B-167570, FEBRUARY 5, 1970, 49 COMP. GEN. 471

B-167570: Feb 5, 1970

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THE RESTRICTIVE LEGEND ON THE PROPRIETARY SPECIFICATION IS INTENDED TO PROHIBIT THE GOVERNMENT FROM USING THE DATA FOR IN-HOUSE MANUFACTURE OR DISCLOSURE OUTSIDE THE GOVERNMENT. THE FACT THAT THE LEGEND DOES NOT RESTRICT THE USE OF THE DATA FOR INTERNAL PURPOSES IS EVIDENCED BY THE CLARIFICATION OF THE RESTRICTIVE DATA CLAUSE IN PARAGRAPH 9-203(B) OF THE ARMED SERVICES PROCUREMENT REGULATION TO LIMIT THE RESTRICTION TO PROCUREMENTS ENTAILING DISCLOSURE OUTSIDE GOVERNMENT. THE SUBJECT RFP'S ARE FOR VARIOUS PARTS KITS. WAS INITIALLY REQUIRED TO BE MANUFACTURED TO CONFORM TO MILITARY SPECIFICATION MIL-R 25897. INITIAL PROCUREMENTS INVOLVING PART NO. 69494R MANUFACTURED TO THE HAMILTON STANDARD SPECIFICATION WERE ON AN "ENGINEERING CRITICAL" BASIS.

B-167570, FEBRUARY 5, 1970, 49 COMP. GEN. 471

CONTRACTS -- DATA, RIGHTS, ETC. -- USE BY GOVERNMENT -- INTERNAL USE THE DATA SUBMITTED UNDER REQUESTS FOR PROPOSALS HAVING BEEN OBTAINED PROPERLY, LOST ITS PROPRIETARY NATURE AND THE GOVERNMENT, THEREFORE, MAY ACCEPT THE DATA AND USE THE PROPRIETARY DATA PREVIOUSLY PURCHASED TO VERIFY THE ACCURACY OF THE DATA. THE RESTRICTIVE LEGEND ON THE PROPRIETARY SPECIFICATION IS INTENDED TO PROHIBIT THE GOVERNMENT FROM USING THE DATA FOR IN-HOUSE MANUFACTURE OR DISCLOSURE OUTSIDE THE GOVERNMENT, AND THE FACT THAT THE LEGEND DOES NOT RESTRICT THE USE OF THE DATA FOR INTERNAL PURPOSES IS EVIDENCED BY THE CLARIFICATION OF THE RESTRICTIVE DATA CLAUSE IN PARAGRAPH 9-203(B) OF THE ARMED SERVICES PROCUREMENT REGULATION TO LIMIT THE RESTRICTION TO PROCUREMENTS ENTAILING DISCLOSURE OUTSIDE GOVERNMENT, AND BY THE RIGHT RESERVED TO THE GOVERNMENT TO USE SIMILAR OR IDENTICAL DATA, WHICH IMPLIES THE USE OF THE RESTRICTED DATA FOR COMPARISON PURPOSES.

TO HAMILTON STANDARD, FEBRUARY 5, 1970:

BY LETTER DATED JULY 23, 1969, AND SUBSEQUENT CORRESPONDENCE, YOU PROTESTED AGAINST THE AWARD OF CONTRACTS UNDER REQUESTS FOR PROPOSALS (RFP) NOS. F09603-69-R-2555, -3442, -3464, -2562, F09603-70-R-0641 AND 0642, ISSUED BY WARNER ROBINS AIR MATERIEL AREA, WARNER ROBINS AIR FORCE BASE, GEORGIA, ON THE GROUND THAT THE SUBJECT RFP'S DIVULGE INFORMATION PROPRIETARY TO YOUR COMPANY.

THE SUBJECT RFP'S ARE FOR VARIOUS PARTS KITS, ALL OF WHICH REQUIRE THE INCORPORATION OF PART NO. 69494R AS A COMPONENT PART OF THE KITS. THE PART IN QUESTION--DESCRIBED AS A VITON "O" RING--WAS INITIALLY REQUIRED TO BE MANUFACTURED TO CONFORM TO MILITARY SPECIFICATION MIL-R 25897. TESTS BY HAMILTON STANDARD, HOWEVER, REVEALED THAT THE HARDNESS REQUIREMENTS SET OUT IN THAT SPECIFICATION SHOULD BE RELAXED WITH THE RESULT THAT HAMILTON STANDARD SPECIFICATION NO. HS3676, CLAIMED TO BE PROPRIETARY BY HAMILTON STANDARD, REPLACED MIL-R-25897 AS THE APPLICABLE "O" RING SPECIFICATION.

