In my last guest post, I commented how many have written about the Small Business Innovation Research (SBIR) program SBIR.gov and relayed information on patents and basics of the company’s patent rights and program background. In the same post, I discussed the time and expense of either the program proposal submission and the agency compliance mechanisms after an award, or what type of companies can best benefit from the program. I hope to now provide some best practice ideas before and after an award.

Best Use of an SBIR Grant

Small companies in the development or research phase of their product or idea can make the best use of an SBIR Grant. This also applies to established companies with a new product idea or offshoot; you are only giving up rights to that new development. If you are unable to arrange funding or desire other scientific partners then SBIR’s must be considered. You also get the benefit of working with incredibly talented government researchers who are focused in your area of need. I have heard nothing but good things about the investigators the federal agencies assign to assist in SBIR projects. These people are smart. They are also a ready and willing user of innovations that can benefit them. This is a significant and broad potential client base a young company must consider. 

SBIR’s are not best for companies truly concerned about giving up some or all product rights. Even though the company can retain title to the invention or development, and the right to use or practice the innovation, the government retains some level of use rights. This includes the government allowing others, even potentially your competitors, to practice the innovation. However in practice this usually does not occur, but some companies are concerned enough about the rights of the government to avoid the process entirely. 

Government Rights to Your Invention (repeated from last week’s post because it’s important!)

There are three product/innovation rights levels the government can claim to your invention, depending on their level of investment: All the money coming from the agency; mixed funding from your company (such as previously invested development money) and the agency; or all the investment from your company. The discussion is too involved for this blog; the point is to have a professional review what rights in your innovation you are giving up in return for the government investment. 

Summary

SBIR’s can be a great source of sustaining capital for small businesses. They allow extended research with government experts that can provide substantial technical assistance in bringing an idea to practice and commercialization. They provide a ready-made prospect for future sales. Just be aware of the proposal time and expense, and the post-award commitment of the program. Get a professional proposal writer to assist you with the submission. And have a professional review bid and the IP rights in your contract, and be aware of the compliance mechanisms required by your funding agency. 

About the Author: David Blackledge is a recent attorney practicing at Quarles & Brady but previously spent 30 years in various non-legal roles in venture-backed startups. His prior professional focus was primarily contracting, and managing programs, with the federal executive agencies, as well as state and local governments. His current practice includes government contracts consulting and capital formation focusing on startups. 

Disclaimer: Not Legal Advice and No Attorney-Client Relationship Formed
The information and materials on this website are provided for general business informational purposes only and are not intended to be legal advice. The law changes frequently and varied from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances. No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this website is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction. If you require legal advice, please consult with a competent attorney licensed to practice law in your jurisdiction.


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