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Course 9, Tutorial 7

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One of the greatest attributes of the SBIR/STTR Programs is data protection. Note: I will refer to SBIR/STTR going forward as only SBIR for convenience because most of what we will discuss applies to both programs equally. If the STTR program differs, I will note that. To continue: while SBIR funding is important, SBIR Data Protection protects the critical market the SBIR firm hopes to create for its innovative product. This tutorial relates to protecting SBIR Data.

Let’s first ask: What is SBIR Data? After all, if SBIR Data is to be protected, we need to know what it is, and is not. The most recent SBA SBIR Policy Directive, effective May 2, 2019, divides SBIR Data into two categories: Technical Data and Computer Data. Both relate to Data generated under an SBIR funding agreement. Technical Data is any data of a technical nature. Computer Data is computer related data, with minor exceptions. These definitions apply to both SBIR and STTR. The Government cannot disclose appropriately marked SBIR Data outside of the Government. Thus, marking is the key to protecting SBIR Data.

SBIR Data does not include Form Fit and Function Data, which is broad data that is non-technical in nature. Think of it, for instance, as the instructions on how to assemble something. Simply reciting “put Tab A into Tab B” would not constitute SBIR Data. SBIR Data also does not include financial information. A separate law protects such proprietary information from Government disclosure.

What is marking? Marking SBIR Data refers to the process of affixing the SBIR Data legend to all data generated under an SBIR funding agreement. Appendix I of the Policy Directive sets forth the legend that SBIR and STTR firms must affix to documents containing SBIR or STTR Data. Affixing the legend notifies the Government that the document contains SBIR Data. This triggers the Government’s nondisclosure obligation not to disclose the Data outside of the Government for a period of 20 years, starting on the date of award.

The SBIR/STTR legend consists of three parts: First, the title, which reads: SBIR/STTR Data Rights. The second part is a five row chart that must be filled in, requiring the following information: 1) the funding agreement number; 2) the award date; 3) the date 20 years out from the award date, referred to as the protection period; 4) the awardee’s name; and 5) the awardee’s address. The third part of the legend is a paragraph of text describing the Government’s rights and obligations. Affixing this three-part legend to a document accurately and completely, in filled out form, is referred to as “marking” SBIR Data. The SBIR clause setting forth the legend requires that the legend be placed on every page of the document. More on that requirement later. This clause and legend are the same for both SBIR and STTR funding agreements, as well as the same for both civilian and military agency awards. All agencies have now agreed to abandon the FAR and DFARS clauses and use SBA’s clause instead, which includes the legend.

Marking SBIR Data is vital and essential to protecting the Data. Failure to mark, or to mark SBIR Data inappropriately, gives the Government Unlimited Rights in the SBIR Data. Unlimited means exactly that. With such rights, the Government can include this unmarked or inappropriately marked data in solicitations, compete it, disclose it directly to commercial firms, disclose it to the SBIR firm’s competitors, and use it for any purpose, even to develop a commercial product from it and sell it, or have others do so. The SBIR firm can cure a failure to mark, or correct an inappropriate marking, within six months of submission of the document. However, the Government retains Unlimited Rights in the Data all the while the failure exists and until the cure is effective. Thus, Failure to mark or to mark inappropriately can result in a catastrophic loss of the Government’s nondisclosure obligation and the SBIR firm’s market for its eventual product. Marking, however, turns the tables completely. Appropriately marked SBIR Data triggers the Government’s nondisclosure obligation. The Federal Trade Secrets Act, 18 USC §1905, puts teeth into that obligation. The Act makes it a felony, punishable by a big fine and prison term, for a federal official to disclose trade secrets. SBIR Data are such trade secrets. So marking is the first key to protecting SBIR Data.

So how does one correctly mark SBIR Data? First, the entire filled out legend should be included on the front title page of any report or submission containing SBIR Data. Bolding the legend helps. This title page marking puts the Government on notice that the document contains SBIR Data. Second, the legend must be included on every page, according to the Policy Directive. There are two ways of accomplishing this. One is to create a document with the legend title and the five rows of entries from the box in the legend listed on the left (the actual box outline need not be included) and the paragraph of text typed into the right of the title and these five rows of information. Make absolutely certain the document creating this legend is accurate down to spelling, commas, and periods. There is no size of font requirement, so a small eight-point font would be adequate. Then copy this legend into the footer or header of each page of the document. That satisfies the Directive’s requirement. Another, slightly more efficient way to do this is to affix the legend to the title page, and then create a statement that reads: “This page governed by the SBIR/STTR Data Rights legend set forth on the title page, which is incorporated herein, as if written out in full.” Then copy that statement into the header or footer of every page of the document following the title page. With either of those alternatives, the document is accurately and appropriately marked.

