University Policies Governing Technology Transfer & Entrepreneurial Activity
- Societal Role of Universities in Technology Development
- Related Issues
- Patent and Copyright Licensing
The Pennsylvania State University has historically sought the full and rapid dissemination of the creative and scholarly works of its faculty, staff, and students in order to provide timely benefits to the citizens of the Commonwealth and nation. This orientation is consistent with the teaching, research and service missions of a land grant university. It was given renewed emphasis by a May, 1987, action of the Board of Trustees. The Board directed the University to undertake an eight-point initiative to strengthen Penn State's contributions to the economic development of Pennsylvania. Facilitating the process whereby University creative and scholarly works may be put to public use and/or commercial application (i.e. "technology transfer") must be effected within the framework of an individual's obligations to the University. Actions which serve personal interests to the detriment of University interests must be avoided. Outside activities should be pursued in a manner consistent with the primary obligations of University personnel (faculty, staff, students, fellows, wage payroll employees, and persons on "visiting" appointments) to teaching, research, and service to the public.
Increasingly, universities, federal laboratories, and a few large corporations and contract R&D organizations are the primary performers of basic research and (pre-proprietary) concept development in the U.S. While there are exceptions to any generalization, industry has tended to concentrate increasingly on the later phases of the R&D process, i.e., those tied to specific products and processes. The pressures of international competition, and the increasing human resource and facilities requirements of research, appear to be major factors in this trend. Universities are thus major sources of the new knowledge which underlies novel commercial concepts, products and processes. The speed and efficiency with which university-based knowledge is transferred to industry is therefore an increasingly important aspect of the competitiveness of technology-intensive U.S. firms, and of the economy as a whole. Knowledge can be transferred in a variety of ways. Undergraduate and graduate students leave the University and bring their knowledge and ideas to their employers. Faculty and staff transfer knowledge through such traditional means as publishing, attendance at technical conferences, professional "networking," etc. More focused mechanisms include university-industry research projects, the licensing of university patents and copyrights, and faculty consulting. The university role in "knowledge management," i.e., generating knowledge which may be utilized for the support of product or process development, is exemplified by collaborative research arrangements with technology-intensive firms. The resulting contractual relationships are generally straightforward, covering such issues as intellectual property rights, publication of research results, project deliverables, etc. Contractual relationships are less straightforward when faculty researchers have a vested interest in a company or not-for-profit sponsoring and/or benefiting from the research they perform. The research in question may provide the basis for the establishment of a new company. While the University encourages company formation as one of many mechanisms for utilizing its knowledge for the benefit of society, it must be done in a way which is consistent with the University's mission and public responsibilities.
Universities conduct research for the purpose of generating new knowledge. The potential for conflict of interest and/or commitment exists when faculty researchers exercise preferential access to knowledge, and/or University resources, for personal gain. The appropriate framework for faculty involvement in enterprises, either commercial or not-for-profit, has to be evaluated on a case-by-case basis in concert with deans, department heads, program and center directors, office directors, etc. ("cognizant University administrators"). The Office of the Associate Vice President for Research and Technology Transfer, under the Senior Vice President for Research and Dean of the Graduate School, is available to assist in this regard. As a rule, there should be a clean demarcation of both effort and incentive between faculty duties and those activities associated with involvement in personal enterprises. For purposes of discussion, a Faculty Company is an enterprise, either commercial or not-for-profit, in which one or more faculty members have a proprietary or other significant interest, pecuniary or otherwise. Faculty wishing to enter into a contractual relationship with a Faculty Company which involves the use or allocation of University resources should disclose the precise nature of their interest in said Company to cognizant University administrators. There is virtually an infinite array of factors, and combinations and permutations thereof, related to faculty involvement in Faculty Companies and other enterprises. They are thus impossible to codify in a comprehensive way. Many carry the potential for conflict-of-interest. The following are general guidelines dealing with issues that often arise when University employees become involved in such activities. Mechanisms whereby these potential conflicts, and others specific to individual cases, will be avoided should be set forth in a Memorandum-of-Understanding approved by cognizant University administrators.
1) The utilization of University resources (laboratory facilities,
clerical and service staff support, etc.) to benefit a private
individual, organization, or commercial entity should be cleared and
documented with cognizant University administrators. This is
particularly important where the beneficiary is a Faculty Company.
Arrangements should be covered in the Memorandum-of-Understanding which
carefully stipulates the extent and nature of facilities utilization,
and establishes use charges based on the cost to the University of
maintaining said facilities. In principle, Faculty Companies or
consultants should not have access to University facilities beyond that
available to similarly qualified, non-University entrepreneurs.
2) The involvement of University human resources, particularly students and staff, in Faculty Company activities should be undertaken with caution. Such arrangements require the full knowledge and approval of cognizant University administrators, and should be codified in a Memorandum-of- Understanding. Examples include the hiring of students and staff outside the context of their University duties, or their support (via a contractual arrangement) within the framework of their University appointments. Safeguards must be instituted on a case-by-case basis to ensure that the performance of University duties and the scholarly mission of the University are not compromised. In particular, faculty must avoid even the appearance of directing students into research activities which serve their own personal interests at the expense of scholarly achievement.
