Management ofConflicts of Interest

Mission Critical in Entrepreneurial Universities

Dr. Bill Hunt, ProfessorBioengineering, and

Microelectronics/Microsystems in the School of Electrical and Computer Engineering

Compare and Contrast Conflicts of Interest and Commitment

“Conflict of Interest”• Whenever it reasonably appears

that a significant financial or other interest could affect the design, conduct, or reporting of activities funded or proposed for funding by a sponsor a conflict of interest exists.

• The personal interest of an employee or his or her family may prevent or appear to prevent the employee from making an unbiased decision with respect to the employee’s employment with the institution.

“Conflict of Commitment”• Whenever an individual's

outside activities interfere with professional obligations to the Institute a conflict of commitment may exist.

• The primary guide should be the intention to promote the interests of the Institute as a place of education, learning and research.

Legal and Policy FrameworkGIT COI Policy

Activities which constitute a Conflict of Interest where there is Significant Financial Interest are prohibited unless a plan to reduce, eliminate or manage the Conflict of Interest has been expressly approved pursuant to the provisions of this policy.

Activities which constitute Conflicts of Interest where an employee has a Substantial Interest are unlawful.

Full-time employees of the Board of Regents of the University System of Georgia may serve as members of governing boards of private, nonprofit, educational, athletic, or research related foundations and associations which are organized for the purpose of supporting institutions of higher education in this state and which in furtherance of this purpose may Transact Business with such institutions or with the Board of Regents of the University System of Georgia. However, full-time employees of the Board of Regents of the University System of Georgia may not serve as a member of a governing board of a for-profit company.

Employees shall submit a written disclose not less than annually and, they must re-disclose when it changes, inform their Chair and the Office of Sponsored Programs Office when a submission poses a conflict of interest in sponsored research and they must inform the Institutional Review Board.

• Official Code of Georgia 45-10-23, 45-10-24

Legal and Policy FrameworkGeorgia Tech Research Corporation & CoI Policy

• GTRC is the owner of IP created at the Institute• GTRC is a 501(c)3, Type 3, Functionally Integrated

Supporting Organization of GIT• GTRC is responsible for Bayh-Dole and contract compliance

– Pre-existing rights– Reporting requirements– Enforceable milestones and diligence provisions

are a must– U.S. manufacture

• GTRC licenses technology at “fair market value” and is mindful of:

– Obligations to all inventors– Obligations to get technology into the marketplace– Excess benefit transactions– Patent cost recovery

• GTRC is also mindful of common conflicts– Option Briar Patch– Other research agreements

• GTRC has its own CoI policy• Institutional Conflicts of Interest

– GTRC does not vote in company shareholder actions– GTRC does not join LLCs

Situations That Give Rise to Conflicts of Interest and Commitment

• Professional or scholarly interest in the outcomes of research

• Authorship of scholarly works or teaching materials

• Family employment or business relationships

• Consulting agreements• Intellectual property licensing• Outside financial interests• Outside professional activities

Sometimes it seems as though the role of Technology Transfer is to create

Conflicts of Interest

• Faculty Start-Ups– License Technology from the Institution– Sponsor Research at the Institution– Involve students of the Institution– Conduct human studies

• Institutional Conflict of Interest– If the institution owns equity, its decisions may not be

viewed as unbiased– If an institution accepts funding from a company its

research and decisions may not be viewed as unbiased

The university3 must protect itself and its faculty, staff and students from any of the following allegations:

• exploitation of students for private gain• undue personal gain from public funds• compromise of university priorities due to financial

considerations• unfair access by a company to information or

technology

3. From the Stanford University Conflict of Interest Policy http://www.stanford.edu/dept/DoR/Resources/coi.html

University Concerns

The university3 must protect itself and its faculty, staff and students from any of the following allegations:

• compromise of appropriate controls in the conduct of research such that research subjects could be harmed

• use of university resources for private gain• adverse effect by those in leadership roles on the professional

or academic advancement of colleagues, staff or students as a result of outside interests.

