CONSULTING BY UNIVERSITY FACULTY AND NON-FACULTY EPA EMPLOYEES
The Office of General Counsel cannot provide legal advice to individual faculty and employees with regard to private consulting agreements. However, this professional activity for pay is subject to UNC and NC State policies, including Conflicts of Interest and Commitment and Intellectual Property. The following is intended to provide general information on the types of questions which are frequently asked by faculty and employees who wish to engage in consulting activities.
Are University employees allowed to engage in private consulting?
Yes. The Board of Governors Policy on Conflicts of Interest and Commitment, UNC Policy Manual, 300.2.2, encourages faculty and non-faculty EPA employees to engage in external professional activities for pay to enhance their own professional development and to benefit the University and society. That Policy also recognizes that private consulting can create conflicts of interest and commitment and that employees must be cognizant of the need to address any conflicts and/or perceived conflicts which would detract from their employment responsibilities.
Who signs faculty consulting agreements?
A consulting agreement is a contract between the individual and a private company or other entity. Therefore, the individual signs the agreement and is legally bound by the terms of the agreement. The University does not sign and has no legal obligation to the company. The legal consequence is that the employee risks personal liability for any breach of his/her contractual obligations and should, therefore, read any proposed consulting agreement with care and should seek legal counsel if he/she has questions about any provision of the agreement. The University Office of General Counsel will answer questions concerning university policies related to consulting, but cannot provide personal legal advice.
Do faculty consulting agreements need to be reviewed and approved by the University?
No. University policy does not require that consulting agreements be reviewed and approved by the University. However, system and institutional policies require advance reporting and administrative approval of all external activities for pay. Prior approval of consulting activities should be sought from the head of the appropriate department or unit, who will determine whether (1) the proposed consulting is consistent with the needs of the department or unit in terms of the time commitment or the type of services provided (2) whether there is a conflict of interest and, if so, whether the conflict has been appropriately managed; and (3) whether reasonable arrangements have been made to reimburse the University for any proposed use of University personnel, facilities or equipment.
What other policies of the University impact faculty consulting?
Both the Conflict of Interest and Commitment Policy and the Intellectual Property Policies, affect faculty consulting arrangements. Consulting obligations should not conflict with these policies or any other policy of the University.
What Conflict of Interest issues are raised by consulting?
Before entering into any consulting or other agreement for external activities, it is important that employees read and understand the University's Policy on Conflict of Interest and Commitment, NCSU REG01.25.01 – Conflict of Interest and Conflicts of Commitment. Consulting obligations should not conflict with this policy or the employee's normal research and teaching duties. An example of an apparent conflict of interest would be acting as principal investigator on a research project sponsored by a company for which the employee also receives remuneration under a consulting agreement. If the research sponsor is compensating the principal investigator personally, there can be a perception of bias in the reporting of the research results, and such activity may be in violation of state law, which prohibits public employees from deriving direct benefit from public contracts. N.C.G.S. 14-234 (a) (1).
Even when the investigator's university research is not sponsored by the company for which the investigator consults, if the consulting is related to the specific research for which the individual is employed by the University, there may be a conflict or the appearance of a conflict, which must be managed under the University's Conflict of Interest and Commitment Policy. In addition, if the employee agrees to maintain the confidentiality of proprietary data in a technical area overlapping with his/her university research, he or she may jeopardize the University's ability to obtain future research funding for the subject research.
How can I distinguish between activities related to my university employment and those which are not related?
This is very difficult, but it can be done. It is to be expected that the outside company will desire the consulting services of the faculty member within the same general area of competence for which he/she is employed by the University. Care must be taken, however, to define narrowly and precisely the subject matter of the consultancy and the specific services to be provided under the consulting agreement. The subject matter of the consulting should be defined sufficiently to distinguish it from the employee's primary activities for the university. Further, consulting typically involves an advisory (consulting) service rather than the actual conduct of research and generally seeks to resolve a problem posed by the company. Although exceptions may be made through the notice process for external professional activities, research faculty and employees should not contract to perform research under a consulting agreement. Research should be contracted through Sponsored Programs and Regulatory Compliance Services (SPARCS). Conflict of interest questions should be directed to the faculty member's Department Head or Associate Dean for Research.
Who owns the intellectual property that is developed under a faculty consulting agreement?
