» Financial Conflict of Interest

PHS Agencies:

• Agency for Health Care Research & Quality (AHRQ)
• Agency for Toxic Substances & Disease Registry (ATSDR)
• Centers for Disease Control & Prevention (CDC)
• Food & Drug Administration (FDA)
• Health Resources & Services Administration (HRSA)
• Indian Health Services (IHS)
• National Institutes of Health (NIH)
• Office of Global Affairs (OGA)
• Office of the Assistant Secretary for Health (OASH)
• Office of the Assistant Secretary for Planning and Evaluation
• Office of the Assistant Secretary for Preparedness and Response (ASPR)
• Office of Public Health and Science
• Substance Abuse and Mental Health Services (SAMHSA)

Other organizations following PHS Regulations:

• Alliance for Lupus Research (ALR)
• Alpha-1 Foundation
• American Asthma Foundation
• American Cancer Society (ACS)
• American Heart Association (AHA)
• American Lung Association (ALA)
• Arthritis Foundation (AF)
• CurePSP
• Juvenile Diabetes Research Foundation (JDRF)
• Lupus Foundation of America (LFA)
• Patient-Centered Outcomes Research Institute (PCORI)
• Susan G. Komen for the Cure

This guidance was developed using policies from research institutions with long histories of successful technology transfer programs supporting researcher-led companies. 

Background

A researcher-associated new business venture (hereafter referred to as a “start-up”) is defined as a company where the original intellectual property originates with the researcher, where the researcher is a founder and has a significant equity position in the company, or where the researcher has an influential role in determining the direction of the company. Start-ups are both opportunities and challenges for Chapman University.

Chapman is an institution of public trust, with education and research as its mission and a requirement to maintain openness in research. Therefore, an entrepreneurial activity must be balanced by carefully reviewing the proposed relationships, which may or may not be allowed. These relationships may require active management to assure openness in research, academic freedom for trainees, and a clear understanding of how conflicts of interest are managed.

Chapman is committed to avoiding either perceived or actual conflict of interest issues concerning start-ups. Both Chapman and its researchers have responsibilities to optimize technology transfer and mitigate conflicts of interest when licensing Chapman IP to a start-up is considered.

University Responsibilities

The University makes licensing decisions based on its professional judgment about technology transfer to achieve the best possible benefit to the public without undue influence from internal or external parties.

The University undertakes several steps and considerations in transferring technology while managing conflict of interest effectively. First, the University markets all Chapman technology to ensure fair and open access to potential licensees – start-ups founded by or involving Chapman researchers should not receive or be perceived to receive preferential treatment. Second, Chapman researchers cannot represent the potential licensee and must not negotiate directly with the University. Third, Chapman licensing agreements may be exclusive or non-exclusive depending on what is most suitable for a given technology. Finally, the researcher’s Dean and the VP for Research must review any actions that present a potential conflict of interest, specifically:

• The researcher must disclose any interest (consulting fees or equity) in the start-up to the researcher’s Dean and the VP for Research.
• The researcher must agree to separate all University responsibilities from all company responsibilities according to the criteria listed under Researcher Responsibilities.
• Chapman may proceed with licensing only if the conflict is deemed manageable by the VP for Research.

Researcher Responsibilities

Researchers are urged to contact the Office of Industry Alliances and Commercialization early in the process when contemplating starting a new company to license Chapman IP.  The Office of Research will assist the researchers in developing a conflict management plan for the new company that complies with Chapman’s conflict of interest and conflict of commitment policies.

Researchers are responsible for separating all University duties (in research, teaching, and service) from personal financial interests in the company.

Researchers must:

• Separate and clearly distinguish ongoing University research from work being conducted at the company.
• Limit consulting for the company to a maximum of one day per workweek while on appointment at Chapman, per University policy (link).
• Serve only in advisory or consultative roles at the company
• Seek prior approval from the dean to accept a managerial role or title (e.g., CTO) that includes management responsibility, such approval shall not be given automatically.  The terms of the approval will be documented in a management plan.
• Take a leave of absence if engaging in a management role.