3. From the Stanford University Conflict of Interest Policy http://www.stanford.edu/dept/DoR/Resources/coi.html

University Concerns

CoI Management Plans

• Limitations on who may serve as a PI on a sponsored project• Distinction between activities appropriate for consulting and

for sponsored programs• Limitations on ownership of stock or stock options• Technology transfer or licensing provisions• Designation of responsibility for control of donated funds• Provisions for the use of university facilities• Provision for the employment of university students• Disclosure requirements• Relationship to other funded projects &/or proposals• Designation of parties responsible for review

Special Cases: GRA Funding and Other External Funding for Translational Research

• Phase 0 through Phase II GRA grants are Institute funds and must be spent for translational research!

• Coulter Funds are the result of a donation to the Georgia Tech Foundation and are spent as Institute funds for translational research.

Special Cases: GRA Funding and Other External Funding for Translational Research

• Faculty members and employees of Georgia Tech must maintain a strict separation between activities performed for GT and those performed for the company in which they have or may have interests as a result of commercialization of the subject technology.

• These funds cannot be used to compensate any founders or employees of the subject companies or others with a financial interest in the company.

• Normal Purchasing rules apply.• Normal IRB, IACUC, biosafety, radioisotope rules, et cetera apply.• IP that results from these projects will be assigned to GTRC and must be

licensed under a separate license or license amendment.• Research projects undertaken with a goal of readying the technology for

commercialization in a start-up company must be carefully firewalled from other research projects conducted by the individuals involved.

Special Cases: STTRs & SBIRs• Management Plan must Address

– PI for the company• May not be a full time GT employee• May not be a full time GT student

– PI for the award to Georgia Tech– Students; students advised or supervised by an individual with a conflict

of interest involving a company funding not be involved in projects funded by that company at Georgia Tech

– Level of ownership by Georgia Tech faculty, inventors, family• Relationship to ongoing and proposed research – whether

federally or privately funded – in Georgia Tech– Design of research projects – avoidance of “pipelining”– Conduct – allocation of resources; data integrity– Reporting of research results – objectivity in research; insider

information• Time and Effort Reporting – A Special Concern

Case Studies1. A faculty member makes a patentable invention during federally-funded research. The invention is exclusively licensed to General Whatever. The company sponsors research in the faculty member’s lab. GW will pay royalties; inventor receives 30% of net.2. A faculty member makes a patentable invention during federally-funded research. The faculty member forms a company to license this very early-stage technology and seeks venture capital. GTRC owns equity in the start-up; faculty member has equity and will receive 30% net royalty.3. The faculty member in #2 submits a proposal to the National Science Foundation to work in the same research area.

4. The company in #2 receives angel investment and wants to sponsor development work in the faculty member’s lab. The faculty member plans to employ a graduate student and two undergraduates who will work on their Senior Design projects under this agreement.

5. The faculty member in #1 accepts a contract from American Whatever. The research will make use of the invention licensed to General Whatever. The contract with American Whatever offers an option for a NERF.

Case StudiesCase COI?

1. Federally-funded invention; licensed to General Whatever which sponsors research in the inventor’s lab.

2. Federally-funded invention; faculty member forms a company to license this very early-stage technology.

3. The faculty member in #2 submits a proposal to the National Science Foundation.

4. The company in #2 wants to sponsor development work in the faculty member’s lab; graduate student and two undergraduates who will work on the projects under this agreement.

5. Technology licensed to General Whatever becomes background IP in a contract with American Whatever which offers an option for a NERF.

Case StudiesCase COI?

1. Federally-funded invention; licensed to General Whatever which sponsors research in the inventor’s lab.

No(potential)

2. Federally-funded invention; faculty member forms a company to license this very early-stage technology.

3. The faculty member in #2 submits a proposal to the National Science Foundation.

4. The company in #2 wants to sponsor development work in the faculty member’s lab; graduate student and two undergraduates who will work on the projects under this agreement.

