September 26, 2005
The staff of the Committee on Open Government is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the information presented in your correspondence.
I have received your letter and apologize for the delay in response, which is the result of a substantial backlog of requests for advisory opinions. It is noted that no written advisory opinion was prepared in response to your earlier correspondence based on my belief that no written opinion was expressly requested. In the latter correspondence you asked that I review your earlier comments and sought "information that would assist [you] in the determination that FOIL is not applicable or is exempt to the service that Pictometry International Corp supplies."
You referred to an advisory opinion prepared at the request of the Office of Real Property Services (ORPS) concerning status under the Freedom of Information Law of an "online web application" developed by that agency and compared it to the product developed by Pictometry. ORPS indicated that:
"The application will allow the assessment community to access this information over the internet. Access will be restricted to assessors who will only be able to sign on if the agency has provided a valid usercode and password. The application will provide powerful features to run reports and select specific sets of data anywhere in the state."
I concurred with ORPS’ view that the application constituted a "delivery system" and not a "record" as that term is defined in§86(4) of the Freedom of Information Law, suggesting that:
"The application, like calculators or computers that provide individuals with the means to create or use data, but which are not themselves "records", would not in my opinion constitute a record for purposes of that statute."
Further, although government agencies would have the ability to acquire data through the use of the Pictometry software, it was advised that ORPS is not required to make the data available via the internet to the public to comply with the Freedom of Information Law. It was added that:
"...so long as ORPS gives effect to the Freedom of Information Law by making the data available on request in some sort of storage medium, whether it be paper, or computer tape or disk, for example, I believe that it would be acting in compliance with law."
In comparing the ORPS situation to yours, you wrote that:
"The Pictometry product is a propriety software system and is the tool county agencies use to perform complex tasks relating to real property, it is not the data itself. Therefore as an information ‘delivery’ system, Pictometry should not be covered by FOIL."
A key element in consideration of the issues that you raised involves the term "record ", which is defined to mean:
"...any information kept, held, filed, produced, reproduced by, with or for an agency or the state legislature, in any physical form whatsoever including, but not limited to, reports, statements, examinations, memoranda, opinions, folders, files, books, manuals, pamphlets, forms, papers, designs, drawings, maps, photos, letters, microfilms, computer tapes or discs, rules, regulations or codes."
If indeed the Pictometry software system is analogous to that considered in the opinion addressed to ORPS, I do not believe that it would constitute a "record" subject to the Freedom of Information Law.
Even if it does constitute a record, the software system could likely be withheld. As you are likely aware, the Freedom of Information Law is based upon a presumption of access. Stated differently, all records of an agency are available, except to the extent that records or portions thereof fall within one or more grounds for denial appearing in §87(2)(a) through (i) of the Law.
Pertinent to considering rights of access is §87(2)(d), which permits an agency to withhold records that:
"...are trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause a substantial injury to the competitive position of the subject enterprise."
The question under §87(2)(d) involves the extent, if any, to which disclosure would "cause substantial injury to the competitive position" of a commercial entity. The concept and parameters of what might constitute a "trade secret" were discussed in Kewanee Oil Co. v. Bicron Corp., which was decided by the United States Supreme Court in 1973 (416 (U.S. 470). Central to the issue was a definition of "trade secret" upon which reliance is often based. Specifically, the Court cited the Restatement of Torts, section 757, comment b (1939), which states that:
"[a] trade secret may consist of 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. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers" (id. at 474, 475).
In its review of the definition, the court stated that "[T]he subject of a trade secret must be secret, and must not be of public knowledge or of a general knowledge in the trade or business" (id.). The phrase "trade secret" is more extensively defined in 104 NY Jur 2d 234 to mean:
"...a formula, process, device or compilation of information used in one's business which confers a competitive advantage over those in similar businesses who do not know it or use it. A trade secret, like any other secret, is something known to only one or a few and kept from the general public, and not susceptible to general knowledge. Six factors are to be considered in determining whether a trade secret exists: (1) the extent to which the information is known outside the business; (2) the extent to which it is known by a business' employees and others involved in the business; (3) the extent of measures taken by a business to guard the secrecy of the information; (4) the value of the information to a business and to its competitors; (5) the amount of effort or money expended by a business in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. If there has been a voluntary disclosure by the plaintiff, or if the facts pertaining to the matter are a subject of general knowledge in the trade, then any property right has evaporated."
In my view, the nature of record, the area of commerce in which a commercial entity is involved and the presence of the conditions described above that must be found to characterize records as trade secrets would be the factors used to determine the extent to which disclosure would "cause substantial injury to the competitive position" of a commercial enterprise. Therefore, the proper assertion of §87(2)(d) would be dependent upon the facts and, again, the effect of disclosure upon the competitive position of the entity to which the records relate.
