Faculty Consulting with Industry
The University of California encourages faculty to participate in outside professional activities that contribute to their profession and to the broader community and contribute to the University's public service mission. Engagement with the outside community is also an important component of the academic enterprise and one way in which faculty and other researchers maintain contact with research directions and priorities that exist in the private sector. This knowledge also guides faculty in preparing students for careers in the private sector.
Consulting Activities Are Regulated
A series of University policies based upon State statutes and Academic Senate consultation have been developed over the years to guide faculty in consulting and other outside professional activities.
The following sections answer the most commonly asked questions about UCI faculty consulting with industry
How Often May Faculty Consult?
Full-time faculty members may consult up to 39 or 48 days each fiscal year depending on the type of appoint¬ment, on average a day a week. Faculty members may consult full-time during the summer months in which there is no other salary compensation from the Uni¬versity (such as work on sponsored projects).
What is a Consulting Agreement
Consultants should have an agreement in place that clearly defines the technical scope and financial terms of the consulting activity. This is a personal agreement between the consultant and outside entity for which the consult¬ant is personally responsible and to which UCI is not a party. It is the responsibility of consultants to ensure that the agreement is consistent with their University employment obligations and with the requirement to disclose and assign inventions to the University. If there are questions, the services of a qualified non-University attorney should be sought for formal legal advice.
What Intellectual Property obligations do consultants have to the University?
There are two separate elements associated with IP and consulting activities: disclosure of inventions and assertion of ownership to IP. Faculty are obligated under the Patent Acknowledgement they signed with UCI to disclose to the Office of Technology Alliances (OTA) ALL inventions, including those made in the course of outside professional activity and to assign to the University those inventions that fall within the scope of their UCI employment or where University resources were used to develop the invention. Generally speaking, The University will assert ownership if any of the following conditions are met:
- The invention is conceived or developed with the use of gift, grant, or contract funds administered by the University, or with the use of University facilities or other resources.
- The conception or development of the invention incurs obligations to a third party (such as, for example, under the licensing obligations under the terms of an MTA or research agreement).
- The conception or development of the invention is within the inventor’s scope of University employment.
- The University recognizes the difficulty of invention disclosure when consulting with some commercial business entities. When requested, OTA can sign a confidentiality agreement with the company covering disclosure of the new invention.
What determines if an invention is within the consultant’s scope of University employment?
The consulting agreement should have a scope of work that will likely be specific to the business interests of the company. This scope of work can be brought to the attention of the Department Chair who can work with the faculty member to assess the degree of overlap with the areas of research, teaching and publications of the faculty member. If the Chair determines there is no substantive overlap with the faculty member’s scope of employment with the University and the specific scope of work to be performed under the consulting agreement, a letter communicating that fact can be written to the OTA Director with the consulting scope of work attached.
How can a consultant obtain release of an invention?
If and when an invention is developed under the consulting agreement, the faculty inventor will file a Record of Invention with the OTA, attach the Department Chair’s letter, state affirmatively that no University resources were used and request release of the invention back to the faculty inventor. Also, if the inventor's scope of University employment has changed since the letter was issued, the faculty member should describe the change. Upon review, if OTA agrees, a release letter will be prepared to the faculty inventor who would then be free to meet any obligations to the company concerning rights to such invention.
Will OTA Help with Consulting Agreements?
Yes. Although there is no requirement that consultants submit their agreements to UCI for review or approval, OTA will review these agreements as a courtesy to the faculty member for consistency with Uni¬versity policy. This service, however, does not constitute legal or other advice on the contractual terms. Again, the services of a qualified attorney should be sought for formal legal advice.
Must UCI academic employees report consulting activities?
Yes. Academic employees are required to submit annual reports on outside professional activities (including consulting) to department chairs or equiva¬lent unit heads. Please refer to APM, Section 25.
