How to Build an SBIR IP Strategy That Wins Long-Term Government Contracts According to Martensen IPColorado Springs, CO, May 28, 2026 (GLOBE NEWSWIRE) -- <a href="https://www.globenewswire.com/Tracker?data=gkSsp5wo4xnlf3BQe1UvtT9sF5ZyzGwRG59WJtm1N0nWQnBCKOP4iYnOzBQNzcjNFXFaFo6tg0N8iBtX1lVUG5YCWtc1WVSXipdKQ0RzCkzcI4Fmbylu1RkES54PhlHfqLPxA0uiVSHCNCjpVVXZUCSdxRWbjE7gYPGbRV4BHGc=" rel="nofollow" target="_blank" title=""><img alt="business woman using tablet" src="https://newsroom.submitmypressrelease.com/system/media_files/images/000/072/311/original_jpeg/iStock-2222819309_2605260749449.jpg" /></a> For innovative small businesses, the Small Business Innovation Research (SBIR) program is often viewed as the ultimate gateway into the federal marketplace. Phase I validates an idea, and Phase II proves the technology works. But SBIR Phase III is where companies transition from research and development into sustained government procurement and true SBIR commercialization. This distinction is critical because everyone wants to reach the final stage where technology becomes an operational reality. The challenge is that many companies focus almost exclusively on winning their Phase I and Phase II awards while overlooking the intellectual property strategy required to maximize Phase III government contracts. In reality, the companies that successfully scale into long-term defense and government contracts rarely rely on a single layer of protection. Instead, the strongest companies build a comprehensive government contractor IP strategy from the beginning, combining SBIR data rights, patents, copyrights, and trade secrets into a coordinated framework that makes them more competitive, valuable, and difficult to replace.  At Martensen, we help innovative companies navigate the intersection of intellectual property, government contracts, and commercialization strategy to ensure their technology is positioned for adoption across government and commercial markets. Why Phase III Is So Valuable SBIR Phase III is unique because it allows federal agencies to continue purchasing technology developed under prior SBIR work using non-SBIR funding. That distinction matters, especially for a growing company. Once an organization demonstrates during Phase I and Phase II that its technology solves a real government problem, the next step is often approaching major commands, program offices, or acquisition groups and demonstrating that the prototype is operationally viable. In the defense space, that conversation frequently becomes: “Here is the technology we developed that addresses your mission needs. What do you want to buy?” The promise of this stage is found in the fact that opportunities are not limited in size or scope. They can include production contracts, procurement agreements, follow-on research, integration support, sustainment programs, and large-scale deployment efforts. Additionally, federal law and SBIR policy directives provide important sole source SBIR contracts for businesses with properly protected data. However, the reality inside many government agencies is often more nuanced than the policy suggests. The Practical Challenge: A Preference for “Low-Risk” Suppliers Major government commands and acquisition offices often prefer working with large, established contractors. Why? That is their preference because those entities are perceived as lower-risk suppliers. These firms are often seen as more scalable, operationally mature, better positioned for manufacturing and deployment, and easier to integrate into existing procurement systems. Overcoming this common government acquisition strategy and preference can be difficult for a small business. Even when a startup develops breakthrough defense innovation IP, agencies may hesitate to rely exclusively on an emerging company for long-term operational needs. The result is a tension where the agency wants the innovation but also desires the flexibility to integrate that technology into larger programs involving major prime contractors. This is where a sophisticated intellectual property approach becomes critical to maintaining your position in the market. SBIR Data Rights Are Powerful But Limited SBIR data rights are one of the most valuable protections available to innovative government contractors. These rights limit the government’s ability to disclose protected technical data outside the government during the protection period. In practice, this can create significant competitive advantages because agencies cannot simply provide protected SBIR technical data to another contractor. Many companies assume that preserving maximum SBIR rights at all costs is always the best strategy. But sophisticated commercialization often requires a more carefully crafted approach. In some situations, companies strategically negotiate portions of their SBIR data rights to make adoption easier for major commands or large integrators. Done properly, this can significantly increase the likelihood of broader procurement opportunities. Importantly, that does not mean giving away the company’s competitive advantage. Instead, successful companies build multiple layers of protection that work together. The Multi-Layered IP Protection Strategy That Positions Companies for Phase III The most successful SBIR companies typically rely on a layered IP protection strategy rather than a single form of intellectual property protection. At Martensen, we recommend overlapping protections that may include: <ul><li> SBIR data rights. SBIR data rights help protect technical data (trade secrets and copyrights) generated under the award and can support sole-source positioning during Phase III.</li><li> Patent protection. A robust patent strategy can protect the underlying inventions, systems, methods, and technological innovations independent of SBIR data rights. A well-developed patent portfolio may allow a company to negotiate data rights more flexibly with agencies or prime contractors because core innovation protections remain intact.</li><li> Copyrights. Software code, technical documentation, interfaces, training materials, and related creative works may qualify for copyright protection. Together, these protections create layered barriers that strengthen long-term market positioning.