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4 min read

Data Rights in SMB Innovation Research & Technology Transfer

Data Rights in Small Business Innovation Research/Small Business Technology Transfer Program

One of the most important benefits of a small business concern (SBC) participating in the Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) programs is the set of SBIR data rights. Throughout this blog, whenever a reference is made to SBIR, it also applies to STTR unless expressly stated otherwise.

The SBC retains the title and ownership rights of SBIR data, both technical data and computer software, developed or generated during its performance of any of the three phases of the SBIR program. The Government obtains license rights in the SBIR data for its use. Still, it is not authorized to disclose the data to an entity outside the Government during the data rights protection period. This effectively gives the SBC exclusive rights to commercialize its developed technology under the SBIR contract.

Within the Department of Defense (DoD), the clause Defense Federal Acquisition Regulation Supplement (DFARS) 252.227-7018 Rights In Noncommercial Technical Data and Computer Software – Small Business Innovation Research (SBIR) Program (MAR 2020) (Deviation 2020- O0007) – applies to all SBIR contracts. This clause defines SBIR data rights as “limited rights” in the SBIR technical data (TD) and “restricted rights” in the SBIR computer software (CS). The terms “limited rights” and “restricted rights” are, in turn, defined in paragraphs (a)(17) and (a)(20), respectively, of the clause and generally mean the Government has the right to use the data within the Government, with no rights to disclose outside the Government without written permission of the data rights owner, the SBC. In absolute terms, “restricted rights” applicable to SBIR CS are narrower in scope than “limited rights” applicable to SBIR TD, even within the Government. One exception to this prohibition against disclosure to an entity outside the Government is the permitted disclosure to a “Covered Government Support Contractor” (CGSC). A CGSC is a contractor whose primary purpose under its own government contract is to furnish independent and impartial advice or technical assistance directly to the Government in support of the Government’s management and oversight of a program rather than to directly provide an end item or service to accomplish the program. They are not affiliated with the prime contractor or a first-tier subcontractor of the program or with a direct competitor of the prime contractor or subcontractor, and they have signed a non-disclosure agreement (NDA) with the Government. An authorized disclosure to a CGSC enables that support contractor to assist the Government’s program management. Such authorization does not, however, include authorization for the receiving CGSC to commercialize the data developed by the SBC.

A template for the NDA is provided in DFARS 227.7103-7. For TD subject to “limited rights” and CS subject to “restricted rights,” including SBIR rights data in a DoD contract, an attachment to the NDA must stipulate the specific conditions under which the intended recipient is authorized to use, modify, reproduce, release, disclose, etc. such TD and CS. For TD and CS subject to special license rights, the NDA template may be modified to list the conditions consistent with the license requirements under which the recipient may use, modify, reproduce, release, etc., the TD/CS. Government contractors that require access to a third party’s TD/CS, including SBIR data, for the performance of a Government contract that includes the clause at DFARS 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends, do not need to sign a separate NDA.  

Per the SBA Policy Directive, under the DFARS 252.227-7018, the Government acquires unlimited rights in specific categories of data such as form, fit, and function (FFF) data and data necessary for operation, maintenance, installation, and training (OMIT) purposes. These are exceptions to the SBIR rights and are based on the nature of the data rather than on the funding source.

In some cases, the Government and the SBIR contractor may wish to negotiate a specially negotiated license for data subject to SBIR data rights rather than relying on DFARS 252.227-7018. For example, the Government may wish to acquire Government Purpose Rights in data that would otherwise be subject to SBIR data rights under the clause. However, such a license may be negotiated only after the award has already been made. It is a separate agreement between the parties that is subsequently incorporated into the awarded contract by a bilateral modification. The Government must not, in any way, make the award of an SBIR contract conditional upon the SBC awardee negotiating or consenting to negotiate a specially negotiated license or other agreement regarding the SBIR data rights. Further, the negotiation of such a license agreement must be voluntary on the part of the SBC and mutually agreeable to all parties. The Government agency awarding the SBIR contract must not exert any pressure or coercion on the SBC regarding any specially negotiated license agreement.

Effective March 2020, the protection period for SBIR/STTR data rights is 20 years from the award date of the contract under which the SBIR data is developed or generated. This protection period is not extended by any subsequent SBIR contracts under which any portion of the previously developed SBIR data is used or delivered. Instead, the data protection period of any such subsequent SBIR contract applies only to the SBIR data developed or generated under that subsequent contract. Therefore, the SBC is advised to align its marketing schedule for commercializing its SBIR-developed technology to this 20-year protection period for each award. Upon the expiration of the data protection period, the DoD acquires a royalty-free license to use within the Government and authorize others to use it on the Government’s behalf for government purposes (i.e., effectively, Government Purpose Rights), is relieved of disclosure prohibitions related to such government purposes, and assumes no liability for unauthorized use of this 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.”

Finally, and most importantly, along with FFF and OMIT data, the Government receives unlimited rights to all unmarked SBIR data, including the right to disclose to anyone for any purpose. To trigger the Government’s non-disclosure obligations, the SBC must place the appropriate SBIR data rights marking on all SBIR/STTR data (other than FFF, OMIT data, and other data listed in DFARS 252.227-7018(b)(1)) before delivering them to the Government. The loss of data rights by failing to place appropriate rights marking on the data may have a catastrophic impact on the SBC’s competitive advantage in the marketplace.

If you are an SBC participating in the SBIR/STTR programs and have developed or generated TD/CS during one of these programs, it is essential to safeguard your SBIR data rights. Contact us, Whitcomb Selinsky, PC, our Government Contracting and Intellectual Property attorneys, will review your SBIR/STTR contract and TD/CS developed during these programs to ensure the appropriate markings are on all SBIR/STTR data before delivery to the Government. If needed, we will negotiate any specially negotiated license or other agreement regarding the SBIR data rights between you and the Government.

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