Illinois education agency's discretion to spend or lapse line-item appropriation on intellectual property

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Dear Mr. Cronin,

at for an opinion in h containing t.wo .parts. You item of a •tate a9enoy•a annual DDJ:'OlilriaUon bJ.11 p:rovidea ~t • certain _.uw i• appi:opriated 'to the agency pm-po•• of' eonuaotin9 for the ~!!t~~~•t of a oenain tectlmiq11e which a • tee intelleot.\1111 property (and there no othu enuling legislation which mctatea aucb a conuac'I:) then, (a) Hllet the agenoy enter a oonuact for ••ch purpoae wllen·aaid a9ency det.eminea it 1:o_be inadviaule to dO so? or may the agency peanit the appropriation to lapse?

(b) If the a9ency enters a contract for nch purpose in a given fiscal year, and the development of sudl intellectual property will take three or four years. with addi- tional fiacal year appropriations,~•• the recipient of the first contract award have a vested interest in receiving the subsequent contract awards?., · You have cited no act. containing an appropriation to your office which specifically provides for contracting £or I the.development of intellectual property. I understand from your q,\leat,.lon that while your agency has authority to ent•r into the contract, 1t is not required by substantive legislation to enter into such a contract. You have again cited no specific provisions. I am able, therefore, only to answer your question in general terms.

The discretion of an a9ency to allow an appropriation to lapse depends on the langU.age of the authorisation and the appropriation aces. In general, however, an agency has the discretion to spend its appropriation as it deems necessary and may allOfll at least a part of its appropriation to lai••• Tbe Supreme Court of Washington in Ieland S:tv• s;om. on a••···· Rat, v. pepartmfa:!i pf Rev •• 500 P. 2d 756 (1972), stated at pave 763 tilat ••an appropriation of public mo:aies by the legislature ia not a mandate to spend, rather it is an authorization given by the 1q1a1atve t:o • designated a9enay to use not to aceed a atated asm for epeo1fie4 puz:posea." :tt noted in its footnote that legialative act• cmetomarily, though not necessarily, contain language reflecting this c:haraot.eristic. 'l'he appro- priation act for your aqency specifically contains lallg\1&9e reflecting' this, i.e. •the following named awns, or ao 111\lGh thereof•~ may be neoeaeary reapeetively, for the objects and purposes hereinafter named". see aleo At.t:orney General v. Baldwin, 279 N.E. 2d 110 (Mass. 1972), St.ate v. Hartmy, 367 P.

· 2d 918 (Bew Mex. 1961), and M,kysas sut.e Highway commia1ton l will advise you whether it is an express authorization by law under which you could enter into a cont.met for which money has not been appropriated.

Frequently, the General A•sembly appropriates at one time the total amount necessary to complete a. project even though it ,is anticipated that all will not be spent before the appro- priation lapses.under.section 25 of •AH AC'l' in relation to State finance"• (Ill. Rev. Stat.. 1975, eh. 127, par •. 161.) The appropriation of the total anticipated cost provides the authority to enter into a contract for the cQJDplete project. The funds 'W'hich lapse muet, of course. be reappropriated.

You state~ second question as follows:

"2. If intellectual property ia C,eveloped as a renlt: oft.he circwutances described in question one, then, (a) DoetJ the State agency have a right to assert an exc1wd.ve copyright: to suah property?

(b) Does the st.ate agenc:y have authority to agree to share a copyright with, or·to grant an exclusive ~pyright to, the rec.ipient of the cont:rac:t. award who developed the property?• Whether a State aqeney baa a right to assert an exclu- sive copyright to intellectual property depends on Federal copy- right law and the authority of the State agency.

'!'here is no qoestion that a copyright is property (Pox Eilm S9IP• v. pgyal# 286 u.s. 123). or that the Stat.e has power to aaqaire property. (1953 Ill. Att•y. Gen. Op. 157.) 'fhere are numerous epecifie provisions granting power to the State Board of B&acation to acquire intellectual property. Por inetance, the State BOard of Education ia reaponaible for the educational policies and gui4elines for public and private eahoola an4 ehal.1 analyse the present. and future aims. needs and reqnir•ent:a of education in Illinoia. (%11. R.ev. stat.

1975, oh. 122, sea. JA-4.) In addition, it 1• authoria~ to maintain a research department to secNl'e, publish anc! pnaerve information and data relative to the public sehoOl eyaUJD of llllnoi• (111. Rev. Stat. 1975, ch. 122, par. 2-3.31), to prc,vi4e eonault:ant serviae to aahool dietrict:e (Ill. ReV. Stat. 1975,· ch. 122, par. 2-3.35). and to define urban •c:hool needs an4 to develop napouive models, project.• and programs for meetincJ t.be needs of urban echool diatriat.e. (111. Rev. Stat. 1975, ch. 122, par. 2-3.37.) In fulfilling any of these responai'biliti•• it could be ~eeessary for the State BOar4 of Education to develop an4 own intellectual property.

