V. University Procedures Concerning Faculty Role in Starting a Company
University reporting and compliance procedures and guidelines apply to starting a company, including:
Conflict of Commitment Reporting
- Compliance categories include Categories I, II and III. Category I activities, which include management or employment positions with the new company, require written pre-approval of the Dean/Chair plus annual reporting. Category II activities, which include consulting and Board of Director positions, require annual reporting.
- Ownership by the faculty member of stock in the new company is subject to the requirements of the Conflict of Commitment Policy, but there is no fixed limit on the amount of stock that can be held.
- If the faculty member's role/interest in the new company leads to involvement of university students, this is subject to pre-approval (but not annual reporting) under the Conflict of Commitment Policy.
- Full-time faculty on an academic-year appointment normally may engage in compensated outside activities for up to 39 days from the start of the fall term through the completion of the spring term. During the summer months, academic-year faculty have no constraints on the number of days of compensated outside activity in which they may engage.
- Full-time faculty on a fiscal-year appointment normally may engage in compensated outside activities for up to 48 days during the months of active service.
- For part-time faculty on both academic- and fiscal-year appointments, the applicable time limit is prorated based on their percentage appointment at the University.
- If the faculty member's role in the new company includes consulting, e.g., as a member of the Scientific Advisory Board or Board of Directors, or other consulting capacity, the UC (“Consulting Guidance Document”) applies. It applies to faculty and other academic employees and addresses various aspects of consultancies, including allowable days, use of University resources, confidentiality and the acceptance of confidential information, appropriate terms for consulting agreements and IP issues in consulting agreements.
- The new company can own inventions made in the course of the consulting activity if the activity qualifies as “Permissible Consulting.” Permissible consulting requires all of the following: (a) the activity is within the faculty member's permitted number of consultancy days (48 for fiscal year appointment, 39 if nine month appointment); (b) the activity does not involve use of facilities/resources/funding at the University; (c) the activity does not result in obligations to the University; and (d) the invention results from consulting activity which is beyond the “scope of employment” of the faculty member at the University (the activity is not beyond the scope of employment if it is a “direct extension” of the Professor’s University research project or if it “has a close and umbilical connection which cannot be severed with the University work”). Inventions made in the course of Permissible Consulting remain subject to the duty of disclosure under the UC Patent Policy.
- There is no fixed limit on consultancy fees that the faculty member may receive, except under Schools of Medicine and Veterinary Medicine policies ).
If the faculty member will have a role/interest in the Company, the applies, as does the UC Davis Conflict of Commitment and Outside Activities of Faculty Members.
In joining the university, faculty accept as their own the university's responsibilities to advance and communicate knowledge. For purposes of advancement and promotion, the performance of faculty members in fulfilling their university obligations is evaluated by grouping their activities into four interrelated categories: teaching, research and creative work activity, professional competence and activity, and university or university-related public service.
Whether professional or non-professional, compensated or uncompensated, an outside activity that interferes with successful performance of the faculty member's University obligations represents a conflict of commitment.
Time Limits on Outside Activities
Faculty members are limited in the amount of time that can be spent on outside activities. The time limit differs for academic-year and fiscal-year appointments.
For further information, see Is There a Time Limit for the Amount of Time That a Faculty Member May Spend on Outside Activities?
Categories of Outside Activities
Compensated outside professional activities differ in terms of their potential to raise conflict of commitment issues. To clarify the differences, the university has developed three categories of activities, each of which has different requirements for prior approval, inclusion in the time limit, and annual reporting.
Category I activities are likely on their face to raise issues of conflict of commitment. These activities include, for example: assuming a managerial position in a for-profit or not-for-profit; administering a grant outside the University that would ordinarily be conducted under the auspices of the University; establishing a relationship as a salaried employee outside the University; and involving a student in an outside compensated activity.
Category II activities are unlikely to raise issues of conflict of commitment and are ordinarily accepted as regularly performed compensated outside professional activities. These activities include, for example: serving on a board of directors; providing consulting services; providing expert testimony in legislative or judicial proceedings; providing a workshop for industry; and engaging in additional compensated University teaching activities.
