How and Why of Contracted Research Agreements September 6, 2012 Rick Friedman, USC Stevens Center for Innovation Sara Judd, USC Department of Contracts and Grants Dan Shapiro, Office of Compliance Perhaps the most important thing you will do all day… Learning Objectives At the end of this session you will be able to: • Understand benefits and challenges of University/Industry collaborations • Identify activities funded by gifts, grants and contracts to USC • Describe the characteristics of a gift, grant and contract • Understand the lifecycle of an award • Understand roles and responsibilities as they relate to research agreements • Understand the key principles, policies and the process for research agreements at USC • Understand key contract terms and why they are important • Identify important issues related to consultancy and other direct personal relationships with industry 3 Learning Objectives At the end of this session you will be able to: • Understand benefits and challenges of University/Industry collaborations • Identify activities funded by gifts, grants and contracts to USC • Describe the characteristics of a gift, grant and contract • Understand the lifecycle of an award • Understand roles and responsibilities as they relate to research agreements • Understand the key principles, policies and the process for research agreements at USC • Understand key contract terms and why they are important • Identify important issues related to consultancy and other direct personal relationships with industry 4 First, a brief overview… USC’s Research Goals • Preventing, detecting and curing diseases prior to causing human harm. • Capturing and distributing energy supplies that are environmentally benign, economical and long-lasting. • Securing the nation and the world against the risk of both natural disasters and intentional acts of terrorism. • Enhancing cross-cultural understanding and cooperation through communication among civic, religious, ethnic, community institutions. • Educating our children and adults for a deeper understanding of science and math, languages and cultures, leadership, and justice. http://www.usc.edu/research/about 5 How Does USC Measure Up? • USC has over $600 million in annual research expenditures, and has ranked among the top 10 private universities in federal supported research activity. • Ranked #9 for total R&D Expenditures at private universities and colleges according to the National Science Foundation • Ranked #23 of national universities according to U.S. News and World Report, America’s Best Colleges http://www.usc.edu/research/about/ 6 7 FY12 Research Dollars by School Total Amount in Millions: $534 Dornsife 14% ICT 7% Keck 37% 25% 15% 8 Benefits of Industry/University Collaboration • Opportunity for faculty to apply “cutting edge” solutions to “real world” problems • Enhance teaching and research experience • Provide students with valuable educational opportunities and gain marketability 9 Benefits of Industry/University Collaboration • As federally funded research dollars continue to decrease, we must pursue opportunities to increase non-federal funding sources • Develop relationships that might lead to additional funding – Support new or ongoing research – Expand body of knowledge • Facilitate informal technology transfer – Move research results toward market place or practical application to benefit the public • Stimulate state and national economy 10 Difference in Frameworks Industry University • Primary aim is return to shareholders • Competitive advantage through confidentiality and proprietary nature of products and systems • Top down management • Sustain operations with product and service sales • Primary aim is education, expanding knowledge and social good • Reputation is most valuable asset • Decentralized and consensus driven • Values the freedom of inquiry • Sustain operations with tuition, gifts and external research funding 11 The Goal To bridge the gap. 12 Learning Objectives At the end of this session you will be able to: • Understand benefits and challenges of University/Industry collaborations • Identify activities funded by gifts, grants and contracts to USC • Describe the characteristics of a gift, grant and contract • Understand the lifecycle of an award • Understand roles and responsibilities as they relate to research agreements • Understand the key principles, policies and the process for research agreements at USC • Understand key contract terms and why they are important • Identify important issues related to consultancy and other direct personal relationships with industry 13 Project Types The University of Southern California Mission Teaching Artistic Creation & Professional Practice Research Public Service • • • • • • Research Public service Training Instruction Travel Conferences Commercial Testing Funding Mechanisms • Gifts • Grants • Contracts 15 University Advancement Gifts Grants Contracts Whatever What is a Gift? • An unconditional, voluntary, non‐reciprocal transfer of assets (including unconditional promises) from a private entity to a not-forprofit organization. The