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John Cornyn

May 10, 1999

Mr. Charles D. Olson
Haley & Davis, P.C.
Triangle Tower, Suite 600
510 North Valley Mills Drive
Waco, Texas 76710


Dear Mr. Olson:

You ask whether certain information is subject to required public disclosure under chapter 552 of the Government Code. Your request was assigned ID# 123874.

The Heart of Texas Council of Governments (the "council") received a request for the following information concerning the Welfare to Work program:

1) the original RFP,

2) all bids submitted in response to the RFP,

3) the contract resulting from the RFP,

4) a list of service delivery areas, and

5) the name and telephone number of the program administrator.

Without taking a position on the release of the information, you state that certain third parties have expressed proprietary interests in portions of their bid proposals. We assume that you have released the remaining requested information to the requestor.

Pursuant to section 552.305 of the Government Code, this office notified Maximus, Inc.; Lockheed Martin IMS Corporation ("Lockheed"); The Training Institute; and Economic Opportunities Advancement Corporation of the request. The latter two companies did not respond to the notice. Therefore, we have no basis to conclude that the two companies' information is excepted from disclosure by section 552.110. See Open Records Decision Nos. 639 at 4 (1996) (to prevent disclosure of commercial or financial information, party must show by specific factual or evidentiary material, not conclusory or generalized allegations, that it actually faces competition and that substantial competitive injury would likely result from disclosure), 552 at 5 (1990) (party must establish prima facie case that information is trade secret), 542 at 3 (1990). However, you state that the two companies' proposals are copyrighted. A custodian of public records must comply with the copyright law and is not required to furnish copies of records that are copyrighted. Attorney General Opinion JM-672 (1987). A governmental body must allow inspection of copyrighted materials unless an exception applies to the information. Id. If a member of the public wishes to make copies of copyrighted materials, the person must do so unassisted by the governmental body. In making copies, the member of the public assumes the duty of compliance with the copyright law and the risk of a copyright infringement suit. See Open Records Decision No. 550 (1990).

Maximus and Lockheed contend that portions of their proposals are excepted from disclosure under section 552.110 of the Government Code. Section 552.110 protects the property interests of third parties by excepting from disclosure two types of information: (1) trade secrets, and (2) commercial or financial information obtained from a person and privileged or confidential by statute or judicial decision. Maximus and Lockheed have made arguments against disclosure under both prongs of section 552.110.

The Texas Supreme Court has adopted the definition of "trade secret" from the Restatement of Torts, section 757, which holds a "trade secret" to be

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. It differs from other secret information in a business . . . in that it is not simply information as to a single or ephemeral event in the conduct of the business . . . . A trade secret is a process or device for continuous use in the operation of the business. . . . [It may] relate to the sale of goods or to other operations in the business, such as a code for determining discounts, rebates or other concessions in a price list or catalogue, or a list of specialized customers, or a method of bookkeeping or other office management.

Restatement of Torts 757 cmt. b (1939); see Hyde Corp. v. Huffines, 314 S.W.2d 763, 776 (Tex.), cert. denied, 358 U.S. 898 (1958). If a governmental body takes no position with regard to the application of the "trade secrets" branch of section 552.110 to requested information, we accept a private person's claim for exception as valid under that branch if that person establishes a prima facie case for exception and no one submits an argument that rebuts the claim as a matter of law. Open Records Decision No. 552 at 5 (1990).(1)

In Open Records Decision No. 639 (1996), this office announced that it would follow the federal courts' interpretation of exemption 4 to the federal Freedom of Information Act when applying the second prong of section 552.110 for commercial and financial information. In National Parks & Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974), the court concluded that for information to be excepted under exemption 4 to the Freedom of Information Act, disclosure of the requested information must be likely either to (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 Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). A business enterprise cannot succeed in a National Parks claim by a mere conclusory assertion of a possibility of commercial harm. Open Records Decision No. 639 at 4 (1996). To prove substantial competitive harm, the party seeking to prevent disclosure must show by specific factual or evidentiary material, not conclusory or generalized allegations, that it actually faces competition and that substantial competitive injury would likely result from disclosure. Id.

