Disclaimer: This article is provided for educational purposes only, and is not a substitute for professional advice. You should not rely on this article for legal advice. Legal advice needs to be tailored to specific circumstances, and you should therefore consult with an attorney for advice regarding your particular situation. No attorney-client relationship is created by presentation of this information.

Since 1982, the federal government has awarded Small Business Innovation Research (SBIR) funding totaling more than $12 billion. SBIR funding is often easier to secure than angel or venture capital funding, so SBIRs are an important source of revenue for science and technology companies.

SBIR funding is awarded either as a grant or as part of a contract. SBIR contractors must grant certain intellectual property rights to the government. It is therefore particularly important to understand SBIR contract provisions relating to intellectual property, as well as related pitfalls.

Patent rights in inventions developed under SBIR contracts. SBIR contractors are generally required to sign a contract with the government.

Most SBIR contracts contain a patent rights allocation clause. This clause specifies the rights retained by the contractor and the rights granted to the federal government in inventions developed under the SBIR contract. Usually the contractor can retain title to patents granted for inventions that were conceived or first actually developed when performing work under the SBIR contract. Even when retaining title to the patent, the contractor must grant a nontransferable license to practice the invention to the federal government. The government may practice the invention on its own behalf or authorize others to practice it for the benefit of the federal government.

This type of allocation clause does not automatically allow the contractor to retain title to the invention. The contractor must first disclose the invention to the government and then elect in writing to retain title. If the contractor fails to fulfill either of these requirements within pre-specified time limits, the federal government can claim title to any patent awarded for the invention.

It is also very important to maintain good written records for inventions that were not created and first developed under the SBIR contract. Otherwise, the contractor may not be able to defend against the accusation that certain inventions were developed under an SBIR contract when, in fact, they were developed under private funding. Additionally, as with all patentable inventions, filing deadlines should be monitored. For example, an invention becomes unpatentable in the United States if it was sold, offered for sale, or disclosed in a publication more than one year before the first filing of a patent application. Most foreign countries do not provide this one-year grace period and instead require absolute novelty for patentability.

Rights in non-commercial computer software and technical data disclosed to the government. What rights does the government get in the non-public technical information and software that is developed and delivered under an SBIR contract? The rights obtained by the federal government for computer software and trade secrets generally depend on the extent to which they were developed under the SBIR contract. For example, software and software documentation created under the SBIR contract are generally released with no limitations to the federal government.

On the other hand, information and software developed under private funding are delivered to the federal government with much more limited rights. Records of how information and software are conceived and developed should therefore be retained, especially if the information or software was developed under private funding.

Finally, contractors can sometimes negotiate the extent of intellectual property rights granted to the federal government under a SBIR contract. The federal government is authorized to allow contractors to retain more rights (in certain cases) than are often specified in the contract clause templates used by the federal government.

These are just some of the issues that must be addressed in protecting your intellectual property. SBIR contracts can vary, and you should consult with your intellectual property attorney for assistance with your particular situation.

SBIR Resource Center^(R) has been the leading provider of commercial SBIR and STTR resources since 1994. 

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