donor may have certain expectations but there cannot be any actual control over expenditure of funds or any quid pro quo. The donor may not benefit from the execution of the gift. The gift’s purpose or use may be restricted or unrestricted. What Characterizes a Gift? • Given in the spirit of “Disinterested Generosity” (IRS term) • No contractual obligations or deliverables (no language about disposition of intellectual property rights, data ownership detailed progress reports or auditable financial reports) • Awarded irrevocably 18 …versus a Grant? Grants usually include: • Specified performance period • Obligation to return unobligated balance • Specific scope of work • Financial reports • Detailed technical/progress report or other work product • The right to audit • Other contractual obligations (e.g., patent rights, indemnification, publication review) 19 What is a contract and what does it do? • Creates mutual obligations between parties • Addresses issues of “what if ’s” • Defines boundaries of relationship and allocates liabilities Ultimate Goal: Secure a contract that achieves critical interests of both parties, and creates the foundation for a successful relationship between the parties. Why is it sometimes difficult to tell? • Documents may not use clear or consistent language. • Recipient’s expectations may not match award maker’s intentions. • Award makers may think that if they are using funds budgeted for philanthropic purposes that they are giving gifts regardless of any restrictions. 21 Two Factors to Consider 1. Source of the donation 2. Intent of the donor A grant is a type of funding awarded to the university to support approved activity, including instruction, research, or public service. A gift is a type of funding awarded to the university that may be earmarked for a specific purpose, but the donor does not have specific control over expenditures or work performed. A gift may not be from a federal sponsor. The line can become very blurry… 22 Contracts, Grants and Gifts… What’s the difference? Contract Grant Gift Procurement/purchasing action (bid process) Awards of financial assistance Philanthropy Negotiated or sponsor defined work scope PI defined work scope Donor voluntarily makes to a qualified organization Period of performance Period of performance No donor-imposed conditions or controls Cost-reimbursement or fixed price agreement Cost-reimbursement agreement Donor letter or agreement Specific deliverables, reports and/or milestones; intellectual property terms Technical and financial reports No strings attached – no deliverables; no legal rights imparted re: IP, liability, publication, etc. Revocable in whole or in part Revocable in whole or in part Irrevocable transfer Specific rights reserved by sponsor in award terms Financial and performance terms May be unrestricted or restricted to a specific program (approved by USC) Resources for applicable regulations/standards/policies • • • • Government Accounting Standards Board (GASB) – (www.gasb.org Financial Accounting Standards Board (FASB) – (www.fasb.org Internal Revenue Service (IRS) - (www.irs.gov ) Office of Management and Budget(OMB A‐21) – (http://www.whitehouse.gov/omb/circulars_default) • Council for Advancement and Support of Education (CASE) – (www.case.org) • University Advancement (http://campaign.usc.edu/about/universityadvancement) For additional guidance regarding the determination of a gift vs. a grant or contract, please contact the Department of Contracts and Grants (www.usc.edu/research/dcg/) Learning Objectives At the end of this session you will be able to: • • • • • • • • Understand benefits and challenges of University/Industry collaborations Identify activities funded by gifts, grants and contracts to USC Describe the characteristics of a gift, grant and contract Understand the lifecycle of an award Understand roles and responsibilities as they relate to sponsored research agreements Understand the key principles, policies and the process for research agreements at USC Understand key contract terms and why they are important Identify important issues related to consultancy and other direct personal relationships with industry 25 The Life Cycle of a Sponsored Award DCG Proposal Review Proposal Development PI has an Idea Funding Opportunities Preparation Dept. Assists with: - Budget - Internal Forms - Agency Forms Approvals - PIs - Chair/Director - Dean/V.P. Submit to DCG Review Revised Budget & JIT Information (approved by DCG) Negotiation/Acceptance Sponsored Projects Accounting (SPA) Negotiation Acceptance Account setup Establish Budget Assign Funds Transmittal Project Management Issued to DCG Review Signatures Submit to Agency Responsible Parties DCG Corrections - Budget - Approvals - Commitments - Compliance Agency Review Peer Review Log in Prioritize Notice Of Award 26 - PI -Department Chair -Department Administrator -DCG -SPA -Disbursement Control & Accounts Payable -Purchasing - Human Resources -Risk Management -Equpment Management -Facilities Management -Internal Audit Activities - Scientific & technical management -Financial