5. Technology licensed to General Whatever becomes background IP in a contract with American Whatever which offers an option for a NERF.

Case StudiesCase COI?

1. Federally-funded invention; licensed to General Whatever which sponsors research in the inventor’s lab.

No(potential)

2. Federally-funded invention; faculty member forms a company to license this very early-stage technology.

No(potential)

3. The faculty member in #2 submits a proposal to the National Science Foundation.

4. The company in #2 wants to sponsor development work in the faculty member’s lab; graduate student and two undergraduates who will work on the projects under this agreement.

5. Technology licensed to General Whatever becomes background IP in a contract with American Whatever which offers an option for a NERF.

Case StudiesCase COI?

1. Federally-funded invention; licensed to General Whatever which sponsors research in the inventor’s lab.

No(potential)

2. Federally-funded invention; faculty member forms a company to license this very early-stage technology.

No(potential)

3. The faculty member in #2 submits a proposal to the National Science Foundation.

Yes(disclosure required)

4. The company in #2 wants to sponsor development work in the faculty member’s lab; graduate student and two undergraduates who will work on the projects under this agreement.

5. Technology licensed to General Whatever becomes background IP in a contract with American Whatever which offers an option for a NERF.

Case StudiesCase COI?

1. Federally-funded invention; licensed to General Whatever which sponsors research in the inventor’s lab.

No(potential)

2. Federally-funded invention; faculty member forms a company to license this very early-stage technology.

No(potential)

3. The faculty member in #2 submits a proposal to the National Science Foundation.

Yes(disclosure required)

4. The company in #2 wants to sponsor development work in the faculty member’s lab; graduate student and two undergraduates who will work on the projects under this agreement.

YesFM equity >25%FM equity <25%

5. Technology licensed to General Whatever becomes background IP in a contract with American Whatever which offers an option for a NERF.

Case StudiesCase COI?

1. Federally-funded invention; licensed to General Whatever which sponsors research in the inventor’s lab.

No(potential)

2. Federally-funded invention; faculty member forms a company to license this very early-stage technology.

No(potential)

3. The faculty member in #2 submits a proposal to the National Science Foundation.

Yes(disclosure required)

4. The company in #2 wants to sponsor development work in the faculty member’s lab; graduate student and two undergraduates who will work on the projects under this agreement.

YesFM equity >25%FM equity <25%

5. Technology licensed to General Whatever becomes background IP in a contract with American Whatever which offers an option for a NERF.

Yes

Other Common Conflicts of Interest SituationsConsulting Agreements between faculty and research sponsors

Consulting arrangements between faculty and companies based on their technologies.

Interests senior officials, those whose jobs involve technology transfer or commercialization, and supervisors may have in start-up companies or licensees.

Gifts or donations made by start-up companies or other licensees to the Georgia Tech Foundation.

Other Common Conflicts of Interest Situations

Interests senior officials, those whose jobs involve technology transfer or commercialization, and supervisors may have in start-up companies or licensees.

Gifts or donations made by start-up companies or other licensees to the Georgia Tech Foundation.

These individuals are generally recused from financial, managerial or compensated roles in GT start-ups.

Gifts should not be controlled by anyone with a financial or other interest in the donor.

Particularly associated with start-up companies based on Georgia Tech technology.

Roadmap for Start-Ups!

• Avoid substantial conflicts of interest & conflicts of commitment.• Firewall ongoing research from translational research and company formation.• Do not involve students advised or taught by faculty involved in the company (unless they are also inventors).• Faculty with a yen to run a company may wish to consider a leave of absence.• Outside entities cannot use Georgia Tech facilities without compensation and there are formal mechanisms for doing that.

• Tip: don’t use GT e-mail, address, or phone number for the company unless it’s in ATDC.

• DISCLOSURE, DISCLOSURE, DISCLOSURE!