</li></ul> Why Patent Strategy Matters in Government Contracting One of the most overlooked aspects of this process is the relationship between patents and data rights. While data rights protect specific technical data (one version of a solution) from disclosure, patents protect the inventions (the functionality) themselves. Companies that rely only on data rights may eventually encounter resistance from acquisition offices that want long-term program stability. For example a company that is unreasonable in their SBIR data demands may find that the government ask another contractor for a "different" solution. You have proven that your concept works, but lacking a patent the government, without disclosing your “data”, can ask for another company for their version of a solution. A patent would prevent this very scenario. A firm with a carefully structured patent portfolio strategy can negotiate from a position of strength. This competitive leverage supports government technology licensing and increases overall company valuation. Additionally, these protections remain in place even if the company pursues dual-use technology commercialization in the private sector. Building the Strategy Early Creates Leverage Later Every federal agency handles SBIR programs differently, and their priorities shift once a technology reaches operational maturity. Acquisition teams begin asking whether a solution can scale, if it can be manufactured reliably, and whether the government has sufficient rights to operationalize it. Companies that proactively address these concerns through early strategic planning are better positioned to move beyond prototype status. Too many firms wait until Phase II or later to think seriously about their intellectual property structure. By that point, critical disclosures may have occurred or patent opportunities may have been compromised. The strongest strategies involve identifying patentable innovations before public disclosure, determining what should remain a trade secret, and ensuring all contractor agreements are structured properly. Along the way, other key actions include preserving SBIR markings and compliance requirements, preparing for future licensing and teaming negotiations, positioning for acquisition or strategic partnerships, and planning for government and commercial dual-use opportunities. Successful IP Protection in Action: Real-World Case Studies Our team at Martensen has seen the benefits of a strategy-first approach firsthand with clients like Elroy Air and Blue Line Engineering. For a company like Elroy Air, which focuses on autonomous aerial cargo systems, the strategy requires balancing autonomous software, proprietary control architectures, hardware integration, and logistics optimization. Our <a href="https://www.globenewswire.com/Tracker?data=Ynmw2tXIGI276KEFZuqN0Cbby9nNgd-YZtJuxKyfoRx35y3kj8ZtSsIsrQmeJ8S_erXbrRMUKOGIkCZuZaDNdIfmBykYWVXzO6JP9azufQuimRhKWKBPO8jsmiCCdj77EHTDcUPUwGqZQJxZORvVR6sBIekp7QGg4I4LPShI8_c=" rel="nofollow" target="_blank" title="Elroy Air case study">Elroy Air case study</a> has details. Similarly, our <a href="https://www.globenewswire.com/Tracker?data=bEdNGQd5MaSZh3v8epHsY5IZFOcYx1txq5oXfr10jI6HJYL1gG6yPKPewsrqgsH1GwrlSbOfiCnq6RX3N4l1SI6vIUaEIrINQGxKdyRM-HJQxSndaQe5Pi7RXWft0LDOP8rZUEtqydCuCpuvh0QVuAQwt8eWOt78y86tXLMfPstw1KeaUP1G4r-xO1W3ZJbhyci3rvZy0AhwOFxfMndbFA==" rel="nofollow" target="_blank" title="Blue Line Engineering case study">Blue Line Engineering case study</a> demonstrates how engineering-focused companies must align their IP with prime contractor relationships and proprietary manufacturing processes. Winning SBIR Phase III Requires More Than Great Technology Exceptional technology alone is rarely enough to secure long-term government adoption. Success requires strong technical performance combined with credible commercialization planning and sophisticated management of your intellectual property. How does Martensen help companies align their legal protections with their business growth objectives? Our team assists them in several ways, including that we: <ul><li>Develop comprehensive IP strategies</li><li>Align patents with SBIR commercialization goals</li><li>Protect trade secrets and proprietary data</li><li>Navigate government IP concerns</li><li>Structure licensing and technology agreements</li><li>Prepare for Phase III opportunities</li><li>Build layered protection strategies designed for long-term growth</li></ul> For companies pursuing SBIR opportunities, the goal should not simply be winning Phase I or Phase II. The real objective is building a durable competitive position that supports SBIR Phase III procurement, commercialization, and long-term enterprise value. And that requires strategy from the very beginning. <hr /> About Martensen IP At the intersection of business, law and technology, Martensen understands the tools of IP. Martensen knows the business of IP. We understand the tech market, especially when the government is a customer, and we know how to plan, assess, and adjust. Patents, trademarks, copyrights, trade secrets, licenses are our tools. <a href="https://www.globenewswire.com/Tracker?data=iLPtKIMUot4Yjl59vfVxc2ksyryEol9CX98Yc1a9JDhem3TDpml0dY_59W4t-jz18tHs1yWaZGTx_lGNwNAyMCvg7Kr1pW2c_53Z6KcKaLtDxLb2BSafMt7ZPxtMt4mh" rel="nofollow" target="_blank" title="">https://www.martensenip.com</a> Martensen IP Media Contact Mike Martensen | Founder 719-417-8709 <img alt="" src='https://ml.globenewswire.com/media/Nzg3MmEwZGItMzNkYi00Zjg0LWFhYzQtOTkyYzgzZmQ4MTFlLTEyMTk0NTctMjAyNi0wNS0yOC1lbg==/tiny/Martensen-IP.png' referrerpolicy='no-referrer-when-downgrade' />

Martensen IP Offers Strategic Insights on Building A Successful IP Protection Strategy and Why Patent Strategy Matters in Government Contracting

Latest news from the world of business and finance – both local and global

MONEY FM 89.3 is Singapore's first and only Business and Personal Finance station, featuring local and international business and financial news.

MONEY FM 89.3

Discover newsletters from our DJs on LinkedIn