Category III activities are integral to all disciplines and ordinarily do not present issues of conflict of commitment. They are accepted as part of the faculty member’s scholarly and creative work, even when the activities result in financial gain. These activities include, for example: serving on a federal, state, or local government agency, committee, panel, or commission; acting in an editorial capacity for a professional journal; reviewing journal manuscripts, book manuscripts, or grant or contract proposals; attending and presenting talks at scholarly colloquia and conferences; and developing scholarly communications in the form of books or journal articles, movies, television productions, and similar works.
These categories are described fully in Section 025-6c, beginning on the bottom of page 6, of the UC .
Procedures for Reporting Outside Activities
All Category I outside activities require prior written approval from the Chancellor or his designee, usually a faculty member’s Department Chair. A form for such approvals is available in Appendix B of the.
Both Category I and II outside activities are included in each faculty member’s time limit for each fiscal year, and both require annual reporting to the Chancellor or his designee at the end of each fiscal year (June 30), listing the nature and extent of Category I and II compensated outside professional activities conducted during that academic or fiscal year, depending on the faculty member’s appointment. In addition, faculty with academic-year appointments must report Category I and II activities for summer months during which they earn additional University compensation. A form for such reporting is available in Appendix C of the Conflict of Commitment Policy.
Category III activities do not require reporting or prior written approval.
The UC Davis Academic Personnel Manual provides a summary of reporting responsibilities for conflicts of commitment at the faculty, Chair, Dean, and Vice Provost (Academic Personnel) levels.
Involvement of Students
Part-time involvement of students in an outside professional activity of a faculty member may provide educational benefits to the student. Before involving a student in an outside professional activity, however, the faculty member must obtain prior written approval from the Chancellor’s designee, following discussion with the Department Chair and the student. For further information, see Section 025-50 of the .
- Ownership and assignment of invention rights.
- Compromising future research funding.
- Acceptance of confidential information.
- California State Law Provision.
- Allowable consulting days.
- Amount of compensation.
- Conflicts of interest.
- Reporting consulting activities.
Determining whether consulting activity is within or outside the faculty member’s scope of employment is best done with reference to the individual’s specific consulting project. The consulting agreement should have a scope of work that will likely be specific to the business interests of the company. This scope of work can be brought to the attention of the Department Chair who can work with the faculty member to assess the degree of overlap with the areas of research, teaching and publications of the faculty member at the University. If the Chair determines that the work under the consulting agreement is beyond the scope of the consultant’s employment with the University, and is otherwise permissible consulting, a letter communicating that can be written by the Chair to UC Davis InnovationAccess. If and when an invention is developed under the consulting agreement, the faculty inventor should do the following: file a Record of Invention with UC Davis InnovationAccess; attach the Department Chair’s letter to the Record of Invention; state affirmatively in a cover letter that no University resources were used; and request in the cover letter the right to assign the invention to the company for which the faculty member is consulting. Upon review, if the University agrees, a letter will be provided to the faculty inventor confirming that the inventor is free to assign the invention to the company for which the faculty member is consulting. The subject invention should not be disclosed to the company prior to a University determination of invention ownership.
As noted above, consultants should have an agreement in place that clearly defines the 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 the University is not a party. It is the responsibility of the consultant to ensure that the consulting agreement does not conflict with the consultant’s University obligations, including the obligation to disclose and assign inventions to the University. If there are questions, the services of a personal outside attorney should be sought by the consultant.
There are a number of important issues that arise, or can arise, under consulting agreements. Many of these issues are addressed in the , which should be carefully reviewed before entering a consulting agreement. The issues can give rise to personal liability on the part of the consultant, and need to be carefully considered and addressed. Ideally the consultant should obtain legal advice from a personal outside attorney before entering a consulting agreement, for purposes of reviewing issues under the consulting agreement, ensuring that the consultant’s personal interests are protected, and ensuring that the terms of the consulting agreement do not conflict with the consultant’s employment obligations to the University. As explained in the Consulting Guidance Document, issues under consulting agreements include the following:
As discussed in the first section of this page, Step V.A: Conflict of Commitment Reporting, Academic employees are required to submit annual reports to the University on outside professional consulting activities.
As discussed in Step VI: Start-up Funding of UC Davis Research, a principal investigator at the university must disclose whether or not there has been any consulting activity with a company in advance of receipt of funding from the company for research in the faculty member's university lab.