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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 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.