management -Compliance -Award negotiation -Interpretation of sponsor policies -Award monitoring & reporting -Subrecipient monitoring -Award closeout What can I do to expedite the process??? • Timely submission of proposals/ all paperwork included, including budget with overhead • Advanced planning for regulatory approvals – IRB/IACUC/CIRC • Responsive to DCG during negotiation period to address sensitive contract terms 27 Learning Objectives At the end of this session you will be able to: • • • • • • • • Understand benefits and challenges of University/Industry collaborations Identify activities funded by gifts, grants and contracts to USC Describe the characteristics of a gift, grant and contract Understand the lifecycle of an award Understand roles and responsibilities as they relate to sponsored research agreements Understand the key principles, policies and the process for research agreements at USC Understand key contract terms and why they are important Identify important issues related to consultancy and other direct personal relationships with industry 28 Audit Office of Research Purchasing Services Dean’s Office Disbursement Control & Accounts Payable USC Stevens P.I. Administering Unit Equipment Management SPA DCG Office of Compliance Principal Investigator • • • • • • Scientific integrity and administrative management Technical and management reports Financial management Subrecipient monitoring Adhering to University policies Adhering to award terms and conditions 30 Office of Research University point of contact for these issues: • Submission of research proposals • Identifying sources of research funding • Participation in, and initiation of, major inter-disciplinary University research programs and formation of research units • Education to prepare investigators for funding strategies and proposal preparation • Clearance for research competitions that limit the number of proposals submitted by the University • Financial disclosures or conflict of interest statements • Complaints pertaining to research misconduct http://www.usc.edu/research/ 31 Department of Contracts & Grants Strives to maintain the University's reputation as a responsible recipient of sponsored support and provide high quality administrative services • • • • • • • Provide training and assistance to faculty and research administrators Assist with proposal development, review, approval and submission Delegated authority to endorse proposals for external funding on behalf of the University Negotiate and accept awards on behalf of the University Offer post-award administrative guidance Maintain the sponsored projects data Provide support to University community in matters related to research policy and guidelines http://www.usc.edu/research/dcg/ 32 USC Stevens Center for Innovation Empowers USC innovators to make impact with their ideas: • USC experts on intellectual property • Manages university-owned IP (spends over $2M/yr on patents) • Provides technology commercialization support through: – Mentoring and gap funding programs – Startup support, including team development and funding – Technology marketing and IP licensing • Also supports research efforts through – Assisting DCG with IP terms of research contracts – Notifying research sponsors of inventions and associated commercialization efforts – Handling Material Transfer Agreements http://stevens.usc.edu/ 33 Office of Compliance Our priority is to help the USC research community act as a responsible steward of federal and private research support. Our services include: • Providing guidance and facilitating solutions regarding research administration & compliance issues. • Tracking new federal and state laws and regulations that may impact the research community. • Partnering with the research community to develop new policies and guidance in emerging areas of risk relevant to researchers and research administrators. • Offering education to assist researchers and administrators in following the rules and regulations related to the conduct and administration of research. • Promoting scientific integrity by providing education, guidance, and oversight on issues like conflict of interest and ethical behavior in the proposal, conduct, and reporting of research. • Monitoring and auditing research compliance activity in partnership with Audit Services. • Providing faculty & staff the ability to report concerns confidentially, & investigating as appropriate. • Specific areas of expertise include, among others: • Conflicts of Interest related to research • Sponsor-specific compliance requirements • Scientific integrity issues, including scientific misconduct, data management, and authorship • Export controls (including compliance with ITAR, EAR, and OFAC) • Regulations regarding financial management of sponsored research, such as effort reporting, charging of administrative and clerical salaries and other expenses, recharge centers, and issues involving Institutional Base Salary • Research ethics training requirements and offerings 34 Sponsored Projects Accounting (SPA) Oversees post award administration of