Also relevant to the analysis is a decision rendered by the Court of Appeals, which, for the first time, considered the phrase "substantial competitive injury" in Encore College Bookstores, Inc. v. Auxiliary Service Corporation of the State University of New York at Farmingdale [87 NY2d 410(1995)]. In that decision, the Court reviewed the legislative history of the Freedom of Information Law as it pertains to §87(2)(d), and due to the analogous nature of equivalent exception in the federal Freedom of Information Act (5 U.S.C. §552), it relied in part upon federal judicial precedent.
In its discussion of the issue, the Court stated that:
"FOIL fails to define substantial competitive injury. Nor has this Court previously interpreted the statutory phrase. FOIA, however, contains a similar exemption for 'commercial or financial information obtained from a person and privileged or confidential' (see, 5 USC § 552[b])...
"As established in Worthington Compressors v Costle (662 F2d 45, 51 [DC Cir]), whether 'substantial competitive harm' exists for purposes of FOIA's exemption for commercial information turns on the commercial value of the requested information to competitors and the cost of acquiring it through other means. Because the submitting business can suffer competitive harm only if the desired material has commercial value to its competitors, courts must consider how valuable the information will be to the competing business, as well as the resultant damage to the submitting enterprise. Where FOIA disclosure is the sole means by which competitors can obtain the requested information, the inquiry ends here.
"Where, however, the material is available from other sources at little or no cost, its disclosure is unlikely to cause competitive damage to the submitting commercial enterprise. On the other hand, as explained in Worthington:
Because competition in business turns on the relative costs and opportunities faced by members of the same industry, there is a potential windfall for competitors to whom valuable information is released under FOIA. If those competitors are charged only minimal FOIA retrieval costs for the information, rather than the considerable costs of private reproduction, they may be getting quite a bargain. Such bargains could easily have competitive consequences not contemplated as part of FOIA's principal aim of promoting openness in government (id., 419-420)."
Assuming that your contentions are accurate, the reproduction of the Pictometry system software, in consideration of the cost of its development and uniqueness, would appear to cause substantial injury to Pictometry’s competitive position. If that is so, the "application" or "delivery system", even if it constitutes a "record", could, in my opinion, be withheld pursuant to §87(2)(d).
I believe, however, that there is a distinction between the status of the Pictometry delivery system and the products generated, used and acquired by agencies that use the system. In short, in my opinion, photographs generated for and provided to an agency, such as a county, are "records" subject to rights conferred by the Freedom of Information Law.
I point out that the state’s highest court, the Court of Appeals, has construed the definition of "record" for the purposes of the Freedom of Information Law as broadly as its specific language suggests. The first such decision that dealt squarely with the scope of the term "record" involved documents pertaining to a lottery sponsored by a fire department. Although the agency contended that the documents did not pertain to the performance of its official duties, i.e., fighting fires, but rather to a "nongovernmental" activity, the Court rejected the claim of a "governmental versus nongovernmental dichotomy" [see Westchester Rockland Newspapers v. Kimball, 50 NY2d 575, 581 (1980)] and found that the documents constituted "records" subject to rights of access granted by the Law.
In a decision involving records prepared by corporate boards furnished voluntarily to a state agency, the Court of Appeals reversed a finding that the documents were not "records," thereby rejecting a claim that the documents "were the private property of the intervenors, voluntarily put in the respondents' 'custody' for convenience under a promise of confidentiality" [Washington Post v. Insurance Department, 61 NY 2d 557, 564 (1984)]. Once again, the Court relied upon the definition of "record" and reiterated that the purpose for which a document was prepared or the function to which it relates are irrelevant. Moreover, the decision indicated that "When the plain language of the statute is precise and unambiguous, it is determinative" (id. at 565). I believe that to be so in the context of the situation that you described, that photographs produced for the County constitute "records" within the custody of the County that are subject to the provisions of the Freedom of Information Law.
Moreover, once a record is maintained by or for an agency, there can be no restriction on its use. As a general matter, when records are accessible under the Freedom of Information Law, it has been held that they must be made equally available to any person, regardless of one's status, interest or the intended use of the records [see Burke v. Yudelson, 368 NYS 2d 779, aff'd 51 AD 2d 673, 378 NYS 2d 165 (1976)]. Moreover, the Court of Appeals has held that:
"FOIL does not require that the party requesting records make any showing of need, good faith or legitimate purpose; while its purpose may be to shed light on government decision-making, its ambit is not confined to records actually used in the decision-making process. (Matter of Westchester Rockland Newspapers v. Kimball, 50 NY2d 575, 581.) Full disclosure by public agencies is, under FOIL, a public right and in the public interest, irrespective of the status or need of the person making the request" [Farbman v. New York City Health and Hospitals Corporation, 62 NY 2d 75, 80 (1984)].
