II.2.2 Intellectual Property Protection

Supreme Court decisions have protected data from release when such release would harm the competitive position of the person supplying those data, and have denied third parties access, leaving it to the awarding institution to determine whether to release certain data in a grant-supported clinical trial.

Science, Vol. 282, p. 1823 (Dec. 4, 1998).

II.2.2.a Introduction

OMB's proposed revision to Circular A-110 has generated criticism from research institutions receiving federal funds who predict that the revised Circular could facilitate the theft of intellectual property rights and undermine statutes such as the Bayh-Dole Act, 365 U.S.C. § 200 et seq. Some private industries that collaborate with federally funded university researchers have expressed alarm that premature data disclosure will threaten their commercial interests.

According to the American Association for the Advancement of Science (AAAS), "The U.S. scientific research enterprise is increasingly reliant on the use of partnerships between government, industry, and academia." AAAS notes that the proposed Circular "shall apply to all federally funded research, regardless of the level of funding or whether the award recipient is also using non-federal funds. Therefore, research that is supported through multiple funding sources would not be exempt from a FOIA request." AAAS believes that industry may be more reluctant to support such research if proprietary data are open to the scrutiny of competitors. AAAS fears that "threats to researchers' intellectual property rights may force them to reveal data to competitors or self-interested parties."

Researchers also worry about the early release of commercially valuable information. According to the National Research Administrator, "Since 1980, patenting of university inventions is testimony of the commercial value of university research data." One website noted:

If data from a study can be obtained by the public before the grantee can publish any results, there is a disincentive for conducting research. It is also unfair to the grantee that his or her work can be used by others before any publication of results. A further concern is that grantees may be forced to release drafts of reports before they are reviewed or published.

FOIA, in combination with other federal statutes, contains forceful protections for intellectual property rights. FOIA exemptions 3 and 4 (5 U.S.C. § 522(b)(3), (4)) insulate patentable materials, confidential trade secrets and commercial information from disclosure. These exemptions, and the narrow scope of Circular A-110 as proposed, ensure that valuable commercial information will not fall subject to wholesale, premature disclosure. Rather, courts will employ a balanced approach, examining the proprietary nature of the information, as against the public interest in disclosure.

According to the U.S. Supreme Court, "In evaluating whether a request for information falls within the scope of a FOIA exemption, the Court must balance the public interest in disclosure against the interest Congress intended the exemption to protect." Department of Defense v. Federal Labor Relations Auth., 510 U.S. 487 (1994). The only relevant public interest in disclosure to be weighed in this balancing test is the extent to which disclosure would serve the core purpose of FOIA of contributing significantly to public understanding of the operations or activities of the government. Bibles v. Oregon Natural Desert Ass'n, 519 U.S. 335 (1997).

II.2.2.b Protection for Pending Patents and Copyrights

To the extent that university research may lead to a patent application, the confidentiality protections afforded intellectual property will insulate the commercially valuable materials from disclosure. The Patent Act, 35 U.S.C. §§ 1-307, and the Copyright Act, 17 U.S.C. §§ 101-1101, protect intellectual property rights. Patent office regulations promulgated under 35 U.S.C. § 122 explicitly grant secrecy to pending patent applications. 37 C.F.R. § 1.14a.

FOIA exemption 3 excludes from mandatory disclosure matters "specifically exempted from disclosure by statute,...provided" that the other federal statute (a) gives an agency no discretion on the issue, or (b) establishes specific criteria for withholding or refers to particular matters which must be withheld. 5 U.S.C. § 552(b)(3). Both the Ninth Circuit and the D.C. Circuit have held that 35 U.S.C. § 122 meets the criteria of FOIA exemption 3. Irons and Sears v. Dann, 606 F.2d 1215, 1220 (D.C. Cir. 1979), cert. denied., 444 U.S. 1075 (1980); Lee Pharmaceuticals v. Keeps, 577 F.2d 610, 615-617 (9th Cir. 1978), cert. denied, 439 U.S. 1073 (1979).

According to the courts, section 122 of the Patent Act does not authorize broad withholding discretion by the patent office, rather the section merely provides for the confidentiality of patent applications in order to prevent the frustration of the patent laws which would result from public disclosure of patent applications prior to the issuance of a patent. Because the Patent Act mandates confidentiality of particular types of matters, namely, patent applications and information concerning them, section 122 satisfies the second prong of FOIA exemption 3, and patent applications and related materials are exempt from mandatory disclosure.