INITIAL PROCUREMENTS INVOLVING PART NO. 69494R MANUFACTURED TO THE HAMILTON STANDARD SPECIFICATION WERE ON AN "ENGINEERING CRITICAL" BASIS, A DESIGNATION APPLIED TO THE PART BY THE DEPARTMENT OF THE NAVY AND HONORED BY THE AIR FORCE WHICH REQUIRED THAT THE PART BE PROCURED ONLY FROM HAMILTON STANDARD OR FROM A SUPPLIER APPROVED BY HAMILTON STANDARD. THIS DESIGNATION, HOWEVER, WAS REMOVED AS A RESULT OF A RECONSIDERATION OF ITS PROPRIETY BY THE DEPARTMENT OF THE NAVY FOLLOWING A PROTEST TO OUR OFFICE ON THAT ISSUE BY AEROKITS, INC. NOTWITHSTANDING THE REMOVAL OF THE "ENGINEERING CRITICAL" DESIGNATION, HOWEVER, IT WAS STILL THE OPINION OF THE AIR FORCE THAT THE HARDNESS DATA SET OUT IN HAMILTON STANDARD SPECIFICATION NO. HS3676 WAS PROPRIETARY TO HAMILTON STANDARD. ACCORDINGLY, PROCUREMENTS INVOLVING THE "O" RING AFTER REMOVAL OF THE "ENGINEERING CRITICAL" DESIGNATION REPORTEDLY LISTED THE REQUISITE PART NUMBER BUT DID NOT SET OUT THE HARDNESS DATA IN VIEW OF THE PROPRIETARY CLAIM.

BY TWX'S DATED JUNE 15 AND 26, 1967, HOWEVER, AEROKITS INFORMED THE CONTRACTING OFFICER THAT IT WAS IN POSSESSION OF THE HAMILTON STANDARD HARDNESS DATA AND ALSO DISCLOSED THE HARDNESS REQUIREMENTS AS CONTAINED IN HAMILTON STANDARD SPECIFICATION NO. HS3676. AFTER COMPARING THE HARDNESS DATA FURNISHED BY AEROKITS WITH THAT CONTAINED IN THE HAMILTON STANDARD SPECIFICATION TO VERIFY ITS ACCURACY, A STATEMENT WAS APPENDED TO THE RFP'S WHICH ARE THE SUBJECT OF THIS PROTEST SETTING OUT THE HAMILTON STANDARD HARDNESS DATA AS FURNISHED BY AEROKITS AND INCLUDING THE STATEMENT "AS SPECIFIED BY AEROKITS, INC., 15 JUN 67 TELEGRAM, PARAGRAPH ONE (1)."

IT IS YOUR PRIMARY CONTENTION THAT THE USE BY THE AIR FORCE OF THE HAMILTON STANDARD HARDNESS DATA TO VERIFY THE ACCURACY OF THE DATA FURNISHED BY AEROKITS WAS AN IMPROPER USE OF THAT DATA BY THE GOVERNMENT FOR "PROCUREMENT" BECAUSE SUCH USE IS PRECLUDED BY THE RESTRICTIVE LEGEND ON THE HAMILTON STANDARD SPECIFICATION AND BY THE REQUIRED RESTRICTIVE LEGEND SET OUT IN PARAGRAPH 9-203(B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) IN EFFECT AT THE TIME THE SUBJECT RFP'S WERE ISSUED. THIS REGARD, YOU POINT OUT THAT THE TERM "PROCUREMENT" WAS DROPPED FROM THE ASPR LEGEND BY REVISION OF AUGUST 29, 1969, AND CONTEND THAT THIS FACT IS AN INDICATION THAT THE GOVERNMENT WAS AWARE THAT THE TERM "PROCUREMENT" AS USED IN THE LEGEND "IMPOSED UNWANTED RESTRICTIONS ON ITS FREEDOM TO USE DATA, OR AT LEAST RECOGNIZE THE AMBIGUITY OF THE WORD." YOU ALSO CONTEND THAT THE DEFINITION OF "PROCUREMENT" SET OUT IN ASPR 1-201.13 IS SUFFICIENTLY BROAD TO PRECLUDE THE USE OF RESTRICTED DATA FOR COMPARISON PURPOSES PREPARATORY TO A COMPETITIVE PROCUREMENT.

