Are University employees allowed to engage in private consulting?
Yes. The Board of Governors Policy on Conflicts of Interest and Commitment (BOG policy), UNC Policy Manual, 300.2.2, encourages faculty and non-faculty EPA employees to engage in external professional activities for pay to enhance their own professional development and to benefit the University and society. That Policy also recognizes that private consulting can create conflicts of interest and commitment and that employees must be cognizant of the need to address any conflicts and/or perceived conflicts which would detract from their employment responsibilities.
Who signs faculty consulting agreements?
A consulting agreement is a contract between the individual and a private company or other entity. Therefore, the individual signs the agreement and is legally bound by the terms of the agreement. The University does not sign and has no legal obligation to the company. The legal consequence is that the employee risks personal liability for any breach of his/her contractual obligations and should, therefore, read any proposed consulting agreement with care and should seek legal counsel if he/she has questions about any provision of the agreement. The University Office of General Counsel will answer questions concerning university policies related to consulting, but cannot provide personal legal advice.
Do faculty consulting agreements need to be reviewed and approved by the University?
No. University policy does not require that consulting agreements be reviewed and approved by the University. However, system and institutional policies require advance reporting and administrative approval of all external activities for pay. Prior approval of consulting activities should be sought from the head of the appropriate department or unit, who will determine whether (1) the proposed consulting is consistent with the needs of the department or unit in terms of the time commitment or the type of services provided (2) whether there is a conflict of interest and, if so, whether the conflict has been appropriately managed; and (3) whether reasonable arrangements have been made to reimburse the University for any proposed use of University personnel, facilities or equipment.
What other policies of the University impact faculty consulting?
Both the Conflict of Interest and Commitment Policy and the Intellectual Property Policies, affect faculty consulting arrangements. Consulting obligations should not conflict with these policies or any other policy of the University.
What Conflict of Interest issues are raised by consulting?
Before entering into any consulting or other agreement for external activities, it is important that employees read and understand the University’s Policy on Conflict of Interest and Commitment. Consulting obligations should not conflict with this policy or the employee’s normal research and teaching duties. An example of an apparent conflict of interest would be acting as principal investigator on a research project sponsored by a company for which the employee also receives remuneration under a consulting agreement. If the research sponsor is compensating the principal investigator personally, there can be a perception of bias in the reporting of the research results, and such activity may be in violation of state law, which prohibits public employees from deriving direct benefit from public contracts. N.C.G.S. 14-234 (a) (1).
Even when the investigator’s university research is not sponsored by the company for which the investigator consults, if the consulting is related to the specific research for which the individual is employed by the University, there may be a conflict or the appearance of a conflict, which must be managed under the University’s Conflict of Interest and Commitment Policy. In addition, if the employee agrees to maintain the confidentiality of proprietary data in a technical area overlapping with his/her university research, he or she may jeopardize the University’s ability to obtain future research funding for the subject research.
How can I distinguish between activities related to my university employment and those which are not related?
This is very difficult, but it can be done. It is to be expected that the outside company will desire the consulting services of the faculty member within the same general area of competence for which he/she is employed by the University. Care must be taken, however, to define narrowly and precisely the subject matter of the consultancy and the specific services to be provided under the consulting agreement. The subject matter of the consulting should be defined sufficiently to distinguish it from the employee’s primary activities for the university. Further, consulting typically involves an advisory (consulting) service rather than the actual conduct of research and generally seeks to resolve a problem posed by the company. Although exceptions may be made through the notice process for external professional activities, research faculty and employees should not contract to perform research under a consulting agreement. Research should be contracted through Sponsored Programs and Regulatory Compliance Services (SPARCS). Conflict of interest questions should be directed to the faculty member’s Department Head or Associate Dean for Research.
Who owns the intellectual property that is developed under a faculty consulting agreement?
