CEO 92-18 -- April 24, 1992

CONFLICT OF INTEREST

CLERK OF COURT EMPLOYEES DEVELOPING

SOFTWARE FOR SALE TO OTHER CLERKS

To: Mr. A. Curtis Powers, Alachua County Clerk of the Court (Gainesville)

SUMMARY:

Employees in the office of a clerk of the court who are involved in computer programming and the design and modification of computer software used in the clerk's office may not form a private consulting business to design and market program enhancements to other clerks of the court, even though the enhancements were not developed as a part of their public employment. The employees could violate Section 112.313(8), Florida Statutes, if they were to use their public position to gain proprietary information and then sell its modification to other persons. If the employees' business sold enhancements to their public employer, the first portion of Section 112.313(7)(a), Florida Statutes, could be violated. However, of more concern is the potential for a conflict of interest under the second portion of Section 112.313(7)(a), Florida Statutes, as the employees would have a continuing or frequently recurring conflict between their private interests and the performance of their public duties, and which could impede the full and faithful discharge of their public duties. CEO's 89-26, 89-13, 83-87, 82-28, 81-54, and 80-21 are referenced.

QUESTION:

Would a prohibited conflict of interest be created were a deputy clerk and a manager of computer operations in the Office of the Clerk of the Court to establish a computer software consulting company and to market computer software to other clerks, which software would be different from that utilized by their public employer?

Your question is answered in the affirmative.

In your letter of inquiry and in subsequent correspondence, you advise that employed in the Alachua County Clerk's Office are Mr. James Parramore, Data Processing Manager, and Mr. Don Murphy,Criminal Court Manager, who together are contemplating forming a corporation to act as computer software consultants to other Clerks of the Court throughout the State of Florida. In doing so, these employees propose creating software programs for the civil and criminal court operations of other clerks which will be different from those currently in place in your office.

You advise that in order to serve their intended market, the proposed business will need to design software systems which will operate off of computer equipment with which the employees have become intimately familiar through the course of their present employment. Further, you advise that the equipment utilized by your office is subject to a licensing agreement which prohibits you, your employees, agents, or others from reselling, disclosing, or copying proprietary material. This licensing agreement also prohibits you, your employees, agents, and others from using any proprietary material in the development of other computer hardware, software programs, or services.

Your concern is that in the realm of computer technology, it would be difficult to prove what ideas belong to whom. Further, you advise that the subject employees have had extensive exposure to the licensor's confidential, protected trade secrets as employees of your office, and you question how you could ever be certain that the ideas the employees contrive for their consulting business would not violate what is protected under the licensing agreement. You also indicate that under the licensing agreement you are liable for any violations--intentional or unintentional-- of the licensor's proprietary interest, and that liability could translate into significant costs to the taxpayers if you were accused and had to defend against alleged violations of the license.

Your request for an opinion raises a number of issues. However, guidance provided by this Commission is necessarily limited to our interpretations of Chapter 112, Part III, Florida Statutes, and we are unable to address the technical, legal implications of the software licensing agreement you have entered into with the licensor.

Concerning the Code of Ethics for Public Officers and Employees, Section 112.313(8), Florida Statutes, provides:

DISCLOSURE OR USE OF CERTAIN INFORMATION.--No public officer or employee of an agency shall disclose or use information not available to members of the general public and gained by reason of his official position for his personal gain or benefit or for the personal gain or benefit of any other person or business entity.

In past opinions, we have determined that Section 112.313(8), Florida Statutes, prohibits a public official or employee from using a program designed as part of his job in private consulting work. CEO 89-26, CEO 89-13, CEO 83-87, CEO 82-28, CEO 81-54, and CEO 80-21. In this case, it does not appear that the employees have designed a program as part of their job which they then intend to use in their private consulting work. Instead, you advise, they intend to develop enhancements to computer software that is not presently utilized by your office. However, we are of the view that Section 112.313(8), Florida Statutes, would be violated were the employees to utilize proprietary information gained by reason of their public employment to develop modifications to the software for sale to others.

Also applicable is Section 112.313(7)(a), Florida Statutes, which provides in pertinent part:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.--No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . ; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties.

The first part of this provision prohibits a public employee from having an employment or contractual relationship with a business entity which is regulated by or is doing business with his agency. The second portion of Section 112.313(7)(a), Florida Statutes, prohibits a public employee from having any employment or contractual relationship that will create a continuing or frequently recurring conflict of interest of that will impede the full and faithful discharge of their public duties.

In the situation you have outlined, the proposed corporation clearly is not regulated by the Clerk's Office. However, you have indicated that the possibility exists that the subject employees could design and market a software program that your office would purchase. Under that scenario, the employees would have a contractual relationship with their corporation which would be doing business with their agency, and which could violate the first part of Section 112.313(7)(a), Florida Statutes.

More apparent, however, is the potential for a conflict of interest under the second portion of Section 112.313(7)(a), Florida Statutes. For purposes of the Code of Ethics, a "conflict of interest" is defined in Section 112.312(8), Florida Statutes, to mean "a situation in which regard for a private interest tends to lead to disregard of a public duty or interest." Based upon this definition, the court in Zerwick v. State Commission on Ethics, 409 So.2d 57 (Fla. 4th DCA 1982), held that Section 112.313(7)(a) "establishes an objective standard which requires an examination of the nature and extent of the public officer's duties together with a review of his private employment to determine whether the two are compatible, separate and distinct or whether they coincide to create a situation which 'tempts dishonor.'"

Because the employees, through their ongoing employment in your office, have knowledge of and access to proprietary computer information which would be an invaluable source of information in their proposed private endeavor, and because of the difficulty in determining whether the ideas for the software they develop came from using proprietary information gained through your office, we are of the view that the situation is one which creates a continuing or frequently recurring conflict of interest between their private interests and the performance of their public duties, as well as impedes the full and faithful discharge of their public duties. It further appears that by undertaking their proposed consulting work these employees would be considered competitors of the licensor, and continued employment in your office would provide them with continued access to the licensor's proprietary materials. Also, where the subject employees develop software programs and then market them to other clerks and potentially your office, we would view these activities as an impediment to the full and faithful discharge of their public duties, since they could also develop these enhancements in their public capacity and further improve the functions of your office.

Accordingly, we find that a prohibited conflict of interest would be created where employees in the Clerk of the Court's Office forme a private business to design computer software systems for other Clerks of the Court, which systems would be different than that utilized by their public employer, but potentially developed by them using proprietary information gained through their public positions.