Government Contracts & Investigations

A Case for Protecting Data Rights – The Boeing Co. v. Secretary of the Air Force

By | December 23, 2020

The Government has many rules regarding the protection of data. Government contractors must understand these rules and the importance of timely and properly marking data that they own or develop in performance of a government contract in order to protect it from unauthorized use, release or disclosure by both the Government and third parties.. The provisions that govern this area may differ depending on the agency and contracting vehicle used. The regulations in the Federal Acquisition Regulation (“FAR”) and the Department of Defense (“DoD”) FAR Supplement (“DFARS”) do not spell out all of the various kinds of legends that might be used to mark data. DFARS 252.227-7013, the noncommercial technical data rights clause applicable to DoD contracts, identifies four types of rights – Unlimited Rights, Government Purpose License Rights (“GPLR”), Limited Rights (“LR”), and Specifically Negotiated License Rights (“SNLR”) – and provides markings to be used for GPLR, LR, SNLR. The Government may, but is not required to, reject markings that do not conform with the markings in that clause. DFARS 227.7103-12; 252.227-7013(h). However, where a contractor includes a protective legend on its data, even if it is not the precise one listed in the agency’s data rights clause, it should be deemed to have put the Government and others on notice that the contractor considers there to be limits on how the data can be used and to whom it can be released.

In a recent case, The Boeing Co. v. Secretary of the Air Force, (“Boeing”), the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) considered whether Boeing’s application of a marking on its delivered data was nonconforming and justified the agency’s rejection of Boeing’s deliverable.

In this case, Boeing held two contracts with the U.S. Air Force (“USAF”) for work on the F-15 Eagle Passive/Active Warning Survivability System. The contracts included the requirement for delivery of technical data to the USAF with Unlimited Rights and the DFARS 252.227-7013, non-commercial technical data rights clause (“Subsection 7013”). The parties did not dispute that Boeing retained ownership of technical data delivered to the USAF under the contracts. Boeing contended that its markings on the technical data were intended to protect its rights as they pertained to third parties – putting them on notice of the proprietary nature of the data, its unpublished copyright reservation, and the direction that “Non-US Government Entities May Use and Disclose Only As Permitted In Writing By Boeing Or By The US Government.” The USAF rejected the data deliverables marked in this manner, contending that they were nonconforming. Boeing requested a final Contracting Officer’s decision on the matter.

Pending the issuance of that final decision, Boeing proposed marking the data with an alternate legend. The USAF also rejected this alternative marking, which read in pertinent part: “Contains Technical Data/Computer Software Delivered to the U.S. Government With Unlimited Rights … Copyright [Year of Creation] Boeing and/or its Supplier, as applicable. Non-U.S. Government recipients may use and disclose only as authorized by Boeing or the U.S. Government.”

The Contracting Officer issued a final decision, confirming the rejection of the legends and directing Boeing to correct them at Boeing’s expense. Boeing appealed this final decision to the Armed Services Board of Contract Appeals (“ASBCA”) on the ground that Boeing’s legend was “not nonconforming” under Subsection 7013(f) since its legend did not address restrictions on Government rights, only third party rights. The ASBCA, ruling on motion for summary judgment, disagreed, siding with the USAF’s position that only the legends listed in Subsection 7013(f) are authorized and Boeing’s legend was not one of those.

Since the interpretation of this clause was a matter of law, the Federal Circuit reviewed the question de novo. It determined that the plain meaning of the clause, when read as a whole, was that it governed only the restrictions being asserted with regard to the Government’s rights to the data, and not the rights of third parties. Thus, in rejecting the Government’s argument that the legends were not authorized under Subsection 7013(f), the Federal Circuit held that they could not be “nonconforming” so as to justify rejection. Because the Court found that the clause’s limitations on markings only related to the markings that were intended to restrict the Government’s rights, it found that the clause did not address Boeing’s right to place markings on the technical data to restrict the rights of third parties except to the extent that Boeing or the Government granted them specific rights.

The Federal Circuit refrained from addressing the important question of whether the application of the markings actually restricted the Government’s rights. If the markings are ultimately found to restrict the Government’s rights under the facts of the case, then in accordance with the Federal Circuit interpretation of the clause, the markings would be considered “nonconforming.” The Federal Circuit held that this fact question needs to be decided by the ASBCA as the trier of fact and remanded the case to the ASBCA. In remanding, the Federal Circuit decision held that this was not a question to be resolved on summary judgment.

Review of the underlying ASBCA decision shows that facts may well rule the day. In that decision, the ASBCA identifies markings which were also provided and proposed by BAE, Boeing’s subcontractor. That “current” BAE legend states:

DATA RIGHTS – This data is submitted to all parties, excluding the US Government, with limited rights under the contract submitted hereunder. In the event this document/drawing, or portions thereof, are subsequently required to be delivered to the US Government in accordance with the contract submitted hereunder, except as otherwise noted, BAE Systems hereby grants the US Government full unlimited rights for all data and computer software contained herein for use on this contract for this program. Otherwise, use or third party disclosure requires written approval from BAE Systems. IESI.

Copyright © 2016 BAE Systems Unpublished WORK – All Rights Reserved

The BAE legend differs from the Boeing legends and may in fact muddy the waters on remand. That clause states that use or disclosure by third parties requires BAE’s written approval; it does not address rights that the Government may provide third parties.

Whether and to what extent the ASBCA will find that the markings placed on the data by Boeing actually restrict the Government’s rights will be determined on remand.

This case is a lesson to all that contract with the Government — if rights in data are important to you, then be sure to address them early and clearly—and incorporate the terms agreed to by the parties into your contract. Indeed, this kerfuffle might have been avoided if the parties had properly identified their respective rights in data up front and agreed in writing to a set of markings to be used.

Contact Susan Ebner for more information.