sponsored research for the University. Responsibilities: • Effectively manage awards for compliance with Federal, State, and Private agency fiscal and reporting guidelines, University policy and procedures, and with Generally Accepted Accounting Principles. • Ensure the payment of obligations and the collection of funds with an efficient cash management system. • Encourage and facilitate proper management of sponsored funds through training and development, streamlined financial systems, and high professional standards. http://fbs.usc.edu/depts/spa/ 35 Purchasing Services Operates as a centralized resource to all campus departments, and ensures that goods and services are procured at the maximum value, in compliance with applicable policies, laws and regulations, and in accordance with best practices. Responsible for: • Conducting bids on behalf of departments • Negotiating best-value contracts by leveraging USC's total purchasing power • Selecting responsive and qualified suppliers • Reviewing and signing vendor contracts • Monitoring supplier-contract performance • Issuing PO’s for subawards http://fbs.usc.edu/depts/purchasing/ 36 Disbursement Control & Accounts Payable Responsible for processing and distributing payments for university business related services and expenses. • • • • • • • • • Ensures expenditure compliance with applicable policies, laws and regulations Administers university expenditure policies and maximum reimbursable rates Accrues or pays sales tax on taxable items Reviews and approves payment requests for cash advances, reimbursements, fellowships, postdoctoral fellows, and student refunds Issues invoice payments to suppliers Processes independent contractor agreements and payments and issues 1099s Processes relocation payments Conducts procurement audits Processes electronic deposit forms for reimbursements and supplier payments http://fbs.usc.edu/depts/DC/ 37 Administering Unit Assists PI with financial and administrative management of award • Accounting (Payroll, Travel, General Ledger) • Purchasing (PR, Inventory) • Report preparation • Subrecipient monitoring • Prior approvals (Rebudgeting, Travel, No Cost Time Extension) – Continuations, supplements, renewal – Close-out 38 Your partners in the USC Research Enterprise…who does what? https://research.usc.edu/policies/responsibilities/ Delegation of Signature Authority • Delegates the authority to solicit (via proposals) and accept sponsored awards on behalf of The University of Southern California: a. Executive Director, DCG b. Director, DCG c. Associate Directors, DCG d. Principal Contract and Grant Officers, DCG e. Senior Contract and Grant Officers, DCG f. Contract and Grant Officers, DCG PI & Dept. Admin. 40 Roles / Responsibilities Check Which of the following has authority to negotiate and accept sponsored awards on behalf of USC? Purchasing Services Sponsored Projects Accounting Graduate students PI’s Department of Contracts and Grants (DCG) Tommy Trojan 41 Department of Contracts & Grants Administration Jeri Muniz Executive Director Dorothy Steele Data Specialist Sapphire Masterson Account Specialist Amanda Salazar Closeout Specialist University of Southern California Department of Contracts and Grants Belinda Galvan Cruz Data Specialist Cynthia Garcia Arndt Admin Assistant Lisa Villaflores Account Specialist Donna Obeid Training Specialist Susan Palomino Closeout Specialist 42 Sarah Cusimano Deputy Director Ryan Tischler Office Manager Gil Govea Admin Assistant Layton Hansen Scanning Technician Noah Congelliere Scanning Technician UPC Team Structure Sara Judd Director DCG TEAM 2 TEAM 1 Ben Holstein Principal C&G Officer Industry State/Local Govt Intl Special Agreements Team Lead/Customer Service POC OPEN Principal C&G Officer Industry State/Local Govt Intl Special Agreements Team Lead/Customer Service POC Katie Rountree Senior C&G Officer Nonprofit/Univ OPEN C&G Officer Federal Heather Kubinec Senior C&G Officer Nonprofit/Univ Lauren Ferrell Senior C&G Officer Nonprofit/Univ Nancy Levien C&G Officer Federal Nicole Burelli C&G Officer Federal Subaward Team OPEN C&G Officer Outgoing subawards Ivan Rukavina C&G Officer Outgoing subawards University of Southern California Department of Contracts and Grants 43 Vicki Iwata C&G Officer Federal HSC Team Structure Sara Judd Director DCG Jean Chan Associate Director HSC TEAM 2 TEAM 1 Colleen James Principal C&G Officer Industry Industry State/Local Govt Intl Special Agreements Team Lead/Customer Service POC Teri Hansen Principal C&G Officer Industry State/Local Govt Intl Special Agreements Team Lead/Customer Service POC Linda Bakabak Senior C&G Officer Nonprofit/Univ Lillian Rivera C&G Officer Federal SUBAWARD TEAM Michael Beltran Principal C&G Officer Outgoing Subawards Team Lead University of Southern California Department of Contracts and Grants Alice Young-Singleton C&G44Officer Outgoing Subawards Steve Misuraca Senior C&G Officer Nonprofit/Univ Jean Chan C&G Officer (Interim) Federal Marina Team Structure Sara Judd Director DCG Steve Mendiburu Associate Director DCG Marina ICT UARC Amechi Akpom Principal C&G