Tech Transfer eNews Blog

Should TTO staff be allowed to participate in new ventures?


By Jesse Schwartz
Published: August 5th, 2020

A detailed article on managing the involvement of TTO staff in university start-ups appears in the July issue of Technology Transfer Tactics. To subscribe and access the full article, along with more than 13 years of archived best practices and success strategies for TTOsclick here.

The story spread through the university technology community last year faster than a Facebook cat video. Executives at the higher reaches of the heralded Memorial Sloan Kettering Cancer Center (MSK) “repeatedly violated policies on financial conflicts of interest, fostering a culture in which profits appeared to take precedence over research and patient care,” The New York Times wrote in an April 4, 2019, article it produced in collaboration with ProPublica. Specifically, the article said these officials violated their own policies, were lax about conflicts of interest in a way that allowed execs to privately receive money from drug and healthcare companies, and “researchers were often unaware that some senior executives had financial stakes in the outcomes of their studies.”

Whatever conflicts-of-interest policy the famous cancer research center had, it either didn’t come with serious enforcement or was blatantly ignored. One executive alone took millions of dollars from companies. MSK has since firmed up its policies, and some executives resigned as the scandal came to light. (You can read MSK’s COI policy documents here. It offers what may be the most current and thorough starting point for any TTO looking to shore up its conflict of interest policies and practices. It addresses board participation and principles; disclosure and transparency requirements; oversight of licensing agreements; principles of research; inventor income sharing rules; monitoring, auditing and compliance; and sanctions.)

With that cautionary tale as background, what can TTOs do to avoid a similar fate when their own employees wish to become involved in a start-up that the TTO is supporting?

At Oregon Health & Science University (OHSU), employees of the TTO are required to disclose interest or potential involvement in a new venture, in other words a conflict of interest, to the university’s Integrity Office. OHSU’s Senior Technology Transfer Director Andrew Watson, PhD, CLP, says they are “treated like any OHSU employee,” and a matter of conflict of interest is evaluated thoroughly.

Watson said that, like other institutions, his 20-member team participates in various internal checkpoint meetings, whether it’s the full team or sub-teams that deal with licensing, contracts, patent dockets, or management of the invention pipeline. “So the invention in question may come up in any of these meetings …. and [the participant in a venture] has to leave the room and recuse themselves from any discussions. Everyone is well versed in this,” Watson notes. “It’s part of the culture. We explain it even to interns, saying, ‘This is why we asked him/her to leave the meeting.’ We’re very open and transparent about this.”

He adds that the entire team has access to their database, but each must follow the OHSU Conflict of Interest Policy and the OHSU Code of Conduct and “not ask for any documents or participate in internal office discussions” related to an invention they are personally involved with.

Most recently, Watson tells Technology Transfer Tactics, a non-profit company was started based on a technology owned and licensed by OHSU, and one of the TTO’s staffers was a co-creator of this technology. “We all followed standard office practices and procedures. The arrangement was reviewed by the OHSU Integrity Office and a third-party negotiated the agreement with OHSU,” he says, so it was a smooth transaction.

OHSU also enjoyed a smooth transaction seven years ago when an entrepreneurial-minded TTO employee wanted to start a business based on a university invention. “We allowed it. He helped co-found the company, which secured federal small business grants.” However, Watson says, “we drew a clear line in the sand, limiting what he could discuss in the office, and asked him to leave during meetings when the subject [of the invention] came up.”

Not every school is comfortable with TTO employee involvement in the start-ups they work with. At the University of Utah Center for Technology & Venture Commercialization (TVC), Executive Director Keith Marmer, DPT, MBA, says it’s their policy that employees “can be involved in a business that comes explicitly from their own work inside TVC, but they cannot benefit from their work in collaboration with an invention disclosed by a faculty/staff member at the university.”

“As a public university, we have the public trust to keep in mind,” he comments. “That’s something any public institution should take very seriously. People may not use their position for personal gain.” Implementing that rule is not left to chance. It’s in writing and part of any new employee’s contract with the university. “They sign the agreement pledging to adhere to the policy as a condition of their employment,” Marmer says. “We hold our staff to higher standards even than other university employees.”

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