Federal Circuit Affirms Government’s Right to Challenge Improper Restrictive Markings on Commercial Technical Data
In a significant ruling for defense contractors, the U.S. Court of Appeals for the Federal Circuit affirmed a decision by the Armed Services Board of Contract Appeals (ASBCA) that FlightSafety International Inc.'s restrictive markings on technical data were impermissible under applicable federal law and DFARS regulations. The case, FlightSafety International Inc. v. Secretary of the Air Force, decided on February 28, 2025, addresses the scope of the government’s rights in commercial technical data and the extent to which contractors can impose limitations through proprietary markings.
The dispute originated from a contract between the Air Force and CymSTAR LLC, which subcontracted FlightSafety to provide flight simulation products and services. FlightSafety delivered commercial technical data to the government, developed exclusively at private expense, and marked the data with restrictive legends asserting proprietary rights. The Air Force rejected these markings, initiating a formal challenge under DFARS procedures, particularly invoking the Validation Clause (DFARS 252.227-7037). FlightSafety’s position was that since the data was privately funded, the government lacked the authority to question the markings themselves and could only contest the development funding source.
However, the Federal Circuit disagreed, affirming that both the governing statute (10 U.S.C. § 2321) and the Validation Clause allow the government to challenge the validity of restrictive legends even without disputing the funding source. The Court clarified that while contractors may protect their intellectual property, any marking that contradicts the government’s contractual rights—such as those involving technical data necessary for operation, maintenance, installation, or training (OMIT data)—are unenforceable. The Court emphasized that “unrestricted rights” in OMIT data permit the government to use and share the data without limitation, including for future procurements.
In its analysis, the Court also dismissed FlightSafety’s reliance on the difference between “unrestricted” and “unlimited” rights, stating that the two are functionally equivalent in this context. The government, therefore, may use commercial OMIT data for competitive reprocurement purposes. The Court further noted that under the parties’ own settlement agreement, the disputed drawings would be treated as OMIT data, giving the government the same expansive rights.
The Court found that each of FlightSafety’s proposed legends—its long form, short form, and an alternate marking—either ambiguously or explicitly limited the government’s rights and were thus improper. For instance, terms like “proprietary” and “confidential,” or conditions requiring express written authorization, created confusion or conflict with the government’s clearly defined rights. Additionally, references to regulatory provisions that did not apply to OMIT data only compounded the ambiguity.
Importantly, the ruling reaffirmed that while contractors may mark their data to preserve rights against third-party disclosure, those markings must align with the government’s rights under contract and statute. Failure to do so allows the government to cancel or ignore such markings. This decision carries weighty implications for contractors in the defense sector, emphasizing the need for careful drafting of data rights legends and a deep understanding of the technical data clauses under DFARS.
This summary is based on the opinion written by Circuit Judge Dyk for the Federal Circuit in FlightSafety International Inc. v. Secretary of the Air Force, decided on February 28, 2025.
Disclaimer: This blog post is provided for informational purposes only and does not guarantee legal accuracy or constitute legal advice. Always consult with qualified counsel before making legal decisions.