Officer Marina Industry/ Marina State/local Govt Marina Intl Marina Other special Agreements Andy Probasco Senior C&G Officer ISI Federal Marina Outgoing Subawards Mitali Ravindrakumar C&G Officer University of Southern California Department of Contracts and Grants Marina Nonprofit/Univ 45 Marina Account Setup USC Stevens Center Contacts Technology Advancement & Licensing Life Sciences Tim Tiemann, Assistant Director [email protected] Chris Moulding, Senior Manager [email protected] Vijay Dhaka, Senior Manager [email protected] Bonnie Wolfe, Licensing Specialist [email protected] Technology Advancement & Licensing Physical Sciences Hossein Pourmand, Assistant Director [email protected] Ed Beres, Senior Manager [email protected] John Sweet, Senior Manager [email protected] New Ventures and Alliances Karen Kerr, Senior Director [email protected] Annette Kleiser, Assistant Director, co-Director of CST [email protected] Juan Felipe Vallejo, Director of Innovation Development [email protected] Technology Advancement & Licensing Other Rick Friedman, Senior Director (Interim Executive Director) [email protected] Michele McMasters, Assistant to the Senior Director mm[email protected] Judy Genovese, Senior Transactions Officer [email protected] Maria Mines, Licensing Projects Coordinator [email protected] Learning Objectives At the end of this session you will be able to: • Understand benefits and challenges of University/Industry collaborations • Identify activities funded by gifts, grants and contracts to USC • Describe the characteristics of a gift, grant and contract • Understand the lifecycle of an award • Understand roles and responsibilities as they relate to sponsored research agreements • Understand the key principles, policies and the process for research agreements at USC • Understand key contract terms and why they are important • Identify important issues related to consultancy and other direct personal relationships with industry 51 Key USC Policies and Principles Important in contracting: • USC policies and principles – Academic Principles (Faculty Handbook) – Intellectual Property Policy – Conflicts of Interest Policies • USC cost principles and practices 52 Principles • Open dissemination of research results and information • Commitment to students • Accessibility for research purposes – Ability to utilize results in future research • Public benefit • Informed participation 53 Principles • Legal integrity and consistency – Applicable laws – Contractual obligations to others • Fair consideration for university research results • Objective decision-making – Academic and business considerations; not personal financial gain 54 USC Intellectual Property Policy What is Intellectual Property? What is it? • “ . . . a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law.” - Wikipedia • Term is most typically associated with patents, copyrights, trademarks and trade secrets . . . • . . . although some people use intellectual property synonymously with patents • Not a very precise term! • What are the differences between common types of IP? 56 What is Intellectual Property? Patents • Granted by govt authority (e.g., USPTO) for inventions that are useful, novel, non-obvious and patentable subject matter • Patent can be barred if not timely filed • Provides right to exclude others for a limited period of time from making, using, selling, or importing claimed invention. Does not confer affirmative right. • Purpose of law is to promote invention and disclosure of invention • Can cost substantial $ to obtain 57 What is Intellectual Property? Copyright • Protects literary, dramatic, musical, and artistic original works of expression, such as poetry, novels, movies, songs, computer software, and architecture • Arises automatically upon fixing the original expression in a tangible media (and rights not lost by publication) • Provides exclusive right to copy, prepare derivative works, publicly distribute copies, perform publicly, and publicly display • Does not protect ideas or functional elements • Purpose of law is to promote creative endeavors 58 What is Intellectual Property? Trademark • A word, slogan, design, or symbol which is used to identify and distinguish the source of goods or services • Rights attach upon use of name in commerce; rights can be strengthened through registration with US Patent & Trademark Office (USPTO) • Protects use of name from third party adopting confusing name for similar product or service • Purpose of law is to protect consumers! 