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.

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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. 

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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.

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