The University of Pennsylvania supports the translation of research results into practical applications for the public good. To this end, the University encourages faculty to patent and license inventions arising from their research, to participate in the establishment of industry partnerships designed to commercialize novel technologies, to accept company-sponsored research funding, and to consult for private companies. Faculty involvement in commercial activities carries many advantages, including the practical application of new technologies, the receipt of royalty income for the University and the faculty, and the provision of an additional source of research funding. Contemporary attitudes are best captured by the fact that the Federal government has mandated that universities seek to commercialize the results of federally supported research for the public good.
However, the increasing involvement of faculty with commercialization ventures carries with it certain intrinsic dangers, which have the potential for diverting the University and its faculty from their primary educational, research, and service missions. Conflicts of interest can arise when the interests of the commercial venture differ from the interests and primary obligations of the University and its faculty, or when the commercial ventures consume an undue share of the faculty members attention.
This primer describes commonly observed conflicts of interest. In addition, illustrations are provided of some approaches to manage potential conflicts so that faculty can pursue ventures in the commercial arena without compromising their academic responsibilities. The University has established policies that define potential conflicts and provide guidelines and procedures for limiting and managing them. Commercialization ventures and licenses of technology are negotiated by the Center for Technology Transfer (CTT) on behalf of both the faculty member and the University. CTT staff are alert to potential conflicts and refer them to the University Conflict of Interest Standing Committee (CISC) for review and advice. The CISC reviews potential conflicts and recommends management strategies to the Vice Provost for Research.
Principle: Faculty owe their primary commitment and allegiance to the University.
Non-University activities include involvement with commercial ventures in roles such as serving on the board of directors or on the scientific advisory board, acting as a manager or scientific director, consulting, and the like. These activities create commitments with the potential to compete with the primary commitment to the University--teaching, research, and service during the academic year (which is 9 months for some faculty and 11 months for others).
Management strategy. Faculty may not engage in non-academic commitments that, in the aggregate, exceed one day in seven during the academic year. This is a limitation imposed by University policy. There is a good faith assumption that faculty will accurately estimate the time devoted to non -academic activities regardless of where they are conducted. This policy applies to the time involved in extramural activities, and not to the dollar amount that is paid for such services.
If a faculty member is involved in founding a new company, he/she may be induced to dedicate excessive time to the myriad issues associated with new ventures. Under these circumstances, a potential conflict of commitment can be reduced by ensuring that qualified individuals are recruited to manage the business and scientific aspects of the company, so that the faculty member has limited fiduciary and other responsibilities, and is able to provide scientific consultation without getting immersed in the day-to-day supervision of research and development. Alternatively, the faculty member may take an unpaid leave of absence for a period of time to dedicate her/himself full time to the new company. Another strategy is to license a patent to an established company that then undertakes product development while paying royalties to the faculty member and the University, rather than attempt to establish a new company to develop a novel technology.
Conflict of Financial Interest
Principle. A faculty member has a responsibility to respect the financial well-being of the University.
Through various relationships with a commercial entity, a faculty member could assume responsibility for the financial well-being of that commercial entity that might produce a conflict of interest by competing with the financial interests of the University. Fiduciary responsibility for a company is created when a faculty member is appointed to the Board of Directors of the company or becomes an officer or manager in the company. If the company is a supplier to the University or holds a patent license from the University, the potential for conflict is augmented.
Management strategies. Faculty members must negotiate technology commercialization proposals through the Center for Technology Transfer. In most cases, contracts for research at the University must be administered through the Office of Research Administration (or other administrative branch) of the University. To protect the intellectual property rights of the University, discoveries made using University resources and facilities must be disclosed to the Center for Technology Transfer, which may file a patent for the University. Only if the University declines to protect the disclosed technology, may a faculty member apply for a patent without University involvement.
If a faculty member has a fiduciary responsibility or an equity interest in a company that does business with the University or holds patent licenses from the University, the faculty member must disclose these relationships (usually done as part of the required annual disclosure form described below). Faculty sign consulting agreements, involving intellectual property or the right to do work in certain areas, at their own risk. If not written properly, such agreements may unduly restrict the research activities of the faculty and the intellectual property rights of the University. Upon request, the Center for Technology Transfer will review consulting agreements.
