UC San Diego SearchMenu

COI: Consulting for Industry

Find information and links relating to conflicts of interest when consulting for industry.

Expand all

Overview

The University encourages its faculty to participate in activities that contribute to their profession and the outside community. The University sees great value in activities outside the University that advance and communicate knowledge through interaction with industry, the community, and the public, and through consulting and professional opportunities. With increased interactions with industry comes an increased responsibility to assure that these interactions do not compromise the University's research or educational mission or create a situation in which financial or other personal considerations compromise, or appear to compromise, a researcher's professional judgment.

The University permits faculty members to provide consulting services related to the person's academic expertise to an outside party, consistent with the full performance of a faculty member's primary University obligations and as long as the consulting does not interfere with a faculty member's full-time commitment to the University.

Faculty members and other researchers may consult and sign personal consulting agreements with outside entities as long as such consulting does not: (1) utilize University facilities; (2) interfere with teaching and research responsibilities or with time commitments to the University; (3) involve students or postdocs whom the faculty members are mentoring or advising; (4) take precedence over prior obligations to the University, including obligations associated with intellectual property arising before, during or after the consulting period, and (5) is not prohibited in a plan developed by the Independent Review Committee on Conflict of Interest to manage a specific conflict of interest.

A consulting agreement is a written agreement between a faculty member and a company or nonprofit entity.  A consulting agreement can be (a) a letter; (b) a short statement of consulting activities; or (c) a lengthier agreement signed by both the faculty member and an officer of the company or nonprofit entity. 

Although outside consulting arrangements are personal, inappropriate consulting agreement language accepted by a faculty member can create conflicts with his or her obligations to the University and negatively impact his or her ability to perform research and secure sponsored research funding at the University. This guidance is not to be taken as legal advice, but as a tool to assist faculty when entering into personal outside consulting agreements. UCSD employees may wish to seek personal counsel before signing a consulting agreement.

Conflict of Interest and Consulting Activities

To ensure compliance with both the University of California Conflict of Interest Code and federal requirements, UCSD requires that any existing consulting activities related to a proposed University contract, grant or gift be reviewed and approved by the Independent Review Committee (IRC) on Conflict of Interest.

The IRC reviews consulting agreements from those investigators and researchers who have a financial interest in a company whose area of interest relates to a federal grant, gift or non-governmental sponsored research project. If there is no written consulting agreement, the IRC may ask the investigator to obtain a written agreement that specifies the nature of the consulting activities.

The IRC review is to determine whether a conflict of interest exists and, if so, recommend actions that should be taken to manage, reduce or eliminate such a conflict of interest between the consulting activities for a company or nonprofit entity and the research being done under a sponsored research agreement from the same company or nonprofit entity. Because an investigator’s consulting services are sought based on their academic expertise, and since consulting agreements frequently include very broad and general references to the scientific area of consulting, the agreement and consulting activities will often appear to overlap with or be indistinguishable from University research projects.  It is therefore incumbent upon the investigator to separate specific University projects from consulting activities.  If a review suggests that a conflict may exist, appropriate steps need to be taken to eliminate or mitigate the conflict before funds can be released for expenditure.

Consulting Activities and Research Involving Human Subjects

Research involving human subjects and clinical trials pose special situations that require close scrutiny for several reasons. The University is responsible for ensuring that human subjects are fully informed and not placed at additional risk because of financial interests on the part of the investigator. The increase in financial relationships between research institutions, investigators and research funders has led to requiring greater disclosure to human subjects of these relationships.  The University has taken the position that, in order for a research subject to be able to give a consent that is fully informed, they should be advised of relevant financial interests of members of the research team and of the University.

The Independent Review Committee (IRC) on Conflict of Interest works closely with the Institutional Review Board (IRB) and considers multiple factors in weighing the benefits of a specific project and potential associated risks when the investigator has reported a consulting relationship with the sponsor or other interested entity.  The IRC must consider the effect of the reported financial interests on the rights and welfare of the participants and the extent to which the outcome of a clinical study can affect the company's and/or the investigator's near-term financial interests. In research involving human subjects, an investigator’s financial interests have the potential or may appear to affect a researcher’s judgments about which human subjects to enroll, clinical care provided to subjects, proper use of subjects’ confidential health information, delivery of informed consent, study design, data collection and analysis, adverse-event reporting, or the presentation and publication of research findings.  The IRC must consider whether the rights of the participants would be better protected by reduction or disclosure of a financial interest, separation of responsibilities for financial and research decisions, additional oversight, elimination of a financial interest, implementation of an independent data and monitoring committee, modification of roles in research staff, or any other mechanism which would mitigate effects of the financial interest.

