Glasses sitting on paper work for United States Patent for SBIR Data Rights

Does the Government Have a Stake in Your Product Once It Awards an SBIR Grant?

Startups must understand Data Rights. They must also understand who owns a product developed with SBIR funds.

The Small Business Innovation Research (SBIR) program includes contracts and clauses that explain who owns the rights to technology developed with SBIR funds. While protections exist for the federal government, Data Rights protect small businesses from having their research sold to a third party.

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Entrepreneurs who develop products with Small Business Innovation Research (SBIR) program funding might have one crucial question in mind: 

Who owns the rights to my research, data, and product?

It’s a straightforward question with a not-so-clear answer. 

Like most government funding aspects, a bevy of finer details must be explored before you begin your SBIR journey. 

To understand the nature of the government’s stake in your SBIR-funding product, you need to learn about Data Rights, Intellectual Property Rights, Computer Software Rights, Phase III specifics, and more.

Let’s jump into it and get this all sorted out!

What are SBIR Data Rights?

Certain rights to your data. However, your small business will be the preferred, singular source for delivering this technology for a substantial period.

SBIR Data Rights are essentially a nondisclosure agreement (NDA) with the federal government.

When one of the government’s participating agencies awards you with SBIR program funding, the agency makes a binding promise that it will not share or sell your eligible SBIR data to a competitor. SBIR Data Rights protect against unfair backroom deals between the government and a competing manufacturer.

Keep in mind that the federal government, in all likelihood, will not break this promise. However, Data Rights ensures the federal agency will incur monetary damages if they do. 

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What are the Three Basic Attributes of SBIR/STTR Data?

For your SBIR work to be protected as Data Rights, it must adhere to three essential attributes.

Every bit of research and development you perform under the auspices of an SBIR program must possess these attributes:

  1. Recorded Information
  2. Of a technical nature
  3. Generated under an SBIR or STTR funding agreement and appropriately marked with the SBIR/STTR Data Rights legend.

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“Recorded information”

Your SBIR data must be written into a document. 

This is mandatory for SBIR data existing as sketches, drawings, source code, equations, formulas, reports, SBIR final reports, descriptions of SBIR technologies, or any writing that meets related criteria. 

However, SBIR Data protections do not apply to ideas or concepts—that is, unless the ideas and concepts are reduced to writing. What does that mean? 

Essentially, protections governing SBIR data only cover ideas contained in a written document and not the idea itself. Therefore, to protect the idea or concept behind the written description, you need to consider patent protection.

“Of a technical nature”

Any data considered “non-technical” does not qualify for protection as SBIR Data. 

One example of non-technical data is cost and pricing information, which is instead protected by the Freedom of Information Act, paragraph (b)(4)—a mandatory disclosure of such information by the government. 

Other non-technical information not protected by SBIR Data Rights is the data background of your company. 

Always keep that in mind when sharing any information about your company. Data “of a technical nature” must relate to the SBIR technology your team develops in phases I, II, and III. 

“Generated under an SBIR or STTR funding agreement … ”

Protected data must be explicitly generated under an SBIR/STTR funding agreement. 

This means that any SBIR data needing protection must be marked as such—proprietary data developed via private funds is not protected under Data Rights, nor is proposed information. 

But here’s an important note: if your project includes non-SBIR Data inextricably linked to SBIR Data, then all the data becomes subject to Data Rights protections. This typically occurs with source code and computer software. 

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What is the Duration of SBIR Data Rights Protections?

No less than two decades. 

SBIR and STTR Data Rights protect your project-related data from disclosure by participating government agencies for no less than 20 years. The protection begins during phase I, II, or III awards.

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What Changed with the SBIR Policy Directive on May 2, 2019?

The Small Business Administration (SBA) holds the authority to establish new, government-wide policies across the SBIR and STTR programs. 

On May 2, 2019, the SBA established an all-new policy directive to underscore the importance of adequately notating your SBIR Data to qualify for SBIR Data Rights protection.

