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Conflict of Interest Situations with Possible Management Plans

Option Agreement

Option agreements or option clauses within research agreements, describe the conditions under which the University preserves the opportunity for a third party to negotiate a license for Intellectual Property. Option clauses are often provided in a Sponsored Research Agreement to corporate research sponsors at the University or are entered into with third parties wishing to evaluate the technology prior to entering into a full license agreement.

License Agreement

A license agreement is a contract between the University and a third party in which the University's rights to a technology are licensed (without relinquishing ownership) for financial and other benefits. A license agreement is used with both a new start-up business or with an established company. University license agreements usually stipulate that the licensee should diligently seek to bring the intellectual property into commercial use for the public good and provide a reasonable return to the University. Important considerations include the following:

Example1: Straight license with minimal risk

Professor N has an ownership interest in Company C which wants to license University-owned technologies invented by Professor N. Company C will further the development and commercialization of the technologies and will obtain use and commercialization rights. The University will retain ownership of the licensed technologies and may continue to further develop and use them internally. No use of University services or facilities, nor any assignment of University employees, is obligated or contemplated under the agreement.

This situation presents minimal risks. The example solution provided below is intended to be a guide for demonstrating how particular conflict situations may be managed [note: the details of some situations may make conflict of interest (COI) management unworkable and the technology transfer agreement and/or project will not commence]. The examples are not intended to be all-inclusive as each individual situation may require a greater or lesser degree of management based upon the elements of risk presented.

  1. Professor N would disclose his/her connection to Company C to lab staff, students, oversight committees (IRB, UCUCA), Purchasing, and, potentially, sponsors of current research projects using the technology which Professor N is a key investigator on as well as in any publications about the research. Professor N would be required to perform a "backfit" review of his/her existing sponsored projects to assess whether a new conflict of interest disclosure is now necessary.

    2. and

  2. Students under the direction of Professor N may not simultaneously work at Company C, either paid or unpaid.

    3. and

  3. All potential sponsored projects from Company C into the University must be disclosed to the appropriate COI committee.

Example 1a: License with research back - significant risk

The license agreement described above will include a sponsored research agreement back into the University under the direction of Professor N (see Operating Principle #5).

This situation presents significant risks. The example solutions provided below are intended to be a guide for demonstrating how particular conflict situations may be managed [note: the details of some situations may make COI management unworkable and the technology transfer agreement and/or project will not commence]. The examples are not intended to be all-inclusive as each individual situation may require a greater or lesser degree of management based upon the elements of risk presented.

  1. Appoint a different faculty member, who has no connection to the company, as PI. The new PI oversees all aspects of the sponsored project to the University. This minimizes the conflict of interest for Professor N, who may decide to be involved in the project as a representative of the company.

    2. or

  2. Appoint a different faculty member, who has no connection to the company, as PI and allow the original faculty member (Professor N) to serve as co-investigator. The new PI oversees all aspects of the sponsored project including research reporting and financial oversight (see notes below).

    3. or

  3. Although the least desirable, if the technical work requires that Professor N remain as PI, another individual with no connection to the company is appointed to oversee the performance of the sponsored project (although this individual may not participate in the research activity).

    4. Notes:

  4. For examples B & C the following additional management conditions may apply:

    5. Professor N does not participate in any decision-making as a representative of the company sponsor and would disclose his/her company connection to lab staff, students, oversight committees (IRB, UCUCA), Purchasing, as well as in any publications about the research. Annual evaluations of staff or key personnel involved in the project would not be the sole responsibility of Professor N; additional oversight would be provided by a higher-level academic administrator. If human subjects are involved in the research, the new PI or another individual with no connection to the company would oversee all aspects of human subject participation.

  5. Both examples require disclosure to and approval by the Regents under the State of Michigan Conflict of Interest Statute.
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