takings Clause when disclosure destroys the property interest.

## Conclusion

The en banc First Circuit held that Massachusetts could not require submission of brand-specific tobacco ingredient lists and then publicly disclose them under an open-ended public-health standard without paying just compensation, because disclosure would destroy protected trade-secret property.


Philip Morris Inc. v. Reilly, 312 F.3d 24 (1st Cir. 2002) (en banc)