COFC held to have exclusive jurisdiction for trade secret misappropriation claim

05/18/2012

In a recent, odd decision, the U.S. Court of Appeals for the Fifth Circuit recently ruled that the Court of Federal Claims had exclusive jurisdiction over claims that the Navy had misappropriated trade secrets of a contractor. The decision is United States Marine Inc. v. United States, 5th Cir., No. 11-30177, 5/11/12. While issued as a nonprecedential decision, the holding is of note because of its potential applicability to other claims.

The claimant contractor claimed that the Navy misappropriated its trade secrets by providing them to other prospective contractors, and was awarded $1.5M by the district court. The Fifth Circuit reversed though, holding that the disclosure was in the form of a contractual breach, and so jurisdiction lay exclusively with the COFC. This is despite the fact that one of the claimant contractors did not have a contract with the Navy, and as the dissent therefore noted likely had no ability to assert claim against the Navy for breach of contract.

How this decision may get expanded will be interesting to see, but it clearly creates a bit of a quagmire for prospective plaintiffs seeking recovery for government misappropriation.

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