of Exemption 4 were not met for the copyrighted photographs at issue there because they were not considered confidential commercial or financial information. See slip op. at 6-7. (That portion of the district judge's opinion was subsequently vacated on appeal on procedural grounds. See 631 F.2d at 831.) As one commentator has suggested, though, such a result seems nonetheless to have been correct in that particular case because the photographs actually had "little commercial value to the copyright holder." Note, The Applicability of the Freedom of Information Act's Disclosure Requirements to Intellectual Property, 57 Notre Dame Lawyer 561, 577 (1982); see also id. at 573 & n.96. In fact, after the court of appeals remanded the Weisberg case in order that the copyright holder might assert any substantial commercial interest, see 631 F.2d at 829-30, the copyright holder did not do so. Thus, Exemption 4 stands as a viable means of protecting commercially valuable copyrighted works where FOIA disclosure would have a substantial adverse effect on the copyright holder's potential market. Such use of Exemption 4 is fully consonant with its broad purpose of protecting the commercial interests of those who submit information to the government. See National Parks & Conservation Association v. Morton, 498 F.2d at 769. Moreover, as has been suggested, where FOIA disclosure would have an adverse impact on "the potential market for or value of [a] copyrighted work," 17 U.S.C. §107(4), Exemption 4 and the Copyright Act actually embody virtually congruent protection, because such an adverse economic effect will almost always preclude a "fair use" copyright defense. See 57 Notre Dame Lawyer at 577-78. Thus, Exemption 4 should protect such materials in the same instances in which copyright infringement would be found.** "FAIR USE" Where it is found that disclosure of a copyrighted document would not have a substantial adverse effect on the copyright holder's potential market, rendering Exemption 4 inapplicable, several considerations strongly compel the conclusion that its release pursuant to the FOIA would not subject the government to liability for copyright infringe **In some circumstances, a FOIA requester denied access to a copyrighted document under Exemption 4 might seek to have an agency afford him non-FOIA access on the grounds that the document is publicly available elsewhere and that he wishes simply to inspect it at the agency as a matter of convenience. In such a case (or where the agency wishes to do so on its own initiative), an agency may, as a matter of administrative discretion, permit inspection but not duplication of the document, provided that the document is proven to be publicly available (e.g.. at a library or the Copyright Office). Fall 1983 ment. As a threshold matter, the courts have over the years placed a "judicial gloss" on the Copyright Act to generally preclude copyright status for works embodying statutes, opinions, and regulatory matters. based upon the general principle that such governmental matters should properly be in the public domain. See, e.g., Building Officials & Code Administrators International, Inc. v. Code Technology, Inc., 628 F.2d 730, 734-35 (1st Cir. 1980). Additionally, the overriding consideration in determining that a particular use is a "fair use" under the Copyright Act, and thus not a copyright infringement, is the public interest in unrestricted access to the information. See A. Latman & R. Gorman, Copyright for the Eighties 473 (1981); see also Rosemont Enterprises, Inc. v. Random House, Inc., 366 F.2d 303, 309 (2d Cir. 1966), cert. denied, 385 U.S. 1009 (1967). Given that the FOIA is designed to serve the public interest in access to information maintained by the government, see, e.g., NLRB 1. Robbins Tire & Rubber Co., 437 U.S. 214, 242 (1978), disclosure of nonexempt copyrighted documents under the FOIA should be considered a "fair use." In fact, reproduction of a copyrighted document by a government entity for a purpose that is not "commercially exploitive of the copyright holder's market," such as copying a work to use as evidence in a judicial proceeding, has been held to constitute a "fair use." Jartech, Inc. v. Clancy, 666 F.2d 403, 407 (9th Cir.), cert. denied, 103 S.Ct. 58 (1982). Indeed, the leading commentator on copyright law has found it "inconceivable that any court would hold such reproduction to constitute infringement." 