VI. Start-up Funding of UC Davis Research
Conflict of Interest
If the faculty member obtains funding from the new company for his/her university research, this can lead to additional research and inventions, which will begin anew the process described in this Roadmap. Various funding mechanisms are available.
In some circumstances, it will be appropriate and desirable for a faculty member’s company to fund, or to continue to fund, research at the faculty member’s lab at UC Davis.
California state law places additional reporting obligations on university employees who have principal responsibility for a research project, if their project is to be funded or supported, in whole or in part, from a nongovernmental entity.
To comply with this requirement, the State of California has developed Form 700-U, which is required to be reviewed, and any potential conflict of interests managed or eliminated, by the university Conflict of Interest Committee, before such research support can be accepted on behalf of the University. Additional information regarding this requirement is available at the Conflict of Interest website.
The same form is also required to be completed by the faculty member, and reviewed by the university Conflict of Interest Committee, upon any change in the faculty member's role/interest in the new company, as well as upon completion of the funded project.
In such a case, some of the funding mechanisms identified in Step I: Research Plan and Funding Sources may be advantageous. Particularly, the UC Discovery Grants program, which provides matching funds for companies partnering with the UC system for research, and the SBIR or STTR programs, which provide small business funding to take technologies to commercialization, may be joined with company funding to provide greater financial resources for ongoing research.Such a situation, however, also raises the potential for conflict of interest for the faculty researcher / entrepreneur, and will bring into effect the policies and requirements of the .
Conflicts of interest in research may, but do not necessarily, arise when a faculty member has an interest in the sponsor of that faculty member’s research.
The university has policies in place to manage conflicts of interest in research and licensing, and has implemented guidelines to ensure adherence to those policies.
Disclosure of Financial Interest
According to the , a researcher must disclose whether or not s/he has a direct or indirect financial interest in the research sponsor which is funded in whole or in part (a) through a contract or grant with a non-governmental entity or (b) by a gift from a nongovernmental entity which is earmarked by the donor for a specific research project or a specific principal investigator.
Disclosure statements must be filed (a) before final acceptance of such a contract, grant, or gift; (b) when funding is renewed; and (c) within 90 days after expiration in the case of a contract or grant, or after funds have been completely expended in the case of a gift. The disclosure statements are open to public inspection.
When disclosure indicates that a financial interest (as defined at Section II A in the) exists, an independent substantive review of the disclosure statement and the research project must take place prior to acceptance of the contract, grant, or gift.
Department chairs must disqualify themselves from approving a research proposal for a project which is funded in whole or in part by a non-governmental entity in which they have a financial interest.
In addition, the UC Policy on Disclosure of Financial Interests and Management of Conflicts of Interest Related to Sponsored Projects ("Disclosure Policy," originally put in place for research projects sponsored by the U.S. Public Health Service, including the National Institutes of Health, and the National Science Foundation), sets out the process described below for identifying and managing conflicts of interest. This process includes the steps of (1) disclosure of interest; (2) review and evaluation of disclosure; and (3) management or elimination of any conflict of interest.
Federal and California state laws require the disclosure of financial interest in a research sponsor. This disclosure required under California state law is accomplished via Form 700-U in advance of funding.
Under Federal law, there are two types of financial interest which may exist with respect to a research sponsor, both of which require disclosure: significant financial interest, and related financial interest (both include equity holdings). For full definitions, see Section IV D and E of the Disclosure Policy.
Under the Disclosure Policy, significant financial interests include, but are not limited to, the following: an aggregated income in excess of $10,000 from a single entity during the prior twelve months; an equity interest, in the form of stock, stock options, real estate, or any other investment or ownership interest representing 5% or more ownership interest; a loan to the entity, exceeding $10,000 in value; a management position such as board member, director, officer, partner, or trustee, held by the investigator; or intellectual property interest held by the investigator where the interest is assigned or to be assigned to a party other than The Regents.
Under the Disclosure Policy, related financial interests generally are those where the faculty member is involved in research that could be expected to benefit the entity in which he or she has a financial interest. An example of a related financial interest is where the investigator has consulting income from a single entity that exceeds $10,000 during the prior twelve months, and the financial interests of that entity, or the Investigator's financial interests related to consulting for that entity, would reasonably appear to be affected by the investigator’s research.
For the purpose of determination of existence of “significant”, or “related” financial interests, any of the above listed income or property ownership interests of the investigator’s spouse or children are attributed to the investigator.
Under the California state law, the investigator is required to report any investment or interest in the entity in excess of $2,000, as well as any income, or loan received from the entity in the previous twelve months that in aggregate exceeds $500. Similar to the federal law, under the California state law income or loans received by the investigator’s spouse or children are considered as being received by the investigator.
Consistent with federal and state regulations, investigators are required to file updated financial disclosures whenever they acquire new financial interests which are related to their projects but which were not listed in the original Disclosure of Financial Interest form, as well as when the subject research project is reviewed for contractual amendments.
Review and Evaluation of Disclosure of Financial Interest
A university official reviews all disclosures. In the event that official identifies a conflict of interest, the disclosure information goes to the Independent Substantive Review Committee (at UC Davis as the Conflict of Interest Committee, or the COI Committee) for a final recommendation.
Management or Elimination of Conflict of Interest
When a conflict of interest in a sponsored project is identified, the COI Committee may recommend to the Vice Chancellor for Research one of several alternatives to either manage, or eliminate the conflict. The COI Committee may recommend that the project not proceed. Alternatively, it may recommend that the project proceed, provided that the campus imposes one or more special conditions or restrictions to manage the conflict of interest to minimize the effect of the financial interest on the design, conduct, or reporting of the sponsored project(s). Investigators may also be asked to make recommendations about how to manage the conflict of interest.
Examples of conditions or restrictions that may be imposed by the COI Committee include: public disclosure of the financial interest, monitoring of the project by independent reviewers, modification of the research or project plan, disqualification of the investigator from participation in all or a portion of the project, divestiture of the financial interest, and severance of relationships that create actual or potential conflicts, among others. See Section VIII of the Disclosure Policy for complete information.