Researchers must not:

• Negotiate with the University on behalf of the company.
• Receive gifts or sponsored research from the company.
• Involve University research staff or other University staff in activities at the company; company personnel cannot be affiliated with the University.
• Involve company personnel in Chapman research.
• Involve current students in company activities. If a student asks to take a leave of absence to participate in the company, the student should be referred to the Dean and VP for Research to review the request and decide if it is allowable.
• Involve junior researchers that they supervise in company activities. Even if the researcher does not have a supervisory role, they should avoid situations in which junior researchers might feel expected to be involved in the company.
• Use University facilities for company purposes.
• Undertake human subject research related to the company at the University as PI or Co-PI.
• Supervise researchers who are PI/Co-PI for human subject research related to the company.

‘Pipelining’

The researcher often wishes to continue to do research at Chapman in the area of interest to their start-up. Chapman is particularly concerned about the use of University resources that benefit the company, especially new companies that do not have their own facilities or many employees (i.e., the “virtual” company). Chapman should not be the research or development arm of a start-up. If a new follow-on or improvement invention is developed after the original dominating technology has been licensed to the start-up, Chapman will still market that technology to all potentially interested parties. Exclusive licenses will not always be granted to the start-up, even if there is no other interest. In cases where the original technology dominates the subsequent developments, sometimes a nonexclusive license will suffice. If, in the interest of effective technology transfer, it is reasonable to grant an exclusive license to the follow-on technology, the exclusivity may be mitigated by a shorter term of exclusivity, limited field of use, increased diligence, etc. Any new license is subject to conflict of interest review and approval.

Wind-Down of Licensed Intellectual Property:

Researcher inventors are expected to wind down ongoing research in the particular area that the start-up will commercialize. 

The inventor is required to stop initiating new work on the technology at Chapman (that is, using University resources) when their technology is licensed to the inventor start-up. Since it may take several months to wind down ongoing research, the inventor needs to plan accordingly and begin the wind-down of the Chapman activities in accordance with the conflict management plan before the licensing takes place.

New research grant submissions must be to initiate new work and not to develop the licensed technology further.  Any current and pending sponsored projects will be assessed for overlap with the start-up company’s activities and documented as part of the conflict management plan.

It’s important for inventors to understand that this guidance is intended to enable inventors to succeed in translating their technologies into use without jeopardizing the mission or funding status of Chapman University.

Revision History:

April 2023 – Added a statement for inventors to contract the Office Industry Alliances and Commercialization early in the process; Provided further details about the wind-down process and clarified that wind-down would occur at the licensing rather than the options stage.

April 2022 – Original publication date.

Guidance on Consulting and Other External Engagements

Chapman University supports the efforts of its faculty to foster productive relationships with the world outside of Chapman, including acting as consultants and in other external engagements, where faculty offer subject matter expertise in exchange for a fee, collectively known as “external engagements.” Faculty should be attentive to and avoid situations where third parties wish to pay a fee to garner favor with the individual or with Chapman.

In undertaking external engagements, faculty must be attentive to their obligations to Chapman and take appropriate steps to ensure that such activities are separate and distinct from their Chapman activities, do not take precedence over their primary commitment to the University, and are of sufficient quality to be worthy of Chapman faculty. Several examples of how to keep external engagement separate and distinct are provided below to help ensure compliance with Chapman’s policies.

Since no guidance can address every instance of external engagements, it is the faculty’s obligation to engage in only those outside professional activities that promote and support Chapman’s commitment to pedagogy, research, and service. Faculty are urged to obtain guidance and prior consent from their Dean before entering into the consulting arrangement with a third party.

• As noted in the Faculty Manual, “Outside employment, consulting activities, or business interests that may interfere with the faculty member's obligations to the University must be reported to the Dean.” 
• Employees named as “Investigators” on sponsored awards and Directors of research institutes and centers must disclose any new outside activity within 30 days of engaging in the activity or acquiring a new financial interest.  See the Sponsored Activity Financial Disclosure Policy for more information. 
• Faculty are expected to spend no more than one day per workweek on consulting during the period for which they are paid for service. This time allowance may be averaged over a semester but does not accumulate from semester to semester.
• Consulting time limits do not apply during periods where faculty are not paid from Chapman funding sources, including internal funds or sponsored funds (e.g., over the summer or while on unpaid leave). However, disclosure of outside activities applies to all full-time faculty members.

