The following is a summary only. Interested parties should arrange individual consultation.

Small Business Innovative Research (SBIR) program requires certain government agencies to set aside a percentage of their R&D budgets for award of research contracts to small businesses.

The SBIR program provides up to $850,000 in early stage R&D funding directly to small technology companies and an equal amount is provided through the Small Business Technology Transfer Program (working collaboratively with a research institution, e.g., university. Participating agencies included the Department of Defense and the National Institute of Health. It is important to note that these are not loans requiring repayment by the small business. Thus strategic use of SBIR’s may further the inventor’s product development efforts.

One important principal is that the government gets no rights in developments or information that are not required to be delivered to the government as a contract requirement. This includes “limited rights data”, i.e., data developed at private expense that embodies trade secrets or commercial or financial confidential information. (Be careful what you promise to deliver. Carefully scrutinize the Contract Data Requirements List or “CDRL’s”))

The government does obtain a paid up, world wide license in any innovation made in performance of the SBIR contract. The license is limited to government use. The government reserves the right to cause the inventor/SBIR contractor to license others for government purposes.

Note that the government will not make public information disclosing an SBIR invention for up to four years to enable the inventor/SBIR contractor time to file for patent protection.

Note, however, inventions must be reported promptly to the government. This may be as short as within two months of the inventor’s initial report to the contractor organization. The contractor must also make a written election of its intent to retain ownership of the invention. Both steps may be required.

Further, data submitted in the proposal may be subject to disclosure under FOIA. Be careful what you submit in the proposal and include a Notice of Proprietary Information (on the proposal cover sheet and on the pages of the proposal containing the proprietary information).

The SBIR program also discusses rights in computer software. Included is the familiar distinction between “unlimited rights” and “restricted computer software”.

Restricted computer software is software developed at private expense, including software that is copyrighted.

Unlimited rights means the right of the Government to use, etc., data in any manner and for any purpose or permit others to do so. This includes form, fit and function data. But note “form, fit or function” data “specifically excludes the source code, algorithm, process, formulae, and flow charts of the software.”