Are the trademark-search reports a company sells to attorneys a taxable information service, or are they exempt because they're personalized?

Plain-English summary

Trademark Service Corporation maintains the trademark records of the U.S. Patent and Trademark Office plus its own library of common-law and unregistered marks (compiled on more than 5.4 million index cards). It sells trademark-search reports to attorneys under set search plans (State, Federal, Extended, Index, Design, Comprehensive, All-Class), for flat fees. A client picks a plan and states the mark and the product; the standardized reports list applications, registrations, and directory/state entries, with no narrative, comments, or opinions from the searcher. The company argued its reports are personalized and confidential and so exempt.

The Department held the reports are a taxable information service that fails the exclusion.

• This is an information service. Collecting, compiling, or analyzing information and furnishing reports to others is an information service (20 NYCRR 527.3(a)(2)) taxable under § 1105(c)(1).
• The exclusion has two prongs — both must be met. The information must be (a) "personal or individual" in nature and (b) "not or may not be substantially incorporated in reports furnished to other persons." The reports meet neither.
• Prong (a) — not uniquely personal. The information is compiled from public records and publications and gathered to build the company's own repository, not for a particular client. Being compiled to a customer's specifications does not make it personal (Twin Coast Newspapers; Towne-Oller), and public records with unlimited access aren't personal (Allstate). This contrasts with the confidential character reports in New York Life, which were personal because the interview phase was tailored to each client.
• Prong (b) — likely incorporated in reports to others. The attorney-client privilege (CPLR 4503) and work-product doctrine (Hickman v. Taylor) do not apply, because they protect confidential attorney-client communications and litigation materials, not information the company gathers from outside sources. The statute asks only whether the information may be substantially incorporated in reports to others — and the facts (searchers reference prior reports) suggest it likely is (regulation Example 4: a legal-research printout is taxable because the citations may be given to another subscriber).
• Result: the receipts from the search reports are subject to state and local sales tax.

What this means for you

"Customized for the client" is not the test. New York's exclusion is for information that is uniquely personal, not merely tailored or formatted to a customer's request. A report built from public records and industry publications is a taxable information service even if each report is individually prepared.

Confidentiality promises don't create the exclusion. Attorney-client privilege and work-product protect certain communications and litigation materials — they don't convert publicly sourced research into "personal or individual" information for sales-tax purposes.

The "not incorporated in reports to others" prong looks at the data, not the paper. If the underlying information can reappear in reports sold to other customers — as it typically can with database-style research — the exclusion fails, regardless of whether an old report is literally reused.

Common questions

Q: We prepare individualized search reports for each client from our own database. Are they taxable?
A: Yes. The Department held that search reports compiled from public records and publications are a taxable information service under § 1105(c)(1), even though prepared individually.

Q: Our reports are for attorneys and are confidential — doesn't that make them personal or individual?
A: No. The exclusion covers uniquely personal information. Confidentiality and the attorney-client privilege don't apply to information gathered from outside public sources, and being made for a specific client doesn't make it personal.

Q: We never literally copy one client's report into another — does that satisfy the second prong?
A: Not necessarily. The statute asks whether the information may be substantially incorporated in reports to others, not whether a prior report is reused. If the same data can reappear for other customers, the exclusion fails.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(1) — taxes the furnishing of information; excludes information that is personal/individual and not substantially incorporated in reports to others
• 20 NYCRR 527.3(a)(2) — collecting/compiling/analyzing information and furnishing reports is an information service
• 20 NYCRR 527.3(a)(3), Example 4 — a legal-research printout is a taxable information service because the citations may be given to another subscriber

Cases and determinations cited:

• New York Life Insurance Co. v. State Tax Commission, 80 A.D.2d 675, aff'd 55 N.Y.2d 760 — tailored confidential character reports held personal/individual
• Twin Coast Newspapers, Inc. v. State Tax Commission, 101 A.D.2d 977 — information isn't personal merely because compiled for a specific person
• Towne-Oller & Associates, Inc., TSB-H-85(36)S, aff'd 502 N.Y.S.2d 544 (1986) — reports to specifications not uniquely personal
• Allstate Insurance Company v. State Tax Commission, 115 A.D.2d 831 (1985) — public records aren't personal/individual
• Hickman v. Taylor, 329 U.S. 495 — scope of the work-product doctrine
• King v. Ashley, 179 N.Y. 281 (1904) — scope of the attorney-client privilege

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1987.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a87_1s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-87(1)S
Sales Tax
December 12, 1986

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S830822A

On August 22, 1983, a Petition for Advisory Opinion was received from Trademark Service
Corporation, 747 Third Avenue, New York, New York 10017.
The issue raised is whether the services performed by Petitioner are subject to the sales tax
imposed under Section 1105(c)(1) of the New York Tax Law.
Petitioner states that it owns and maintains the trademark records of the U.S. Patent and
Trademark Office and that it has compiled and is continuously updating an "extensive library of
common law marks, and a comprehensive list of unregistered marks from magazines and specialized
journals". Petitioner uses this information, which has been compiled by it on more than 5.4 million
index cards, along with the background and the experience of the researcher to compile a
"personalized and customized reports to the legal profession."
A schedule of charges supplied with the Petition lists the following search categories, as
developed by the Petitioner:
(1)

STATE SEARCH
Search of the trademark records of the fifty individual states.