After a review of Lockheed's arguments and the submitted information, we conclude that Lockheed has established that the release of most of the portions of its bid proposal, which it contends are excepted from disclosure under section 552.110, would cause it to suffer substantial competitive harm. Thus, the council must withhold the following sections of the bid proposal from disclosure under section 552.110 as commercial or financial information: Exhibits 3.A-1, 3.A-3, 3.B-4, 3.B-5, 3.B-8, 3.D-2, pages 12 - 26 of the Service Delivery Plan, and Attachment 12.(2) As for the budget forms on pages 85 to 104, we conclude that if any of these pricing terms in the bid proposal are incorporated into the council's contract with Lockheed, then they are not excepted from disclosure under section 552.110 and must be released to the requestor. See Open Records Decision Nos. 514 (1988) (questioning whether general terms of contract with state agency could ever constitute trade secret), 494 (1988) (application of commercial or financial information prong of section 552.110 requires balancing of public interest in disclosure with competitive injury to company in question); see generally Freedom of Information Act Guide & Privacy Act Overview (1995) 136-138, 140-141, 151-152 (disclosure of prices is cost of doing business with government). If the budget terms are not incorporated into the contract, then the council must withhold the budget forms under section 552.110 as confidential commercial or financial information.

We next consider whether portions of Maximus's bid proposal are excepted from public disclosure by section 552.110. Maximus does not object to the release of Chapters 1, 2, 6, and 9 and Attachments B, C, and F. Thus, these portions must be released. As for the remaining portions of the bid proposal, the information you submitted to this office does not correspond to the information to which Maximus's brief refers. Therefore, we are unable to rule on Maximus's section 552.110 claim for Chapters 3, 4, 5, 7, and 8 and Attachments A, D, E, G, H, and I.

We are resolving this matter with an informal letter ruling rather than with a published open records decision. This ruling is limited to the particular records at issue under the facts presented to us in this request and should not be relied upon as a previous determination regarding any other records. If you have any questions about this ruling, please contact our office.


Yen-Ha Le
Assistant Attorney General
Open Records Division


Ref: ID# 123874

Enclosures: Submitted documents

cc: Ms. Mindy Swindler
Marketing Communications
1220 SW Morrison, Suite 700
Portland, Oregon 97205

(w/o enclosures)

Mr. Robert Renbarger
Ford, Fritz, Byrne & Head, L.L.P.
98 San Jacinto Blvd., Suite 2000
Austin, Texas 78701

(w/o enclosures)

Ms. Barbara Loscalzo
Senior Associate Counsel
Lockheed Martin IMS Corporation
Glenpointe Centre East
Teaneck, New Jersey 07666

(w/o enclosures)

Economic Opportunities Advancement Corporation
500 Franklin Avenue
Waco, Texas 76701-2111

(w/o enclosures)

The Training Institute, Inc.
3699 Wilshire Blvd., Suite 625
Los Angeles, California 90010

(w/o enclosures)



1. The six factors that the Restatement gives as indicia of whether information constitutes a trade secret are: "(1) the extent to which the information is known outside of [the company]; (2) the extent to which it is known by employees and other involved in [the company's] business; (3) the extent of measures taken by [the company] to guard the secrecy of the information; (4) the value of the information to [the company] and [its] competitors; (5) the amount of effort or money expended by [the company] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others." Restatement of Torts 757 cmt. b (1939); see also Open Records Decision Nos. 319 at 2 (1982), 306 at 2 (1982), 255 at 2 (1980).

2. Because we conclude that the council must withhold this information from disclosure as commercial or financial information, we do not reach the issue of whether this information also constitutes a trade secret.

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