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                                           BRNEY                     ENERAB.4
                                          OF TEXAS
                                       AUHTIN.   TEXAS         78711




        The Honorable James R. Arnold                            Opinion No.    H- 440
        Administrator
        Governor’s    Office of Traffic Safety                   Re: Whether film produced for
        P. 0. Box 13449, Capitol Station                         state agency may be reproduced
        Austin,  Texas     78711                                 by private business enterprise
                                                                 and sold for a profit where the
                                                                 film is in the public. domain.

        Dear Mr.   Arnold:

                You have asked whether the conditions attached to a federal grant,
        used by the Texas Education Agency to develop and produce traffic safety
        multimedia   films and materials    for driver education classes,   permit.
        reproduction   and distribution  of the film and materials  by a private business
        concern to the public at a profit.

                The grant was approved by the National Highway Traffic Safety
        Administration  (NHTSA) subject to the conditions stated in its Consultant
        Policy Memorandum    No. Rb-B-101  of February 14, 1972, par,“. 6(g)

                          (l) Before publication or print$ng, the final draft
                         report shall be submitted to the Regional Office
                         for review and xoncurrence.

                    ..                                                            .,
                         .   .   . .


                         (2) After a report has been accepted for publication
                         or printing,  it is to be regarded as information    in the
                         public domain and its further use does not require
                         approval.    Accordingly,   the published version of the
                         final report shall not be copyrighted,    nor contain any
                         restrictions  which prohibit distribution and reproduc-
                         tion..


                                                         p.   2030
                                                                                         .




The Honorable      James    R. Arnold        page 2     (H-440)




                  As used herein,     the term report generally    refers to
                  an,y result of consultant contracts,    such as surveys,
                  studies,   manuals,    guides, films, . . . etc.

        Under these terms,   the Texas Education Agency executed a contract
with a private production firm providing for the development    of five .(5)
driver education lessons and other materials    adapted for use on certain
multimedia   equipment owned by the State.    The final product due under
the contract included “one (I) master copy of each lesson and fifty (50)
sets of each lesson.   Film stri,ps, films, and tapes must be provided
with reels and in color coded containers adaptable to state owned storage
equipment. ”

          The contract     also   provided   that:

                  Ai”‘;. II (A)
                  The Texas Education Agency and the National Highway
                  Safety Bureau would retain all copyrights.      Title to
                  all materials  developed including master prints,
                  internegatives  and scripts will be transferred    to the
                  TEA upon completion     of Contractor’s tasks.

                  Art.   IV (B)

                  All programs,     systems,   designs or other materials
                  developed by Contractor pursuant to this contract
                  shall be the property of TEA, but Contractor        shall
                  have the right to use such programs      for other purposes,
                  provtded no confidential kformation      is disclosed.      It
                  is dis~~m,c~ly understood that TEA, and any other
                  agency of the State of Texas shall have the right        to
                  use, reproduce,     or publish any or all of such programs,
                  systtms,    designs or other materials    developed under
                  the contract for any purpose      without permission      of
                  Contractor,    and without expense or charge.

          In our judgment,        the rights of parties under the State contract   are
subject    to the condi.tions     of the funding grant as expressed  in NHTSA’s


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L   c




        The Honorable    James   R. Arnold    page ~3   (H-440)




        Policy Memorandum      N. R6 -B -101.   The overriding   condition, recognized
        in the production contract,   is that the product of the grant, once accepted
        by NHTSA’s    regional office for publication,  is forever and unconditionally
        in the public domain, and may be freely copied and used by any person or
        agency desiring to do so without prior approval or charge for the right to
        COPY.

                The Regional Administrator     of NHTSA explained the purpose and
        effect of its policy of requiring all reports, including films, to be dedicated
        to the public domain:

                        Our Consultant Policy Memorandum         R6-B-101   relates
                        mainly to copyright aspects,     in that no materials
                        developed shall be copyrighted nor contain any restric-
                        tions which prohibit   distribution and reproduction.      If
                        [the Contractor],  for example,     sold a copy of the multi-
                        media materials   to an agency,    whether in Texas or
                        outside the State, then any or all of it could be reproduced
                        or modified or used in anyway without prior approval.

        Since the contract has been fulfilled and the materials       due the State under its
        provisions    have been published and distributed,    the film and materials
        produced under the agreement~may       be copied and marketed by anyone,
        including the original contractor.     The materials    are now in the public
        domain and may be reproduced and distributed by a private business concern
        for a profit.    G. Ricordi v. Haendler,     194 F. 2d 914 (2nd Cir. 1952).
        Neither the State nor the original contractor has the right to exclude any
        other person in possession     of the materials  from copying them, or using
        them.

                  You have also asked whether the State must accept competitive        bids
        before deciding who will be “permitted”       to make copies of the films and
        material for public distribution.      This would be the case if, under the
        contract,    the State could retain a “property” interest in the materials
        after they were delivered.      Under our interpretation   of the grant conditions,
        the only property interest left to the State is the right to control access and
        use of the copies it owns.     Expressly   precluded is the right to “sell”


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The Honorable    James   R.   Arnold   page 4      (H440)




reproduction   rights in the driver education materiala.    Anyone who obtains
the materials,   whether from the State or otherwise,    may copy and distribute
them without prior approval.      Consequently, competitive   bidding is
unauthorized if used as a means to restrict the right to,reproduce      the films
developed under the federal grant.

        However,  if the State itself intends     to purchase copies in addition to
those produced under the original contract        it must comply with laws relating
to competitive bidding.   See e.g.,    Article     664-3, V. T. C. S., State Purchasing
Act of 1957.

                                   SUMMARY

                     The conditions attached to a federal grant used
                by the Texas Education Agency to develop and pro-
                duce traffic safety films and materials    for driver
                education classes    permit reproduction  and distribu-
                tion of the films and materials   by a private business
                concern at a profit.

                                                   Very     truly yours,




                                                        N L. HILL
                                                   Attorney General        of Texas




DAVID M. KENDALL,         Chairman
Opinion Committee


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