Faculty need prior approval to engage only in those outside activities outlined in APM 025 that are likely to raise issues of conflict of commitment. These include assuming an executive or managerial position, establishing a relationship as a salaried employee outside the University, or submitting a contract or grant proposal outside the University. Nonetheless, it is often valuable to discuss with one’s dean or department head outside commitments that draw a faculty member away from University obligations.
Important Issues Arising from Consulting Activity:
All UCI employees have pre-existing obligations to disclose ALL patentable inventions to UC regardless of origin. Whether the invention falls outside the consultant’s “scope of UCI employment” is to be distinguished from the question of whether the invention falls within the broad area of an employee's expertise, which it normally would. University ownership interest in an inven¬tion is a University-based decision supported by the facts and equities of the situation.
Faculty members are strongly encouraged to include a provision in their consulting agreements to the effect that the outside entity acknowledges that the consultant is a UCI employee with preexisting obligations to disclose ALL inventions to UCI and to assign to the University any intellectual property resulting from activities that involve the use of University time or research funds/facilities, University commitments to others, or that fall within the employee's scope of employment. Ideally, the faculty member’s Patent Acknowledgement will be appended to and made a part of the consulting agreement. Consulting agreements that inappropriately assign intellectual property to an outside entity may be legally challengeable and/or unenforceable.
Future Research Funding
Future research funding should not be compromised by the consulting agreement. Companies employing consultants typically seek rights to inventions made during the consulting activity. They may also desire rights to future inventions made at UCI which have a relation to the consulting activity (neither faculty nor the University can grant such rights.) Any “agreement” to provide rights to future inventions may preclude UCI from providing comparable rights to future sponsors and from meeting its obligations to the federal government.
Acceptance of Confidential Information
It is not uncommon for a company to disclose proprietary information to a consultant and want assurances that this information will be kept confidential. Any disclosure of proprietary information by the recipient, either intentionally or unintentionally, may be actionable under both criminal and civil law. Therefore, it is essential to limit the amount of confidential information received when consulting, to agree in advance to receive it only in written form, and to have the company agree to identify clearly such proprietary information by marking it as “confidential.” It is recommended that consulting agreements include a “no-fault/no liability” statement regarding unintentional disclosure.
Consultants are normally asked to provide advice to the company, which may or may not be accepted. Usually the consultant has no control over how the results are used in practice. Therefore, agreements should limit the consultant's liability to negligent acts on his or her part only. A consulting agreement should not include general liability or liability for any product produced based on the consulting activity. A consultant may want to seek personal insurance for the liability exposure incurred by the consulting activity.
California State Law Provision
Most consulting agreements will indicate that the laws of a particular state or country will be used in a dispute, usually those of the state where the third party is located or where the consulting is taking place. The litigation of any dispute may take place in that state or country. Thus, it is important to include a statement in a consulting agreement that California laws will apply in the event of a dispute. If choice of venue cannot be negotiated in that way, then it would be best to have the agreement remain silent on that issue.
Amount of Compensation
The University does not set a cap on compensation from outside personal consulting arrangements, except as agreed upon under an applicable health sciences compensation plan.
Conflicts of Interest
A faculty member serving as a Principal Investigator must disclose whether or not there has been any consulting activity with a company when accepting research funding or gifts at the University from that company. The format for disclosure is the ‘Principal Investigator's Statement of Economic Interests’ (www.rgs.uci.edu/ora/forms/coi/700-u.pdf). Some funding agencies such as the National Science Founda¬tion and the Public Health Service also have disclosure requirements for all investigators on a project with financial interests in companies that may reasonably appear to affect the work performed under the NSF or PHS project or that may be affected by the research. UCI considers any consulting to be related to an inves¬tigator's university obligations and, therefore, disclosable.
Thus, under both State law and NSF/PHS regulations, an existing or prior consulting arrangement might require that a proposed University contract or grant be reviewed and approved by the campus Conflict of Interest Oversight Committee (COIOC) as to conflicts of interest concerns. Please contact UCI's COI Admin¬istrator at (949) 824-4530 for more information.