3) Care should be taken to ensure that cooperative agreements with external organizations do not contain unacceptable limitations on open publication. Limited delays in publication, normally not to exceed six months, may be acceptable to accommodate explorations of patentability or sponsor utilization of research results for a new product or process. Such arrangements may not be implemented where they impede the progress of students toward their degrees.
4) Work performed by faculty for a Faculty Company, involving expertise for which faculty are employed by the University, should be of a nature which is clearly inappropriate for the University. Typical distinctions include research with scholarly, publishable content vs. refinement of a specific process or product; fundamental inquiry vs. routine or service-oriented tasks, etc. In general, work with scholarly content should be performed as part of faculty duties. In cases where such distinctions are blurred, cognizant University administrators should make the final judgement.
5) Collaborative research arrangements between the University and industry are effective mechanisms for technology transfer. This generalization extends to cases in which the private sector collaborator is a Faculty Company. Typically, as indicated in (4), work with scholarly content is done as a part of University duties, with the balance done by the Faculty Company. The rationale for this distinction, and faculty roles in collaborative research arrangements (including those with Research Park tenants), should be disclosed to cognizant University administrators on a case-by-case basis. Faculty Companies involved in contractual relationships with the University should be substantive, i.e., they should have an identity distinct from the faculty principal's association with the University. Criteria pertinent to this distinction include a defined non-University workspace, a viable capital base, a credible business plan, and an auditable cash flow.
6) As part of its overall technology transfer function, the University is prepared to help potential Faculty Company licensees identify sources of capital required to commercialize University technology. Such sources include state and federal programs, private and corporate investors, product development and venture capital firms, etc. In general, University funds are not available for this purpose, although exceptions may be made on a highly selective basis. Exceptions will be made on the basis of standard investment criteria, and are subject to approval by the University Treasurer. Mechanisms have been established to insulate the management of investment portfolios from academic issues. As indicated in (5), the execution of a license agreement with a Faculty Company will be predicated on an adequate capital base and sufficient operating funds.
University personnel are enjoined by their terms of employment to disclose to the University intellectual property developed within the scope of their employment and/or the field of expertise for which they are retained by the University. Such developments should be promptly disclosed to the Office of Technology Management. In the case of copyrightable materials, circumstances in which the University retains rights are discussed in "Intellectual Property Policies and Procedures." Upon receipt of a faculty invention disclosure, the Office of Technology Management will, in concert with inventors and the cognizant University administrators, attempt to find a licensee willing to underwrite both the cost of patent prosecution and any further research required to bring a concept to the commercialization stage. The University may, at its discretion, execute patent and copyright licensing agreements with Faculty Companies, including those being formed on the basis of the technology in question. In the latter case, licensing will be considered when Faculty Company "start-ups" have a) proper clearance from cognizant University administrators, and b) an acceptable business plan including product development and marketing strategies, a viable management plan, and access to adequate capital. Licensing decisions must ultimately be dictated by the University's obligation to transfer technology in a way which benefits society. This necessitates that Faculty Company licensees have the aforementioned resources to successfully commercialize the technologies in question. Where these conditions are met, the University may agree to accept an equity position in a Faculty Company in lieu of a licensing fee and/or sales-based royalty arrangement.
The University encourages faculty consulting as an effective mechanism for technology transfer and professional development. Consulting privileges are not in general granted to non-faculty employees. A faculty member may not provide consulting services to the Commonwealth of Pennsylvania for additional compensation without prior written approval from the President of the University. Faculty requesting such approval must submit a document to the President describing the consulting service, the approximate time involved, the anticipated compensation, and the impact of the consulting service on his or her work. As an adjunct activity, consulting should be carried out in a manner which is consistent with a faculty member's obligation to the University, including his/her terms of employment. In particular, an employee may engage in consulting up to one day per week with the understanding that it
a) may not interfere with the performance of University duties, and
b) enhances his/her professional stature or academic proficiency.
Faculty are expected to inform cognizant University administrator(s) of the extent and nature of consulting activities prior to undertaking them. In addition, faculty wishing to consult for organizations currently supporting their research through a grant or contract must obtain prior approval from the cognizant University administrator(s). Particular care should be exercised in the executing of consulting contracts. For example, contracts should be examined to ensure that the assignment of rights to intellectual property evolving from consulting activities does not conflict with the patent agreement signed by all University employees. In particular, faculty may, within the scope of a consulting agreement, assign rights to intellectual property in their fields of expertise where organizations engaging their services have legitimate prior claims to the development(s) in question. Examples include consulting activity leading to the refinement of an existing product or process, or to a development for which background patents or prior art claims exist. There have been a number of instances in which faculty have unknowingly entered into consulting agreements which are in violation of their terms of employment. The consequences may seriously limit faculty career and program development options. For example, by reserving intellectual property rights to a single company, consulting agreements may limit (or eliminate) opportunities for faculty inventors to profit from commercial applications of their work, or to obtain industry funding for promising areas of research. Similarly, consulting contract provisions may restrict the freedom to publish, or otherwise affect the scholarly disposition of, University research. It is generally much easier to deal with conflicts up-front than to unravel them after the fact. Restrictions on the use of University resources, staff and students for consulting are similar to those cited for entrepreneurial activities. Such arrangements require full disclosure and review by cognizant University administrators. Rights to inventions developed in part with University resources belong to the University.