3 M. Nimmer, Nimmer on Copyright §13.05[D][2] (1983). In the FOIA context, because reproduction is mandated by law and serves to inform the public of the operation of government, it should similarly be unlikely that a court would find the disclosure of nonexempt information to constitute an infringement. CONCLUSION In sum, agencies should carefully examine all copyrighted materials encompassed within FOIA requests to determine whether they qualify for Exemption 4 protection as set forth above. As for those copyrighted materials to which Exemption 4 is inapplicable, the position of the Department of Justice is that the release of such materials under the FOIA is a defensible "fair use." FOIA UPDATE 5 Unit Prices Under Exemption 4 One controversial issue arising under the Freedom of Information Act's fourth exemption, 5 U.S.C. §552(b)(4), is that of the disclosure of unit prices contained in government contracts. It is not unusual in this area of limited but sharply conflicting case law for agencies to find themselves in the role of a mere stakeholder as business competitors seek to withhold or obtain the submitter's price-the government's cost-for each item in an awarded contract. The arguments on both sides of this issue are forcefully presented at the administrative and the judicial levels, both in the standard FOIA access setting and in the "reverse" FOIA context. There is no serious controversy concerning the disclosure of the total or "bottom line" amount of a government contract. Nor does there appear to be any real question that unit prices are properly withholdable prior to the final contract award determination. See, e.g., Shermco Industries, Inc. v. Secretary of the Air Force, 613 F.2d 1314, 1317-18 (5th Cir. 1980); Racal-Milgo Government Systems, Inc. v. SBA, 559 F. Supp. 4, 7 (D.D.C. 1981) (disclosure order stayed pending final resolution of bid protest). But the Exemption 4 status of unit prices in awarded contracts is not nearly so clear. The appropriate inquiry under Exemption 4 for any requested record is to determine whether it is either (A) a trade secret or (B) information that is (1) commercial or financial, (2) obtained from a person, and (3) privileged or confidential. Gulf & Western Industries, Inc. v. United States, 615 F.2d 527, 529 (D.C. Cir. 1979). Judicial analysis has focused on whether unit prices qualify as either "trade secrets" or "confidential information." Trade Secret Protection In two "reverse" FOIA cases decided in 1982, it was squarely held that unit prices constituted protectible trade secret information and thus could not be disclosed. See Electronic Data Systems Federal Corp. v. Carmen, Civil No. C82-353-PKS, slip op. at 4 (W.D. Wash. Nov. 16, 1982); Sperry Univac Division v. Baldrige, 3 GDS 1183,265 at 84,052 (E.D. Va. 1982), appeal dismissed, No. 82-1723 (4th Cir. Nov. 22, 1982). See also Honeywell Information Systems, Inc. v. NASA, Civil Nos. 76-353, 76377, slip op. at 5 n.4 (D.D.C. July 28, 1976) (alternative holding). However, the continuing vitality of these holdings should be seriously questioned in light of the D.C. Circuit's recent adoption of a restrictive "common law" definition of trade secret. See Public Citizen Health Research Group v. FDA, 704 F.2d 1280, 1288 (D.C. Cir. 1983) (trade secret limited to "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"). 10 Confidential Information To qualify as "confidential" information under Exemption 4's traditional test, disclosure must 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. National Parks & Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). The government's ability to let contracts has generally not been considered to be impaired by disclosure of unit prices. See, e.g., Racal-Milgo Government Systems, Inc. v. SBA, 559 F. Supp. at 6 ("It is unlikely that companies will stop competing for Government contracts if the prices contracted for are disclosed."). Thus, the dispositive issue is almost always whether disclosure will be likely to cause substantial competitive harm to the submitter of the information, i.e., the bidder. The cases addressing the question of competitive injury to a contractor from the disclosure of unit prices are difficult to harmonize. At one extreme is Racal-Milgo Government Systems, Inc. v. SBA, 559 F. Supp. at 6, in which District Judge June L. Green ordered unit price information disclosed, holding that the agency had not proved that disclosure would cause substantial competitive harm to the submitter. In response to the SBA's claim that disclosure. would allow a competitor to calculate the supplier's manufacturing costs and would give insight into its pricing strategy, Judge Green drew the rather confusing conclusion that these arguments were somehow inconsistent, and stated that even if they were accepted, the record did not indicate that disclosure would cause substantial competitive harm. See id. She then emphasized the public interest in favor of disclosure, stating that adequate information about government contracts was necessary in order for the public to evaluate the "wisdom and efficiency" of federal programs and that disclosure of only the aggregate prices was insufficient to allow evaluation of the contract. Id. The public release of prices charged the government was, she found, "a cost of doing business with the government." Id. Providing essentially no practical assistance to FOIA decisionmakers are the three judicial decisions which have found unit prices protectible. These cases conclude in only the most cursory fashion that the disclosure of the unit prices involved in those cases could somehow directly lead to the harmful revelation of specific sensitive information.. See Electronic Data Systems Federal Corp. v. Carmen, supra, slip op. at 3 ("costs and overhead"); Sperry Univac Division