The May 2, 2019, Policy Directive makes it clear that to qualify for Data Rights protection; the SBIR/STTR data must be appropriately marked

If data is unmarked, the government takes unlimited rights to that data. It can do whatever it wants with the information and even hand over that data to third parties for commercialization.

Additionally, before the new Policy Directive, small businesses had an indefinite grace period to correct inaccurately marked SBIR Data. However, as of the May 2, 2019, Policy Directive, you only have six months to make corrections.

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What is SBIR Data Marking?

SBIR Data Marking refers to attaching your SBIR Data legend to all information generated under an SBIR funding agreement. 

And a data legend is exactly what it sounds like—a representation of data on the plotted area of a graph or chart linked to a data table.

illustration Woman drawing on a white board with a line chart

Appendix I of the SBIR Policy Directive sets forth the legend that SBIR firms must affix to documents containing SBIR Data. 

Affixing the legend notifies the participating government agency that the document contains SBIR Data. This sets off the government’s obligation not to disclose the SBIR Data outside of the government for 20 years, starting on the award date.

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What are SBIR Intellectual Property Rights?

Intellectual property (IP) rights are legal parameters that control whether or not others can use a technology and how it could be applied if they are permitted to use said technology. 

Keep in mind that creators do not automatically obtain IP rights simply through developing the technology. Instead, you must take deliberate steps, such as filing a patent application. 

In terms of SBIR-specific Intellectual Property Rights, it works the same as with other IP rights processes. 

If you are a technology startup, you likely already have an IP rights strategy. The main difference is that as an SBIR program awardee, you are using government money to fund your R&D, which you then deliver to the federal agency.

That R&D is protected by SBIR Data Rights (if adequately marked). So, for all intents and purposes, your IP rights are effectively similar to other startups.

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Can I Have a Patent and SBIR Data Rights?

Yes! However, this requires some explanation, as SBIR Data Rights and patenting are essential, but each involves different types of protections. 

While patents protect concepts, ideas, designs, or methods considered “inventive,” SBIR Data Rights protect the public disclosure of properly recorded technical information. 

Further, patented data is public knowledge, while the government’s ability to disclose SBIR data remains limited. 

If you publish SBIR data in a patent, it relaxes the terms of the government’s nondisclosure obligation — a significant problem if you decide to pursue both government and commercial markets. 

SBIR Data Rights are not applicable in the commercial market. And if there’s a chance your innovative technology can be reversed engineered by the public, you should apply to protect it with a patent. This is your competitive advantage in the free market.

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What are Government Purpose Rights?

Government Purpose Rights bestow the federal government with unlimited rights over your research. These rights also allow the government to disclose your technical data outside the government, authorizing third parties to use, modify, reproduce, release, perform, display, or disclose the technical data for government purposes.

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What are SBIR Computer Software Rights?

Under the auspices of federal SBIR programs, Computer Software Rights are another form of Data protection.

These rights protect computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated, or recompiled by a third party.

Any technology deemed eligible for protection under Computer Software Rights must be developed or generated in the performance of an SBIR award.

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How do SBIR Contracts Work?

SBIR contracts are built to protect small businesses from governmental overreach. 

Illustration of man sitting on a lightbulb typing on a laptop surrounded by papers and gears

Each contract boasts significant benefits to a startup, allowing them to maintain proprietary rights in the technical data (SBIR Data) developed during SBIR research. 

SBIR contracts ensure the federal agencies cannot take hold of SBIR data for commercial purposes, nor can they (the government) produce technology in the future that diminishes the rights of the small business that first developed the SBIR data. 

However, SBIR contracts also provide the government with a degree of access to evaluate the R&D work and effectively deploy the results. 

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What Does DFARS 252.227-7018 Mean for the Department of Defense (DoD)?

Always remember: Rights granted via SBIR Data rights are not automatic! 

Under the Department of Defense (DoD) clause for SBIR technical data and computer software (DFARS 252.227-7018), for your intellectual property to be protected under Data Rights, you must make these restrictions abundantly clear before development and apply Data Marking before you deliver it to the government agency. 