The courts' treatment of section 122 is instructive because the Bayh-Dole Act generally permits federal contractors, including nonprofit organizations, to retain title to any invention the contractor conceived of or first actually reduced to practice in the performance of work under a funding agreement. Section 122 also protects the confidentiality of pending patent applications. The confidentiality section of the Bayh.-Dole Act states:

Federal agencies are authorized to withhold from disclosure to the public information disclosing any invention in which the Federal Government owns or may own a right, title, or interest (including a nonexclusive license) for a reasonable time in order for a patent application to be filed. Furthermore, Federal agencies shall not be required to release copies of any document which is part of an application for patent filed with the United States Patent and Trademark Office or with any foreign patent office."

35 U.S.C. § 205.

Because Bayh-Dole section 205 provides clear guidance on the particular matters to be withheld, and resembles the Patent Act section 122 in this way, federally funded university research embodied in patent applications will be protected from disclosure while such applications are pending. See Irons and Sears, and Lee Pharmaceuticals, supra.

Intellectual property created under Cooperative Research and Development Agreements ("CRADAs") between private parties and federal agency government laboratories is also protected from disclosure. Under CRADAs, the government is granted certain rights to use inventions or other intellectual property of the private party. Pursuant to the National Technology Transfer Act of 1995, the non-disclosure provisions of FOIA exemption 4 apply to these agreements. The Technology Transfer Act, which amended the Stevenson-Wydler Technology Innovation Act of 1980, provides that where the government exercises its license to use an invention:

the Government shall not publically disclose trade secrets or commercial or financial information that is privileged or confidential within the meaning of [FOIA exemption 4], or which would be considered as such if it had been obtained from a non-federal party.

15 U.S.C. § 3710a(b)(1). A separate provision of the Stevenson-Wydler Act states the matter even more plainly:

No trade secrets or commercial or financial information that is privileged or confidential, under [FOIA exemption 4], which is obtained in the conduct of research or as a result of activities under this chapter from a non-Federal party participating in a cooperative research and development agreement shall be disclosed.

15 U.S.C. § 3710a(c)(7).

Copyright law provides only limited opportunities to protect university research from disclosure. Copyrights may be secured for literary works, musical works, dramatic works, pantomimes and choreographic works, pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; and sound recordings. While these categories are not exhaustive, "copyright does not protect ideas, procedures, processes, systems, methods of operation, concepts, principles or discoveries regardless of how they are described, explained, illustrated or embodied in the work." Jay G. Taylor, "Intellectual Property: A General Practitioner's Guide," 34 Res Gestae 452, 456 (1991). Thus, copyright protection may exist for drawings, schematics, designs and notebooks associated with research, but not for the research itself. Pat Shockley, "The Availability of 'Trade Secret Protection' for University Research," 20 J.C.D. & P.L. 309 (Winter, 1994). In addition, the Copyright Act displays much less concern than the Patent Act for the confidentiality of intellectual property. Protective provisions in copyright law permit "fair use" of copyrighted materials. 17 U.S.C. §§ 106-7.

Finally, Weisberg v. Dept. of Justice, 631 F.2d 824, 828 (D.C. Cir. 1980), appeal after remand, 745 F.2d 1476 (D.C. Cir. 1984), reh'g denied, 763 F.2d 1436 (D.C. Cir. 1985), found that 17 U.S.C. section 106 does not satisfy FOIA exemption 3 and rejected a definitional approach excluding all copyrighted materials from FOIA's reach. The Weisberg case arose when a researcher attempted to acquire copyrighted photographs of Dr. Martin Luther King's death in the possession of the FBI. Because the plaintiff intended to use the copyrighted materials for scholarly purposes and because the effect of the plaintiff's use on the "potential market for or value of the copyrighted work" would not be substantial, the court found the FOIA exemption did not apply. The copyrighted materials were agency records under FOIA because they "plainly reflected the operation, or decision making function of the agency." In addition, the court found that FOIA exemption 4 would not protect the copyrighted material from mandatory disclosure unless such disclosure would cause undue harm to the economic position of the copyright owner.

