COI: Consulting

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 outside entities, such as industry, the community, and the public, and through consulting and professional opportunities. With increased interactions with outside entities 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 entity, 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.

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.

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.

IRC Management Strategy Options for PCAs and ICAs

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. 

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.

IRC Management Strategy Options for PCAs and ICAs

Outside Personal Consulting Agreements

This guide to outside personal consulting agreements is designed as a tool to assist faculty, staff and students (who are employees) at the University of California San Diego, with issues to consider when entering into personal outside consulting agreements.  UC San Diego does not review or sign personal consulting agreements.  This guide is not to be taken as legal advice; faculty may wish to seek personal legal advice prior to signing any such agreement. The COI Office in consultation with other UCSD institutional offices has developed sample contract language that can be included in a personal consulting agreements.  

The University encourages its faculty to participate in activities that contribute to their profession and to the outside community. Personal consulting is a professional activity related to a person’s field that is undertaken with an outside party, usually for a fee-for-service. Although outside consulting arrangements are personal, language in consulting agreements can create conflicts with the obligations of a faculty member to the University. Faculty members and other researchers may engage in consulting with outside entities as long as University facilities are not utilized and the consulting activities do not interfere with teaching and research responsibilities to the University. Outside consulting activities are governed by Regents' Standing Order 103.1(b) and the University Policy on Outside Professional Activities of Faculty Members (APM-025 / APM-671).

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.

* The invention reporting or disclosure process is described in: Invention Disclosure System https://blink.ucsd.edu/research/conducting-research/edisclosure.html. Also see the OIC website at https://innovation.ucsd.edu/

Guidance for Faculty and Other Academic Employees on Issues Related to Intellectural Property and Consulting

From: http://www.ucop.edu/research-policy-analysis-coordination/_files/Consulting-Industry-White-Paper-2003.pdf (page 12). Per Question # 3. Does the invention fall within the employee’s scope of employment with the University?

As a public trust, the University must exercise its responsibility to protect the public interest in a State employee’s inventions made within their scope of employment (California Labor Code Sec. 2860 and 2870). An employee’s obligation under law to assign inventions to the University that are conceived and/or developed “while employed by the University” is contained in the Patent Acknowledgement. This assignment determination, based upon an employee’s scope of employment, can be difficult. This determination must be distinguished from the irrelevant question of whether the invention falls within the broad area of an employee’s professional expertise – which it normally would.

 In guidance provided on March 22, 1978, University General Counsel Reidhaar advised that inventions resulting from a consulting activity fall within the employee’s scope of employment when “the activity to be undertaken by the consultant is a direct extension of his/her University research project or duties, or if the activity can be construed as one that has a close and umbilical connection which cannot be severed with the University work.” For University faculty and researchers, the question of an employee’s scope of employment is initially an academic issue best addressed by the appropriate University academic manager – most often the department chair or dean – with guidance from the Office of General Counsel as necessary. Ultimately, scope of work may become a legal issue.

UC Patent Acknowledgement

UC employees, persons not employed by the university but who use UC research facilities, and persons who receive gift, grant or contract funds through the university are all required to sign the University Patent Acknowledgment https://ucnet.universityofcalifornia.edu/compensation-and-benefits/patent-acknowledgment/

The Patent Acknowledgment — called a Patent Agreement prior to 1997 — requires the individual to promptly report and fully disclose to UC licensing offices potentially patentable inventions. In addition, the individual acknowledges an obligation to assign to UC rights to inventions and patents that are conceived or developed while employed by the university or while using any university research facilities or any gift, grant, or contract research funds received through the university. UC typically evaluates each invention disclosure for development and commercialization potential and may require the inventor to formally assign rights to the university.

Compromising Future Research Funding

Great care must be taken not to compromise future research funding. Although consulting agreements are personal, if such agreements are not properly formulated, they can jeopardize future University research programs and related funding. Companies employing consultants may desire commercial access to inventions made during the course of the consulting arrangement and often will seek rights to future yet-to-be-developed inventions made at the University related to the consulting activity. An agreement to provide such rights to future research results would preclude the University from providing comparable rights to other companies that sponsor University research. Most potential sponsors would refuse to fund research if their access to resulting inventions were denied because of prior obligations made through a consulting arrangement.

Acceptance of Confidential Information

It is not uncommon that a company will disclose proprietary information to a consultant. In doing so, the company will want assurances that this information will be kept confidential. Confidentiality can be tricky for a faculty member, staff, and students (who are employees) involved in open, free exchanges of information in a public university setting. Disclosure of proprietary information, either intentionally or unintentionally, may be actionable under criminal as well as civil law. Therefore, 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.” Consulting agreements should always include a statement about the transmission of proprietary information and a no-fault statement regarding unintentional disclosure.

Liability

Consultants are normally asked to provide advice to the company that may or may not be accepted. Usually, the consultant has no control over how the results are used in practice. Therefore, consulting agreements should limit the consultant's responsibilities to negligent acts on the part of the consultant only. Under no circumstances should a consulting agreement include general liability or liability for any product produced based on the consulting. It is essential to have personal insurance for the liability exposure faced as a consultant. The University will not be responsible for providing legal help or for payment of any claim arising from a dispute with the company.

California State Law Provision

Most personal consulting agreements will indicate that the laws of a particular state or country will be used in a dispute, usually those of the state or country where the firm is located or where the consulting is taking place, and that 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 State law will apply. An alternative option is to be silent on governing law and disputes (i.e., delete these sections in their entirety).

Disclosing Financial Conflict of Interest

Under the California Political Reform Act of 1974, a Principal Investigator must disclose whether or not there has been any consulting activity with a company when accepting funding for research from that company. The National Science Foundation and the Public Health Service also require disclosure of consulting income under specified conditions. An existing or prior consulting arrangement might require that proposed funding be reviewed and approved by appropriate campus officials for possible financial conflicts.  UC San Diego requires Conflict of Interest disclosure be made in Kuali COI.

Reporting Personal Consulting Activities

Under University policy (APM-025 / APM-671), faculty are required to submit annual reports to department chairs in UC OATS on their outside professional activities which includes personal consulting.

Institutional Consulting Agreements (ICA) are negotiated for Health Sciences Faculty.

An ICA is an agreement between the University and an outside entity. The outside entity requires the consulting services of a Health Sciences Faculty member subject matter expert. The consulting services being requested can be for professional services (e.g. medical director, clinical trial oversight, faculty consulting, data management for multi-site studies), clinical services (e.g. nurses, dieticians, research personnel), or educational programs (e.g. CME, preceptorships, community health outreach).

The Health Sciences Office of Business Contracting is the office responsible for negotiating ICAs and can be contacted at hsbizcontracting@ucsd.edu.

Factsheet: Institutional Consulting Agreements for Health Sciences Invesitgators (PDF)

IRC Management Strategy Options for PCAs and ICAs

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: 

• Disclosure Form for Category I & II Outside Activities 
• School of Medicine Required Annual Report on Compensated Outside Professional Activities

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:

• Regents Standing Order 103.1(b)
• University Policy on Conflict of Commitment and Outside Professional Activities of Faculty Members (APM-025)
• Guidance for Faculty and Other Academic Employees on Issues Related to Intellectual Property and Consulting (4/03)
• Principles Regarding Rights to Future Research Results In University Agreements With External Parties (8/99)
• Faculty Consulting – Guidance on Intellectual Property