ing the data. As long as the data is not available to others, an originating contractor may be the sole source or, at least, competitively advantaged, in providing the product or service to which the data is related.

The willingness of many prospective contractors and suppliers to accept Government contracts is dependent on the willingness of the Government to protect information resulting from private development. Most contracts can be performed without involving patent rights, but there is a greater likelihood the contract will involve the use of technical data which has previously been developed by the contractor at his own expense and maintained as proprietary information. Since disclosure without limitations on use destroys its competitive value, it is important to the contractor that the type and quantity of such data to be delivered be limited, that there be contractual limitations placed on the use thereof, and that effective protective measures exist to assure its integrity. The data owner's desire to maintain the competitive value of his data and the Government's desire to enhance its procurement ability are the opposing considerations which lead to problems.

LEGISLATIVE BACKGROUND

There is limited statutory coverage of matters relating to technical data.

• Acquisition of "Proprietary Data" and "Trade Secrets." Similar to the situation in the case of patent rights, only a limited number of agencies have been specifically authorized to acquire rights in trade secrets, either on a general or a special basis. These include the Department of Defense, the Department of the Interior," and the Environmental Protection Agency. However, most other agencies have not been given express authority in this regard, though authority probably could be implied.

4

• The Taking of Rights in Data Developed Under Government Contracts. A variety of statutes require that information developed under contracts of specific agencies or programs of that agency be made available to the public. These were noted in Chapter 2 at

+10 U.S.C. § 2386 (1970).

516 U.S.C. § 778 (e) (1970).

42 U.S.C. 1857b-1(b) (4) (1970).

footnote 11. However, most agencies have not been given any legislative guidance in this

area.

• Judicial Remedies. Unless an action can be framed under 28 U.S.C. § 1491 or 1346, which confer jurisdiction in the Court of Claims and United States District Courts for actions sounding in contract, there is generally no remedy for the violation of "trade secrets" by the Government (although Government employees divulging such secrets could be held criminally accountable under 18 U.S.C. § 1905). On the other hand, while the holder of a trade secret may not have a remedy against the Government except on a contract basis under 28 U.S.C. § 1491 or 1346, he may have rights against a Government contractor who is using his "trade secret." Since there is no statutory provision comparable to the anti-injunctive provisions of 28 U.S.C. § 1498, it would seem that a Government contractor could be enjoined from using another's improperly obtained "trade secrets."

• Administrative Remedies. Except for a remedy under the Foreign Assistance Act $ and to a limited extent under the Invention Secrecy Act, there do not appear to be any statutes expressly providing an administrative remedy for trade secret violations. Some relief has been obtained from the General Accounting Office under 31 U.S.C. § 74. However, none of the executive agencies (with the possible exceptions of DOD,10 NASA," and the AEC 12) have express authority to settle such claims.

Remedies for violations of "trade secrets" are discussed more fully in Part 2 of this chapter.

AGENCY POLICIES AND PRACTICES

The general lack of statutory coverage and the lack of administrative attempts to bring

A few specific exceptions are found at 22 U.S.C. § 2356 (a) (1970), 10 U.S.C. § 2273 (b) (1970), 42 U.S.C. § 2223 (1970), and 35 U.S.C. §§ 181-88 (1970). See also the discussion at pp. 131-132, infra.

822 U.S.C. § 2356 (1970).

935 U.S.C. §§ 181-88 (1970).

10 10 U.S.C. § 2386 (1970).

11 42 U.S.C. § 2458 (1970).

12 42 U.S.C. § 2187 (b) (3) (1970).

uniformity in this area have resulted in a diversity of approaches by the various agencies. The discussions below focus on the required clauses for use in research and development and other contracts where the data is required as an incidental aspect of the contract. Agency policies respecting contracts where the production of data is the primary aim of the contract (e.g., films or historical works) are not discussed here.

National Aeronautics and Space Administration

In NASA's R&D contracts, the contractor is permitted to withhold data concerning standard commercial items and proprietary data concerning items developed at private expense and not sold or offered for sale, if, in lieu thereof, adequate identification of the item concerned in a "form, fit, and function" format is delivered to NASA.13 This is substantially different from the DOD approach discussed below. Unlike a DOD contractor, a NASA contractor may not place restrictive markings on the data he delivers. His option, instead, is to withhold delivery of proprietary data. Such withholdings sometimes result in what are known as "swiss cheese" drawings.

Department of Defense

The Department of Defense until 1964 followed an approach similar to that now used by NASA. In 1964, DOD altered its data rights policy substantially, since it found it was not getting the full data packages needed.