59 What is Intellectual Property? Trade Secret • Information (e.g. process, method, plan, or formula) that companies keep secret to give them an advantage over their competitors • Not filed with any governmental agency; trade secret status maintained through taking precautions to maintain secrecy • Provides no protection from a competitor developing the information independently. • Can last indefinitely • Generally, difficult to use trade secrets for commercializing technology in university setting 60 USC Intellectual Property Policy • Located at: http://policies.usc.edu/ • Key provisions: – Delineates ownership of inventions – Delineates sharing of licensing income 61 USC Intellectual Property Policy University owns inventions made: • during the course of responsibilities to USC, • using funds from any USC grant, or • with significant use of USC facilities, funds, resources, or supplies Example: If a School of Cinema-Television student utilizes a significant amount of university resources to create a film, then USC would own the copyright for the film. Otherwise, university does not assert claim of ownership 62 USC Intellectual Property Policy Sharing of licensing income • For pre-April 2001 employees: 50/50 split between inventors and university after expenses For post-April 2001 employees, after expenses and 15% to Commercialization Incentive Fund: • 1/3 to the inventors • 1/3 to the university • 1/3 split between inventor’s school and department Department Innovation Fund School University 63 Inventors Conflict of Interest in Research Conflict of Interest – Defined A conflict of interest is a situation where financial or other personal considerations compromise or may appear to compromise objectivity in the proposal, conduct, or reporting of research Conflict of Interest – Financial Interests The following types of financial interests and activities may create the appearance of a conflict when held in a research sponsor or company that has an economic interest in the outcome of research (e.g., licensee): –Consulting relationships and other payments for service (advisory board service, scientific/technical appointments) –Ownership interests (public or private) –Management roles (director, officer, or similar position of significant decision-making authority) –Use of students to provide services where researcher has ownership interest or management role Conflict of Interest – Example •Invention arises out of conduct of research and patent protection obtained. •License executed between university and outside entity to further research/commercialize invention. •Faculty inventor asked to consult for entity as a scientific advisor or other role. •Additional research is planned at USC by the faculty inventor. Conflict of Interest – How to Disclose •Conflict disclosure at USC is made online via “diSClose” (disclose.usc.edu) •Disclosure requires explanation of financial interest, description of research, and proposing a way to manage conflict •HHS-supported researchers must also make an annual disclosure of all financial interests related to professional responsibilities to USC, regardless of whether an interest creates a conflict Conflict of Interest – Management Certain types of conflicts are scrutinized more closely. Examples: –Ownership interests in excess of 10% of value of private entity (any ownership in human subjects research) –Management roles in research sponsors –Consulting in excess of 25k in the case of human subjects research Conflict of Interest – Management Management strategies include: –Disclosure in publications/presentations –Disclosure in informed consent –Recusal from IP negotiations –Disclosure to students –Assignment of un-conflicted co-investigator –Restrictions on data gathering/analysis Conflict of Interest – Takeaways –If you are uncertain whether you have a conflict, err on the side of disclosure –Disclose as early as possible, and always before commencing research –For guidance, contact Dan Shapiro ([email protected]) or Ben Bell ([email protected]) in the Office of Compliance (213) 740-8258 Learning Objectives At the end of this session you will be able to: • Understand benefits and challenges of University/Industry collaborations • Identify activities funded by gifts, grants and contracts to USC • Describe the characteristics of a gift, grant and contract • Understand the lifecycle of an award • Understand roles and responsibilities as they relate to sponsored research agreements • Understand the key principles, policies and the process for research agreements at USC • Understand key contract terms and why they are important • Identify important issues related to consultancy and other direct personal relationships with industry 72 Scope of Work Key Contract Clauses What is a scope of work? • A detailed description of the work to be performed as part of a sponsored project USC position • A scope of work must be included with each contract Why is it necessary? • To clearly identify obligations • To avoid disputes over patent rights and copyrights 73 Period of Performance Key Contract Clauses What is a period of performance? • The period of time in which a sponsored project will be performed commencing on a certain start date and expiring on a certain end date. USC position • Each contract must include a clearly defined period of performance Why? • Tie the obligations of each party to a specific period of time 74 Budget and Payment Key Contract Clauses USC position • Recover all costs associated with project – including facilities and administrative costs • Require advance payment whenever possible Why? • Non-profit cannot underwrite expenses for for-profit entity • Cover start-up costs • Ensure