- Posted on: Mar 30 2022
By: Jonathan Brittin [3/30/22]
The Defense Federal Acquisition Regulation Supplement (DFARS) implements strict requirements for marking proprietary technical data with an appropriate restrictive legend tailored to the non-commercial items delivered to the government when it receives less than unlimited license rights. DFARS Section 252.227-7013(f) provides clear instructions for how contractors may restrict the government’s right in technical data for non-commercial items. However, the DFARS does not provide language about how to mark technical data with an appropriate protective legend with regards to restricting the rights of third parties. This was the precise issue discussed in The Boeing Co. v. Secretary of the Air Force, 983 F.3d 1321 (Fed. Cir. 2020). 
In the Boeing case, each of its technical data deliverables was marked and submitted to the Air Force with a protective legend that purported to describe Boeing’s rights in the technical data as they pertained to third parties. Boeing’s proprietary legend provided a notice of copyright, requiring non-government third parties to receive permission from Boeing or the government before using or disclosing the data. However, the government rejected Boeing’s restrictive mark and protective legend as non-conforming because it was not in the format expressly authorized by DFARS Section 7013(f).
Boeing appealed to the Armed Services Board of Contract Appeals (ASBCA), arguing that DFARS Section 7013(f) only applies to protective legends that purport to restrict the government’s rights in technical data and cannot be non-conforming.  The ASBCA agreed with the government that DFARS Section 7013(f) lists four specific legends, and Boeing’s legend is not one of the listed legends. The Board concluded that DFARS Section 7013(f) precluded even non-conforming legends that restrict only third-party rights.
Nevertheless, Boeing appealed to the Court of Appeals of the Federal Circuit. The Court found that the plain language of DFARS Section 7013(f) describes the way in which a contractor may assert restrictions on the government’s rights. The Court agreed with Boeing that DFARS Section 7013(f) clause is only applicable in that context and is silent on any legends that a contractor may mark on its data when it seeks to restrict only the rights of non-government third parties. The Court determined the copyright license serves as the indication that the government could be subject to a suit for copyright infringement under 28 U.S.C. § 1498 if it exceeds the scope of its license.
Ultimately, the case was remanded to resolve whether Boeing’s proprietary legend indirectly restricted the government’s rights. If the legend restricts the government’s unlimited license rights, then it is improper because it is non-conforming to the legends authorized under DFARS Section 7013(f). If, on the other hand, the legend restricts third parties and not the government’s rights, then it is proper because it is not subject to the requirements of DFARS Section 7013(f).
Thus, the Court’s decision to remand Boeing provides the following takeaways.
- First, DFARS Section 7013(f) implements strict requirements for marking proprietary technical data with an appropriate restrictive legend tailored to the non-commercial items delivered to the government when it receives less than unlimited license rights.
- Second, Boeing retained ownership of any technical data it delivered to the government under the contract and everything not granted to the government, even if the government retained unlimited license rights.
- Third, contractors may mark technical data delivered to the government with a proprietary legend that does not conform to DFARS Section 7013(f), so long as it puts third parties on notice of the contractor’s rights. However, in doing so, contractors must be cautious that the language used in their legend does not indirectly restrict the government’s data rights, just third parties.
Posted in: Government Contracts