'l'he P-4era1 copyright law (17 u.s.c. sec. 1 a .!!St•> contains no expres• provieion relating to the right of a State to take out for itaelf a copyright or to enjoy the benefit of one taken O\lt for it by an individual, mt merely provides eul,ject of copyright may secure a copyright therefor. (17 v.s.c. •"• 9.) Undei:- the early statut.ea the benefit of the copyright· laws waa limited solely to citizens an4 residents of the united Stat.ea, and a State, beinq neither a citizen nor a resident, could not. obtain a copyright. Since the removal of that re- striction, there appears no reason why a state may not be ant.it.led to a copyright aa a "proprietor 11 or even as an •author"

under the provision that. the word "author• ah.all include an employer in case of worke made for hire. (17 u.s.c. aec. 26.)

In fact, the records of! t:he copyright office show many claim• regiatered in 'the name of a St:ate, a ftau agency or an official in behalf of a $tat.a. 18 Alll. J\U:. 2d Copyrjqbt ud Literaxy PrOperty, •ec. 30r 18 c.J.s. COpyript and Literary Prop•ty, ... 61.

It. 1a the geunl nle that. the anployer has th• right. to UMrt. an exclusive COWJ:iqht. in material produ.ced 1'y ••••Sect.ion 26 of the Copyright. Act:, 17 u.s.c. t26, pzovi4ea that.~• •author' of a work *1d\a11 iaal\14e an employer in the ease of works for hire.• Horeov.,.., Profeaaor Bina•, in.hie treaUee on copyript. law, states that. there ia a pres\llllptioa in the abaeno• of an GPZ'••• contractual r••erva- t.ion to the contrary, that the copysight shall be ill~ peraon at whoa• J.na1:anee -4 expenae the won 1• 4one. lUJNaer on Copyright 238 (1964).

!'bi• ao-aalled •won■ for hire' 4ootrine •• recognized earli.u lty the SUpr•• COUZ't in Bleiateill v. Donaldaon Lithofraphy co., 188 u.s. 239, 248, 2J s.c:1:. 298, 47 L.Ecl. 460 (1903), an4 waa lat.er codified in the COpyright. Act.. In Bleiatein, the CC)l.lft- he14 that the eopyri9ht to certain adVertlae~ Mni:a c:rreated 1'y U aapl.oyee clu.ln9 the CO\IZ'88 Of hi• e11Ployment, be10Jlc;re4 to his employer. While the 'work• for bin' dootrille ha• been invoked ••t frequ•tly in tutanc:es involving music publiahera, •••, ••9• foite• •ittedJ it t• applicable Wlleaever an employee•• work is produced at. the instance and expe•• of lu..e employer. Jn nob cirCNmnanoe•, . the employer baa 'been presumed t.o have the c:opy.ript. (ci~• amit.te4J ..

we - no aoud reuon -,. th- - prin- ·-:··· ciplea are not. applicable when the parties bear ·. tu relaU011ahip of employer -.n4 inc!epenclent _. contract.or. 'Whether the copyright resides in th•: peraon tlm• commieeion:1Dtg the work or in the illcl~/ pendent cont.raetor creating the work will always -,r: t.vn on the intention of the parties where that intent. can be aaeerta1nec1.• ffimmer, aupi-a, at 244. Where ~t. i.nt.•t. CllllllOt be 4~ed, the preaaptJ..on of copyright ownership rune in favor of the employer.

Which ie utN&lly e,cpreeaed in the eontnct. i• ot:herwtu.

t em alao of 'the opinion that a st:ate agency. as part of its authority t.o fte90tJ.ate and enter into contract.•, may allow an independent oonuactor either t:o use the Stat••• exclusive c:opyrtght, or to obtain his own uclualve copyright, to intellectual property dffelopec!-pu-nant to dle orl9inal eonva~. % WOGld ••--- that if an independen. contractor will have the right either to obtain bia own exc1uive copy- right or to uee the State•• copy&-i9ht, he would develop 'the property at a lower eon t.o 1:he State.

Your requut. doe• not concern th• authoi-ity of the Stat• to oell i~• copyright• OZ' to lioenae their uae other than ae part. of aD ori9iraal contract. to develop copyri9ht:able material, and this opinion 8hou14 not be interpreuct to ·. relate to that &\lthodty.

ATTORNEY GBBBRAL