Now, a few Do’s and Don’ts. Do mark all documents under SBIR funding agreements. This marking requirement applies to all types of funding agreements—grants, contracts, cooperative agreements, Other Transaction Agreements, task orders of any type, and any other Government funding agreement, no matter what the Government calls it. Marking also applies to any document containing SBIR Data, even if that document is not connected to a funding agreement. An example would be a presentation to government personnel of an agency, other than the funding agency, who would like to hear about the SBIR innovation.

Do not affix the SBIR legend to a proposal, even if the proposal contains SBIR Data, which may be true for a Phase II or Phase III proposal. A separate law protects proposal information. Marking a proposal with the SBIR Data Rights legend is inappropriate. Be aware that some agencies, like the Department of Energy, prescribe how to mark your proposal. DOE’s proposal marking requirements are detailed, complex, but required. When agency SBIR solicitations contain such requirements, follow them carefully and fully. However, do not use such proposal markings to protect SBIR Data outside of the proposal.

Sometimes, a document may contain both proprietary, non-SBIR Data, and SBIR Data. In that case, for such a document, you can stack legends on top of one another. Affix the SBIR legend, and then below it place the proprietary and confidential legend. This would indicate the presence of both types of data. The agency may request identification of SBIR and proprietary data in the document.

Additionally, do not assume a prior legend covers a later document. For instance, if the Government requests additional information after submission of a document containing SBIR Data, mark the second supplemental document again. A marking applies only to the document on which it is affixed.

Also, avoid voluntary disclosure of SBIR Data. If the Government requests a briefing of your SBIR project, ensure that all attendees at that presentation are Government personnel. The only exception would be personnel of a support services contractor. These types of contractors operate inside the Government, and have signed nondisclosure agreements with the Government preventing disclosure of information they receive in the course of their work. Before making the presentation, ask if any non-Government personnel are present. If so, have them excused, except for support services contractor personnel. Voluntarily disclosing SBIR Data to non-Government personnel, absent a nondisclosure agreement, can result in loss of the Government’s nondisclosure obligation.

In connection with this, learn how to discuss your SBIR innovation without disclosing SBIR Data. For instance, describing at a high level how the eventual product will benefit federal agencies, other customers or society, potential future applications, test results, or non-technical characteristics of the innovation, does not disclose SBIR Data. However, discussing chemical composition of the innovation, computer code architecture, or other technical aspects, gives away trade secrets, if voluntarily disclosed without Data Rights protection or a nondisclosure agreement.

One clarification regarding patents. Data Rights protection is a unique SBIR right and benefit resulting from nondisclosure of SBIR Data. In contrast, patenting is by nature a disclosure process. The patent document must disclose a sufficient amount of data so that a person “skilled in the art” could replicate the invention. The SBIR Data in a patent, when published, becomes public, and loses its nondisclosure protection with the Government. That disclosure is in exchange for the patent monopoly, which the SBIR firm will have to enforce. Patenting has its place, but data that is never disclosed can never be used by a competitor.

If an agency requests removal of SBIR markings, challenge such a request. Obtain professional help, if necessary, to retain the markings and ensure nondisclosure.

I hope this presentation has proved helpful.

Tutorial 7
SBIR Data Marking: What, Why, How?


(1) Which of the following is a false statement?

(2) The statement that “SBIR/STTR data are generated under an SBIR funding agreement” means that:

(3) True/False? To protect your SBIR/STTR data rights all you have to do are two things: (1) mark all documents containing SBIR data rights with the SBIR/STTR Data Legend in the appropriate format and (2) assure that NDAs are in place with individuals with whom you discuss your SBIR/STTR data.

(4) True/False? When an SBIR/STTR solicitation provides guidelines on how to protect proprietary information contained in your proposal, this protects your SBIR/STTR data rights.

(5) True/False? A small business can claim SBIR/STTR data rights on technical data generated under an SBIR/STTR funding agreement, even if they did not appropriately mark documents submitted to the government containing SBIR/STTR data.

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