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Explanation:

Researchers at the University often create patentable and commercially viable ideas. The University negotiates with businesses to use this intellectual property in exchange for royalties or other cash payments. The University may also assist the researcher with creating a business to commercialize the intellectual property in exchange for a share of the company.

Potential institutional conflicts of interest may take place or appear to take place when the University is receiving the royalties or holding equity in the start-up and University researchers continue to conduct projects sponsored by the commercial licensee or start-up or enter into some other business or financial relationship with it. Even where the researchers do not have personal stakes in the project, knowledge that the University stands to gain financially from successful development of a licensed technology can influence the direction of related research or other University activity, the objectivity of research, the dissemination of results and the allocation of resources among competing projects and activities.

Example of potential conflict situation:
A college gets significant revenue from royalties for a drug licensed by Company X. A researcher in the department wants to conduct research on a new drug that if successful, could eliminate that revenue stream. The dean is asked to review the proposal and provide administrative approval to conduct research on the new drug.

There is an additional potential institutional conflict of interest when the University holds equity in the start-up. A potential conflict could arise if the office making an investment decision is also responsible in some way for the research and has intimate knowledge about the technology licensed and the company holding the license.

Process for Potential Conflict Identification and Management (royalties and other income)

1. Identify the potential conflict:
   1. Researchers completing applications for Institutional Review Board review are asked whether the proposed study evaluates directly or indirectly a University invention. If so, a copy of the application is forwarded to the Regulatory Affairs Officer.

   2. Twice a year, the Office of Technology Commercialization (OTC) will give a report to the Regulatory Affairs Office of all companies that paid more than $100,000 the prior year to the University and will report the units and faculty that receive a share of the revenue. The Regulatory Affairs Officer will compare that list against a database of research sponsors and principal investigators and a database of potential vendors. If those companies also have a financial or business relationship with the unit or the principal investigator, the Regulatory Affairs Office will gather information for evaluation.

   3. OTC will email the Regulatory Affairs Officer when their staff are preparing an exclusive license or option agreement. The Regulatory Affairs Officer will check information about research sponsors, vendors and gift donors to determine whether the potential licensee or startup company also has other types of financial or business relationships with the University. The Regulatory Affairs Officer will then inform OTC staff if execution of the license or option should be delayed pending review and management of any potential institutional conflict of interest.

   4. Employees or other individuals concerned about possible conflicts of interest may report situations to University officials.

2. Review any potential conflict:

   The Regulatory Affairs Officer and Executive Committee of the Institutional Conflict Review Committee will evaluate the risk of an institutional conflict, consulting with other offices or individuals as necessary.

   • If the licensing or equity relationship could affect or appear to affect research involving human subjects, the matter will automatically be referred to the Institutional Conflict Review Committee.

   • If there is little risk that the licensing or equity relationship can affect or appear to affect University teaching, research, outreach or other activities, the Regulatory Affairs Officer will include the matter in a report that is reviewed by the Board of Regents and distributed to the Institutional Conflict Review Committee.

   • If there is a risk that the relationship can affect or appear to affect University teaching, research, outreach or other activities, the Regulatory Affairs Officer will refer the matter to the Institutional Conflict Review Committee.

3. Create a management plan, if needed:

   If a management plan is appropriate, the Institutional Conflict Review Committee will develop it.

4. Determine whether the potential conflict management plan must be approved by the Regents

   The Regulatory Affairs Officer and the Executive Committee of the Institutional Conflict Review Committee will evaluate whether the potential conflict management plan fits the criteria for Regents' approval (it presents an unusually significant financial impact, it involves the president, it raises serious policy issues or has a significant public impact on the University's mission or reputation, or it needs their review under the Reservation and Delegation of Authority policy). If so, the President or delegate will bring the plan to them for review and action. If not, the Regulatory Affairs Officer will summarize the management plan in an annual report to the Regents.

5. Implement the management plan

   Once the Institutional Conflict Review Committee or Regents approve the management plan, the appropriate University official will implement it.

6. Oversight

   The Institutional Conflict Review Committee works with the appropriate senior officer to implement conflict management decisions as needed. The committee also verifies post-approval compliance with the management plan and addresses any issues that arise. They will also review reports of low-risk situations and may request inquiries into specific situations.

Process for Potential Conflict Identification and Management (start-ups and equity interests):

1. Identify the potential conflict:
   1. For conflicts of interest that could arise when the University is negotiating a possible equity interest in a start-up company, potential conflicts will be identified when licensing associates in Patents and Technology Marketing are developing agreements that include an equity interest in the new company of 5% or greater. There is no threshold if it is likely that the start-up company may sponsor research at the University that involves human subjects. Before finalizing these agreements, the licensing associate will contact the Regulatory Affairs Officer for information on current and potential research projects or other business or financial relationships.

   2. For conflicts of interest that could arise when the University already holds equity in a company, the University generally avoids risks associated with this type of institutional conflict by separating equity information and decision-making from the research enterprise. Once an equity agreement is signed, decisions regarding the equity and voting are made by outside firms and the office of Asset Management. Employees in the position to directly influence research, teaching, outreach, or other activities do not make decisions regarding these equity interests.

      If Asset Management is asked to vote on behalf of the institution on an issue involving a company in which the University holds equity because of a technology license, Asset Management will consult with the Institutional Conflict Review Committee to ensure that conflict situations are avoided. OTC will keep Asset Management and outside equity management firms informed about companies in which the University holds equity because of a license. Asset Management or the outside firm responsible for the decision to sell the equity will determine whether or not such information can be used to make this decision without violating laws and regulations concerning insider trading.

2. Review any potential conflict:

   The Regulatory Affairs Officer will evaluate the risk of an institutional conflict, consulting with individuals and offices involved in the arrangement as necessary.

   • If the equity arrangement may involve a research project that involves human subjects, the matter will automatically be referred to the Institutional Conflict Review Committee.

   • If there is little risk that the equity arrangement will affect or appear to affect research, teaching, or outreach activities at the University, the Regulatory Affairs Officer will include the matter in a report that is reviewed by the Board of Regents.

   • If there is a risk that the arrangement can affect or appear to affect research, teaching, or outreach activities at the University, the Regulatory Affairs Officer will refer the matter to the Institutional Conflict Review Committee.

3. Create a management plan, if needed:

   If a management plan is appropriate, the Institutional Conflict Review Committee will develop it.

4. Determine whether the potential conflict management plan must be approved by the Regents

   The Regulatory Affairs Officer and the Executive Committee of the Institutional Conflict Review Committee will evaluate whether the potential conflict management plan fits the criteria for Regents' approval (it presents an unusually significant financial impact, it involves the president, it raises serious policy issues or has a significant public impact on the University's mission or reputation, or it needs their review under the Reservation and Delegation of Authority policy). If so, the President or delegate will bring the plan to them for review and action. If not, the Regulatory Affairs Officer will summarize the management plan in an annual report to the Regents.

5. Implement the management plan

   Once the Institutional Conflict Review Committee or Regents approve the management plan, the appropriate University official will implement it.

6. Oversight

   The Institutional Conflict Review Committee verifies post-approval compliance with the management plan and addresses any issues that arise.