II.2.2.c Exemption for Trade Secrets

FOIA explicitly excludes from disclosure "trade secrets...obtained from a person and privileged or confidential." 5 U.S.C. 552 § (b)(4). To the extent that university research qualifies as a privileged or confidential "trade secret" obtained from a person, it will receive protection from disclosure. In Public Citizen Health Research Group v. FDA, the D.C. Circuit defined "trade secret" to mean, "solely for the purpose of FOIA Exemption 4, as a secret, commercially valuable plan, formula, process, or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort." 704 F.2d 1280, 1288 (D.C. Cir. 1983).³²

To the extent that private companies collaborate with federally funded university researchers in developing innovative products or processes, and the universities maintain the confidentiality of such research, however, a "trade secret" disclosure exclusion should apply. See Public Citizen Health Research Group, supra. "Trade secrets" implies a direct relationship between the information at issue and the productive process. Washington Research Project recognized the possibility that "an individual...engaged in profit-oriented research...could conceivably be shown to have a commercial or trade interest in his research design." 504 F.2d at 244 n.6. For example, genetic engineering discoveries often qualify for trade secret protection. See, e.g., Pioneer Hi-bred Int'l v. Holden Foundation Seeds, 35 F.3d 1226 (8th Cir. 1994) (finding "trade secret" interest in corn seed genetic messages); Charles E. Lipsey, "Protecting Trade Secrets in Biotechnology," 2 Trade Secret L. Rep. 42, 44 (1986). Where information falls within exemption 4, it is also protected by the Trade Secrets Act, 18 U.S.C. § 1905, which provides criminal penalties for the release of trade secret information.

II.2.2.d Exemption for Confidential Commercial Information

FOIA also explicitly excludes from disclosure "commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552 (b)(4). In National Parks & Conservation Ass'n v. Morton, the D.C. Circuit Court of Appeals defined "confidential commercial information" in the following fashion, "[C]ommercial or financial matter is 'confidential' for purposes of the exemption if disclosure of the information is likely to have either of the following effects: (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained." 498 F.2d 765, 770 (D.C. Cir. 1974).

In Public Citizen Health Research Group v. FDA, supra, a FOIA requester sought records of clinical studies of the safety and efficacy of corrective vision disks submitted to the FDA. The court found that the manufacturers of the lenses had a commercial interest in the requested information because health and safety data about their products would be instrumental in gaining marketing approval. 704 F.2d at 1290. The court then turned to the question of whether the information submitted to the FDA was confidential within the meaning of Exemption 4. The court reasoned that information is confidential if disclosure would either (1) impair the government's ability to obtain necessary information in the future; or (2) cause substantial harm to the competitive position of the person from whom the information was obtained. Actual competitive harm need not be shown, only evidence of actual competition and of the likelihood of substantial competitive harm to the submitting manufacturers. According to the court, "If on remand the district court is persuaded that the release of these documents would cause substantial competitive harm to the manufacturers, it should authorize FDA to withhold them under the İconfidential commercial informationŞ prong of Exemption 4."

In a similar fashion, Monsanto Company's raw data submitted to the FDA to support a bovine growth hormone application was held to be confidential commercial information properly exempt from a FOIA request under exemption 4. See Cohen v. Kessler, 2 No. 18 MLRPEDS 14 (No. 95-CV-6140) (D.N.J. Nov. 25, 1996). To show competitor interest, the defendants submitted an affidavit by an FDA scientist who said that the raw data could be used by competitors in their new drug applications. Defendants also cited Tri-Bio Lab., Inc. v. United States, 836 F.2d 135, 142 (3rd Cir. 1987), cert. denied, 488 U.S. 818 (1998), a case establishing that a pioneer drug manufacturer has an investment backed propriety interest in safety and effectiveness data. "The court finds that defendants have credibly established that disclosure of the rat study's raw data would allow competitors to develop or refine their products and avoid the research and development costs because of the opportunity to piggy-back upon Monsanto's development efforts," the court wrote. "Disclosure of the data would therefore have an unwarranted deleterious impact on Monsanto's competitive position." The court also noted that publication of the study results in Science magazine did not mandate disclosure of the raw supporting proprietary data.