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How is SBIR Phase III Connected to SBIR Data Rights?

Phase III opens the door to your startup receiving SBIR Data Rights. This is why you must recognize a Phase III requirement and insist that SBIR Data Rights be accorded a Phase III.

“Recognizing” and “according” a Phase III is crucial. This is where the rubber meets the road. SBIR Data Rights are at stake here, as well as other Phase III rights and benefits. Section 4(c)(2) of the May 2, 2019, SBA SBIR Policy Directive states that “Phase III is by nature an SBIR, and must be accorded SBIR status, including SBIR Data Rights.”

In addition to SBIR Data Rights, Phase III status brings with it:

 

  • Exclusive rights to sole-source contracts
  • Exemption from SBA size standards
  • Rights to Phase III mandate
  • Right to be awarded a future Phase III award
  • Right to receive subcontracts for Phase III work
  • Ability to pursue R&D, services, products, and production

Phase III rights are valuable not only to the SBIR firm but also to the government.

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Team 80 CEO Sarah Sinicki

Sarah Sinicki

Team 80 CEO

Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.


The Department of Homeland Security

The Department of Homeland Security’s SBIR Program: What You Need to Know

Small businesses can positively impact the nation’s security through the Department of Homeland Security’s SBIR program.

The Department of Homeland Security (DHS) Small Business Innovation Research (SBIR) program encourages the research and development (R&D) of advanced technologies through government funds. In addition, the federally funded program helps startups achieve commercialization with their product or service. 

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It’s easy to hear “homeland security” and only think of counter-terrorism defense systems.

But while the Department of Homeland Security (DHS) was created in 2002 as a direct result of September 11, its responsibilities blanket a broad range of disciplines to protect national interests.

According to the DHS homepage, the department is responsible for counterterrorism but also “cybersecurity, aviation security, border security, port security, maritime security, administration and enforcement of our immigration laws, protection of our national leaders, protection of critical infrastructure, detection of and protection against chemical, biological and nuclear threats to the homeland, and response to disasters.”

It’s a lot, which is why the department’s participation in the Small Business Innovation Research (SBIR) program is crucial to deploying new technologies across a spectrum of concerns.

What does DHS SBIR Stand for?

DHS SBIR stands for Department of Homeland Security Small Business Innovation Research.

It’s a federal program that funds small businesses, entrepreneurs, and startups to perform research and development (R&D) on an array of innovative technologies, with the ultimate goal of commercializing these technologies.

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How is the DHS Science and Technology Directorate involved with SBIR?

The budget for the DHS SBIR program is associated with two smaller organizations: The Science and Technology (S&T) Directorate and the Countering Weapons of Mass Destruction (CSMD) office. 

DHS SBIR solicitations contain topics relevant to both of these organizations.

The mission of the Science and Technology Directorate is “to deliver effective and innovative insight, methods and solutions for the critical needs of the Homeland Security Enterprise.”

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The Directorate States Five Visionary Goals:

  1. Screen at speed so that security matches the pace of life
  2. Provide a trusted “Cyber Future,” protecting privacy, commerce, and community
  3. Help decision-makers receive actionable information at the speed of thought
  4. Assure the “Responder of the Future” is protected, connected, and fully aware
  5. Disaster-proof society and create resilient communities

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How is DHS Countering Weapons of Mass Destruction involved with SBIR?

The DHS Countering Weapons of Mass Destruction (CWMD) is the result of consolidating various offices within the DHS. 

For example, the Domestic Nuclear Detection Office (DNDO), a jointly staffed national office established in 2005 to improve the nation’s capability to detect and report unauthorized attempts to import, possess, store, develop or transport nuclear or radiological material for use against the country and to further enhance this capability over time.

Today, the CWMD (established in December 2017) coordinates with domestic and international partners to safeguard the country against chemical, biological, radiological, nuclear (CBRN), and health security threats. 