(2)

FEDERAL SEARCH
Search of the trademark records of the United States Patent and Trademark
Office, covering registered published and pending marks, including records
of cancellations, assignments, abandonments and oppositions.

(3)

EXTENDED SEARCH
Search of the trademark records of the fifty individual states, common law
marks and business titles.

(4)

INDEX SEARCH
Search of applicants' and registrants' files.

(5)

DESIGN SEARCH
United States Patent Office Records only. Search covers
primary and related classes.

RODERICK G. W. CHU, COMMISSIONER
GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (3/83)

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(6)

COMPREHENSIVE SEARCH
Standard search; includes (1) through (4) above.

(7)

ALL-CLASS COMPREHENSIVE SEARCH
Search of a word mark in all classifications, covering all areas of our
searching facilities.

In each search request, the client simply selects a search plan and states the trademark and
the product or services to which it applies. The flat fees charged in 1983 ranged from $75.00 for a
State or Federal Search to $375.00 for the All-Class Comprehensive Search.
Copies of completed search reports appended to the Petition list, on a standardized form
under pre-printed categories, trademark applications and registrations of the U.S. Patent Office (with
photocopies of Petitioners file cards attached), marks listed in trade directories, state registrations,
and excerpts from a list of business titles relating to the trademark. The search reports contain
neither narrative, nor comments or opinions of the researcher.
Section 1105(c)(1) of the Tax Law imposes a tax on the receipts from every sale, except for
resale, of: "The furnishing of information by printed, mimeographed or multigraphed matter or by
duplicating written or printed matter in any other manner, including the services of collecting,
compiling or analyzing information of any kind or nature and furnishing reports thereof to other
persons, but excluding the furnishing of information which is personal or individual in nature and
which is not or may not be substantially incorporated in reports furnished to other persons. . . ."
The collecting, compiling or analyzing of information of any kind or nature and the
furnishing of reports thereof to other persons constitutes the rendering of an information service.
20 NYCRR 527.3(a)(2). The reports furnished by Petitioner consist of information which has been
collected, compiled or analyzed. Therefore, the sale of these reports constitutes the rendering of an
information service within the meaning of the statutory provision set forth above.
The first of the two criteria which must be met to exclude Petitioner's reports from taxation
is that the information supplied must be "personal or individual" in nature. Petitioner maintains that,
in searching for exact trademarks, different searches would obtain the same result; however, a search
beyond the exact trademarks would generally produce different results. This difference is due,
according to Petitioner, to the "suggestion or association" method which allows the searcher to
employ his own experience to develop the search. Thus, the report furnished by Petitioner, while
utilizing information in its files, is described as a personalized effort based on the information given
to the searcher and is designed individually in conformity with the requesting attorney's unique needs
and interests.

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In the Matter of New York Life Insurance Co. v. State Tax Commission, 80 AD 2d 675, aff'd.
no op 55 NY 2d 760, confidential character reports prepared by licensed detective agencies were
deemed to be personal or individual in nature by virtue of the fact that the interview phase of the
investigations, the primary basis of the report, was tailored in each instance to the specifications of
the client. However, in the Matter of Twin Coast Newspapers, Inc., v. State Tax Commission, 101
AD 2d 977, the Court held that information is not personal or individual in nature merely because
it is compiled for a specific person. The information must be of the uniquely personal nature
contemplated by the statute in order to come within the purview of the exclusion. Thus, information
which has been published elsewhere and which is merely complied to the specifications of a
particular person is not personal or individual in nature.
The requirement that the information furnished be of a uniquely personal nature also formed
the basis for the determination of the State Tax Commission in the Matter of Towne-Oller &
Associates, Inc., TSB-H-85(36)S; aff'd. 502 NYS2d 544(1986). In that instance, Towne-Oller
provided information reports to manufacturers of health and beauty aids. The information provided
by Towne-Oller was used by its customers to determine whether the manufacturers' products were
in stock in the appropriate distribution outlets. The Tax Commission, citing Twin Coast, concluded
that the fact that some of the reports were prepared to a customer's specifications did not in and of
itself, render the reports personal or individual in nature and held further that the information
provided by Towne-Oller was not of the uniquely personal nature contemplated by the Tax Law
1105(c)(1).
Additionally, in Allstate Insurance Company v. Tax Commission of the State of New York,
115 A.D.2d 831 (1985), Department of Motor Vehicle reports (MVR's) were held to not qualify as
personal and individual in nature. The court held that "[t]his exclusion (Tax Law 1105(c)(1)) refers
to uniquely personal information and does not apply to information filed with a governmental agency
as a public record to which there is unlimited public access" (citations omitted).
Unlike Towne-Oller, Petitioner engages in the marketing of information which it has
gathered, not for a particular client, but for the purpose of compiling and keeping up-to-date the
repository of data which constitutes the stock-in-trade of its business. Moreover, this information
is collected from public records of governmental agencies and publications and is therefore not of
the uniquely personal and individual character required by the statute.
The second criterion of the exclusionary portion of the statute is that the information "is not
or may not be substantially incorporated in reports furnished to other persons."
Petitioner urges that the information contained in the reports it furnishes to its customers
"may not be substantially incorporated in reports furnished to other persons," because of the
applicability of the attorney-client privilege and the work-product immunity doctrine. (Petitioner
performs its trademark search service exclusively for attorneys.) The attorney-client privilege is
embodied in CPLR 4503, which provides, in pertinent part, as follows:

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Unless the client waives the privilege, an attorney or his employee, or any person
who obtains without the knowledge of the client evidence of a confidential
communication made between the attorney or his employee and the client in the
course of professional employment, shall not disclose, or be allowed to disclose such
communication, nor shall the client be compelled to disclose such communication
in any action, disciplinary trial or hearing, or administrative action, proceeding or
hearing conducted by or on behalf of any state, municipal or local governmental
agency or by the legislature or any committee or body thereof.
It will be readily seen, from the very language thereof, that CPLR 4503 relates to confidential
communications between an attorney (or an employee of an attorney) and the attorney's client, and
prohibits the disclosure thereof in specified actions, disciplinary trials or hearings, or administrative
actions, proceedings or hearings. Such provision does not relate to information gathered by an
attorney from sources other than his or her client, and does not prohibit the disclosure of such
information by such outside source. King v. Ashley, 179 N.Y. 281 (1904) (decided under a
predecessor provision). Nor does the attorney's work-product doctrine compel any other conclusion.
Such doctrine, as set forth in the leading case in the area, Hickman v. Taylor, 329 U.S. 495, does not
provide for an absolute privilege attaching to every document in an attorney's hands and in every
possible situation. Rather, it protects such materials from disclosure in a discovery proceeding
conducted in connection with a judicial proceeding, where there is no "showing of necessity or any
indication or claim that denial of such production would unduly prejudice the preparation of [a
litigant's] . . . case or cause him any hardship or injustice." In the present matter we are concerned
with neither a discovery proceeding nor a document in an attorney's files. Rather, the question is
whether Petitioner is prohibited from incorporating in a report to one customer information contained
in a report sold to a previous customer. Even if business ethics were to prohibit the disclosure of the
fact of Petitioner's dealings with a particular customer, there is no prohibition, arising from either
the attorney-client privilege or the attorney's work-product doctrine, which would prevent Petitioner
from selling to a customer a report substantially incorporating data included in a report furnished to
a prior customer.
Petitioner contends, finally, that its reports satisfy the "is not" test of the statute.
Petitioner represents that in thirty-one years of business, it has not incorporated the results
of one report into another, and that because of the danger of inaccuracy, the searchers are permitted
access to past search reports as an additional reference only after the customized report is completed.
Searchers are not permitted access to old search reports to aid them in compiling new reports.

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Petitioner emphasizes the circumstances that its employees do not initially work from
previously issued reports in preparing new reports, using the old reports "only to double-check search
requests for an identical name or trademark after the new report is completed". However, the fact
that old reports may ultimately be used for reference implies the existence of prior reports which are
of value to the searcher, because they are essentially similar to the new report. The statute,
moreover, does not require that a report itself be used as a basis for later reports, but only that the
information embodied therein be substantially incorporated in reports to others.
Sales tax regulation section 527.3(a)(3) provides the following example:
Example 4:

A computer service company owns a service program consisting of analyses of law
cases and statutes. It is asked by a customer to research all references to the word
"assessment". The fee for the printout received by the customer constitutes a taxable
receipt from an information service, as the citations listed may be given to another
subscriber requesting the same information.

Since, from Petitioner's description of its activities, it appears likely that the information
contained in a report issued to one customer has been substantially incorporated in reports to other
on previous occasions, it can reasonably be anticipated that the information will be so used in the
future.
Accordingly, Petitioner's information services do not meet the criteria for exclusion from the
tax imposed under Section 1105(c)(1) of the Tax Law, and its receipts from the sale of search reports
are subject to the applicable state and local sales taxes.

DATED: December 12, 1986

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.