It is the practice of the IRC to recommend that investigators who participate in a privately sponsored clinical trial not receive any compensation from the sponsor, including honoraria and consulting fees, during the course of the study particularly when the proposed research involves therapeutic or diagnostic studies that alter patient care or test the company’s products.  Investigators should not engage in consulting activities with the company sponsoring the clinical trial, the company supplying drugs and/or other materials to be used in the study, or any entity that may benefit from the results of the research. The University has an obligation to ensure that the results are free from any harmful conflicts of interest or any appearance of such conflicts.

Consulting Activities and Sponsored Research

UCSD investigators participating in privately sponsored research must disclose consulting income received from the sponsor or, in the case of federal sponsored research, consulting income received from any entity that could reasonably appear to be affected by the sponsored research.

If the investigator appears to be conducting the same research or services under the consulting agreement as he/she is performing under the sponsored research agreement, the Independent Review Committee (IRC) on Conflict of Interest requires that the consulting activities be incorporated into the sponsored research agreement and that the consulting agreement be terminated. An investigator can have a consulting agreement with an entity sponsor at the same time as he/she has a sponsored research agreement funded by the entity provided that (1) the consulting activities are clearly delineated in a written consulting agreement and separate from the sponsored research activities, and (2) the sponsored research is not a clinical study.

No overlap of research activities and consulting activities is allowed.

Consulting Activities and Service Agreements

A service agreement is a legally binding agreement between the University and an external entity, such as a private corporation. A service agreement sets forth the terms and conditions pertaining to specific goods or services to be provided by the University.  University members are encouraged to render professional or scholarly services to external individuals, businesses, and charitable or government agencies. These services are expected to enhance, and must not interfere with, their internal University duties. The provision of such services fits with the research and service missions of the University when:

  • The University is uniquely qualified to offer such special “services”.
  • Those services provide additional research and experience for the University’s faculty, staff, and students; and
  • Access to those services or specialized equipment is not readily available through local commercial means. These services may include the utilization of specialized expertise of the faculty or specialized instrumentation that may be offered to the company. Quite often, this will include testing of certain materials for an outside company.

Services are defined as “small, specifically-designed” projects and are confined to those projects that provide services involving classification, diagnostics, or testing of a sponsor’s data, samples, mechanisms, procedures, or products. These services are performed using University resources, including personnel, equipment, or facilities.  The rationale for University involvement in this kind of service or testing is that since University researchers conduct research that is often on the leading edge of scientific investigations, they are uniquely qualified to provide certain kinds of services that are not readily available locally from anyone in the private sector.

It is difficult to mitigate the appearance of conflict of interest when a university employee is providing consulting services to a company and performing services for the company using University resources. Therefore, the Independent Review Committee (IRC) on Conflict of Interest recommends that University researchers should not provide consulting services to the company while performing contracted services for the company. 

Quick Reference Guide for Consulting Activities

How often may I consult?

Full-time faculty members may consult or engage in other outside activities up to 39 days (for 9-month appointees) or 48 day (for 11-month appointees) each during the academic year. Faculty members may consult full-time during the summer months in which there is no other salary compensation from the University (such as work on sponsored projects). If an academic-year faculty member is receiving University summer compensation, then the applicable limit on compensated outside professional activities is the equivalent of one day per week during the period in which compensation is received.

Allowable days not used one year may not be carried forward to the next year. University policy makes no provision for allowable consulting days for researchers or lecturers. For more information, please refer to the University Policy on Conflict of Commitment and Outside Professional Activities of Faculty Members APM-025.

Are there any limits on compensation?

The University does not set any cap on compensation from outside personal consulting arrangements, except as agreed under a medical compensation plan. For more information on the School of Medicine’s implementation of the UC Health Sciences Compensation plan, please see: http://facultycouncil.ucsd.edu/faculty-compensation/health-sciences-compensation-plan.

Do I need prior approval to consult?

Faculty need prior approval to engage only in those outside activities described in APM 025 that are likely to raise issues of conflict of commitment. These include assuming an executive or managerial position, establishing a relationship as a salaried employee outside of the University, or submitting a contract or grant proposal outside of the University. For more information, please refer to the  University Policy on Conflict of Commitment and Outside Professional Activities of Faculty Members APM-025.

Am I required to report my consulting activities?

All academic employees are required to submit annual reports on outside professional activities (including consulting) to their department chairs or equivalent unit heads. Refer to: 

Who can help me with a consulting agreement?

