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On December 21, 2020, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) held that contractors may include restrictive markings on unlimited rights technical data as long as those markings do not restrict the Government’s rights to that technical data.

The Boeing Company (Boeing) entered into two contracts with the United States Air Force (USAF), both of which included DFARS Clause 252.227-7013, Rights in technical data – Noncommercial items and required Boeing to deliver certain technical data to the USAF with unlimited rights. Boeing marked each technical data deliverable with a legend that restricted third parties’ use of that data. The USAF rejected Boeing’s legend and the Contracting Officer ultimately issued a Final Decision asserting that Boeing’s legend was a nonconforming legend because it was not in the format authorized by Subsection 252.227-7013(f) of the clause. Boeing appealed the Final Decision to the Armed Services Board of Contract Appeals (ASBCA) arguing that Subsection 7013(f) is not applicable to legends like Boeing’s that only restrict the rights of third parties, not the Government. The Board disagreed, holding that only the four legends prescribed in Subsection 7013(f) are authorized and any other legends are nonconforming. Boeing then appealed to the Federal Circuit.

The Federal Circuit reversed, finding that the portion of Subsection 7013(f) that specifies the permitted markings must be read in context with the first sentence of that subsection which provides that a contractor “may only assert restrictions on the Government’s rights” by marking the data. Thus, “Subsection 7013(f) ‘authorizes the use of certain restrictive markings’ for the purpose of restricting the government’s rights.” Markings that do not restrict the Government’s rights are not prohibited. The Federal Circuit remanded the case back to the Board to “resolve factual disputes between the parties over whether Boeing’s legend does or does not restrict the government’s rights.”

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Photo of Jonathan M. Baker Jonathan M. Baker

Jonathan M. Baker is a partner in Crowell & Moring’s Washington, D.C. office. He practices in the Government Contracts Group.

Jon advises clients on a wide array of government contracts legal issues, including both federal and state bid protests, prime-sub disputes, government contracts…

Jonathan M. Baker is a partner in Crowell & Moring’s Washington, D.C. office. He practices in the Government Contracts Group.

Jon advises clients on a wide array of government contracts legal issues, including both federal and state bid protests, prime-sub disputes, government contracts due diligence and transactions, regulatory compliance, and contract terminations. Jon’s practice has a notable emphasis on technology-related issues, including counseling clients in the areas of patent and data rights, responding to government challenges to technical data and computer software rights assertions, and litigating cases involving complex and cutting edge technologies. Jon also provides guidance on national security matters, such as National Industrial Security Program Operating Manual compliance and facility and security clearance matters. In addition, Jon has advised clients on local government contract negotiation, internal and government investigations regarding potential False Claims Act issues, and export violations. Jon is also actively involved in the firm’s pro bono program, having litigated prisoner neglect, parental rights termination, and landlord-tenant matters.

Photo of John E. McCarthy Jr. John E. McCarthy Jr.

John E. McCarthy, Jr. is a partner in the Washington, D.C. office of Crowell & Moring and member of the firm’s Government Contracts Group. John has spent more than thirty years litigating all forms of government contracts cases for both large and small…

John E. McCarthy, Jr. is a partner in the Washington, D.C. office of Crowell & Moring and member of the firm’s Government Contracts Group. John has spent more than thirty years litigating all forms of government contracts cases for both large and small government contractors, with a particular emphasis on bid protests. Because of John’s strong engineering background, he has particular experience in technology related issues, including litigation regarding complex technology and data rights, patent and other intellectual property issues.

Photo of Nicole Owren-Wiest Nicole Owren-Wiest

Nicole Owren-Wiest is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group in the firm’s Washington, D.C. office. Nicole is nationally ranked by Chambers USA in Government Contracts and a recognized leader in two of the most…

Nicole Owren-Wiest is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group in the firm’s Washington, D.C. office. Nicole is nationally ranked by Chambers USA in Government Contracts and a recognized leader in two of the most complex areas in government contracting: accounting, cost, and pricing, and intellectual property/data rights. With over 20 years’ experience, Nicole has a broad counseling and dispute-resolution practice and leads the Group’s cost accounting practice, which focuses on helping clients navigate the government’s complex cost and pricing rules, including the FAR Part 31 cost principles, the Cost Accounting Standards (CAS), and Truth in Negotiations Act/Truthful Cost or Pricing Data (defective pricing).

Photo of M.Yuan Zhou M.Yuan Zhou

M. Yuan Zhou is a counsel in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Yuan’s practice includes a wide range of investigatory, counseling, and transactional capabilities, including: internal investigations related to…

M. Yuan Zhou is a counsel in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Yuan’s practice includes a wide range of investigatory, counseling, and transactional capabilities, including: internal investigations related to the False Claims Act, the Procurement Integrity Act, and other civil and criminal matters; compliance reviews and enhancing contractor compliance programs; representing clients in suspension and debarment proceedings; counseling on data rights issues, challenges, and disputes; mandatory disclosures; and providing government contracts due diligence in transactional matters. As part of the firm’s State and Local Practice, Yuan also counsels clients on state and local procurement issues, ranging from bid protests to contract negotiations with state agencies, and advises prime contractors and subcontractors on a variety of issues including prime/sub contract formation, disputes, and other government contracts issues.

Photo of Christopher D. Garcia Christopher D. Garcia

Christopher Garcia is a counsel in the Washington, D.C. office of Crowell & Moring, where he is a member of the firm’s Government Contracts Group.

As part of his government contracts practice, Chris conducts internal investigations regarding False Claims Act issues and defends…

Christopher Garcia is a counsel in the Washington, D.C. office of Crowell & Moring, where he is a member of the firm’s Government Contracts Group.

As part of his government contracts practice, Chris conducts internal investigations regarding False Claims Act issues and defends against related government inquiries and investigative demands. Chris also assists clients with technology-related issues, including counseling clients in the areas of patents and data rights, and defending against government challenges to technical data and computer software rights assertions. In addition, Chris performs government contracts due diligence for buyers in transactional matters, representing government contractors in a range of industries. As part of the firm’s State and Local Practice, Chris also counsels clients on state and local procurement issues, including reviewing state and local opportunities, and leading negotiations with government customers regarding contractual terms and conditions. Chris also advises contractors on the federal Freedom of Information Act as well as state-level public records laws. He has counseled contractors in numerous reverse-FOIA actions at the federal and state levels.