Ownership of the intellectual property developed by an employee under a consulting agreement is determined by the language of the consulting agreement. However, employees may not convey rights to intellectual property that they do not own. If the consulting agreement is inconsistent with University policy on ownership of inventions, any purported transfer in a consulting agreement would be without the authority of the University, not binding on the University, in breach of the employee's employment agreement with the University, and in breach of the consulting agreement.
Section 4.1 of NCSU POL10.00.01 - Patent and Tangible Research Policy, states as follows:
Section 4.1 All INVENTIONS arising from (1) research conducted with University-administered funds, (2) work within the INVENTOR’S SCOPE OF EMPLOYMENT, or (3) the SUBSTANTIAL USE OF UNIVERSITY RESOURCES are owned by the University.
Section 6.2 provides that the INVENTOR must disclose all INVENTIONS to the Office Technology Transfer (OTT) “whether or not the INVENTIONS are owned by NC State. “ Consequently, when a faculty member invents as a result of work performed under a consulting agreement, the faculty member must disclose the INVENTION to OTT so that an ownership determination may be made. However, as long as the disclosure provides sufficient relevant information for OTT to make an ownership determination, the disclosure may be non-proprietary.
The University will not claim ownership in an invention where (1) the INVENTION is neither made nor conceived under circumstances involving NC State administered funds, resources or personnel other than the consultant and is either (i) made in the course of performance of the services described in a written consulting agreement or (ii) made in response to a problem posed by the company or based on company proprietary information provided to the consultant. It is very important for employees not to sign patent agreements (including consulting agreements) with outside entities that may abrogate the University’s rights as stated in the Patent Policy. Employees should not accept contract terms that (1) prohibit publication of proprietary data in a technical area that overlaps with their University research or impede the reporting of results to research sponsors; (2) preclude the employee from assigning to the University intellectual property owned by the University or (3) are designed to circumvent University policies and procedures for disclosure of INVENTIONS. Patent Policy, Section 6.1.
How can I avoid conflict between my consulting and the University intellectual property policy?
Because it is in their best business interest, most companies prefer to ensure that consultants employed by universities adhere to university policies. University employees should advise the company that they have intellectual property obligations to the University and provide the company with a copy of the policy or a link to the University website http://www.ncsu.edu/ott/university_policies.html.
In addition, to protect the legal interests of both the University and the employee, the Office of General Counsel and the Office of the Vice-Chancellor for Research and Innovation recommend that the following language be included in faculty consulting agreements:
“This Agreement is made subject to the understanding by Company that Consultant is a member of the faculty of NC State University, that Consultant must fulfill certain obligations including teaching, conducting research, and directing a research laboratory, and that, as a result of Consultant's employment, NC State has certain rights to intellectual property developed by Consultant, including the right to receive a disclosure of any inventions of the Consultant. Any rights to intellectual property which may be conveyed by this Consulting Agreement shall be subject to the rights of the University as set forth in its Patent and Tangible Research Policy. Any inconsistency between this Agreement and the Policy of NC State shall be resolved in favor of the NC State Policy.
Under no circumstances should employees enter into an agreement which purports to convey intellectual property of NC State.
If questions arise about whether any provision in a consulting agreement conflicts with the Patent Policy of NC State, faculty may contact the Office of Technology Transfer, the Office of Sponsored Programs, or the Office of General Counsel.
Can University facilities and/or equipment be used for faculty consulting?
Generally not. In most cases where university resources or equipment are required, the work should be performed under a Testing Services Agreement (TSA), which may be obtained from your college Dean's business office, or other agreement with the University, rather than pursuant to a consulting agreement.
May I consult with a company for which my lab is performing services under a TSA?
Generally not. TSA's are designed for use in those cases where there is no research component. If a university employee, whether acting as consultant or on behalf of the university, provides an analysis of the results or interpretation of data, the project becomes research and should be contracted with the University pursuant to a sponsored research agreement. University guidelines for TSA's prohibit consulting by individuals who also supervise staff/students performing the tests, determine use rates, or administer the contract TSA on behalf of the university. (See Guidelines for Testing Service Agreement (TSA) Activities) Furthermore, such consulting may be in violation of state law which prohibits employees from benefiting from public contracts. N.C.G.S. 14-234 (a)(1).For further information, please contact Judy Curry, Office of General Counsel, firstname.lastname@example.org, (919) 515-2696 or Matt Ronning, Research Administration, email@example.com, (919) 513-2148.