Consulting agreements between faculty or other academic employees and outside entities are personal agreements to which the University is not a party.  However, inappropriate consulting agreement language accepted by a faculty member can create conflicts with his or her obligations to the University and negatively impact his or her ability to perform research and secure sponsored research funding.  It is strongly recommended that faculty seek legal advice before entering into a consulting agreement.

Consultants should have a written agreement in place that clearly defines the technical scope and financial terms of the consulting activity.  This is a personal agreement between the consultant and outside entity for which the consultant is personally responsible and to which UCSD is not a party. 

If there are questions, the services of a qualified non-University attorney should be sought for formal legal advice.  The agreement is not routinely reviewed by UCSD, nor is it approved or signed by the institution.

Where can I find additional information?

A number of policies apply to outside consulting activities. These include:

Consulting Agreements

Consulting agreements between faculty or other academic employees and outside entities are personal agreements to which the University is not a party. It is the responsibility of a faculty member or other University employee to ensure that consulting agreement terms do not conflict with their University research and teaching obligations, and that they are consistent with University policies and employment obligations and policies. Before entering into a consulting agreement, faculty and other academic appointees should consider carefully issues such as whether the nature and scope of services are appropriate for a consulting agreement and are clearly defined in the agreement; if the activity may create a potential conflict of interest that must be reported; whether the terms of the agreement might conflict with their pre-existing obligations to the University and whether any commitments are being made that may impact University resources or other personnel. The University’s published policies and guidelines are a key resource available to faculty in addressing these types of issues. Any faculty member or other academic appointee who engages in consulting activities should review in particular the following:

Duty to Report

Many outside industry consulting contracts purport to take precedence over a University employee’s primary and continuing obligations to the University.  These arrangements are not considered permissible consulting activities by the University and the employee should take care to avoid such contracts.  In particular, University employees should not sign a consulting agreement that precludes the disclosure to the University of any inventions they make.  The University of California Patent Agreement/Acknowledgment (Patent Acknowledgment) is a contract between the employee and the University. It specifically states "I further acknowledge my obligation to promptly report and fully disclose the conception and/or reduction to practice of potentially patentable inventions to the Office of Innovation and Commercialization or authorized licensing office." At UC San Diego, the "authorized licensing office" is the Office of Innovation and Commercialization (OIC) and it is responsible for receiving all the disclosures. The obligation of the employee to make prompt disclosures of inventions to the University is independent and continuing even if an invention is made in connection with outside consulting activities. Therefore, all inventions made by a University employee must be reported to the University, including inventions made on weekends, on leave, at home “in the garage,” or during paid or unpaid consulting work.  Disclosure is a legal obligation of employment at the University.  As discussed below, the University requirement to report all inventions does not imply that the University will claim title to all inventions.

Intellectual Property Rights and Obligations

Outside consulting by faculty members or other University employees is a professional activity that provides the opportunity to confront real world challenges, identify and work with practicing industrial professionals, and contribute their own expertise to help fuel technological and economic development. However, there are several considerations and potential conflicts that must be examined before a faculty member enters into a binding consulting agreement. One issue concerns consulting contract clauses referring to future intellectual property rights.

When joining the University every new employee signs the Patent Acknowledgment and agrees to abide by the University of California Patent Policy (Patent Policy) and the University of California Policy on Copyright Ownership (Copyright Policy). The Patent Policy and the Copyright Policy spell out the rights of the University to own, and the obligations of University employees to assign title and interest in inventions or certain copyrights that may arise during their employment at the University. For work that is both patentable and copyrightable, the Patent Policy and the Patent Acknowledgment shall first apply. The Patent Acknowledgment contractually describes University employees' duty to report their inventions to the University and the procedure to appeal for ownership under certain conditions for an exception to University ownership.

Companies employing consultants frequently require assignment of title to inventions made during the course of the consulting relationship.  Since the actual consulting frequently occurs concurrently with the researchers’ University projects, it is essential to ensure that the assignment of title is restricted to inventions made “under the scope of the consulting agreement” rather than during the time of the consulting agreement.”  If this is clear in the consulting agreement, it will avoid later title disputes for inventions developed at the University during or after the period of the consulting.  If this is not clear, a dispute regarding ownership of patents, software, data, etc. could occur between the consulting entity, the University and a commercial sponsor which is presently supporting or may in the future fund research at the University.