Finally, in Gilmore v. Dept. of Energy, 4 F. Supp. 2d 912, 920-921 (N.D. Cal. 1998), the court found that even assuming that video conferencing (CLERVER) software prepared for the Department of Energy by Sandia National Laboratories qualified as an "agency record" subject to FOIA, "it would still be exempt under FOIA exemption 4." Because disclosure of the confidential information would not serve to illuminate DOE's performance of its duties, but rather merely harm the software producer's competitive interest, disclosure was not warranted. According to the court, "If the technology is freely available...there is no reason for anyone to license CLERVER from Sandia, and the value of Sandia's copyright effectively will have been reduced to zero." So, in the majority of cases, where research performed for the government leads to the production of commercially valuable products, but such research does not form the basis for federal rules or policies, researchers can continue to expect their confidentiality to be protected.

II.2.2.e Relationship to Circular A-110

Proprietary information contained in patent applications or representing confidential commercial information will continue to receive protection even after the adoption of Circular A-110. Given existing FOIA exemptions, universities that participate in the development of innovative proprietary information with private companies need not fear the loss of commercially valuable data to competitors. Finally, the language of proposed OMB Circular A-110 should assure research interests, as it applies only to published data used in formulating federal policies and rules. Because the Circular would normally defer release of the data until after publication of research results, threats to intellectual property interests should greatly minimized or eliminated.

Generally, then, FOIA requests would only be entertained after the completion or publication of the research project. The timing of FOIA disclosures, following publication, also obviates fears that raw data will be released before it has been analyzed and peer reviewed. In any event, even in the absence of Circular A-110, publication generally diminishes the confidential status of the materials. See National Parks & Conservation Association v. Kleppe, 547 F.2d 673 (D.C. Cir. 1976) ("if a party claiming the [FOIA] exemption has customarily disclosed similar information to the public, it may be hard pressed to justify a subsequent claim of confidentiality").

Finally, the proposed OMB Circular limits access to that published data used as a basis for federal rules and policies. Since the proposed revision applies only to research that is used in establishing policies and regulations, researchers need not fear wholesale disclosure of all federally funded research. Instead, where researchers anticipate their federally funded, and published, work will form the basis of federal policy making they must be prepared for public access. As noted by the Association of American Universities and the Council on Governmental Relations, "we understand that the OMB was directed to revise the Circular because an agency relied on research data to engage in rulemaking. In this circumstance, it may be appropriate for the regulated community to have access to data."

II.2.2.f "Reverse FOIA" Proposal

Notwithstanding the protections afforded intellectual property discussed above, CRE recommends that OMB require agencies to allow private sector participants in federally-funded projects, who either contributed part of the database to the project or participated in developing the database, an opportunity to make recommendations to the federal agency regarding which data should be withheld from disclosure pursuant to the FOIA exemptions. Under this procedure, a party who provided information to the federal government would receive notice of when a FOIA request for the information is submitted. The party could then provide justification for why the information should be withheld from public disclosure under an applicable FOIA exemption.

Under the framework CRE envisions, private joint-participants in federal research projects would first be given an opportunity to submit their data for a pre-submission review by the agency at the inception of the project or when the data are first included. The party could recommend at that time that certain data be exempt from disclosure. The agency would either issue a binding pledge that the data would be withheld in the event of a FOIA request or would decline to issue such a commitment. In the event the agency did not pledge to withhold the data, the private party would bear the risk of disclosing the data as part of the research project.

When a relevant FOIA request was received, the agency would then review the data requested and determine whether any of the data sought should be withheld pursuant to one or more FOIA exemptions. After notification from the agency, the private party whose data are affected by the request would be given an opportunity to negotiate with the agency in the course of the agency's review. If the agency determined that one or more FOIA exemptions applied, or if the agency had previously issued a commitment not to disclose the data, then the agency would deny the FOIA request as to those data. The agency would provide the affected party 10 days notice of its intent to release the data in response to the FOIA request, and a private party aggrieved by an agency's disclosure determination would have recourse in an appropriate court for injunctive relief.

³² Public Citizen Health Research Group concerned records of clinical studies of the safety and efficacy of corrective vision disks (IOLs) submitted to FDA and sought under a FOIA request. The D.C. Circuit found no "trade secret" in the materials, but acknowledged that a confidential commercial interest might exist. See also CNA Financial Corp. v. Donovan, 830 F.2d 1132 (D.C. Cir. 1987) (holding that the Trade Secrets Act did not qualify as an additional withholding statute under FOIA exemption 3, but rather was coextensive with FOIA exemption 4); Washington Research Project v. Dept. of Health, Education and Welfare, 504 F.2d 238 (D.C. 1974), cert. denied, 421 U.S. 963 (1975).