v. Baldrige, supra, 3 GDS at 84,052 (pricing and discount strategies on specific contract items); Honeywell Information Systems, Inc. v. NASA, supra, slip op. at 3 ("pricing strategy, discount policy, cost and profit margins, and technical methodology"). FOIA UPDATE Fall 1983 The J.H. Lawrence Precedent ... FOIA Counselor In the only thorough treatment of the issue, District Judge Shirley B. Jones in J. H. Lawrence Co. v. Smith, Nos. 81-2993, 82-0361 (D. Md. Nov. 10, 1982), examined a unit price breakdown that contained more than two thousand line items to ascertain whether disclosure would reveal the profit or overhead costs of the submitter. After receiving extensive testimony concerning the various formulas that might be used to compute the contractor's markup, profit and overhead costs, Judge Jones concluded that because so many variables and uncertainties were involved, disclosure of the unit prices would not permit competitors to calculate confidential proprietary information. See slip op. at 6-9. Her conclusion that those unit prices must be disclosed under the FOIA seems an entirely rational one, at least under the circumstances presented in that case. Overall, the varying results in these cases can mostly be attributed to the extent to which, based on the evidence available in a particular case, a judge has been convinced that release of the unit prices at issue would cause competitive harm to the submitter. Agencies can fulfill their responsibilities to both requesters and submitters by conscientiously examining all such evidence at the administrative level, after following the submitter notification procedures set forth in FOIA Update, June 1982, at 3, to ascertain whether (1) disclosure of unit prices would lead directly to the precise calculation of specific proprietary information and (2) revelation of that information would cause substantial harm to the submitter. Only upon such an assessment can it properly be determined whether unit prices should be disclosed under the FOIA in a given case. This supersedes the guidance set forth in FOIA Update, Winter 1981, at 5-6. Supreme Court Update In an entirely unexpected development, the Washington Post Company has abruptly withdrawn its FOIA request underlying the case of Washington Post Co. v. Department of State, 685 F.2d 698 (D.C. Cir. 1982), which the Supreme Court only recently accepted for review. The Washington Post Company had sought access to records reflecting the State Department's "Emergency Fund" expenditures for its diplomatic and consular services. The D.C. Circuit Court of Appeals ruled that the statutes authorizing the Secretary of State to keep such disbursements secret are not specific enough to satisfy Exemption 3, as amended. See 685 F.2d at 704; see also FOIA Update, Jan. 1983, at 5. After the D.C. Circuit denied rehearing en banc, the Solicitor General filed a petition for certiorari with the Supreme Court, which was granted when the Court reconvened in early October. See 52 U.S.L. W. 3239 (Oct. 3, 1983). The Washington Post Company's sudden withdrawal of its underlying FOIA request, however, appears to have effectively precluded Supreme Court review of this important Exemption 3 issue. Such a development is highly reminiscent of a similar move made just last year in Holy Spirit Association v. CIA, 636 F.2d 838 (D.C. Cir. 1980), Fall 1983 cert. granted & vacated in part, 455 U.S. 997 (1982), an Exemption 1 case in which the plaintiff withdrew its FOIA request literally on the eve of Supreme Court certiorari consideration. See FOIA Update, March 1982, at 5. As in Holy Spirit, it can be expected that the Supreme Court will at least vacate the D.C. Circuit's decision in Washington Post. This would have been the fourth adverse D.C. Circuit FOIA decision reviewed by the Supreme Court at the government's urging in the last two years. In each of the three previous cases-FTC v. Grolier, Inc., 103 S.Ct. 2209 (1983) (Exemption 5). Department of State v. Washington Post Co., 456 U.S. 595 (1982) (Exemption 6), and FBI v. Abramson, 456 U.S. 615 (1982) (Exemption 7)-the Supreme Court reversed the D.C. Circuit with an opinion strongly in the government's favor. See FOIA Update, Summer 1983, at 1-2: FOIA Update, June 1982, at 9. Still remaining on the Supreme Court's docket this Term is the Ninth Circuit's narrow Exemption 5 decision in Weber Aircraft Corp. v. United States, 688 F.2d 638 (9th Cir. 1982), cert. granted, 103 S.Ct. 3534 (1983), in which the Ninth Circuit refused to accord traditional privilege protection under that exemption to an Air Force accident investigation report. The government is asking the Supreme Court to construc Exemption 5 broadly enough to encompass such protection, as have both the Fifth and Eighth Circuits. See Cooper v. Department of the Navy, 558 F.2d 274, 278-79 (5th Cir. 1977), modified on other grounds, 594 F.2d 484 (5th Cir. 1978), cert. denied, 444 U.S. 926 (1979); Brockway v. Department of the Air Force, 518 F.2d 1184, 1193 (8th Cir. 1975). See also FOIA Update. Jan. 1983, at 5. Oral argument in Weber Aircraft has not yet been scheduled. FOIA UPDATE 11 II-42 |