adequate flow of funding throughout project 75 Confidentiality of Sponsor’s Information Key Contract Clauses USC position • Clearly identified/marked if provided in writing • Reduced to writing and marked if orally disclosed • Not financially liable for disclosure • No mechanisms to guarantee confidentiality Why? • Maintain open, academic environment 76 Ownership/Use of USC’s Research Records Key Contract Clauses USC position • University owns all data, information and materials • Sponsor may use copies of data and information or portions of materials delivered under a contract for research and evaluation purposes Why? • Managed as an asset and fulfill regulatory obligations • Necessary to promote the open exchange of ideas • Ensure ability to publish research results • Ensure availability for independent scientific validation or for use in future research 77 Technical Reporting Requirements Key Contract Clauses USC position • Preferred annually, but no more frequently than quarterly • Discussed and approved with PI concurrence Why? • Reporting schedules should not impede the performance or progress of the project 78 Publication Key Contract Clauses USC position • Freedom to publish • Short delay to allow for sponsor comment/review • Confidential information • Potentially patentable inventions • Delay not to exceed 60 to 90 days Why? • • • • Necessary to promote the open exchange of ideas Ensure ability to widely publish research results Contribute to the body of knowledge Prevent the infringement or limitation of academic freedom 79 Termination Key Contract Clauses What is a termination? • The act of concluding or ending agreement before stated end date USC position • Mutual termination – Breach – Technically, financially or administratively unfeasible • Recover all costs through date of termination • Recover all non-cancellable obligations Why? • Minimize or eliminate financial losses • Protect USC and faculty interests 80 Intellectual Property Key Contract Clauses • As discussed earlier, no rights can be granted to IP in gift agreements • In sponsored research, patents and copyrighted materials (e.g., software) of value may be developed • Industry sponsors generally will want some level of access to IP developed under project • Foundation sponsors often will want to encourage patenting and commercialization 81 Intellectual Property Key Contract Clauses Industry sponsor interests: • Competitive advantage (exclusive rights to IP either through assignment or exclusive license) • Freedom to operate (not get sued for using IP developed as a result of the project) • No surprises (such as hidden IP) • No additional costs, or uncertainty around costs 82 Intellectual Property Key Contract Clauses University interests: • Fair return on valuable assets created through intellectual effort • Ability to continue research endeavor • Autonomy of researchers (e.g., research in one lab should not negatively affect research in another lab) • Compliance with laws! 83 Intellectual Property Key Contract Clauses Template Research Agreement • New template attempts to take balanced approach. Not take it or leave it though. • Ownership: Mine; Yours; Ours (determined in accordance with patent law) • Time-limited right to negotiate an exclusive royaltybearing license to USC IP rights, subject to USC rights to use • Patent provisions: USC controls prosecution, subject to sponsor input; sponsor pays patent costs if it licenses technology 84 Intellectual Property Key Contract Clauses Occasional sponsor requests: • Ownership of IP • Pre-determined economic terms for exclusive license • Non-exclusive royalty free (NERF) license • Rights to pre-existing intellectual property that may be practiced by new inventions – referred to as background IP (BIP) • Many other requests: share of USC licensing income; right of first refusal; extended negotiation period; control of patent prosecution; etc. 85 Intellectual Property Key Contract Clauses Sponsor requests assignment of IP ownership: • Rarely granted by U.S. universities • Complexity in granting ownership as a result of: – – – • • Bayh Dole Act (assignment generally prohibited if federal funding involved) Tax law regarding tax-free bonds and “private use” General resistance of university to do “work for hire” Doesn’t mean it can’t be done. There’s just little precedent Interests of sponsor can often be accommodated with ability to negotiate an exclusive license 86 Intellectual Property Key Contract Clauses Sponsor requests pre-determined license economics: • University has more flexibility on these requests • Still look at “private use” issue in case economics may be less than fair market value • In these circumstances, may attach a schedule to the agreement with range of terms for license to IP resulting from the research 87 Intellectual Property Key Contract Clauses Sponsor requests Commercial NERF: • Some industries expect these rights • USC Safe Harbor for granting upon request of PI and co-investigators if five conditions met – Funding is more than $50,000; – Funding is fully burdened (i.e. standard overhead); – Funding