A detailed article on faculty consulting, the sticky IP issues it can raise, and the policies and practices of TTOs in asserting IP ownership in certain situations appears in the November issue of Technology Transfer Tactics. To subscribe and access the complete article, or for further subscription details, click here.
Faculty consulting with companies to help them design or improve products, or otherwise develop ideas that might become commercially viable, is common and can be a significant revenue stream for faculty members. World class experts in technology or medicine are frequently called upon by corporations, but how does a TTO handle these side deals that do not involve university licenses and formal agreements with the university?
The answer varies widely among even the most prestigious tech transfer programs, with different views on how to balance the potential revenue involved against the risk of alienating faculty who might go elsewhere to find a more lenient consulting policy.
These faculty are employed by the university and must operate under its IP rules, but the lines can get blurry, especially when something is commercialized at least in part from a consulting relationship. If the work theoretically is based on their work in the university, the university could assert total or joint IP ownership. The question becomes more difficult as the amount of money in question increases, as some arrangements could have faculty members making millions while the university is left empty handed.
These arrangements also raise conflict of interest concerns when the faculty acts in favor of the company at the risk of harm to the university, such as signing a royalty deal for IP that should go to the university, or conducting research that benefits the company instead of the university, or using grad students for work that benefits the company.
Some university TTOs take a hard stand on faculty consulting agreements, and others prefer a more hands-off approach to keep faculty content. Even some of those who take an aggressive approach may find they have to ease up when faculty bristle at attempts to complain.
Emory University in Atlanta tries to accommodate faculty while still making a strong stand against any faculty consulting that would violate its IP policies or unfairly leave the university out of potential revenue streams. Like most universities, Emory allows its faculty to consult, with the understanding that it should not take up more than 20% of their time, essentially one day a week, explains Todd Sherer, associate vice president for research and executive director in Emory’s Office of Technology Transfer.
“We feel like it’s part of our academic duty and our commitment to society to make our faculty available to help others. And we also then say that we understand that if we’re going to allow faculty to consult, we probably need to let them or let the company own the intellectual property that comes out of that,” he says. “Because if we don’t do that, then they’re not going to be asked to consult very often. Companies are going to require that if they pay them to consult, [the company will own] the IP that comes out of that work.”
That does not negate the researcher’s obligations to assign everything to the university that is supported by the university, Sherer notes. However, Sherer and his colleagues have long suspected in certain cases — a small percentage of the time — faculty may be consulting over an idea they have that sprang from their research and rightfully should be pursued for the university. There is no good way to know whether that has occurred, he says.
In response to that concern, Emory in 2010 prohibited faculty from having a side royalty deal (a policy that would be rescinded a decade later). If they wanted to consult for companies, the respective school needed to see the consulting agreement and advise them on it, but the school did not sign it.
“We made it clear in a memo I sent to the deans that even though we’re here to handle the university’s IP, we are granting you the authority to negotiate away or allow the university’s IP rights to be usurped through consulting agreements, and you can handle that locally,” Sherer says. “Secondly, we said that you can only allow it in contracts and in situations where faculty understand that any sort of other arrangement is prohibited, such as having a royalty deal. That was what made us different than the rest of the country, prohibiting the side deal.”
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