United States Marine v. United States

United States Marine, Inc. (US Marine) (plaintiff) supplied the design for a Mark V military boat to VT Halter Marine, Inc. (VT Halter). VT Halter contracted with the United States Navy (Navy) (defendant) to develop prototypes of two military boats, one of which was based on US Marine’s design. As required by regulations governing rights in technical data, VT Halter marked the design drawings and data that it submitted to the Navy with a limited-rights legend. Several years later, without VT Halter’s or US Marine’s consent, the Navy disclosed those design drawings and technical data, stamped with the limited-rights legend, to the participants in a joint venture to improve the Mark V design. US Marine sued the Navy in federal district court under the Federal Tort Claims Act (FTCA), alleging that the Navy had tortiously misappropriated US Marine’s trade secrets. The district court denied the Navy’s motion to dismiss, which argued that US Marine’s claim sounded in contract, not tort, and could, therefore, be heard only in the United States Court of Federal Claims (claims court) pursuant to 28 U.S.C. § 1491(a)(1). The Navy then filed a third-party complaint against VT Halter, and VT Halter filed a counterclaim, advancing the same tort theory as US Marine. The district court entered judgment in favor of US Marine and VT Halter, and the Navy appealed. The United States Court of Appeals for the Fifth Circuit vacated the district court’s ruling, finding that US Marine was a subcontractor to the VT Halter–Navy contracts and that the district court lacked jurisdiction because both parties’ claims sounded in contract and could be heard only in the claims court. The district court then transferred the case to the claims court, and US Marine appealed.