is not under a government sub-contract or using government funds; – No investigator owns or is in management of the Sponsor; and – Research is in a preapproved field 88 Intellectual Property Key Contract Clauses Sponsor requests Commercial NERF (cont’d): • Even if all five conditions not met, still may be possible to accommodate sponsor’s interests • DCG will work with USC Stevens to determine if NERF still appropriate • Note: if less than full overhead, university less likely to permit NERF (see next bullet) • If NERF not available, other solutions may address sponsor needs, such as open source or public domain 89 Intellectual Property Key Contract Clauses Sponsor requests BIP rights: • Request may be rights in all BIP university wide – • No practical way to grant this right Typical resolution: – – PI certifies to sponsor whether he/she has developed any BIP If PI BIP exists, sponsor can negotiate license (or option) to BIP with USC Stevens 90 Getting to Yes • Research agreements with industry and private foundation sponsors are an important and growing aspect of USC’s research enterprise! • Contract negotiations are often a sensitive point • How do we nurture healthy relations with sponsors and “get to yes”? – – – – Flexibility in our approach Understanding the sponsor’s interests Understanding the university’s interests Working as a team! 91 Questions? 92 Learning Objectives At the end of this session you will be able to: • Understand benefits and challenges of University/Industry collaborations • Identify activities funded by gifts, grants and contracts to USC • Describe the characteristics of a gift, grant and contract • Understand the lifecycle of an award • Understand roles and responsibilities as they relate to sponsored research agreements • Understand the key principles, policies and the process for research agreements at USC • Understand key contract terms and why they are important • Identify important issues related to consultancy and other direct personal relationships with industry 93 Personal Relationships w/Industry • Faculty may spend up to one day per week on outside activities, including working with industry • Personal relationships with industry can take many forms: – Consultants – Advisory boards – Company founders (e.g., CTO) – Expert witnesses – The list is endless 94 Personal Relationships w/Industry • Important considerations for faculty entering into direct personal relationships: – Compliance with conflict of interest policies to protect research integrity, patients and students – No use of university facilities or resources – Segregation of university work from industry work – Intellectual property considerations (especially assignment of rights in IP) 95 Case Study: Stanford v. Roche • At suggestion of supervisor, Stanford researcher visits company to learn test method relevant to work at Stanford. • Before being allowed access to company facilities, researcher signs a Visitor Confidentiality Agreement • Stanford researcher developed a new test at company, while working with company employees. • Researcher returned to Stanford and refined test. Stanford filed three patents on work at Stanford • Company commercialized test without license from Stanford. Product became blockbuster. 96 Case Study: Stanford v. Roche • Stanford asked company to pay for a license to patents. Company declined. • Stanford sued company for patent infringement • Who wins? 97 Case Study: Stanford v. Roche • Company asserted co-ownership in patents based on Visitor Confidentiality Agreement • Agreement between Stanford and researcher provided that researcher “agreed to assign” to Stanford any intellectual property that “resulted from” his employment at Stanford. • Visitor Confidentiality Agreement stated that he “will assign and hereby does assign” to company any intellectual property rights made “as a consequence of ” gaining access to the company facilities. 98 Case Study: Stanford v. Roche • US Court of Appeals: Since the Visitor Confidentiality Agreement immediately assigns inventions to Company (“hereby”), there was nothing left to assign to Stanford in the future. Company wins! • US Supreme Court: Affirms court of appeals. Looked solely at question under Bayh Dole Act of whether federal law mandated ownership in Stanford. Ruled that Bayh Dole Act did not. 99 Case Study: Stanford v. Roche USC Responses: • Importance generally of having a contract stating mine, yours, and ours in ownership of IP for collaborations with industry, even if not funded • Updating offer letter language for present assignment language (“hereby assigns”) • Availability of USC Stevens and OGC to review personal consulting, confidentiality and other agreements of USC researchers for IP compliance 100 Who to Contact for Help • Department of Contracts and Grants – http://www.usc.edu/research/dcg/ • USC Stevens Center for Innovation – http://stevens.usc.edu/index.php • USC Office of Compliance – http://ooc.usc.edu/ • USC Office of Research – http://research.usc.edu/ 101 Questions? 102 How and Why of Contracted Research Agreements September 6, 2012 Thank You!