The passage of Senate Bill No. 286 by the Ohio General Assembly provides universities with more flexibility in commercializing technology developed by the faculty and selected staff. The bill allows these university employees, under certain circumstances, to hold ownership interests in firms commercializing technology resulting from their university research. The bill also requires that universities draft rules outlining the process and procedures by which these commercialization efforts will proceed. These rules must be modeled after guidelines approved by the state, including the Ohio Ethics Commission, and must be approved by the Board of Trustees. These rules have been designed to:
Articulate a process for determining the
applicability of the guidelines;
Specify the general responsibilities of the involved parties, including the entrepreneurs, department and college administrators, and senior academic leadership (the Technology Transfer Oversight Committee); and
Identify issues that may need to be addressed to eliminate, manage, or reduce the conflicts of interest inherent in the commercialization effort and offer guidance on managing those issues responsibly. Careful attention to these issues will assure compliance with applicable laws, regulations, and policies; protect the integrity of the University, including the integrity of the research performed by the faculty and staff; provide accountability for the use of University resources, and in general, assure that these exciting opportunities will enhance, rather than detract from, the central mission of the University.
A working group from the Office of Academic Affairs, Office of Research, and Office of Legal Affairs prepared Final Rule 3335-13-07 of the Rules of the University Faculty. The rules were circulated among university groups, such as the University Research Committee, the Council of Deans, the University Senate and two open forum sessions were held. The formal university rules were approved by The Ohio State University Board of Trustees on April 6, 2001.
Detailed Summary of Final Rule 3335-13-07
Applicability. These guidelines apply to all university employees who create university owned intellectual property (IP) and desire to hold an ownership interest in a private company commercializing that IP.
Public Employment/Private Benefit. Private business activities must not interfere with the employee’s university responsibilities and must be undertaken in accordance with the Policy on Paid External Consulting (for Faculty) or the Staff Policy on Work Outside the University (for Staff). A formal agreement between the employee, the company, and the University called the Conflict of Interest management plan or COI management plan is also required. This agreement is created in consultation among the employee, company, department chair and/or supervisor, the Conflicts Administrator and representatives from Technology Licensing and Legal Affairs.
Responsibilities of Department Chairs and Staff Supervisors. Department chairs and staff supervisors are responsible for ensuring that the employee participating in the approved entrepreneurial activity continues to perform all of his or her university responsibilities and must make recommendations as to the propriety of the activities as part of the COI management plan.
Potential for Personal Financial Benefit as a Basis for Selection of Research. University employees should not allow potential personal financial benefits arising out of their research efforts to influence their roles as teacher, advisor, or colleague.
Procedure for Determining the Applicability of Guidelines. Decisions concerning the relationship between an employee’s private business activities and his or her University research shall be explicitly stated as part of the COI plan.
The Approval of Research Related Business Activities Terms and Process. Employees must obtain approval from the Technology Transfer Oversight Committee and the COI management plan must be in place before any business agreements related to their university research are finalized.
Conflict of Interest Management Standards.
University facilities, equipment and other resources may be used for research benefiting a company in which an employee has an interest only pursuant to a sponsored research agreement, facilities use agreement or other appropriate contractual arrangement.
While it may be initially necessary for employees to engage in activities to attract necessary resources to refine the technology and to launch the company, it is expected that university employees’ management responsibilities will gradually decrease as the company develops beyond the start-up stage, and eventually professional management will assume all decision making roles.
Beyond the limited circumstances described above, an employee who acquires an ownership interest in a company which has licensed his or her university owned IP and who desires any further company engagement with the University beyond the license agreement, may not serve in a decision making capacity such as a director, officer or employee of that company.
An employee engaged in approved private business activities who is unable to perform all of his or her university responsibilities must disengage from such business activities or seek an approved reduction of appointment or an approved leave mechanism. Faculty professional leave may not be used for this purpose.
Companies in which university employees hold an ownership interest may not enter into any agreements with the University for the purchase, sale or rental of equipment, supplies or services other than those explicitly authorized by the Technology Transfer Oversight Committee.
An individual employee should not eventually hold more than twenty five (25%) percent of the outstanding equity in a company commercializing his or her university owned IP if that company desires any further engagement with the University beyond the license agreement. Employees not directly involved with research and development of licensed IP may not hold equity interests in companies approved under these guidelines.
University regulatory review boards including, for example, committees dealing with human subjects research and animal care and use, may be utilized for research benefiting a company in which an employee has an interest only pursuant to a sponsored research agreement.
Employees may not assume the role of principal investigator for sponsored research projects funded by companies commercializing their research involving the use human subjects or veterinary clinical trials involving the use of animals. Employees may be principal investigator for company-sponsored research subject to a formal plan to assure the integrity of the research.
Agreements for sponsored research projects funded by companies commercializing employee research must include, at a minimum, a requirement for full University publication rights, university ownership of IP, and fully negotiated cost recoveries.
University employees participating in start-up companies approved pursuant to these guidelines continue to be bound by other university polices as pertinent to the particular circumstances of those policies.
Student Participation. A student may not be employed by a company in which a faculty member has an ownership interest if:
- the student is enrolled in a course taught by the faculty member;
- the faculty member is a member of the student’s thesis or dissertation committee;
the faculty member is the student’s advisor or the director of his or her thesis or dissertation research. In other situations, students may be employed by these companies if, prior to employment, an agreement disclosing the student’s rights and obligations has been signed by the student, the faculty member, the chair of the student’s department, the chair of the graduate studies committee and a company representative.