DOD clauses now require that all data ordered under the contract be delivered to the Government. However, the rights of the Government in the data vary depending on the type of data involved. In general, the Government takes "unlimited rights" in most data. But where engineering or manufacturing-type data is called for which pertains to "items, components, or processes developed at private expense" the Government may only have "limited rights." In addition, agreements may be made as to whether specific data will be

13 See NASA PR 9.203-1 (Rights in Data Clause).

The Office of Saline Water has a prescribed data clause 18 similar to NASA's in that it allows contractors to withhold "proprietary data," provided that the contractor identifies the source of the data and, in the case of standard commercial items to be included in the final product, provides form, fit, and function type information. Unlike most other data clauses, the clause requires that the data be in such form as to allow others to make and

14 See ASPR 9-203 (b) (Rights in Technical Data Clause).

15 AECPR 9-7.5006-13 (1971).

16 AECPR 9-9.5008-7 (1971).

17 DOTPR 12-9.6302.

18 41 CFR 14R-9.202.

Recommendation 11. Authorize agencies to acquire information and data.

Most of the issues arising from the Government's acquisition and use of data are interrelated. Some of these interrelationships concern the quality of that data to be protected by the Government, the system by which protection is afforded, the manner by which notice of protectable status is given, the system for verifying that data claimed to be protectable meets the definition, and the remedies for misuse of protectable data. Thus, an inadequate system for safeguarding protectable data adversely affects a contractor's willingness to accede to the Government's requirements for data and the willingness of some firms to participate in Government procurement.

The complexity of issues involved has led to a proliferation of approaches, as reflected by the regulations of the various Government agencies. As noted above, AEC, NASA, and DOD have basic differences in their approach

to important data issues. Since there are no Government-wide policies on the subject of data, each Government agency has been free to develop its own policy. Complete uniformity is probably neither achievable nor desirable, but we believe greater uniformity should be sought.

NEED FOR GREATER UNIFORMITY

After examining the data rights policies of the various agencies, we have concluded that it is not practical at this time to establish any single, Government-wide, data policy by legislation. The varying needs, capabilities, and missions of the agencies appear to militate against the creation of a single policy. Yet, the great diversity of relatively intricate clauses and regulations governing this area can obviously work hardships on contractors. Accordingly, we believe greater uniformity is within reach. While a single data clause might be impossible, perhaps standard clauses could be developed from which agencies could select the ones best suited to their needs.

Accordingly, we have concluded that the time has come for the development of a Government-wide policy on technical data. The Federal Council for Science and Technology in coordination with the Office of Federal Procurement Policy," should be responsible for developing such a statement and for evaluating its implementation. In view of the work that the Federal Council for Science and Technology has done in the related patents area, the Council is the natural body to turn to for the coordination of efforts in the technical data area. We recognize that major improvements will not occur overnight, but believe, based on developments in the patents area, that out of such an effort will eventually evolve greater understanding of the problems and issues and greater agreement as to how they should be resolved.

To facilitate this effort any statutes limiting flexibility in this area should be appropriately amended.

Section 14 of the draft legislation at Appendix A contains a series of amendments which would accomplish Recommendation 9. How

19 Our recommendation for such an office is in Part A.

ever, since those amendments also impact on patent rights policy, additional drafting effort would be needed if it were desired to change only those aspects of the statutes impacting on data rights policy.

SUBCONTRACTOR DATA

Numerous issues would confront those developing a Government-wide data policy. We call attention to one area in particular. There have been numerous complaints over the years by subcontractors of overreaching by prime contractors with respect to subcontractor data. Not surprisingly, prime contractors have denied this. We believe that whatever may be the merits of this controversy, attention should be given to this facet of data policy. Consideration should be given to whether it is administratively feasible for Government agencies to exert through appropriate contract provisions greater pressure on prime contractors to respect the rights of their subcontractors. At present, some agencies, for example DOD, do allow subcontractors to submit "limited rights" data directly to the Government. Consideration should be given to whether this policy should be extended and in what ways it might be strengthened.

AUTHORITY TO ACQUIRE TECHNICAL DATA

All agencies should be authorized by legislation to acquire rights or interests in technical data and information. Although agencies probably have such power inherently, the issue is confused because a few agencies have been given such authority expressly. To eliminate any confusion, we see a need to grant such authority Government-wide.

Section 6 of the draft legislation at Appendix B would serve to accomplish our Recommendation 11.

DATA SUBMITTED WITH PROPOSALS AND/OR IN CONFIDENCE

One way in which new ideas and innovations are transmitted to the Government is

through the submission of proposals to it, either solicited or unsolicited. Information of a technical nature may also be supplied in a number of ways other than as part of a proposal. As discussed more fully in Part B on Research and Development, it is important that the lines of communication between the Government and those with innovative ideas be kept open.

