The intent of this document is to enable design flows that provide interoperability among IP authors, tool providers, integrators, and users of the IP. The resulting flow identified aids IP authors in providing IP that can be processed by tools without sharing protected information with IP users. Furthermore, this flow can support an integrated licensing scheme, enabling the IP authors to specify compile-time licenses. An integrated rights management scheme is also an element of the flow, which helps IP authors to control tool behavior including, but not limited to, IP visibility, allowed tool versions, and output file encryption. There is currently no defined, independent standard for describing IP encryption markup for design information formats. Each design format that incorporates IP encryption describes their markup differently, leading to confusing interpretation. Users of those standards also lack a recommended practice for interoperable use of IP encryption. For the IP author, the digital envelope containing the rights, key, and data blocks is the main focus. This envelope contains the source, encrypted with a symmetric cipher using a one-time session key. The session key is encrypted with a tool vendor public key for each supported vendor arranged in a series of key blocks. The license constraints and rights constraints are similarly encrypted with a tool vendor public key for each supported vendor arranged in a series of rights blocks. The tool vendor supporting the standard can then parse and process the envelope and its contents. When the tool vendor finds the blocks with their public keys, each block is decrypted with their private key, thus extracting the data key, licensing requirements, and rights constraints. If required, the tool then checks for the presence of a valid license and, if successful, decrypts the source using the data key and obeying the rights constraints. Output files from the tool may be encrypted for use in downstream tools, provided such action is granted in the IP rights. A standard defined with all these IP author and tool vendor features would make the overall flow transparent for the IP user. Therefore, this document provides guidelines and recommended practice for use of IP protection markup syntax and key management to enable interoperable tool flows with IP and tools from a wide array of suppliers. It includes algorithm selection for encryption and encoding. This document also specifies a subset of markup syntax for hardware description language (HDL) formats that could adapted to other file formats. These files represent potential inputs and outputs of tools that would otherwise expose IP. The generic syntax of these directives may be suitably modified for a particular file format if there are syntactic conflicts and variations that may be described in recommended practices.