SECONDLY, YOU CONTEND THAT THE HAMILTON STANDARD SPECIFICATION WAS IMPROPERLY OBTAINED BY AEROKITS FROM A HAMILTON STANDARD SUPPLIER AND THAT THE ACCEPTANCE AND USE BY THE AIR FORCE OF DATA DERIVED THEREFROM AND FURNISHED BY AEROKITS WAS IMPROPER INASMUCH AS THE AIR FORCE KNEW OR SHOULD HAVE KNOWN, FOR A VARIETY OF REASONS, THAT THE DATA HAD BEEN IMPROPERLY OBTAINED.

WE SEE NO MERIT IN THE SECOND GROUND OF YOUR PROTEST, I.E., THAT THE DATA FURNISHED THE GOVERNMENT BY AEROKITS WAS IMPROPERLY OBTAINED, AS THE PRESENT RECORD CONTAINS NO EVIDENCE THAT ANY CONTRACTUAL OR CONFIDENTIAL RELATIONSHIP EXISTED BETWEEN HAMILTON STANDARD AND AEROKITS CONCERNING PROTECTION OF THE DATA'S SECRECY; NEITHER DOES THE RECORD ESTABLISH THAT AEROKITS OBTAINED THE DATA IMPROPERLY.

AMONG THE LEGAL PRINCIPLES GOVERNING THE USE AND DISSEMINATION OF PROPRIETARY DATA, THE PRIMARY RULE IS THAT THE PROPRIETARY NATURE OF A PARTICULAR ITEM OF DATA IS LOST ONCE KNOWLEDGE THEREOF IS OBTAINED BY ANOTHER BY FAIR MEANS WITHOUT BREACH OF A CONTRACTUAL OR CONFIDENTIAL RELATIONSHIP WITH THE OWNER OF THE DATA. IN THIS REGARD, THE COURT STATED AS FOLLOWS IN SPEEDRY CHEMICAL PRODUCTS, INC. V CARTER'S INK COMPANY, 306 F. 2D 328, 330 (1962):

*** THERE IS A "PROPERTY RIGHT" IN TRADE SECRETS, WHICH MAY BE PROTECTED AGAINST THOSE WHO ACQUIRE AND USE THE KNOWLEDGE THEREOF WRONGFULLY. FERROLINE V GENERAL ANILINE & FILM CORP., 207 F. 2D 912 (7 CIR. 1953), CERT. DENIED 347 U.S. 953, 74 S. CT. 678, 98 L. ED. 1098 (1954). HOWEVER, THE DISCOVERER OF SUCH SECRETS HAS NO EXCLUSIVE RIGHT AGAINST ANOTHER WHO UNCOVERS THE SECRET BY FAIR MEANS, OR AGAINST THOSE WHO ACQUIRE KNOWLEDGE OF IT WITHOUT A BREACH OF CONTRACT OR OF A CONFIDENTIAL RELATIONSHIP WITH THE DISCOVERER, AMERICAN DIRIGOLD CORP. V DIRIGOLD METALS CORP., 125 F. 2D 446 (6 CIR. 1942); NIMS, UNFAIR COMPETITION AND TRADE-MARKS, 4TH ED. P. 418. SEE, ALSO, JUNKER V PLUMMER, 67 N.E. 2D 667, 670 (1946); ELLIS, TRADE SECRETS, SECTION 14.

WHILE YOU ALLEGE THAT AEROKITS OBTAINED THE HAMILTON STANDARD DATA BY IMPROPER MEANS, NO EVIDENCE TO THAT EFFECT HAS BEEN SUBMITTED AND WE ARE UNABLE TO CONCLUDE ON THE BASIS OF THE PRESENT RECORD THAT SUCH WAS THE CASE. AEROKITS STATED IN ITS JUNE 26, 1967, TWX THAT IT HAD OBTAINED THE HARDNESS DATA FROM ITS "O" RING SOURCE (ALSO HAMILTON STANDARD'S "O" RING SOURCE) BY RECEIVING AN AFFIRMATIVE ANSWER TO ITS QUESTION AS TO WHETHER A SPECIFIC VITON COMPOUND, APPARENTLY SOLD ON THE OPEN MARKET, WAS APPROVED TO HAMILTON STANDARD SPECIFICATION HS3676. AEROKITS ALSO STATED IN THAT TWX THAT A COPY OF THE PROPRIETARY SPECIFICATION (HS3676) HAD BEEN OBTAINED FROM HAMILTON STANDARD. WHILE WE ARE UNABLE TO VERIFY THE ACCURACY OF THESE STATEMENTS, WE ALSO ARE UNABLE TO VERIFY YOUR CONTRARY ASSERTION THAT THE DATA WAS IMPROPERLY OBTAINED.

