B-143711, JUN. 21, 1961

B-143711, JUN. 21, 1961

TO MARECHAL, BIEBEL, FRENCH AND BUGG:

BY LETTER DATED MAY 25, 1961, WITH ENCLOSURE, YOU REQUEST RECONSIDERATION OF OUR DECISION OF MAY 15, 1961, WHEREIN WE CONCLUDED THAT OUR DECISION OF DECEMBER 22, 1960, TO THE EFFECT THAT THE PROPRIETARY DATA OF THE GAYSTON CORPORATION WAS IMPROPERLY DISCLOSED IN INVITATION FOR BIDS NO. 33-604-61- 101, SHOULD BE AFFIRMED.

THE REQUEST FOR RECONSIDERATION IS SUMMARIZED IN YOUR LETTER AS FOLLOWS:

"THERE IS NO TRADE SECRET; HAD THE OPINION BEEN BASED ON THE RESTATEMENT DEFINITION OF TRADE SECRET, IT WOULD BE APPARENT THAT THERE WAS NONE.

"THERE WAS NO GENUINE CONTRIBUTION BY GAYSTON OVER WHAT WAS ALREADY OWNED BY THE GOVERNMENT. SUBSTITUTION OF NYLON FOR COTTON IN A WELL KNOWN PRODUCT, IN THE YEAR 1960, SIMPLY CANNOT BE PROPRIETARY INFORMATION SUBJECT TO PROTECTION, PARTICULARLY BY UNSOLICITED DISCLOSURE.

"IT IS RESPECTFULLY REQUESTED THAT GAYSTON'S CONTRIBUTION BE EXAMINED FACTUALLY (1) IN THE LIGHT OF THE RESTATEMENT'SDEFINITION OF TRADE SECRET; (2) WITH A VIEW TO THE EFFECT ON THE EXPENSE TO THE ARMED FORCES OF "TREATING ALL UNSOLICITED DISCLOSURES AS THOUGH THEY CONTAINED LEGALLY PROTECTIBLE TRADE SECRETS," WHETHER THEY DO OR NOT, AND (3) THAT IT BE DETERMINED ON THIS BASIS WHETHER THE GOVERNMENT SHOULD STILL BE REQUIRED TO PAY ONE-THIRD MORE FOR WHAT IT WISHES TO BUY.'

WE RECOGNIZED IN OUR DECISION OF MAY 15, 1961, THAT EXHIBIT "A" PREPARED BY GAYSTON MAY NOT HAVE FALLEN WITHIN THE STRICT LEGAL DEFINITION OF A "TRADE SECRET" AS ENUNCIATED IN SECTION 757 (B), RESTATEMENT OF THE LAW OF TORTS. HOWEVER, CONSIDERING THAT THE QUESTION OF "SECRECY" OF TRADE INFORMATION IS A QUESTION OF FACT (KLEIN V. EKCO PRODUCTS CO., 135 N.Y.S.2D 391), WE CONCLUDED ON THE BASIS OF THE FACTS OF RECORD THAT EXHIBIT "A," WHEN VIEWED IN THE LIGHT OF ARDC REGULATION 80-8 AND ARDC FORM 91, WAS IN FACT ENTITLED TO PROTECTION AGAINST UNAUTHORIZED DISCLOSURE. IT CANNOT BE DISPUTED THAT THE GOVERNMENT WAS UNDER A DUTY TO HOLD INVIOLATE THE DETAILS OF EXHIBIT "A.' THIS IS THE CRUX OF THE MATTER SINCE THE GREAT WEIGHT OF AUTHORITY IS TO THE EFFECT THAT INFORMATION RECEIVED IN CONFIDENCE WILL BE PROTECTED AGAINST ABUSE OF SUCH CONFIDENCE. SEE THE RULE OF LAW QUOTED FROM RESTATEMENT OF THE LAW OF TORTS ON PAGE 9 OF OUR MAY 15 DECISION; MCKINZIE ET AL. V. CLINE ET AL., 252 P.2D 567; EXTRIN FOODS V. LEIGHTON, 115 N.Y.S.2D 429, 435. IN E. I. DUPONT DE NEMOURS POWDER CO. V. MASLAND, 244 U.S. 100, MR. JUSTICE HOLMES STATED:

"* * * THE WORD "PROPERTY" AS APPLIED TO TRADEMARKS AND TRADE SECRETS IS AN UNANALYZED EXPRESSION OF CERTAIN SECONDARY CONSEQUENCES OF THE PRIMARY FACT THAT THE LAW MAKES SOME RUDIMENTARY REQUIREMENTS OF GOOD FAITH. WHETHER THE PLAINTIFFS HAVE ANY VALUABLE SECRET OR NOT THE DEFENDANT KNOWS THE FACTS, WHATEVER THEY ARE, THROUGH A SPECIAL CONFIDENCE THAT HE ACCEPTED. THE PROPERTY MAY BE DENIED BUT THE CONFIDENCE CANNOT BE. THEREFORE THE STARTING POINT FOR THE PRESENT MATTER IS NOT PROPERTY OR DUE PROCESS OF LAW, BUT THAT THE DEFENDANT STOOD IN CONFIDENTIAL RELATIONS WITH THE PLAINTIFFS, OR ONE OF THEM. * * * AND THE FIRST THING TO BE MADE SURE OF IS THAT THE DEFENDANT SHALL NOT FRAUDULENTLY ABUSE THE TRUST REPOSED IN HIM. IT IS THE USUAL INCIDENT OF CONFIDENTIAL RELATIONS. * *

IN THE CASE OF FRANKE V. WILTSCHEK, 209 F.2D 493, 495, THE COURT HELD:

"DEFENDANTS ARGUE THAT THE HEART OF PLAINTIFFS' PROCESS WAS REVEALED BY AN EXPIRED PATENT, AND THAT THE IMPROVEMENTS THEREON WERE UNPATENTABLE APPLICATIONS OF MECHANICAL SKILL. THIS TOTALLY MISCONCEIVES THE NATURE OF PLAINTIFFS' RIGHT. PLAINTIFFS DO NOT ASSERT, INDEED CANNOT ASSERT, A PROPERTY RIGHT IN THEIR DEVELOPMENT SUCH AS WOULD ENTITLE THEM TO EXCLUSIVE ENJOYMENT AGAINST THE WORLD. THEIRS IS NOT A PATENT, BUT A TRADE SECRET. THE ESSENCE OF THEIR ACTION IS NOT INFRINGEMENT, BUT BREACH OF FAITH. IT MATTERS NOT THAT DEFENDANTS COULD HAVE GAINED THEIR KNOWLEDGE FROM A STUDY OF THE EXPIRED PATENT AND PLAINTIFFS' PUBLICLY MARKETED PRODUCT. THE FACT IS THAT THEY DID NOT. INSTEAD THEY GAINED IT FROM PLAINTIFFS VIA THEIR CONFIDENTIAL RELATIONSHIP, AND IN SO DOING INCURRED A DUTY NOT TO USE IT TO PLAINTIFFS' DETRIMENT. THIS DUTY THEY HAVE BREACHED.'

TO LIKE EFFECT, SEE ALLEN MANUFACTURING COMPANY V. LOIKA, 144 A.2D 306, 310.

WE DO NOT AGREE THAT GAYSTON'S CONTRIBUTION, AS EXEMPLIFIED BY EXHIBIT "A," WAS NOT PROPRIETARY INFORMATION WHICH, UNDER THE TERMS AND PROVISIONS OF ARDC REGULATION 80-8 AND ARDC FORM 91, WAS ENTITLED TO PROTECTION AGAINST UNWARRANTED DISCLOSURE. WHILE PROCUREMENT OF THE DESIRED END PRODUCT COULD BE ACCOMPLISHED AT A LESSER COST IF AWARD WERE MADE TO DAYTON, WE REMAIN OF THE OPINION THAT AWARD OF A CONTRACT TO DAYTON WOULD NOT BE PROPER UNDER THE CIRCUMSTANCES. WE EXPRESS NO OPINION AS TO THE ADMINISTRATIVE PRACTICES NOW BEING FOLLOWED IN PROCESSING UNSOLICITED PROPOSALS OR WHETHER UNRESTRICTED DATA PROTECTION SHOULD BE EXTENDED IN ALL CASES. HOWEVER, WE DO BELIEVE THAT THE FACTS OF THIS CASE JUSTIFY THE AWARD OF A NEGOTIATED CONTRACT TO GAYSTON FOR THE REASONS EXPRESSED IN OUR DECISIONS OF DECEMBER 22, 1960, AND MAY 15, 1961. IN REACHING THIS CONCLUSION WE HAVE CONSIDERED THE SUPPLEMENTAL AFFIDAVIT OF DR. WAYNE C. HALL BUT WE ARE NOT PERSUADED THAT THE STATEMENTS THEREIN JUSTIFY THE BREACH OF CONFIDENCE THAT OCCURRED.

NEITHER CAN WE AGREE THAT THE RESULT OBTAINED IN THIS CASE WAS UNCONSTITUTIONAL AS EXTENDING LEGAL PROTECTION TO "WRITINGS AND DISCOVERIES" FOR MORE THAN A LIMITED PERIOD OF TIME. IN ANY EVENT, SUCH CONSTITUTIONAL QUESTION HAS NOT BEEN DEFINITELY DETERMINED IN THE COURTS AS RESPECTS THE RIGHT OF THE GOVERNMENT TO EXTEND PROTECTION TO DATA FURNISHED IN CONFIDENCE.