Hi! Yes, you can use your 7% small business fee for IP-related expenses.
Per NSF guidelines, “Up to 7% of the total indirect and direct project costs may be requested as a fee. The fee is intended to be consistent with normal profit margins provided to profit-making firms for R&D work. The fee applies solely to the small business receiving the award and not to any other participant in the project. The fee is not a direct or indirect “cost” item and may be used by the small business concern for any purpose.”