Private Sector Data for Performance Management
Final Report

July 2011

CHAPTER 5. LEGAL ISSUES

This chapter summarizes the findings of the fourth task of this project, which was intended to address various legal and data rights issues that may arise when the public agencies procure traffic data from the private sector data providers. The topics in this chapter are as follows:

• Data licensing
  • Data rights
  • Derivative works
  • Licensing/pricing models
• Open Records/Freedom of Information Act issues
• Privacy issues

Data Licensing

When referring to the procurement of private sector data for performance monitoring (or other uses), the term "licensing" is more appropriate than "buying" or "purchasing." The terms "buying" or "purchasing" imply that the public agency owns the "purchased" data when, in fact, that is often not the case. With most private sector data providers, the ownership of the traffic data remains with the private company and the public agency is simply given permission to use the traffic data for various applications.

One can think of private sector data in the same way as a software application—when you "buy" the software, you do not own the software, but you are given permission (the license) to install and/or use the software in a specified way and sometimes on a specified number of computers. The terms of use are typically spelled out in fine print in the attached or enclosed software license.

Because the data licensing concept is a departure from the traditional data collection model in public sector ITS, the following sections will address unique aspects that will often arise in licensing private sector data.

• Data rights
• Derivative works
• Licensing/pricing models

Data Rights

As a general rule, the federal government obtains "unlimited rights" if the data pertains to an item or process developed exclusively with government funding.⁷ "Unlimited rights" means that the federal government may "use, modify, reproduce, perform, display, release or disclose" the data to anyone and for any purpose."⁸ These rights also apply to "technical data", which is defined as follows:

Technical Data means recorded information (regardless of the form or method of the recording) of a scientific or technical nature (including computer databases and computer software documentation). This term does not include computer software or financial, administrative, cost or pricing, or management data or other information incidental to contract administration. The term includes recorded information of a scientific or technical nature that is included in computer databases.⁹

In contrast, the federal government obtains "limited rights" to data (other than software) that embodies trade secrets or are commercial or financial and confidential or privileged, to the extent that such data pertains to items, components or processes developed exclusively with private funding.¹⁰ Such "limited rights" restrict the federal government from disclosing the data outside of the government, except under circumstances disclosed and agreed to between the government and the contractor.¹¹ Therefore, to the extent public agencies desire to share the data with its partners and other contractors, they must expressly set forth in the procurement documents the circumstances and conditions under which the traffic data will be disclosed and used by third parties.¹²

What this means to public agencies is as follows: Unless a public agency pays for the full cost of data collection, they cannot expect to own or freely redistribute the data. That is, they have limited rights to use the data as specified in the licensing agreement. The data rights terms of private sector data providers vary widely; however, there are two common themes:

1. Data rights can often be negotiated.
2. The licensing costs will increase as the extent of data rights and redistribution increases.

Because of this, public agencies should seek the experience of other agencies who have already procured private section data. These other licensing agreements should give a better idea of what terms are possible at what price.

Derivative Works

Most public agencies that license historical private sector data for performance monitoring will be analyzing and further summarizing the original licensed data. That is, the public agencies will be creating "derivative works" that commonly include summary congestion and reliability statistics, maps and charts of congestion and performance trends, and other aggregate summary information. The nature of performance monitoring requires that this summary information (i.e., derivative works) be freely distributed to other transportation agencies, key decision-makers, elected officials, and the general public.

Therefore, any procurement of private sector data should address the data rights for derivate works as produced by the licensing agency (or its contractors). Ideally, a public agency should have unlimited rights to freely redistribute derivate works at some specified level of aggregation or summary. For example, the following terms have been included in several public sector procurements:

• Licensing rights shall be provided that permits TTI to analyze the average speed data and create derivative congestion statistics for the purposes of developing a prototype statewide performance report.

• Licensing rights shall be provided that permits TTI to publicly release and redistribute these derivative congestion statistics at the corridor-level (e.g., 5- to 10-mile long directional sections of road). Examples of these derivative congestion statistics include, but are not limited to, measures such as start time of congestion, end time of congestion, average congestion duration, average multi-hour speed, travel time index, travel delay, etc.).

Licensing/Pricing Models

The licensing and pricing models among the private sector data providers varies considerably, and often is only quoted for specific scenarios or requests for bid. There are several different historical data pricing models being used that public agencies should be aware of:

• Pricing by miles covered – a unit price is quoted on a per highway mile basis.

• Pricing by population – a total price is quoted based on the population of the regions of interest (e.g., urban/metro area or state).

• Pricing by number of computer users – a total price is quoted based on the number of computers that will have access to the original traffic data provided.

• Pricing as a percentage of analysis cost – a total price is quoted as a percentage of the engineering analysis cost (used specifically for consultant-based analyses).

Open Records/Freedom of Information Act Issues

Several public agencies have expressed concern about being forced to publicly disclose private sector data that is in their possession. The FHWA is subject to the FOIA, and nearly all state DOTs have a similar Open Records, Open Government, or Sunshine law that requires that certain information within their control must be released upon request of any citizen. The concern is that a public agency may be forced to disclose proprietary private sector traffic data, which would likely be a violation of most private sector data licensing agreements.

Federal and state law varies considerably in this regard, so it is difficult to make any generalizations about how private sector data will be viewed with respect to open records laws. During interviews conducted for this project, several state DOTs have noted that they license other proprietary datasets from private companies and that certain legal exclusions protect this proprietary data from public disclosure.

Several public agencies have contracted with an intermediary (i.e., consultant or contractor) to produce aggregate performance statistics that can be freely redistributed. In this manner, the public agency never has possession or control of the private sector data and would be less likely to be required to publicly release the proprietary traffic data. The use of an intermediary also has certain disadvantages, as the public agency is dependent on the intermediary for access to create or develop further derivative data works.

Privacy Issues

Public agencies must take into account any privacy issues that may arise as a result of disclosure of the private sector traffic data by their agency, its contractors, grantees or other third parties. In particular, both federal and state law recognizes a certain degree of privacy with respect to driver information. If the traffic data that a public agency purchases, uses or discloses is anonymous in nature, the proposed transaction is unlikely to trigger legally-recognized privacy rights under current law. If, however, a public agency intends to procure personally identifiable information, constitutional, statutory and common law privacy rights that guard against the intrusion created by the unwarranted and unauthorized distribution of personal information are implicated.