HEADING GOES HERE IN RED UNIVERS CONDENSED BOLD ALL CAPS

AVOIDING CONFLICT IN FACULTY CONSULTING

Judith L. CurryAssociate General Counsel

NC State University

December 2, 2011

Board of Governors Policy

• Board of Governors Conflict of Interest/Commitment Policy:– “Participation of EPA employees

in….consulting, is an important characteristic of academic employment that often leads to significant societal benefits, including economic development through technology transfer.”

Board of Governors Policy

“However, such external professional activities for pay are to be undertaken only if they do not– Create a conflict of commitment– Create a conflict of interest– Involve inappropriate use or exploitation of

University resources…”

NCSU Regulations and Policies

• NC State Conflicts of Interest and Commitment Regulation [REG01.25.01]

• Patent and Tangible Research Policy [POL10.00.01]

Consulting Must be Reported and Approved In Advance

• Must be reported at least 10 days in advance [NOI]

• Department Head Approval• May require update of COI report

Conflicts of Interest

• An employee has a conflict of interest when:– Significant Financial Interest– Affects or appears to affect– Objectivity in conduct of University

duties

Example:

• Consulting for a company with regard to the same subject matter for which he/she acts as principal investigator under a research agreement sponsored by company

• Also may violate N.C.G.S. 14-234(a)(1) which prohibits public employees from deriving a direct benefit from public contracts

Testing and Services Agreement

• Project Coordinator certifies:– No research component– NOT WORKING AS CONSULTANT– WILL NOT IN FUTURE CONSULT FOR PURPOSE

OF ANALYZING DATA

Use of University Space and Equipment

• Generally not permitted in connection with consulting

• Inappropriate use or exploitation of University resources means using any services, facilities, equipment, supplies or personnel which members of the general public may not freely use.

• BOG Policy 300.2.2 Conflict of Interest and Commitment

Conflicts of Commitment

• Consulting which involves time commitment that interferes with employee’s accomplishing university duties

Consulting and the Patent Policy

• Article 6, Patent and Tangible Research Policy

• Assignment to University– University administered funds– Scope of Employment– Substantial Use of University resources

Scope of Employment

• North Carolina Law:Employer may require assignment

unless the invention does not relate to the employer’s business or actual or demonstrably anticipated research or development N.C.G.S. 66-57.1

Inventions Made with Substantial Use of University Resources

• Resources that would not be available to unaffiliated person

• Exceptions– Minimal office use– Library– Personal Computer

Key Terms in Industry Consulting Agreements

• Confidential Information/Data Protection• Intellectual Property Ownership • Liability• Indemnity• Choice of Law/Forum• Non-Compete

Stanford v Roche

• Board of Trustees of the Leland Stanford Junior University v Roche Molecular Systems, Inc., 131 S.Ct. 2188, 180 L.Ed.2d 1 (June 6, 2011)

How Can I Avoid Conflict Between My Consulting and University Policies?• Report NOI/COI • Provide copy of University Patent Policy

to company• Include language establishing priority of

University obligation (http://www.ncsu.edu/general_counsel/legal_topics/consulting-faqs.php)

• Define narrowly and precisely the subject matter of consultancy

What Are The Legal Risks To Me Personally In Engaging In Consulting?• Damages for Breach of Contract• Indemnification requirement• Liability for misappropriation of state

property (intellectual property)• Liability for non-disclosure of conflicts

– False Claims Act (31 U.S.C. 3729 et seq.)

How Can I Minimize The Risk Of Liability For My Consulting?

• Consult personal legal counsel and obtain review of contract

• Obtain errors and omissions insurance• Seek guidance from Office of General

Counsel if questions about University policies

• Seek guidance from SPARCS/OTT