## Facts

- Ervin & Associates, Inc. contracted with the Department of Housing and Urban Development (HUD) to review audited financial statements required from owners of HUD-insured loans and to develop electronic collection and automated analysis processes.
- During performance, Ervin created data compilations and computer programs it treated as proprietary.
- The contract referred to the FAR “Rights in Data—General” clause, but the contract did not reproduce the clause’s full text; other FAR provisions were expressly incorporated.
- FAR mechanisms allowed Ervin to negotiate limited/restricted rights and to mark deliverables to reserve such rights, but Ervin did not negotiate limitations and did not clearly identify or mark materials as privately developed or restricted.
- HUD disclosed certain data and software created by Ervin to other contractors, including competitors.
- Ervin submitted administrative claims to HUD; the contracting officer denied them, and Ervin sued in the U.S. Court of Federal Claims for breach based on alleged misappropriation and wrongful disclosure.
- The parties filed cross-motions for summary judgment on the scope of the government’s rights in the data and software.

## Issues

1. Whether the FAR “Rights in Data—General” clause applied to the contract and governed the government’s rights, despite the clause’s full text not being set out in the contract.
2. Whether the disputed data and software were “first produced” under the contract, or instead were preexisting proprietary materials outside the government’s unlimited rights.
3. Whether HUD breached the contract by disclosing the data and software to Ervin’s competitors.

## Decision

- The court granted summary judgment in substantial part for the United States.
- The court held the FAR Rights in Data—General clause governed and granted HUD unlimited rights in data and software first produced under the contract.
- The court found the principal data compilations and software at issue were developed in performance of the contract and therefore were “first produced” under it.
- Because Ervin did not negotiate restrictions or mark/segregate preexisting proprietary components, Ervin could not later impose limits on the government’s rights.
- HUD’s disclosure to other contractors fell within unlimited rights and did not constitute breach or wrongful misappropriation.

## Legal Principles

- Mandatory FAR clauses governing rights in data may be treated as part of a government contract where the contract references them and/or procurement law requires their inclusion.
- Under the FAR, the government receives “unlimited rights” in technical data and computer software first produced in performing a government contract, including rights to use and disclose and to permit others to do so.
- A contractor seeking to preserve limited or restricted rights must negotiate explicit limitations and properly identify/mark deliverables and segregate preexisting proprietary materials.
- Informal assurances, custom, or course-of-dealing theories generally cannot override standard FAR data-rights allocations absent authorized, contract-consistent modifications.
- When the government has unlimited rights, sharing contract-developed data/software with other contractors is within scope and does not, without more, create contractual liability.

## Conclusion

The court held that the FAR rights-in-data regime gave HUD unlimited rights in the software and data Ervin developed under the contract and, because Ervin failed to negotiate or mark restrictions, HUD’s disclosure to competitors was permitted and not a breach.


Ervin & Assocs., Inc. v. United States, 59 Fed. Cl. 267 (2004)