NIH SBIR Grants: How to Disclose and Protect IP and Proprietary Information

by Tom Hollon

Newcomers to NIH SBIR grants often wonder, “Do I have to disclose my company’s intellectual property in the research plan — and if I do, how can I do it safely?”

NIH defines proprietary information as “patentable ideas, trade secrets, privileged or confidential commercial or financial information, disclosure of which may harm the applicant.” NIH advises you not to disclose proprietary information unless you feel you have to for reviewers to understand your SBIR research project. Even then, don’t disclose anything proprietary without talking it over first with your company’s management and patent attorneys. Follow their advice.

If you decide you must disclose IP, protect it by following NIH instructions:

NIH explains how to disclose proprietary information in its SF424 instruction guide for writing SBIR and STTR grants. Its full title is, “SF424 (R&R) SBIR/STTR Application Guide for NIH and Other PHS Agencies.” It’s easy to find through Google and download as a PDF file.

(By the way, the SF424 SBIR guide changes from year to year, so always get the latest version. My comments here are based on the version of July 25, 2011; pages I-70, I-72-, I-124, III-46, and III-54.)

The following disclosure instructions are from page  I-124 of the guide. The use of bold and colored text is mine.

“Notice of Proprietary Information

“Applicants are discouraged from submitting information considered proprietary unless it is deemed essential for proper evaluation of the application. However, when the application contains information that constitutes trade secrets, or information that is commercial or financial, or information that is confidential or privileged, make sure you have checked the “Yes” box of question #3 in the “Other Project Information” component. Identify the pages in the application that contain this information by marking those paragraphs or lines with an asterisk (*) in the left-hand margin. Include at the beginning of the Research Plan which pages contain asterisks and a note stating “The following sections marked with an asterisk contain proprietary/privileged information that (name of Applicant) requests not be released to persons outside the Government, except for purposes of review and evaluation.

“When information in the application constitutes trade secrets or information that is commercial or financial, or information that is confidential or privileged, it is furnished to the Government in confidence with the understanding that the information shall be used or disclosed only for evaluation of this application. If a grant is awarded as a result of or in connection with the submission of this application, the Government shall have the right to use or disclose the information to the extent authorized by law. This restriction does not limit the Government’s right to use the information if it is obtained without restriction from another source.”

Disclosure example

If you intend to disclose proprietary information, the instructions tell you to insert an alert notice such as this at the beginning of your research plan (I suggest using bold letters):

PROPRIETARY INFORMATION NOTICE: On pages ####, the following sections marked with asterisks in the left-hand margin contain proprietary  / privileged information that (insert Applicant name) requests not be released to persons outside the Government, except for purposes of review and evaluation.

Then, at each section on the appropriate page, insert left-hand margin asterisks to mark proprietary info. I suggest also using capital letters to make sure reviewers notice, like this (where I’ve used latin text as filler):

*PROPRIETARY INFORMATION: Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do *eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud *exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor.

If you’re really paranoid (and you know what they say: just because you’re paranoid doesn’t mean they aren’t out to get you) you can double up on the all caps, like this:

*BEGIN PROPRIETARY INFORMATION: Lorem ipsum dolor sit amet, consectetur adipisicing elit, *sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis *nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor. *END PROPRIETARY INFORMATION.

NEVER put proprietary information in your SBIR abstract

Never disclose proprietary information in your SBIR grant application’s abstract (also called a Project Summary) because the abstract will be included in NIH’s public database (the NIH RePORTER) of funded grants. Every SBIR abstract of every funded SBIR grant is there in the database for anyone to see.

WARNING: The Freedom of Information Act (FOIA) makes your SBIR grant available for public release

If your SBIR grant application is not funded, it remains your company’s property. But if your SBIR grant does win funding, things change. Here I quote from page III-46 (italics, bold and colored text, etc., are mine):

The Freedom of Information Act and implementing DHHS regulations (45 CFR part 5) require the release of certain information about grants upon request, regardless of the intended use of the information.

Generally available for release, upon request are:

  1. all funded grant applications and progress reports including their derivative funded noncompeting supplemental grant progress reports;
  2. pending and funded noncompeting continuation progress reports;
  3. progress reports of grantees;
  4. and final reports of any review or evaluation of grantee performance conducted or caused to be conducted by the DHHS.

Generally not available for release to the public are:

  1. competing grant progress reports (new, resubmission, renewal, and revisions) for which awards have not been made;
  2. evaluative portions of site visit reports;
  3. and summary statements of findings and recommendations of review groups.

Trade secrets and commercial, financial, or otherwise proprietary information may be withheld from disclosure. Information, which, if disclosed, would be a clearly unwarranted invasion of personal privacy, may also be withheld from disclosure. Although the grantee institution and the PD/PI will be consulted about any such release, the PHS will make the final determination. If a requested document contains both disclosable and nondisclosable information, the nondisclosable information will be deleted and the balance of the document will be released.

Other NIH SBIR policies important to your business

NIH’s SF424 SBIR guide describes NIH SBIR and STTR policy regarding a number of other topics important to your company’s business. Among them are NIH policies for rights to data developed under SBIR/STTR funding, copyrights, inventions and patents, sharing research tools and data, and joint ventures and limited partnerships. For details see the guide.

Summary

1. Do not disclose proprietary information unless you feel it’s essential if reviewers are to understand your SBIR research plan; even then, talk it over with company management and patent attorneys and follow their advice.

2. Never disclose proprietary information in your SBIR abstract because SBIR abstracts are always disclosed to the public.

3. If you win a SBIR grant, it will be available for public release, except for its proprietary information, which is supposed to be withheld. If your competitors want to see copies of your grant, that’s their right.

4. Download the latest version PDF of the SF424 (R&R) SBIR/STTR Application Guide for NIH and Other PHS Agencies and follow its instructions about disclosing proprietary information to the letter. The instructions may be in several places within the guide, so try finding them with a PDF search using the keyword, “proprietary information”.

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