Mainly, the CWMD works to:

  • Anticipate, identify, and assess current and emerging WMD threats
  • Strengthen detection and disruption of CBRN threats to the homeland
  • Synchronize homeland counter-WMD and health security planning and execution

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The CWMD at the DHS has an SBIR program office that focuses on their specific needs and collaborates with S&T to conduct outreach, explore new initiatives, and coordinate schedules so that all DHS SBIR topics are published in one annual solicitation.

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What are DHS SBIR Program Priorities? 

DHS SBIR Program Priorities constitute topics found in the department’s annual solicitations, covering DHS mission areas. 

DHS SBIR topics are solicited by the S&T and CWMD offices and address the needs in areas that include the

  • Federal Emergency Management Agency
  • Cybersecurity and Infrastructure Security Agency
  • Transportation Security Administration
  • U.S. Citizenship and Immigration Services
  • U.S. Coast Guard, U.S. Customs and Border Protection
  • U.S. Immigration and Customs Enforcement
  • U.S. Secret Service

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What are the DHS SBIR Topics?

The solicitations found in DHS SBIR typically consist of topics relevant to the following organization focus areas:


What are the DHS SBIR Eligibility Requirements?

The eligibility requirements for DHS SBIR follow the same track as other government agencies. 

The requirements necessary to apply for—and receive—SBIR funding include:

  • Must be a for-profit business
  • Must be based in the U.S.
  • Must have 500 or fewer employees
  • The Principal Investigator must be primarily employed (more than 50 percent) with the small business applicant

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Your SBIR proposal must offer quality research and develop new processes, products, and technologies to support the missions of the DHS and the U.S. government.

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DHS SBIR Program Phases

The DHS SBIR program consists of a three-phase, highly competitive award system that funds qualified small businesses to propose and develop innovative ideas and technologies. 

The overall effort must meet specific homeland security research and development technology needs.

Now, let’s examine each phase more closely.

DHS SBIR Phase I

DHS SBIR Phase I kicks off the program and is referred to as the “Scientific and Technical Feasibility Study.” In this Proof of Concept phase, specific funds are available to cover a set period.

How Much is the DHS SBIR Phase 1 Award?

Phase I typically funds up to $150,000.

How Long is DHS SBIR Phase 1?

Phase I covers five months to determine the proposed effort’s scientific and technical merit and feasibility. Phase I awards are typically made within 45 days after selection.

DHS SBIR Phase II

DHS Phase II continues your efforts and is referred to as “Full Research/R&D.” Known as the Prototype Demonstration phase, Phase II also has a set amount and timeframe. 

How Much is the DHS SBIR Phase II Award?

Phase II typically funds up to $1 million.

How Long is DHS SBIR Phase II?

Phase II covers 24 months to continue the R&D effort from the completed Phase I project and work towards a prototype demonstration.

Only SBIR Phase I awardees are eligible to participate in subsequent phases. However, options for S&T SBIR Phase II projects with firm commitments for follow-on funding may be exercised.

DHS SBIR Phase III

DHS Phase III is the outlier of the three SBIR phases. 

This Commercialization phase is funded with private or non-SBIR dollars with the goal of commercialization or continuing the development and testing that initially kicked off with SBIR funding. 

Since it’s non-SBIR funded, there’s no cap to Phase III dollar amounts and no set timeline for completion.

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How do I Apply for a DHS SBIR Award?

To apply for DHS SBIR, first develop a ground-breaking, innovative research idea that can be commercialized. 

You need to learn about eligibility, your proposal requirements, and more.

For a step-by-step guide through this SBIR application process, follow the federal government’s roadmap for applicants here.

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Who are the DHS SBIR Program Contacts?

The main point of contact for the DHS SBIR program is Dusty Lang, the SBIR Program Director for the DHS. 

To contact the director, email stsbir.program@hq.dhs.gov or call 202-254-7000. For information specifically regarding CWMD’s SBIR program, email cwmd.sbir@hq.dhs.gov.

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Who has Won DHS SBIR Phase II Awards?

Through its many years in operation, the DHS SBIR program has recognized numerous small businesses for stellar achievements, awarding them funds to develop innovative ideas and paradigm-shifting technology.

