Data Rights for Contractors and the Government in SBIR/STTR Programs

The Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) programs offer valuable SBIR data rights to small business concerns (SBCs) that participate in them. In this blog, any mention of SBIR includes STTR unless explicitly mentioned otherwise.

Under the SBIR program, the SBC is entitled to maintain title and ownership of all SBIR data, including computer software and technical data, developed or produced during any of the three program phases. While the Government has the right to utilize the SBIR data through a license, it is prohibited from disclosing the data to any external entity during the data rights protection period. As a result, the SBC has exclusive rights to commercialize any technology developed under the SBIR contract.

Data rights under SBIR contracts within the Department of Defense (DoD) are regulated by Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.227-7018. The SBIR program grants the Government "restricted rights" regarding computer software (CS) and "limited rights" in technical data (TD) generated under the SBIR contract. Paragraphs (a)(17) and (a)(20) of the clause define “limited rights” and "restricted rights.” respectively. Generally, these terms mean that the Government has the right to use the data within the Government but is not permitted to disclose it outside the Government without written consent from the SBC that owns the data rights. Even within the Government, the "restricted rights" for SBIR CS are narrower in scope than the "limited rights" for SBIR TD.

Although disclosure of SBIR data to an external entity is generally not allowed, one exception to this rule is the disclosure to a "Covered Government Support Contractor" (CGSC). They have their own contract with the Government. A CGSC is a contractor primarily engaged in providing impartial and independent advice or technical assistance to the Government to support program management and oversight rather than providing end products or services to complete the program. They are not associated with the SBIR/STTR's prime contractor or first-tier subcontractor. They are also not associated with a direct competitor of either contractor. The CGSC also has signed a non-disclosure agreement (NDA) with the Government. Such an authorized disclosure allows the receiving CGSC to assist with the Government's program management, but it does not authorize the CGSC to commercialize the SBC's developed data.

DFARS 227.7103-7 provides a template for the NDA. Attached to the NDA are the conditions under which the recipient is allowed to disclose, modify, release, reproduce, use, etc., the restricted CS/TD, including the SBIR data. If the CS and TD are subject to special license rights, the NDA template may be altered to include a list of the conditions that align with the license requirements, under which the recipient may modify, reproduce, release, use, or take any action related to the CS/TD. If contractors are required to access third-party SBIR data and/or CS/TD for the execution of a government contract that includes DFARS 252.227-7025, they do not lave to sign a separate NDA.

According to the SBA Policy Directive, under DFARS 252.227-7018, the Government obtains unlimited rights to certain categories of data and are exceptions to the SBIR rights. These categories include form, fit, and function (FFF) data and data essential for operation, maintenance, installation, and training (OMIT) purposes. These exceptions are determined by the type of data rather than the source of funding.

In certain instances, it may be desirable for the Government and the SBIR contractor to negotiate a specially negotiated license or Government Purpose Rights for data that falls under SBIR data rights instead of relying on DFARS 252.227-7018. However, this can only be negotiated after the award of the contract. It is an independent agreement between the contractor and the Government that is included in the awarded contract through a bilateral modification. The SBIR contract award cannot be contingent on the SBC awardee agreeing to negotiate the rights in the SBIR data. Moreover, the negotiation of such an agreement must be voluntary for the SBC and mutually satisfactory for all parties. An SBC must not be coerced or pressured into negotiating any specially negotiated license agreement by the agency awarding the SBIR contract.

As of March 2020, the SBIR/STTR data rights protection period is 20 years starting from the date of the contract award that produced or generated the SBIR data. Even if any portion of the developed or generated SBIR data is used or delivered in a subsequent SBIR contract, the protection period for that data is not extended. Any SBIR data developed or generated during the subsequent SBIR contract is protected under its own data protection period. Therefore, it is recommended that the SBC align its commercialization marketing plan for its SBIR-developed technology to the 20-year SBIR/STTR protection period for each award.

After the data protection period ends, the DoD obtains a royalty-free license, of greater scope than limited/restricted rights, to use the SBIR data developed or generated under the SBIR contract. This license permits the Government to use and authorize others to use the data for government purposes, effectively resulting in Government Purpose Rights. Consequently, the DoD is no longer bound by any restrictions on disclosing the data for government purposes. Additionally, it is not liable for any unauthorized use of the data by third parties. “Government purpose” is:

“any activity in which the United States Government is a party, including cooperative agreements with international or multi-national defense organizations or sales or transfers by the United States Government to foreign governments or international organizations. Government purposes include competitive procurement, but do not include the rights to use, modify, reproduce, release, perform, display, or disclose technical data or computer software for commercial purposes or authorize others to do so.”

It is important to note that, in addition to FFF, OMIT data, and data listed in DFARS 252.227-7018(b)(1), the Government acquires unlimited rights to all unmarked SBIR data. This includes the right to disclose it to anyone for any purpose. Therefore, the SBC must apply the appropriate SBIR data rights markings on all SBIR/STTR data before delivering it to the Government. The markings will trigger the Government's non-disclosure obligations. Failure to mark the data appropriately could result in losing data rights, significantly impacting the SBC's competitive advantage in the marketplace.

Protecting your SBIR data rights is crucial if you are an SBC participating in SBIR/STTR programs and have developed or generated CS/TD. To help protect your data rights, the Government Contracting and Intellectual Property attorneys at Veterans Advocacy Law Group will review your SBIR/STTR contract and CS/TD developed during these programs. Our attorneys will ensure appropriate markings are placed on all SBIR/STTR data before delivery to the Government. In addition, if a specially negotiated license or any other agreement concerning the SBIR data rights needs to be negotiated, we can assist you in this process.