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I. Research Plan and Funding

Funding Sources

The researcher may develop a research plan and obtain funding through the University. Funding sources are generally either public or private.

Public funding through federal and state government agencies available through the grant process, is by far the largest source of support for research programs at UC Davis and other leading research institutions.  Because of the breadth of public funding sources and faculty familiarity with public funding, for more information, please visit Sponsored Programs or Interdisciplinary Research Support.

Private sector funding from industry sponsors is increasingly important to research universities, as competition for public funding sources increases. Private sector funds are available from both for-profit entities and private foundations

    Characteristics of Industry Sponsored Research

    Unlike the federal research funding agencies, a private sponsor views research collaboration with the University as a business arrangement. Typically the company expects something tangible in return for its research investment. In some cases, the company is simply seeking data or knowledge that it can use in its own research and development. In other cases it may want a clinical trial to prove efficacy of its therapeutic drugs, or a direct relationship with a certain researcher. But more often the company is seeking technology it can use to form the basis for a segment of its business growth.  To that end, companies fund research projects in the hope that new technology emerges. The research contract affords the sponsor rights to prospective intellectual property arising from the research.

    As part of the research collaboration, the sponsor may be offered an option or a license to an existing invention. This agreement is a legal contract with the university and is separate from the research contract. The license agreement contains its own terms, which include a financial structure, and provides that the licensee meet certain diligence requirements toward the timely commercial development and marketing of products based on the invention. See also Step III: Licensing.

    The university retains ownership of the technology to meet its obligation to disseminate new technology for the public benefit by ensuring diligent commercialization, as well as to ensure university researchers freedom to continue their research in their chosen fields. When the university negotiates a new research contract with a sponsor who is also a licensee under a prior license agreement with the university, funding of the new research can be part of the diligence the company must perform under the prior license agreement.

    Forms of Industry Sponsorship

    Industry-sponsored research can be supported either by an individual company or by a consortium in a variety of ways:

    • Research contracts define a scope of work carried out solely by UC Davis (possibly with subcontractors) and may provide sponsor access to resulting inventions and research results made within the project scope and term. Collaborative research contracts involving a company and UC Davis scientists include mutual obligations, and sharing of data, facilities and materials. For inventions resulting from such collaborations, joint inventorship between UC Davis scientists and company scientists may result in joint ownership of patent rights by the university and the company, so long as the company scientists do not use university facilities or resources in making their contribution to the invention.
    • Clinical trials involve testing of sponsor-owned drugs or devices using the sponsor’s protocol, with rights to results and often technology improvements accruing to the sponsor.
    • Gifts are irrevocable donations to general or specific areas of campus activity that, under IRS regulations, must not carry no obligations for deliverables or rights to results, although UC Davis may provide a courtesy report to the sponsor indicating what was accomplished with the funds.

    Leadership of Research Projects

    Each industry-sponsored project is led by a university principal investigator (PI) who guides the research, shapes the resulting technology, and is responsible for the scientific coordination with the sponsoring company. The PI and department chair are also responsible for ensuring that the project and its employees comply with all applicable UC policies and procedures, such as the Disclosure of Financial Interest in Private Sponsors of Research.

    Project Funding

    UC policy requires that a corporate sponsor reimburse the full costs of industry-sponsored research (direct and indirect costs, including salaries and benefits as appropriate) in order to secure the right to negotiate an exclusive license to any inventions made in the course of the project. Indirect costs are not charged on equipment, patient care costs, certain student fees, or sub-contract amounts over $25,000. Clinical trial projects are assessed a special indirect cost rate. These research and development investments may qualify as tax credits to the sponsoring company. Therefore, in communicating with potential sponsors about research costs, it is important to point out that research costs must include full direct and indirect costs for the company to be assured of exclusive access to resulting technology.

    Indirect Cost Recovery is Required

    When research is sponsored by private industry through a contractual arrangement, direct and indirect costs must be covered in order to secure the right to negotiate a license to any inventions made in the course of the project. The indirect costs cover the facilities and administrative costs associated with each project. The rates are set by an agreement between the University and the federal government, and are based on the type of activity being supported (research, training, or other sponsored activities) and where the research is being done (on- or off-campus). The rates used are the same as those negotiated by UC Davis with the federal government.

    Accepting simultaneous research funding during the same or overlapping time frames from multiple industry sponsors in the same or similar research area should be avoided if possible. Overlapping private sponsorships may lead to legal problems relating to proprietary information and intellectual property rights.

    If there are multiple sponsors for one laboratory, it is important that the scope of work of each research contract be clearly defined and that expenses under each contract not be co-mingled (separate accounts must be established). That way, any inventions arising from activities in any laboratory can be clearly attributed to the correct sponsor. Detailed laboratory notebooks must be kept up to date and should be associated with the appropriate contract exclusively. Although this may seem an added administrative burden, it is important to avoid any potential disputes between industrial sponsors and the University. Such disputes can carry significant legal liability on the University's part.

    Negotiation, Review and Approval of Industry-Sponsored Research Agreements

    Agreements with UC Davis go through the following review and approval process:

    • Sponsored and collaborative research agreements are reviewed and negotiated for compliance with UC policy, and accepted on behalf of The Regents and signed by the UC Davis Office of Sponsored Programs.
    • Exceptions to university policy must be approved by the UC Office of the President.
    • Research projects are subject to applicable clearance by Animal and Human Subjects Committees, as well as the Conflict of Interest Committee for projects where the faculty member has a financial interest in the sponsor. See Step VI: New Company Funding of Research at UC Davis, for a discussion of conflict of interest.
    • For industry partnerships involving complex intellectual property provisions, Sponsored Programs and InnovationAccess collaborate in negotiations and communications with the industry partner.
    • Important principles that apply to any university agreement include: the university’s right to publication and dissemination of the results; accessibility of results for university purposes; public benefit; informed participation; legal integrity; protecting student involvement; fair economic value for public assets; and objective decision-making. See Principles Regarding Rights to Future Research Results in University Agreements with External Parties

    Public/Private Partnership Funding

    Certain funding sources that seek to foster university/industry collaborations are particularly appropriate for University research arrangements involving outside companies, e.g., the Small Business Technology Transfer Program at the federal level (STTR) and the UC Discovery Grant Program at the California state level, also known as the Industry-University Cooperative Research Program (IUCRP), a UC-wide matching grants program established to increase research interactions and technology transfer between individual university researchers and California businesses. IUCRP, through peer review and approval, provides matching funds equal to the company’s investment in the research collaboration. Indirect costs are charged only on the company share, and the university absorbs indirect costs associated with the university’s investment in each project. Full intellectual property rights may be negotiated by the company, similar to projects for which the company sponsor provides full direct and indirect costs of the research. Matching grants are awarded by IUCRP in five areas: biotechnology, communications and networking, digital media, electronics manufacturing and new materials, and information technology for life sciences, as well as a multi-field research area, added to encourage broad interdisciplinary research. See also Step VI: Start-up Funding of Research at UC Davis with respect to SBIR/STTR federal funding sources.