DHS SBIR success stories highlight small businesses that have made crucial contributions to protecting the country from various threats. 

These examples showcase several small businesses from around the nation that have worked with S&T to develop and support the technology needs of our nation and homeland security end-users.

N5 Sensors Inc.

Total DHS SBIR Investment: $850,000

Maryland-based N5 Sensors Inc. received an SBIR award from the DHS S&T to develop an ultra-small, low-cost hazardous gas and particulate matter detector using novel chip-scale chemical sensor technology that firefighters can use.

“In essence, we are harnessing the power of nanoscale materials and combining that with advanced semiconductor manufacturing techniques,” explains Dr. Abhishek Motayed, Founder & President of N5 Sensors. “The result is a wearable, ultra-low power microscale robust gas sensor that can save lives is easy to manufacture, and can dramatically drive down costs.”

Phase II funding was awarded through the DHS Commercialization Readiness Pilot Program (CRPP), which allowed the company to continue the development of the technology. 

N5 Sensors also received a $1.2 million contract from the Combating Terrorism and Technical Support Office (CTTSO) to advance beyond detecting toxic industrial chemicals.

“The DHS S&T SBIR program was tremendously valuable, and the Program Managers were the reason we could connect and ultimately work with other agencies,” says Motayed. “Not only did it provide valuable next-round funding for the product development, but it gave us a platform to showcase the applicability of this technology.”

Polestar Technologies, Inc.

Total DHS SBIR Investment: $1.1 million

Massachusetts-based Polestar Technologies developed the capability of chemical identification of explosives hidden by a person at a distance. 

Originally designed to assist U.S. troops in conflict zones, the Self-Tracking and Reconnaissance of Explosives (STARE) System detects small amounts of explosive materials concealed beneath clothing, hidden in backpacks, or hand-carried baggage. 

“This is a very novel technology that doesn’t require an operator sitting by the instrument but could, in the future, be scaled up to meet other needs,” says Dr. Ranganathan Shashidhar, Senior Vice President of Research and Technology at Polestar Technologies.  “We’ve had talks with some major companies, including those in the sports and entertainment industry, and several venture capitalists are helping us take this to the commercial sector.”

Polestar partnered with DHS through another SBIR project called Portable Imager for Stand-Off Detection of Homemade Explosives; the project aimed to produce images positively identifying the presence of explosives while being able to detect and identify different types of military explosives and homemade explosives.

“The DHS SBIR program was a critical influx for us to take our product to the next level,” explains Dr. Shashidhar. “It opened up many applications since we automated the product under the DHS SBIR. We are now in talks with United States Special Operations Command, as well as the Army and the Navy.”

Applied Visions

Total DHS SBIR Investment: $2.2 million

In 2014, the DHS S&T released an SBIR topic seeking a hybrid analysis solution that combined  static and dynamic tools to locate vulnerabilities and security weaknesses in software and application code. 

Through its Secure Decisions Division, New York-based Applied Visions won a DHS SBIR Phase I award and subsequent Phase II award to develop Code Ray. This tool combines static and dynamic analyzers to locate more source code weaknesses.

Code Ray was the first tool that helped prioritize vulnerabilities by mapping them to industry standards and regulations. Applied Visions leveraged its developments from the SBIR project and provided customers with a first-of-its-kind technology to prioritize and manage application security risk.

“The SBIR allowed us to integrate the Code Ray technology into our existing Code Dx product line,” explains Ken Prole, CTO of Code Dx, a spinoff of Applied Visions developed under DHS SBIR. “This was a huge advancement in technology. There is more information from the dynamic findings, and now developers know where to focus their efforts to fix the problems.”

You Could Be The Next DHS SBIR Success Story

From the standpoint of protecting national interests—and American citizens—from various threats, the DHS is one of the most crucial federal departments. 

As such, the country’s decision-makers will continue to look to the innovative minds behind small businesses for new technologies geared toward the DHS’s ultimate goal.

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Team 80 CEO Sarah Sinicki

Sarah Sinicki

Team 80 CEO

Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.