Farbman pertained to a situation in which a person involved in litigation against an agency requested records from that agency under the Freedom of Information Law. In brief, it was found that one's status as a litigant had no effect upon that person's right as a member of the public when using the Freedom of Information Law, irrespective of the intended use of the records. Similarly, unless there is a basis for withholding records in accordance with the grounds for denial appearing in §87(2), the use of the records, including the potential for commercial use or the status of the applicant, is in my opinion irrelevant.
Lastly, I do not believe that an agency may charge a fee based on a contractual agreement that exceeds the fee authorized by the Freedom of Information Law.
Based on the legislative history of the Freedom of Information Law, an agency may charge in excess of twenty-five cents per photocopy up to nine by fourteen inches or greater than the actual cost of reproducing any other records only when a statute, an act of the State Legislature, so permits. By way of background, §87(1)(b)(iii) stated until October 15, 1982, that an agency could charge up to twenty-five cents per photocopy or the actual cost of reproduction unless a different fee was prescribed by "law". Chapter 73 of the Laws of 1982 replaced the word "law" with the term "statute". As described in the Committee's fourth annual report to the Governor and the Legislature, which was submitted in December of 1981 and which recommended the amendment that is now law:
"The problem is that the term 'law' may include regulations, local laws, or ordinances, for example. As such, state agencies by means of regulation or municipalities by means of local law may and in some instances have established fees in excess of twenty-five cents per photocopy, thereby resulting in constructive denials of access. To remove this problem, the word 'law' should be replaced by 'statute', thereby enabling an agency to charge more than twenty-five cents only in situations in which an act of the State Legislature, a statute, so specifies."
Therefore, prior to October 15, 1982, a local law, an ordinance, or a regulation for instance, establishing a search fee or a fee in excess of twenty-five cents per photocopy or higher than the actual cost of reproduction was valid. However, under the amendment, only an act of the State Legislature, a statute, would in my view permit the assessment of a fee higher than twenty-five cents per photocopy, a fee that exceeds the actual cost of reproducing records that cannot be photocopied, (i.e., electronic information), or any other fee, such as a fee for search or overhead costs.
Most significantly, it has been confirmed judicially that fees inconsistent with the Freedom of Information Law may be validly charged only when the authority to do so is conferred by a state statute [see Sheehan v. City of Syracuse, 521 NYS 2d 207 (1987)]. In another decision on the matter involved a provision in the Suffolk County Code that established a fee of twenty dollars for photocopies of police reports [Gandin, Schotsky & Rappaport v. Suffolk County, 640 NYS2d 214, 226 AD2d 339 (1996)]. The Appellate Division unanimously determined that the provision in the County Code was invalid. In short, it was determined an enactment of a municipal body is not a statute, and the County was restricted to charging a fee of twenty-five cents per photocopy for the records at issue.
While the situation at issue does not involve a local enactment, the principle and precedent are clear, that fees for copies are fixed by the Freedom of Information Law. Any agreement between an agency and a private entity to assess fees in excess of those authorized by that statute would, in my view, be invalid. Merely because Pictometry’s software may be used to send an electronic image to an agency is of no moment relative to ability to charge a fee. That kind of situation is common; agencies routinely use commercial software to carry out any number of functions relating to transfer, preparation or reproduction of records. The use of the software is itself relevant only as a factor in determining the actual cost of reproducing records; that use does not authorize the establishment of a fee above the actual cost of reproduction.
I note, too, that the specific language of the Freedom of Information Law and the regulations promulgated by the Committee on Open Government indicate that, absent statutory authority, an agency may charge fees only for the reproduction of records. Section 87(1)(b) states:
"Each agency shall promulgate rules and regulations in conformance with this article...and pursuant to such general rules and regulations as may be promulgated by the committee on open government in conformity with the provisions of this article, pertaining to the availability of records and procedures to be followed, including, but not limited to...
(iii) the fees for copies of records which shall not exceed twenty-five cents per photocopy not in excess of nine by fourteen inches, or the actual cost of reproducing any other record, except when a different fee is otherwise prescribed by statute."
The regulations promulgated by the Committee state in relevant part that:
"Except when a different fee is otherwise prescribed by statute:
(a) There shall be no fee charged for the following:
(1) inspection of records;
(2) search for records; or
(3) any certification pursuant to this Part" (21 NYCRR §1401.8)."
Based upon the foregoing, the fee for reproducing electronic information ordinarily would involve the cost of computer time, plus the cost of an information storage medium (i.e., a computer tape or disk) to which data is transferred.
In sum, just as an agency cannot charge a fee for photocopies based in part on the cost of purchasing a photocopy machine, I do not believe that it could properly charge for the cost of software. I do not believe that the sale or production of a copy can be equated with the sale of proprietary software. Again, in my view, any agreement that authorizes the assessment of a fee greater than the actual cost of reproduction would be inconsistent with law and, therefore, invalid.
I hope that I have been of assistance.
Robert J. Freeman