Film Budget Summaries Are Not Trade Secrets

On August 1, 2012, in Trade Secrets, by Brian A. Hall

UnIP (UnIntellectual Property): Trade Secret for Film Budget Summaries

The Iowa Supreme Court has decided a case stemming from a dispute over whether filmmakers participating in a state film program that provides tax credits for eligible expenditures must disclose financial information in the form of their film budget summaries. The Iowa Open Records Act (Iowa Code chapter 22) generally requires that state and local entities make their records available to the public. The Plaintiffs, filmmakers, sought to benefit from the film program and thus completed the required “Application for Registration” and submitted it to the Defendant. The Application for Registration form required information such as the project title, a synopsis of the project, the production company to receive incentive, lead production names and contacts, production dates, production type, format, distribution, current production budget, qualified in-state expenditures, and a schedule of project investors. In addition, the application asked the filmmaker to indicate whether there was information in the application “for which the business [was] requesting confidential treatment. In order to ensure compliance and verify eligibility of expenditures for the tax credits, once the film project was completed, the Producer was required to submit a schedule of qualified expenses, known as a “FORM Z: Final Budget Expenditure Report.” In addition, each Form Z contained a two-page summary (the Form Z Summary), which included the totals for forty-six categories of expenses, such as “STORY & RIGHTS,” “WRITING,” “PRODUCER & STAFF,” “DIRECTOR & STAFF,” and “TALENT & STAFF.”

The filmmaker Plaintiffs sought a Court Order to enjoin disclosure of their film budget summaries due an exception under the Iowa Open Records Act, which provided relief from disclosure for “[t]rade secrets which are recognized and protected as such by law”. The Iowa Supreme Court applied Iowa’s codification of the Uniform Trade Secrets Act (UTSA), recognized that the business information included in the budget summaries is of the kind that could qualify as a trade secret, and then analyzed whether it indeed did because of proof that it derived independent economic value from being subject to reasonable security measures to maintain its secrecy. In doing so, the Court refused to adopt the Plaintiffs’ two theories of independent economic value: (1) that public disclosure of the overall cost of a movie would impair the filmmaker’s ability to resell that movie at a substantial profit; and (2) that release of the summaries could potentially allow the public to reach a conclusion about the compensation paid to individual actors and directors who had agreed to work only on the condition that their compensation would remain confidential. Furthermore, the Court found that Plaintiffs failed to implement reasonable security measures under the circumstances since they did not identify the film budget summaries as trade secrets, and thus exempt them from open disclosure, in the Application for Registration, and they had not treated the information as trade secret in the past with, for example, use of non-disclosure agreements.

The Court’s ultimate holding, however, was sure to be made fact specific: “We do not foreclose the possibility that on a different record, budget summaries for projects awarded tax credits by the State of Iowa might be considered trade secrets.” Put another way, do not wait until the end to claim something is trade secret, but instead identify it and treat it as such from the get go.

I think we can all agree that this “movie” could have had a very different ending. Instead of Lights…Camera…Action…Trade Secret, film producers should remember the new mantra of Trade Secret…Lights…Camera…Action.

Iowa Film Production Services v. Iowa Dept. of Economic Development, __ N.W.2d __, 2012 WL 3052436, No. 10-1719 (Iowa, July 27, 2012).


One Response to Film Budget Summaries Are Not Trade Secrets

  1. […] Iowa: In a recent, very fact-driven case involving the intersection of open records laws and trade secrets laws (see “Trade Secrets at the Intersection with Public Records” in a prior “Noncompete – Issues and Cases in the News” post), the Iowa Supreme Court held that trade secret protection was not available to a filmmaker’s budget summaries where the filmmaker was receiving tax credits. See Film Budget Summaries Are Not Trade Secrets. […]

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