Megapulse, Inc. v. Lewis
| Decision Date | 29 January 1982 |
| Citation | 217 U.S.App.D.C. 397,672 F.2d 959 |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 80-01543).
Thomas Patton, Washington, D. C., with whom Paul G. Dembling and Stefan M. Lopatkiewicz, Washington, D. C., were on the brief for appellant.
Valerie K. Schurman, Asst. U.S. Atty., Washington, D. C., with whom Charles F. C. Ruff, U.S. Atty., Royce C. Lamberth and Kenneth M. Raisler, Asst. U.S. Attys., and David Brochstein, Atty., U.S. Coast Guard, Washington, D. C., were on the brief for appellees.
Before BAZELON, Senior Circuit Judge, and WILKEY and WALD, * Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKEY.
Appellant challenges the district court's refusal to issue a preliminary injunction against the United States Coast Guard enjoining the release of certain technical data without restrictions protecting Megapulse's claimed proprietary commercial rights in that data. The district court denied appellant's motion for preliminary injunction and granted the Government's motion for summary judgment on the ground that it had no subject matter jurisdiction in this case. For reasons outlined in detail below, we hold that the district court erred in this conclusion. We reverse and remand for further proceedings on the merits.
Megapulse, Inc. is a corporation founded by Dr. Paul Johannessen for the development, manufacture, and sale of long-range (Loran) navigation transmitter equipment embodying a pulsing circuit system known as a megatron, developed by Dr. Johannessen.
Feeling that his development in transmission circuitry might have valuable military as well as commercial application, Johannessen invited the Coast Guard in May 1970 to witness a demonstration of a Loran-C type transmitter utilizing the megatron. 1 As a result of this demonstration, Megapulse and the Coast Guard entered into a series of agreements, beginning in August 1970, for the demonstration and development of megatron transmitter technology for government-use power levels.
The first contract required Megapulse to construct and test a demonstration model Loran-C transmitter and submit a report with test results and recommendations. Two provisions of this contract related to technical data. One listed several patents and patent applications on which the demonstration model was based and stated that
(w)hile the U.S. Coast Guard will be granted rights to data relating to the demonstration model transmitter to be constructed under the proposed contract the use of the same will be subject to the above patent rights under which no license is hereby granted at this time other than freely to use the demonstration model transmitter. 2
A second provision granted the government the right to "duplicate, use and disclose in any manner and for any purpose whatsoever, and have others so do, all or any part of the technical data delivered by the Contractor to the Government under this contract." 3
Additional contracts were entered into in January and September 1971 containing similar provisions relating to rights in data. The final contract, dated 5 December 1975, required the delivery of a pre-production prototype and provided that all data first produced in performance of the contract would become the property of the government. Data not first produced in performance of the contract was to remain property of the contractor; the government were to acquire the right to use them and to authorize others to use them unless the data were entitled to limit rights protection at the time they were delivered to the government. A portion of the engineering drawings and specifications submitted by Megapulse under the contract in November 1977 was marked with a legend, "limited rights data."
In the Spring of 1978 the parties entered negotiations on the form of the license agreement to be issued by Megapulse to prospective bidders on a contract to supply Loran-C transmitters to the Coast Guard. The appellant claimed limited rights protection for a comprehensive list of data at that time, apparently without opposition from the Coast Guard. In August 1978 the Coast Guard announced a procurement of Loran-C transmitters which included notification that those wishing to bid would be required to execute licenses before receiving the data package. The required licenses preserved Megapulse's commercial rights in those portions of the data package in which it claimed a valid proprietary interest.
After several bidders objected to the terms of the licenses, 4 the Coast Guard informally reviewed the proprietary status of the "limited rights" data and determined that it was unlikely that significant portions of the processes described in that data were developed entirely at Megapulse's expense. As a result of this determination, the Coast Guard advised Megapulse in May 1979 that it would remove all restrictions against commercial use of its proprietary data in the bid solicitation. Megapulse protested this decision to the General Accounting Office (GAO) on 29 May 1979, and filed suit in the United States District Court for the District of Columbia to enjoin the Coast Guard's release of the proprietary data pending the GAO decision. Following a preliminary hearing, the government agreed not to issue the solicitation without protecting the data pending resolution of the GAO protest; Megapulse withdrew its motion before the district court.
On 15 January 1980 the GAO issued an opinion denying appellant's protest on the ground that Megapulse had failed to meet its burden of showing no reasonable basis for the agency's determination that the data were not entitled to limited rights treatment. 5 Following a 28 May 1980 GAO denial of Megapulse's request for reconsideration, Megapulse once again filed an action for injunctive relief in the district court, founding subject matter jurisdiction on, inter alia, 28 U.S.C. § 1331 6 and 5 U.S.C. § 702. 7 Notice by the Coast Guard on 2 October 1980 of its intention to proceed with the solicitation by about 1 December 1980 8 precipitated Megapulse's motion for preliminary injunction.
In connection with its motion for preliminary injunction, Megapulse identified, out of approximately 4,000 documents delivered to the Coast Guard, six specific drawings in the solicitation data package, restriction on release of which would at least minimally protect its commercial interests in the methods and techniques for manufacturing the megatron. 9 It argued that unrestricted release of this data violates the Trade Secrets Act 10 and deprives Megapulse of its property without due process of law.
The district court indicated at oral argument on appellant's motion for preliminary injunction that Megapulse had set out a case for injunctive relief if the court had power to address the merits of the case. 11 The key issue, however, was whether the court had subject matter jurisdiction over plaintiff's claim.
The court noted that the Supreme Court's decision in Chrysler Corp. v. Brown 12 held that a district court has jurisdiction to enjoin an alleged violation of the Trade Secrets Act. It also noted, however, the "well-established rule (under the Tucker Act) that jurisdiction over government contract disputes lies exclusively in the Court of Claims, which cannot issue an injunction." 13 Faced with the question of whether a government contractor can step outside the Tucker Act and seek an injunction in the district court to prevent an alleged violation of the Trade Secrets Act when the data involved were originally provided to the government pursuant to the terms of various contracts, the district court described it as a "close and difficult question whether the logic in Chrysler should be extended to allow this court to find jurisdiction in the present case." 14 In the end, the court found room to distinguish Chrysler, 15 and felt compelled to follow this court's position in International Engineering Co., Division of A-T-O, Inc. v. Richardson, 16 which found under facts similar to those of the instant case that the district court had no jurisdiction to enjoin agency disclosure of information. Appellant challenges the district court's conclusion and the propriety of its adherence to International Engineering.
The ultimate issue in this case was clearly described by the district court: "whether a party to a government contract can seek an injunction in (district) court to prevent an alleged violation of the Trade Secrets Act when the disputed data was (sic) divulged to the government in order to fulfill the terms of various contracts." 17 As simply as it is stated, this single issue actually combines two separate inquiries: (1) Does the district court have subject matter jurisdiction over Megapulse's request for injunctive relief? (2) If so, is the district court's jurisdiction limited in any way by sovereign immunity? 18 We address each in turn.
Megapulse, relying upon the Supreme Court's opinion in Chrysler, argues that the district court has subject matter jurisdiction under 28 U.S.C. § 1331(a) (federal question jurisdiction). The Government counters with an argument that Chrysler does not apply under the facts of this case and that the district court was correct in adhering to this court's holding in International Engineering. As a first step, therefore, we are faced with determining if the relevant part of International Engineering has in fact survived Chrysler in a form helpful to our analysis in this case.
In International Engineering a government contractor (IEC) brought an action to prevent the Air Force from disclosing to...
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