Contractor’s motion for summary judgment on its data rights claims is denied, where a previous release executed by the government and contractor did not extend to future claims arising out of the contract, and where the claim at issue did not arise prior to the execution of the release.
In 2003, the Navy awarded Cubic Defense Applications Inc. a contract to design and develop a system that transmits data between ships and military aircraft. In 2007, Cubic filed a claim with the Navy, seeking an equitable adjustment for alleged delays and specification defects. The agency then asserted a claim against Cubic for contract relief due to reduced costs. Cubic appealed both claims to the ASBCA. In 2008, before ASBCA ruled, Cubic and the Navy settled, releasing each other from all claims arising out of or incidental to the contract.
Years later, Cubic bid on a second Navy contract for a data transmission system. As part of its proposal, Cubic asserted that the government’s rights to use, release, or disclose technical data were limited and that the company was asserting the data rights established in the initial 2003 contract. The Navy awarded Cubic the second contract in 2012, but it sent Cubic a letter challenging company’s interpretation of the data rights established by the 2003 contract and asking Cubic to provide documentation supporting its asserted rights.
Cubic advised the Navy that its challenge to Cubic’s data rights was moot because those rights related to that contract and the government and Cubic had agreed to release all claims against each other relating to the 2003 contract. The Navy issued a decision denying Cubic’s assertion of limited data rights and opining that the government was entitled to unlimited rights. Cubic appealed to decision to the ASBCA and then moved for summary judgment.
Cubic argued in its motion that the Navy had expressly and unambiguously released Cubic from any data rights in 2008. As an initial matter, the board noted that the basic premise of Cubic’s argument was incorrect. The board reasoned that under 10 U.S.C. § 2321, a contractor is required to furnish written justification for a restriction asserted on data provided to the government as part of a contract. In requiring the contractor to provide written justification, Congress placed the burden of proof for validating a use restriction on the contractor, and that validation constitutes the claim. Accordingly, the issue on the appeal was not whether the agency’s “claim” was barred by the release, but rather whether Cubic’s claim asserting the restrictions is valid and barred by the release.
The board then turned to the language of the release, noting that on one hand, the settlement agreement stated that the release applied to potential claims known or unknown and to “all claims and appeals arising out of the of, incidental to, or relating to the Contract.” On the other hand, the settlement agreement also provided, “[n]otwithstanding anything to the contrary, this release does not extend to any claims related to the contract that may arise in the future.”
The board reasoned that it was obligated to give meaning to all parts of an agreement so that no clause was superfluous. Thus, construing the seemingly contradictory clauses together, the board found that the future claims clause modified the more general release. While the settlement agreement applied to all claims, by its plain terms, it did not apply to contract claims that may arise in the future. The board believed that the inclusion of this future claims clause indicated that the parties only intended the agreement to be a partial release, and that they expressly reserved the ability to bring future claims.
Cubic, however, claimed that even if the settlement agreement did not contain a general release, the claim at issue in the appeal was still barred because it arose before the parties executed the settlement agreement. Cubic contended that the Navy knew from Cubic’s proposal for the 2003 contract that the company had previously asserted limited data rights. Thus, Cubic concluded, the government possessed the information it needed for its claim before the 2008 settlement.
Again, however, the board found that Cubic had based its arguments on a false premise. The appeal did not actually involve a government claim. Rather, the appeal constituted a “validation” claim asserted by Cubic pursuant to a statutory process created by Congress under 10 U.S.C. § 2321. When a contractor proposes to use proprietary technical information for a government contract, it must list the data and software it intends to use on a Contract Data Requirement List. As part of this list, the contractor must assert the category of data rights for each assertion and the basis for the assertion.
The assertions in a CDRL are not binding on the government; they are simply the unilateral claim of a contractor to rights in noncommercial data or software. An agency can require a contractor to explain the basis of its data rights if assertion. If reasonable grounds exist to doubt the contractor’s assertion, the agency may issue a written statement challenging the assertion. The contractor’s production of records to validate the assertion of restricted data rights is then considered the “contractor” claim. If the contractor fails to provide records, the agency can issue a final decision on data restrictions, which a contractor can appeal to the board or the Court of Federal Claims.
In this case, the Navy challenged Cubic’s assertion of rights in the 2003 contract in 2012. Cubic was required to assert its claim by responding to the challenge and validating the rights assertion. Cubic did not effectively respond, but rather, it waited for a final decision, which it then appealed to the board. Regardless, the board found that the real “claim” at issue in the appeal—i.e. the response the agency’s challenge—arose in 2012, four years after the settlement agreement, which meant it could not have been released by the settlement agreement. Cubic’s argument—that a data rights claims belongs to the agency and arises once the contractor asserts it rights—ignored the statutorily prescribed process for handling data rights assertions.
The board denied Cubic’s motion for summary judgment.
Cubic Defense Applications Inc. is represented by Paul F. Khoury and Tracye Winfrey Howard of Wiley Rein LLP. The government is represented by Craig D. Jensen, David Koman, and Ellen M. Evans of the U.S. Navy.