Gail & Jim Greenwood, Greenwood Consulting Group, Inc.

Copyright © 2002 by Greenwood Consulting Group, Inc.

Protection of intellectual property (IP) is always of great concern to technology entrepreneurs, including many SBIR/STTR applicants. In this article, we want to focus on one aspect of IP protection, namely how you protect it in your SBIR/STTR proposal.

The SBIR/STTR agencies are very aware of your concerns about protecting your IP, and therefore provide guidance on how it should be treated in your proposal. There is considerable difference, however, in how each agency asks you to label the IP in your proposal so that they can be cognizant of its presence and location. Some examples of how agencies want you to highlight any confidential discussion in your proposal include:

NIST asks that all IP be placed on a single page in the proposal that is then labeled as being confidential and proprietary

Many agencies, including DOD, EPA, DOT, and DOE, ask that a legend be placed on the cover, abstract or table of contents that indicates those pages on which confidential or proprietary information is found in the proposal.

Some agencies, including DOD and EPA ask that the specific paragraphs or sentences on those pages be highlighted to further make it obvious what is considered confidential or proprietary. DOD clarifies that it wants asterisks (*) used to delineate such sections, whereas EPA gives more flexibility in how you mark them.

NIH gives the proposer the option of listing the proprietary page numbers in a legend on the table of contents page, or highlighting the actual proprietary sections with asterisks.

Regardless of the agency, there are several rules of thumb on how you should treat proprietary or confidential information in your SBIR/STTR proposal.

Never include any IP in your abstract, as the abstract becomes public information if an SBIR award is made

Don’t label the whole proposal as proprietary or confidential—it’s a bit like crying wolf in that the reviewer is less likely to respect truly sensitive information when you’ve labeled everything including minutia as proprietary.

Never give away the store. Write the proposal assuming the worst, namely that some unscrupulous individual gets their hands on it. You should never disclose in your proposal 100% of your innovation—only provide enough detail to gain credibility with the reviewer that you know what you are doing and are on to something great.

However, do not hide 99% of the innovation and expect the reviewer to trust that you have something neat to offer the agency—you’ve got to give enough information that they can grasp what you are proposing to do.

The split of proprietary rights in an STTR proposal with the non profit research institution (like a university or federal lab), or in an SBIR proposal involving a subcontractor, is up to what you negotiate with them. Note that the split needs to be decided before you disclose a lot of juicy details to this prospective partner while preparing the proposal.

Be sure to carefully follow the instructions for the agency to which you are applying in terms of how you label sections of your proposal that include IP. This will avoid having the proposal rejected (a right the agencies reserve if you don’t follow their instructions on IP labeling) or giving away your IP unintentionally.