The US Court of Appeals for the Federal Circuit reversed an Armed Services Board of Contract Appeals (ASBCA) denial of summary judgment and held that a federal contractor may include certain restrictive markings on “unlimited rights” data supplied to the US government. The Boeing Company v. Secretary of the Air Force, Case No. 19-2147 (Fed. Cir. Dec. 21, 2020) (Lourie, J.)

Boeing entered into two contracts with the US Air Force that required Boeing to deliver technical data to the Air Force with “unlimited rights” pursuant to Defense Federal Acquisition Regulation Supplement 252.227-7013 (-7013 clause). Boeing marked each technical data deliverable submitted to the Air Force with a legend that described Boeing’s data rights pertaining to third parties. The government rejected Boeing’s technical data deliverables in view of the legend Boeing placed on the data, and Boeing requested a Contracting Officer Final Decision (COFD) regarding the propriety of its marking. The Air Force issued a COFD for each contract, confirming the rejection of technical data marked with Boeing’s legend as a nonconforming marking because it was not in the authorized format pursuant to paragraph (f) of the -7013 clause (Subsection 7013(f)).

Boeing appealed the COFDs to the ASBCA and moved for summary judgment, arguing that Subsection 7013(f) only applies to legends that restrict the government’s rights in technical data and is inapplicable to legends that only restrict third-party rights. The ASBCA denied Boeing’s summary judgment motion because Boeing’s legend was not one of the four specific legends authorized under Subsection 7013(f). The ASBCA entered final judgment, and Boeing appealed.

The Federal Circuit reversed. The Court found that the plain language of Subsection 7013(f) makes clear that the two sentences describe the way in which a contractor “may assert restrictions on the Government’s rights,” and agreed with Boeing that Subsection 7013(f) applies only in situations when a contractor seeks to assert restrictions on the government’s rights. The Federal Circuit explained that under the ASBCA’s reading, the first sentence would be “entirely unnecessary” to the regulation, and the Court “cannot disregard the first sentence.” The Court also explained that its interpretation of Subsection 7013(f) is faithful to the overall purpose of the -7013 clause because the US Department of Defense intended the technical rights regulations to govern allocation of data rights between contractors and the government.

The Federal Circuit remanded the case back to the ASBCA for further proceedings on whether Boeing’s legend did in fact restrict the government’s rights.

Practice Note: This decision strengthens contractors’ ability to ensure that data supplied in a federal procurement remain protected from non-governmental access, particularly in light of evolving standards for the protection of “confidential information” pursuant to the Freedom of Information Act from the Supreme Court holding in Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019).