Conflict of Research Integrity
Principle. Faculty should maintain the highest level of scientific integrity in the conduct of research. The complete, objective, and timely dissemination of new findings through publications and presentations, is essential for research integrity.
The potential for personal gain must not jeopardize or appear to jeopardize the integrity of the research process, including the choice of research, its design, the interpretation of results, and the reporting of results. If an investigator has a significant financial interest in a commercial venture, then there may be a temptation to dedicate research effort to development of saleable products or processes for that company. A faculty member is particularly at risk of conflict if he/she has a sponsored research agreement (SRA) from the company in which he/she has a financial interest. Furthermore, the possible conflict may increase in proportion to the impact the company-sponsored research could have upon the value of the faculty member's financial interest.
Management strategies. A plan must be individually tailored to protect against potential conflicts of research integrity.
One troublesome problem encountered by the Conflict of Interest Standing Committee is the request for a sponsored research agreement from a company in which a faculty member has an equity interest or a fiduciary responsibility. One option is to identify another investigator, with no financial interest, to undertake the research project. Another option is to involve a disinterested faculty member as a co-investigator with control over the design and analysis of research projects, to certify integrity of all aspects of the research program. Finally, in rare cases, it may be justified to create an oversight committee of disinterested scientists who certify the integrity of the program by an appropriate review process. In some instances, a proposed sponsored research project is more appropriately performed at the company itself rather than at the University. In all instances, presentations or publications must clearly disclose the sources of funding and any financial interest that could influence the perception of research integrity.
Conflict of Educational Mission
Principle. Students and post-doctoral fellows must be assured of an educationally appropriate training program.
Education is a salient mission of the University, and training programs should be designed to give priority to the educational needs of students and research trainees such as postdoctoral fellows. Sometimes the goals of a commercial entity that sponsors research at the University may be in conflict with the goals of an optimal training program.
Management strategies. Usually, it is inappropriate to support the stipends or research ex- penses of students or postdoctoral fellows through sponsored research funding from commercial entities in which the faculty member has a financial interest. In those cases where a student or postdoctoral fellow is involved in research that is supported by a company-funded SRA, the SRA should state that the presentation of results will not be controlled by the company.
The Conflict of Interest Standing Committee (CISC) reviews and makes recommendations on the resolution of cases of potential or real conflict of interest which arise from technology transfer activities or from sponsored projects of the University or its faculty. The recommendations of the CISC are transmitted to the Vice Provost as advice on the disposition of cases involving potential conflicts of interest, including a determination whether a real or potential conflict exists, and proposals on how such conflicts should be eliminated, reduced, or managed.
Cases involving potential conflict of interest may be referred to the CISC by the Center for Technology Transfer (CTT), by the Office of Research Administration (ORA), by University or School administrators, Department Chairs, or individual faculty. The staff of the Center for Technology Transfer (CTT) is responsible for referring to the CISC cases which arise from commercialization efforts under consideration by the CTT. The ORA staff is responsible for referring to the CISC cases which arise from applications for sponsored research support.
In its deliberations, the CISC depends upon University policies for guidance since it acts in a regulatory and advisory rather than a policy making capacity. University policies are promulgated in several documents which are listed at far right.
Cases referred from the CTT. Upon learning of a potential conflict of interest, a CTT staff member prepares a brief descriptive memorandum which includes background, current status, proposed financial arrangements, and the nature of the potential conflict. After review by the individual who is the subject of the memorandum, it is distributed to members of the CISC, and to the appropriate Dean and departmental Chair, preferably at least one week in advance of the meeting of the CISC.
Cases referred from the ORA. The staff of ORA will review all grant and contract applications, identify those where the applicants have indicated a potential conflict, and screen these to determine which ones should be referred to the CISC. The staff will prepare a brief synopsis of the issues involved in each case referred to the CISC.
Cases from other sources. Deans, Department Chairs, or individual faculty may refer cases of potential conflict of interest to the Chair or staff of the CISC, who will review them, determine whether they are appropriate for consideration, and present them for review by the committee.