Ownership of Inventions

Inventions developed by University employees are usually the property of, and owned by, the University. One exception to this general rule is an invention conceived and reduced to practice during permissible outside consulting activities:

  • Without utilization of University research facilities and/or gift, grant, or contract funds administered through the University;
  • Without incurring any University obligations to other parties; and
  • Outside an individual’s academic employment obligation (“scope of employment”) to the University. 

Outside consulting activities are considered "permissible" if and only if the activities do not interfere with the University employee's primary obligations to the University to perform his/her University duties and to satisfy his/her responsibilities to the University. For faculty members, such primary duties and responsibilities shall include on-going research, teaching, mentoring and supervising students, and services to selected committees. Nonetheless, even if the University employee believes he/she has developed an invention under permissible outside consulting and without the use of any University resources and therefore the University should not have ownership of the invention; the University employee is still contractually obligated to report the invention to the Office of Innovation and Commercialization (OIC). The University employee must present the supporting facts stating why the University's claim to ownership should be exempted. Upon receipt of the disclosure of the invention and the written representations by the University employee inventor, OIC will make a determination and notify the inventor whether the University is asserting ownership to the invention or approves of the exception. OIC will examine and keep the disclosure in confidence and will in no way jeopardize the patentability of the invention and/or the commercial value of the invention to the company for which the University employee consults. In any event, the University employee should not assign title and interest in any invention of which he/she is an inventor to any third party before he/she reports the invention to OIC and receives a letter of determination by which the University disclaims ownership of the invention.

Protecting Future Research Rights

Companies may desire rights to future inventions made at UCSD that they feel are related to consulting activities. Neither the University employee nor the University can enter into this kind of agreement.  Granting rights to future inventions in consulting agreements may subsequently preclude UCSD from providing comparable rights to future research sponsors and from meeting its obligations to the federal government.  Future research funding may be compromised by engaging in consulting that reaches beyond the proposed scope of work.

Ownership of Copyright

The University generally does not assert ownership to copyright on permissible consulting that is performed outside of the University and without the use of University resources; including facilities, funds, employees and students, or original work (including software) that is owned by the University. Copyrights developed by University employees under such circumstances therefore can be assigned to a third party at the employee's discretion.

Acceptance of Confidential Information

It is not uncommon for a company to disclose proprietary information to a consultant. In doing so, the company often wants written assurance that this information will be kept confidential. Confidentiality can be tricky for a faculty member involved in open, free exchanges of information in a public university setting, and the company's documentation in this regard should be scrupulously examined. It is essential to limit the amount of confidential information received when consulting and to have the company agree to clearly identify such proprietary information by marking it as "confidential."

On occasion, it may be necessary to report company proprietary information to the University in order for a faculty/researcher to report an invention made in the course of an outside professional activity (e.g. consulting).  In this case, the proprietary information may be protected by executing a non-disclosure agreement between the company and the University.  Company proprietary information either existing prior to the consulting relationship or embodied in an invention made under the consulting relationship may be included under the terms of such on-disclosure agreement.

Liability/Insurance

It is very important to remember that the University's duty to defend and indemnify its faculty members as University employees does not extend to consulting activities. Therefore, by signing the consulting agreement, the consultant assumes any risk of legal liability, including those referenced above, and the faculty member should consider personal insurance for such liability.

Consultants are normally asked to provide advice to the company which may or may not be accepted or may be interpreted by the company in a different manner than what was intended by the consultant. The consultant generally has no control over how the results are used in practice.

Therefore, it is very important that consulting agreements limit the consultant's responsibilities to negligent acts on the part of the consultant only. A consulting agreement should not include language which makes the consultant responsible for general liability or liability for any product based on the consulting.

Some consulting agreements may also attempt to require that the consultant actually assume the financial costs of defending lawsuits against the company which result from the consulting activities. University employees should seek to eliminate such language from any consulting agreement they enter into.

California State Law Provision

Most consulting agreements will indicate that the laws of a particular state or country will be used in a dispute, usually those of the state where the company is located or where the consulting is taking place. If it is other than California, the litigation of any dispute will physically take place in that state or country. As this could be very costly and disruptive, it is important to try to include a statement in a consulting agreement that in the event of a dispute, California laws will apply.

Use of University Facilities

In order to comply with the consultant's responsibilities to both the company and the University, consulting activities need to be conducted without the use of University resources, including laboratories, equipment or other facilities. Any use of such University facilities could be interpreted to be in direct conflict with the Patent Policy which states that only permissible consulting activities without the use of University facilities are exempt from the requirement to assign inventions and patents that result from the consulting activity to the University.

Since almost all consulting agreements require the assignment of title to inventions to the company, the above restriction must be carefully observed.

Expand all