I would also like to remind you, if you can, to complete your testimony in 5 to 7 minutes so that we will have time for questions as well.

I am going to have to depart now. Thank you all very much. Would you continue, Mr. Whale?

Mr. WHALE. I am through, Senator, except to say that I think the protection of trade secrets has an important bearing on innovation in all technologies requiring substantial investments.

In fact, there is a distinct and necessary relationship between the feasibility and, hence, the magnitude of investing and the dependability of reasonable patent and trade secret protection.

I suggest that this, too, should enter the equation of the national interests addressed by the Freedom of Information Act.

Thank you.

Mr. RADER [acting chairman]. Thank you.

[The prepared statement of Mr. Whale follows:]

PREPARED STATEMENT OF ARTHUR R. WHALE

This statement is in support of amendments to the

Freedom of Information Act, 5 U.S.C. 552, in the nature of those contained in S. 1247. These views are supplementary

to my testimony before the Subcommittee on July 22, 1981.

Eli Lilly and Company has a significant interest in the Freedom of Information Act (FOIA). We are engaged in the discovery, development, manufacture and sale of chemicals for human health, cosmetic and agricultural use, and of medical device systems for hospital use. In 1980 we spent over $200 million for research and development in these fields.

Nearly all our products are subject to regulatory review by one or more federal agencies. Our confidential information embodying trade secrets important to our operations are frequently requested by and delivered to these agencies; this information then becomes part of the government records subject to release to third parties under FOIA.

Our problem is not with the underlying purpose of FOIA, which we understand to be the assessment and monitoring of the operations of our government. Rather, our problem is with the uncertainty spawned by FOIA through the proliferation of rules, practices and policies in the many statutes and implementing agencies that control release of our confidential information.

We have found sympathetic understanding in many government quarters of the value of our trade secrets and the consequences of their loss to competitors.

But FOIA has departed from its intended purpose and has been interpreted to leave with the agencies the burden of determining what is to be accorded trade secret status. This produces a practical impossibility of uniform or even fair application of FOIA by the agencies. FOIA does not really recognize the rights of submitters of information; it is structured to favor requesters, without regard for the purpose of the disclosure requests.

We are handicapped in our lack of ability to document with certainty the extent to which we have been harmed by releases through FOIA. But this does not diminish our concern, for the potential is clearly there behind the competitors' requests and the blind requests for our information and the defenseless posture in which submitters find

themselves under FOIA.

I will discuss below a number of truths and conse

3.

Uses of the Act that result in dissipation of trade secrets and which have little or no relevance to the underlying purpose of FOIA.

4.

The limitations on protecting much of this technology through patenting.

5.

Why there is not a wealth of publicly known "horror tales" of experiences with FOIA.

6.

Problems in the administration of FOIA as

presently constituted.

7. Resolution of these problems in S. 1247.

The developers of technology, either voluntarily

or under statutory compulsion, submit technology often constituting trade secrets to agencies of our government. The purpose of these submissions is to comply with the laws respecting the health and safety of our citizens. It is not the purpose to take from the technology-rich for the Robin Hood purpose of giving to the technology-poor. Indeed, the same technology given to the government, if taken without authorization by an employee, or stolen by a competitor, could result in legal sanctions, including imprisonment of the individuals responsible.

Nevertheless, through FOIA our competitors and

even foreign governments and citizens of foreign countries can, for the price of postage and copying, receive enough information to aid them in competing unfairly with the originator. When so used, the FOIA comes to mean "For Our Inquisitive Adversaries" and is distant in purpose from the law's original intent.

Our nation's interest in encouraging investment in innovation is not consistent with the leaking sieve philosophy that compels disclosure of technology but then permits access to trade secrets by competitors, or, at best, consigns them to an uncertain fate in the hands of government agencies.