The CISC discusses the potential conflict and makes recommendations, including a determination whether a potential conflict of interest exists, and how it should be managed. A draft of these recommendations is circulated to all members of the CISC for comment. The final version is then circulated to the committee members for a mail/FAX/email ballot. After approval, the final recommendations are sent to the Vice Provost as advice. The Vice Provost may accept the recommendations or may return them to the CISC for further consideration, revision, or clarification. Once the recommendations have been accepted, the Vice Provost informs the faculty or staff member involved, with copies to the concerned Chair, Dean, and CISC.
The Department Chair and Dean are responsible for insuring that there is compliance with the recommendations of the Vice Provost. The Dean is responsible for reporting by letter to the Vice Provost, with a copy to the CISC, that compliance has been achieved.
If the conflict involves an application for sponsored research, the award will not be accepted until the Vice Provost for Research has conveyed a decision on compliance.
Confidentiality. The proceedings of the CISC are confidential, including all documents, drafts, and discussions.
The CISC consists of about 10 members of the standing faculty appointed by the Vice Provost for Research. Faculty members serve as citizens of the University and not as advocates for specific schools or constituencies. There are three ex-officio members, the Executive Director, Sponsored Programs, the Managing Director, Center for Technology Transfer, and an attorney from the Office of the General Counsel. In addition, invitations to meetings are extended to professional staff of the Center for Technology Transfer and to selected professional staff from the Schools. The CISC is chaired by a faculty member appointed by the Vice Provost. Staff support for the CISC will be provided by the Office of Research Administration and/or the Center for Technology Transfer, which will designate an individual to serve as Secretary of the Committee.
All faculty members, plus the Director, Office of Research Administration, and the Director, Center for Technology Transfer have voting rights. Other attendees participate in discussion but do not vote. Voting membership implies a commitment to attend all meetings unless the member is out of town or has other overriding obligations.
Attendance. Meetings are limited to CISC members, invited staff, and other invitees, and are not open to the public.
Quorum. A quorum consists of over half of all voting members. In general, an attempt will be made to insure that there is a quorum present at all meetings. The CISC Chair, at her/his discretion, may require that certain decisions be approved by a majority of all voting members not just a majority of those attending a specific meeting. Final versions of recommendations will usually be approved by mail/FAX in order to insure that all voting members have an opportunity to register their opinions.
Conflicts for Committee Members
A CISC member is recused from discussion of a particular case under the following conditions: (1) The case involves a member of the same department; (2) The CISC member has a personal interest because of inter-departmental relationships, such as collaboration with the faculty member whose case is under consideration; (3) The CISC member has a fiscal interest in the case under discussion. Special exceptions to these guidelines may be made but only with the prior approval of a majority of the voting members.
In the event of a disagreement between the responsible administrator(s) or investigator(s) and the Vice Provost regarding the management of a potential conflict, an appeal may be made to the Provost. The decision of the Provost is final.
University policies relevant to conflict of interest are set forth in the sources listed below. A booklet which includes copies of these policies can be obtained from the Center for Technology Transfer, 3700 Market St, Suite 300, Philadelphia, PA 19104-3147, phone 215-573-4500; FAX 215-898-9519.
The University has policies and procedures for reviewing and managing conflict of interest issues. A formal set of guidelines regarding conflict of interest and related matters appears in the University of Pennsylvania Handbook for Faculty and Administrators and in several other University documents. A booklet entitled Information on Conflict of Interest that brings these guidelines together in one place can be obtained from the Center for Technology Transfer.
At any time, faculty members may consult their department chairs and deans for advice about potential conflicts of interest. The University Conflict of Interest Standing Committee (CISC) reviews potential conflict of interest questions referred to it by the Center for Technology Transfer, by administrators, or by the faculty. The CISC can be contacted through the Center for Technology Transfer.
In addition, faculty members are required to disclose all external activities and financial interests on a form that is distributed annually by all departments. This regular disclosure of all potential conflicts of interest serves to help the University monitor possible conflicts, and helps the faculty by providing them with assurance that they are acting in conformity with the spirit and guidelines of the University.
Center for Technology Transfer
3700 Market St, Suite 300
Philadelphia, PA 19104-3147
(Check University directory for names and email addresses of CTT staff members.)
Volume 43 Number 22
February 18, 1997
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