Disclosure, Research Integrity and Academic Freedom

• Faculty should clarify that opinions they express in work prepared in the course of any consulting or other external engagements are their own and are not official positions of the University. Whenever a faculty member is listed as an author on a publication resulting from external engagements or engages in speaking activities related to consulting or other external engagements, this or a similar disclosure is recommended:

“Dr./Professor [NAME]’s contribution to this publication/speaking event was as a paid consultant/ representative of an external entity and is not related to his/her Chapman University duties or responsibilities.”

• Transparency is particularly needed when a faculty member’s University research supports or could reasonably be concluded by a neutral observer to support a position or agenda beneficial to or favored by an entity with which that faculty member consults or has another external engagement. Publications and presentations reporting such research should always disclose the arrangement using this or a similar disclosure:

“Dr./Professor NAME is a paid consultant/representative of ENTITY, which has activities or has interests to which this research is directly related or might be reasonably inferred as directly related.”

Contractual Agreements

• Individual faculty members are responsible for reviewing the business terms associated with their external engagements.
• If faculty intend to use information - including data, material, or other forms of intellectual property - gathered in the course of external engagements for Chapman research or other creative works, the Chapman Office of Industry Alliances and Commercialization must review the terms or conditions for accepting such information for use in Chapman research or other creative works, even if the data are provided free of charge. The terms of any such agreement must not be in conflict with Chapman University policy.

Intellectual property concerns

• Intellectual property developed while at Chapman using University or sponsored funds is owned by Chapman.  Contact Chapman’s Office of Industry Alliances and Commercialization to arrange for any third party to license patented or copyrighted materials from Chapman if such materials are needed as part of a consultancy.
• Faculty must not sign consulting, employment, facility access, non-disclosure, or confidentiality agreements containing terms that conflict with the faculty’s obligation to confer rights to Chapman for certain inventions, specifically all those that result from activity conducted in the course of an appointment with the University and all those produced using University resources.  Similarly, intellectual property related to your Chapman work may not be promised to outside entities as part of an external engagement.

Separation of external engagements and Chapman activities

• Faculty may not enter into any external agreements imposing obligations or liability upon Chapman.
• In any external engagement, faculty may not involve those Chapman staff or students for whom they have direct supervisory or academic responsibilities, as it may create a conflict of interest between the faculty member’s academic or supervisory responsibilities towards their student or staff and their personal interest.
• Chapman letterhead, name, or other identification must not be used to imply University support for a personal viewpoint or external engagement.
• Faculty may not use University resources to conduct or support their external engagements, with the only exceptions being the use of Chapman facilities and services that are openly available to outside commercial entities; or the use of an assigned office, office computer, or software routinely provided to all faculty.
• Faculty may not seek to provide access to University resources to individuals from entities with which they have an external engagement by sponsoring visiting or affiliate appointments unless it supports Chapman’s mission as an academic research institution.

All conflicts in research, teaching or other Chapman responsibilities related to sponsored programs must be managed, reduced, or eliminated.

When Chapman determines that a conflict of interest exists, the research integrity officer will work with the individual with the conflict, the dean, and the VPR as needed to determine what conditions or restrictions, if any, should be imposed by the University to manage, reduce, or eliminate such conflict of interest. If a FOCI cannot be managed, it must be eliminated by either divesting equity interest, termination of the relationship that gives rise to the Significant Financial Interest, terminating the sponsored award or human subject research, or other similar measures.

The management plan conditions may include but are not limited to: (i) monitoring of research by independent reviewers; (ii) modification of the research plan; (iii) disqualification from participation in the portion of the externally sponsored activity or human participant project that would be affected by Significant Financial Interests; (iv) divestiture of Significant Financial Interests; (v) severance of relationships that create conflicts; or (vi) public disclosure of Financial Conflicts of Interest. 

The final plan must be agreed to before the activity commences. The management plan is subject to final approval by the Vice President for Research. All management plans require regular monitoring for as long as the conflict exists—sample management plan.