Where valuable data is supplied to the Government as part of a proposal or other related types of communications, contractors will often place legends containing restrictive limitations on such data allowing it to be used only for evaluation purposes. Some agencies have now adopted regulations prescribing standard legends and establishing policies with respect to the manner in which they will use such data. While there are differences in these policies, in general these efforts appear laudatory and are to be encouraged. However, many agencies have no regulations covering the treatment of data submitted with proposals.

Need for Greater Uniformity

Recommendation 12. Undertake, through the Federal Council for Science and Technology in coordination with the Office of Federal Procurement Policy, to develop and evaluate the implementation of a statement of Government policy on the treatment of data submitted with proposals or other related communications.

We have reviewed agency policies in this area, but cannot supply any set policies. Varying agency missions, organizations, and capabilities may require different attitudes toward the use of data submitted with proposals. Hence uniform legislation would not appear useful. The executive agencies should be free to develop their own policies in this area.

While we conclude that a Government-wide legislative statement is not feasible, we do believe that the development of Governmentwide guidelines and, perhaps, uniform alternate policies would be helpful. To this end, we recommend that the Federal Council for Science and Technology in coordination with

the Office of Federal Procurement Policy undertake an effort to develop a uniform policy statement relating to the treatment of data submitted with proposals or related communications. Follow-on studies of the implementation of such a statement and its effects should then be conducted. We believe that, just as has occurred in the patents area, such a statement with follow-on studies could lead eventually to a much greater understanding of the issues involved and a greater agreement as to how these issues should be resolved. The result of such efforts should be to facilitate the flow of information to the Government.

Remedies

Recommendation 13. Establish a remedy for the misuse of information supplied to the Government in confidence.

We also see a need for an additional ingredient to facilitate the flow of information to those agencies that wish to encourage it. A remedy for the misuse of data that is supplied in confidence is needed.

Despite established policies and regulations, the possibility remains that through oversight, or otherwise, use or exposure may be made of data that is contrary to stated regulations. Yet, there is no clear-cut judicial remedy available to a person supplying information in confidence to the Government to obtain relief for the breach of that confidence. The lack of such a remedy has a deterrent effect, albeit a difficult one to ascertain and probably in the majority of cases of minor consequence, on the flow of technical information to the Government. Because we believe that it would conform to fundamental notions of fairness, and in view of the beneficial effect it might have on the flow of information to the Government, we recommend the creation of a remedy for Government misuse of data supplied in confidence.

Under current law, unless a breach of contract action can be framed under 28 U.S.C. § 1346 or 1491, normally not a real possibility with regard to the submission of proposals, no judicial remedy for the violation of "trade secrets" by the Government exists. There are

a few isolated statutes of rather limited scope that would allow such suits, but the basic statute authorizing actions against the Government for its tortious actions, the Federal Tort Claims Act, 20 has generally been construed as not allowing suits based on trade secret grounds.21 While 18 U.S.C. § 1905 does establish criminal penalties against Government personnel who unlawfully disclose confidential data, this does not aid the damaged party.22

To accomplish our recommendation, proposed legislation is provided in Section 6 of the bill at Appendix B to this part. It should be noted that this bill, as drafted, covers a broader range of Governmental misuse than simply the misuse of data submitted with proposals. An action might be brought under it, for instance, for the misuse of data supplied to a regulatory agency for a limited purpose. In this regard, the draft legislation is not unlike the criminal provisions of 18 U.S.C. § 1905, which are not limited to contract-related breaches of confidence.

One reason we have proposed a broad statute is that, as a purely technical drafting matter, it has been found extremely difficult to develop wording that would limit the remedy only to contract-related data submissions. Not all technical submissions are necessarily supplied as "proposals." More importantly, it is felt that the principles set forth in the draft should apply to all dealings by the Government. If a Government agency misuses data which was, in the language of our proposed legislation, "submitted to or obtained by" it "in confidence and under conditions limiting its use for specific purposes," no sound reason is seen why

2028 U.S.C. §§ 1346 (b), 2680 (1970).

21 See generally, Harris, "Trade Secrets as They Affect the Government," 18 Business Lawyer, 613 (1963). Consider Alkiebolaget Bofors v. U.S., 194 F.2d 145 (1951).

22 18 U.S.C. § 1905 reads as follows: "Whoever, being an officer or employee of the United States or of any department or agency thereof, publishes, divulges, discloses, or makes known in any manner or to any extent not authorized by law any information coming to him in the course of his employment or official duties or by reason of any examination or investigation made by, or return, report or record made to or filed with, such department or agency or officer or employee thereof, which information concerns or relates to the trade secrets, processes, operations, style of work, or apparatus, or to the identity, confidential statistical data, amount or source of any income, profits, losses, or expenditures of any person, firm, partnership, corporation, or association; or permits any income return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law; shall be fined not more than $1,000, or imprisoned not more than one year, or both; and shall be removed from office or employment."