ACCORDINGLY, WE MUST CONCLUDE THAT THERE WAS NO DUTY ON THE GOVERNMENT TO REFRAIN FROM ACCEPTING THE DATA SUPPLIED BY AEROKITS. THEREFORE, THE QUESTION REMAINING FOR RESOLUTION IS WHETHER IT WAS PROPER TO COMPARE THE DATA OBTAINED FROM AEROKITS WITH THE HAMILTON STANDARD PROPRIETARY SPECIFICATION. FOR REASONS SET OUT BELOW, WE MUST CONCLUDE THAT SUCH USE OF PROPRIETARY DATA WAS NOT CONTRARY TO THE LIMITED RIGHTS LEGEND THEREON. THAT LEGEND READS AS FOLLOWS:

FURNISHED UNDER UNITED STATES GOVERNMENT CONTRACT NO. 66-0162. SHALL NOT

BE EITHER RELEASED OUTSIDE THE GOVERNMENT, OR USED, DUPLICATED, OR

DISCLOSED IN WHOLE OR IN PART FOR MANUFACTURE OR PROCUREMENT, WITHOUT THE

WRITTEN PERMISSION OF THE HAMILTON STANDARD DIVISION OF UNITED AIRCRAFT

CORPORATION, EXCEPT FOR: (I) EMERGENCY REPAIR OR OVERHAUL WORK BY OR FOR

THE GOVERNMENT, WHERE THE ITEM OR PROCESS CONCERNED IS NOT OTHERWISE

REASONABLY AVAILABLE TO ENABLE TIMELY PERFORMANCE OF THE WORK; OR

(II) RELEASE TO A FOREIGN GOVERNMENT, AS THE INTERESTS OF THE UNITED

STATES MAY REQUIRE; PROVIDED THAT IN EITHER CASE THE RELEASE, USE,

DUPLICATION OR DISCLOSURE HEREOF SHALL BE SUBJECT TO THE FOREGOING

LIMITATIONS. THIS LEGEND SHALL BE MARKED ON ANY REPRODUCTION HEREOF IN

WHOLE OR IN PART.

THIS DOCUMENT IS THE PROPERTY OF UNITED AIRCRAFT CORPORATION AND IS

DELIVERED ON THE EXPRESS CONDITION THAT IT IS NOT TO BE DISCLOSED,

REPRODUCED IN WHOLE OR IN PART, OR USED FOR MANUFACTURE FOR ANYONE OTHER

THAN UNITED AIRCRAFT CORPORATION WITHOUT ITS WRITTEN CONSENT; AND THAT NO

RIGHT IS GRANTED TO DISCLOSE OR USE ANY INFORMATION CONTAINED IN SAID

DOCUMENT. THIS RESTRICTION DOES NOT LIMIT THE RIGHT TO USE INFORMATION

OBTAINED FROM ANOTHER SOURCE.

ON THE QUESTION OF THE INTENT OF THE LIMITED RIGHTS LEGEND, THE REPORT FURNISHED OUR OFFICE IN THIS MATTER BY THE DEPARTMENT OF THE AIR FORCE STATES THAT:

THE PURPOSE OF THE LIMITED RIGHTS LEGEND WAS TO PROHIBIT THE GOVERNMENT FROM USING THE DATA FOR IN-HOUSE MANUFACTURE OR DISCLOSING THE DATA TO ANY PARTIES OUTSIDE THE GOVERNMENT. THE LEGEND WAS NEVER INTENDED OR INTERPRETED TO RESTRICT THE GOVERNMENT FROM USING THE DATA FOR ITS OWN INTERNAL PURPOSES AS LONG AS SUCH USE DOES NOT INVOLVE DISCLOSURE TO OUTSIDE PARTIES OR IN-HOUSE MANUFACTURE. IN FACT, THE STANDARD LEGEND CONTAINED IN ASPR 9-203(B) HAS RECENTLY BEEN CLARIFIED TO MAKE THIS INTENT MORE EXPLICIT. FURTHER, WE NOTE THAT THE ASPR 9 203(B) RIGHTS IN TECHNICAL DATA CLAUSE APPLICABLE TO HAMILTON STANDARD SPECIFICATION NO. HS3676, IN ADDITION TO PRECLUDING THE USE OF DATA FOR "PROCUREMENT," STATES THAT "THE LIMITED RIGHTS PROVIDED FOR BY THIS PARAGRAPH (B)(2) SHALL NOT IMPAIR THE RIGHT OF THE GOVERNMENT TO USE SIMILAR OR IDENTICAL DATA ACQUIRED FROM OTHER SOURCES." AS INDICATED ABOVE, SIMILAR LANGUAGE IS ALSO CONTAINED IN THE LEGEND PRINTED ON THAT SPECIFICATION. WE CAN PERCEIVE OF NO WAY IN WHICH A DETERMINATION COULD BE MADE THAT DATA ACQUIRED FROM OTHER SOURCES IS "SIMILAR OR IDENTICAL" WITHIN THE CONTEMPLATION OF THE CLAUSE WITHOUT COMPARING IT WITH RESTRICTED DATA PREVIOUSLY PURCHASED BY THE GOVERNMENT. IN OUR OPINION, EVEN REVERSE ENGINEERING WOULD NOT NECESSARILY REVEAL SIMILARITY OR IDENTICALITY WITHOUT SOME COMPARISON WITH THE RESTRICTED DATA. CONTRARY TO YOUR ASSERTION, THEREFORE, WE ARE OF THE OPINION THAT THE DEFINITION OF THE TERM "PROCUREMENT" SET OUT IN ASPR 1-201.13 DOES NOT PROHIBIT THE USE OF YOUR RESTRICTED DATA FOR COMPARISON PURPOSES. FOR WHILE THAT DEFINITION DOES INCLUDE THE "SELECTION AND SOLICITATION OF SOURCES" AS BEING ENCOMPASSED BY THE TERM "PROCUREMENT," WE THINK IT SHOULD NOT BE READ TO CHANGE THE CLEAR IMPORT OF THE ASPR 9-203(B) RESTRICTED DATA CLAUSE PRESERVING THE GOVERNMENT'S RIGHT TO USE "SIMILAR OR IDENTICAL" DATA ACQUIRED FROM OTHER SOURCES. ANY OTHER READING OF THAT DATA CLAUSE WOULD VIRTUALLY FORECLOSE ANY USE BY THE GOVERNMENT OF DATA ACQUIRED WITH LIMITED RIGHTS, THEREBY EFFECTIVELY NULLIFYING THE GOVERNMENT'S EXPRESS INTEREST IN ACQUIRING LIMITED RIGHTS DATA FOR PROPER INTERNAL USES NOT INVOLVING UNWARRANTED DISCLOSURE TO OTHERS OUTSIDE OF THE GOVERNMENT. MOREOVER, USE OF RESTRICTED DATA FOR EVALUATION OF "OR EQUAL" OFFERS OR FIRST ARTICLE ACCEPTABILITY COULD BE SAID TO BE USES FOR "PROCUREMENT" AND THEREFORE SUCH USES WOULD BE PRECLUDED, AS COULD THE CUSTOMARY USE OF SUCH DATA IN THE COURSE OF CONTRACT ADMINISTRATION.

WE THINK THAT THE INTENT OF THE GOVERNMENT TO ACQUIRE LIMITED RIGHTS DATA FOR SUCH INTERNAL USES, AS WELL AS OTHER APPROPRIATE USES NOT INVOLVING DISCLOSURE, IS CLEARLY EXPRESSED BY THE RIGHTS IN DATA CLAUSE WHEN THAT CLAUSE IS READ IN ITS ENTIRETY, PARTICULARLY IN VIEW OF RESERVATION OF THE RIGHT TO USE "SIMILAR OR IDENTICAL" DATA ACQUIRED FROM OTHER SOURCES. THEREFORE CONCLUDE THAT THE TERM "PROCUREMENT" AS USED IN THE RIGHTS IN DATA CLAUSE CAN ONLY BE INTERPRETED TO REFER TO PROCUREMENT ENTAILING DISCLOSURE OF LIMITED RIGHTS DATA. WE ACCORDINGLY AGREE WITH THE AIR FORCE ANALYSIS OF THE RECENT ASPR CHANGE DELETING THE WORD "PROCUREMENT" AS A CLARIFICATION OF THE GOVERNMENT'S EXISTING RIGHTS RATHER THAN A SUBSTANTIVE CHANGE AFFECTING THE EXISTING RIGHTS AND LIABILITIES OF THE GOVERNMENT AND CONTRACTORS FROM WHOM LIMITED RIGHTS DATA HAS BEEN ACQUIRED.

IN ACCORDANCE WITH THE ABOVE CONSIDERATIONS, YOUR PROTEST MUST BE DENIED.