Ownership of the intellectual property developed by an employee under a consulting agreement is determined by the language of the consulting agreement. However, employees may not convey rights to intellectual property that they do not own. If the consulting agreement is inconsistent with University policy on ownership of inventions, any purported transfer in a consulting agreement would be without the authority of the University, not binding on the University, in breach of the employee’s employment agreement with the University, and in breach of the consulting agreement.
Section 3.1 of NC State Patent Procedures states as follows:
Section 3.1 As defined by the UNC Policy, to which these Procedures are expressly subject, NCSU owns all inventions of University personnel that are made as a part of or as a result of (a) University research (b) activities within the scope of the inventor’s employment by, or in official association with, the University; and (c) activities involving the use of University time, facilities, staff, materials…”.
Section 3.1 also provides that all University faculty, staff and students must disclose their inventions to the Office of Technology Transfer “whether the inventions fall into the categories above or not.” Consequently, when a faculty member is an inventor as a result of work performed under a consulting agreement, the faculty member has the obligation to file a disclosure with the Office of Technology Transfer so that the Intellectual Property Committee may determine ownership.
The University will not claim ownership in an invention where (1) the invention is unrelated to the activity for which the inventor is employed (see preceding discussion and (2) the invention was not made or conceived under circumstances involving University facilities or personnel, other than the consultant.
NC State’s Patent Procedures, Section 4.4 states as follows: NCSU personnel may not (a) sign agreements with outside persons or organizations that may abrogate the University’s rights and interests either as stated in the UNC Policy, the Procedures, or as provided in any grant or contract funding the research which led in whole or in part to making the invention. Consequently, the University policies on intellectual property control any individual consulting agreement.
How can I avoid conflict between my consulting and the University intellectual property policy?
Because it is in their best business interest, most companies prefer to ensure that consultants employed by universities adhere to university policies. University employees should advise the company that they have intellectual property obligations to the University and provide the company with a copy of the policy or a link to the Technology Transfer Policies website.
In addition, to protect the legal interests of both the University and the employee, the Office of General Counsel and the Office of the Vice-Chancellor for Office of Research & Innovation recommends that the following language be included in faculty consulting agreements:
“This Agreement is made subject to the understanding by Company that Consultant is a member of the faculty of NC State University, that Consultant must fulfill certain obligations including teaching, conducting research, and directing a research laboratory, and that, as a result of Consultant’s employment, NC State has certain rights to intellectual property developed by Consultant, including the right to receive a disclosure of any inventions of the Consultant. Any rights to intellectual property which may be conveyed by this Consulting Agreement shall be subject to the rights of the University as set forth in its Patent and Copyright Policies and Patent Procedures. Any inconsistency between this Agreement and the policy and procedures of NC State shall be resolved in favor of the NC State policy and procedures.”
Under no circumstances should employees enter into an agreement which purports to convey intellectual property of NC State.
If questions arise about whether any provision in a consulting agreement conflicts with the intellectual property policies of NC State, faculty may contact the Office of Technology Transfer, the Office of Sponsored Programs, or the Office of General Counsel.
Can University facilities and/or equipment be used for faculty consulting?
Generally not. In most cases where university resources or equipment are required, the work should be performed under a Testing Services Agreement (TSA), which may be obtained from your college Dean’s business office, or other agreement with the University, rather than pursuant to a consulting agreement.
May I consult with a company for which my lab is performing services under an ATA?
Generally not. TSA’s are designed for use in those cases where there is no research component. If a university employee, whether acting as consultant or on behalf of the university, provides an analysis of the results or interpretation of data, the project becomes research and should be contracted with the University pursuant to a sponsored research agreement. University guidelines for TSA’s prohibit consulting by individuals who also supervise staff/students performing the tests, determine use rates, or administer the contract TSA on behalf of the university. (See Guidelines for Testing and Service Agreement (TSA) Activities) Furthermore, such consulting may be in violation of state law which prohibits employees from benefiting from public contracts. N.C.G.S. 14-234 (a)(1)