Argument Preview / Panel Activity

As we mentioned yesterday, four cases being argued next week at the Federal Circuit attracted amicus briefs. The second case we are previewing is Boeing Co. v. Secretary of the Air Force. In this case, the court will consider whether the Armed Services Board of Contract Appeals erred in holding that the Defense Federal Acquisition Regulation Supplement 252.227-7013 precludes government contractors from marking technical data delivered to the Government in a certain way. In particular, Boeing argues it should be permitted to mark technical data in a way that (a) recognizes the Government’s unlimited rights in the data, (b) does not restrict or impair the Government’s rights, and (c) restricts only the rights of third parties to use the data absent permission from the contractor or the Government. This is our argument preview.

Boeing argues in its opening brief that the Board erred by misinterpreting Section 7013(f) in such a way that impermissibly impairs contractors’ ownership rights in technical data. In this regard, Boeing agues “[t]he Board’s decision should be reversed for three reasons.”

First, in its primary argument, Boeing contends the “Board misinterpreted the plain language of Section 7013(f) as applying to all legends delineating restrictions on the use of a contractor’s technical data, not just legends restricting the Government’s rights.” Boeing argues that whole purpose of DFARS “is to establish the rights and obligations of the parties to government contracts.” Boeing asserts that “[n]othing in Section 7013(f) pertains to markings relating to third party rights.” Specifically, Boeing interprets “the first sentence [of Section 7013(f) as] provid[ing] that data markings are the only means for restricting the government’s rights in data delivered under a contract [and] the second sentence [as] dictat[ing] which such data markings are permissible.”

Second, Boeing asserts that, “to the extent the Court identifies any ambiguity in the meaning of (f), the intent, purpose, and history of the -7013 clause confirm Boeing’s interpretation.” Boeing emphasizes that “[n]othing in the regulatory history suggests that DoD intended to prohibit contractors from using these ‘commonly used’ markings to protect their data for purposes of dual use.”

Third, Boeing argues that “the Board’s interpretation of Section 7013(f) is in tension with the Rights in Technical Data statute, 10 U.S.C. § 2320.” According to Boeing, this statute “cautions that DoD’s data rights regulations ‘may not impair any right . . . of any contractor or subcontractor with respect to patents or copyrights or any other right in technical data otherwise established by law.’”

In its response brief, the Secretary of the Air Force first asserts that the “technical data at issue here are noncommercial data.” Therefore, according to the Air Force, “by the plain terms of Boeing’s contracts, the Government obtained an ‘unlimited rights license’ that broadly grants the Government the ‘rights to use modify, reproduce, perform, display, release, or disclose, [Boeing’s] technical data in whole or in part, in any manner, and for any purpose whatsoever, and to have or authorize others to do so.’” Moreover, the Air Force contends that, “given the breadth of this license, it is not surprising that the -7013 clause authorizes no restrictive markings on unlimited rights data.” In this regard, the Air Force argues the court should affirm for five reasons.

First, the Air Force asserts “the plain language of the -7013 clause does not authorize Boeing to mark unlimited rights data with a legend.” According to the Air Force, “it more broadly directs, without qualification, ‘only the following legends are authorized under this contract,’” and “Boeing’s legends are not one of them.” Thus, the Air Force contends “by the plain language of paragraph (f), Boeing’s legends are unauthorized.” Second, the Air Force argues “the corresponding regulation, DFARS 227.7103-12, confirms that no legends other than those enumerated in paragraph (f) are allowed.” Third, the Air Force explains the “board astutely concluded that Boeing ‘had ample warning signs’ that the contracts did not allow Boeing to apply a legend of its own making.” Fourth, the Air Force argues that, “even if Boeing’s interpretation were correct, Boeing’s legends would still be improper because they purport to limit the Government’s rights.” Finally, the Air Force responds to Boeing’s argument regarding the Rights in Technical Data statute, 10 U.S.C. § 2320. The Air Force contends that “Boeing cites no authority to support its view that it retains trade secret rights in data that it turns over to the Government fully knowing that there is no expectation or requirement that the Government maintain the confidentiality of the data.”

In its reply, Boeing rebuts three main points made by the Air Force. First, Boeing contends the Air Force’s argument, “that the regulatory history supports its interpretation because that history does not specifically address third party markings,” is incorrect because the regulatory history “focuses exclusively on restrictions on the Government’s rights, not on those of third parties.” Second, Boeing argues the Air Force’s argument, that “Boeing’s marking impairs its unlimited rights license,” is incorrect because “the Board recognized that Boeing’s marking expressly acknowledges the Government’s unlimited rights, and it calls those rights out to others.” Third, Boeing assets that the Air Force’s argument, that “Boeing waived its argument that the Board’s interpretation conflicts with the mandate of 10 U.S.C. § 2320(a) requiring that the DFARS not impair contractor rights in technical data,” is incorrect because “[t]he fact that Boeing and the Government agreed that the Board had decided the interpretive question before it, thus resolving the entire appeal, does not constitute a waiver of Boeing’s argument that the Board erred by failing to interpret Section 7013 in harmony with 10 U.S.C. § 2320.”

The Chamber of Commerce of the United States of America and the Professional Services Council filed an amicus brief in support of Boeing. In it, the amici present two main points why the Board erred. First, they argue that the Board erred by interpreting “DFARS § 252.227-7013(f) in isolation from the controlling statute, 10 U.S.C. § 2320(a)(1).” When analyzed in the full context, according to the amici, “[t]he regulation’s plain text applies only to markings that restrict government rights in the licensed technical data.” By contrast, according to amici, “[t]he regulation does not, on its face, apply to the types of general ownership notices Boeing proposed.” Second, the amici assert “the Board’s interpretation impairs a contractor’s ownership rights in the licensed technical data,” which “does not comport with 10 U.S.C. § 2320(a)(1).” Moreover, according to amici, “the Board’s interpretation . . . impairs a contractor’s trade secret rights in the licensed technical data.”

Oral arguments will be heard Wednesday, November 4. We will keep track of this case and report on any developments.