## Facts

- Dowty Decoto, Inc. (Decoto) manufactured “repeatable holdback bars” used to launch aircraft from Navy carriers and supplied them beginning in 1971 through a subcontract with a prime contractor.
- Decoto developed the holdback bar design to practical workability at its own expense and did not seek government research and development funding for the original design.
- For technical drawings and data delivered to the Navy, Decoto used a restrictive legend asserting proprietary status and limiting the government’s disclosure rights; the legend’s form was undisputedly appropriate to reserve limited disclosure rights.
- Years later, the Navy requested modifications to extend the bars’ longevity; Decoto performed the modifications and sought reimbursement for those modification costs through the prime contractor.
- In 1983, the Navy asked Decoto to remove the restrictive legends voluntarily; Decoto refused, asserting the Navy had not obtained disclosure rights sufficient to justify removal.
- In 1986–1987, after requesting substantiation and conducting an informal administrative review, the Navy concluded Decoto failed to justify the legends and asserted it had acquired broader rights due to reimbursing certain modification costs.
- The Navy’s position implied authority to disclose Decoto’s technical data to other manufacturers to obtain competitive bids for follow-on procurement.
- Decoto asserted that disclosing its technical data without a contractual or regulatory right would violate the Trade Secrets Act, 18 U.S.C. § 1905.

## Issues

1. Whether the Navy acquired “unlimited rights” in Decoto’s technical data based on reimbursed modification work, permitting disclosure to third parties for competitive procurement, or instead possessed only limited rights barring such disclosure.
2. Whether, on APA review, the district court properly enjoined the Navy from disclosing Decoto’s technical data in light of the asserted lack of disclosure authority and the Trade Secrets Act.

## Decision

- The Ninth Circuit affirmed the district court’s permanent injunction barring the Navy from disclosing Decoto’s technical data to third parties.
- The court held that, under any applicable procurement regulations, Decoto did not surrender disclosure rights to the Navy.
- The court rejected the Navy’s claim that reimbursing later modification costs converted the underlying privately developed design data into government-funded technical data subject to unlimited rights.
- Because the Navy lacked contractual or regulatory authority to disclose the data, the threatened disclosure was unlawful and injunctive relief under the APA was proper.

## Legal Principles

- Government rights in technical data depend primarily on the source of development funding and the governing contract/regulatory scheme: privately developed data, properly marked, generally yields limited rights that do not include disclosure for competitive reprocurement.
- Proper restrictive legends, when substantively justified by private development and absence of surrendered rights, preserve limits on government disclosure and may not be negated by a later agency demand without contractual or regulatory basis.
- An agency determination asserting disclosure rights may constitute final agency action reviewable under the APA, and courts may set it aside and enjoin disclosure when inconsistent with controlling regulations or contract terms.
- If the government lacks legal authority to disclose confidential commercial information, disclosure may implicate the Trade Secrets Act, supporting injunctive relief to prevent unauthorized release.

## Conclusion

The Ninth Circuit upheld an injunction preventing the Navy from disclosing Decoto’s properly marked, privately developed technical data to competitors, holding that reimbursement for later modifications did not confer unlimited disclosure rights and that APA relief was appropriate to prevent an unlawful disclosure that could violate the Trade Secrets Act.


Dowty Decoto, Inc. v. Department of the Navy, 883 F.2d 774 (9th Cir. 1989)