THE UNIVERSITY OF CALIFORNIA'S
RELATIONSHIPS WITH INDUSTRY
IN RESEARCH AND TECHNOLOGY TRANSFER
January 1999 Progress Report on
Priority Action Items Arising from the 1997 Retreat
1. Reconsider University policy guidance on what is an appropriate academic enterprise
University Regulation 4 was issued by President Sproul in 1958 after extensive consultation with faculty in order to provide a clear understanding both by University faculty and the public of the appropriateness of activities and services that the University provides to industry. Regulation 4 presents the basic principles that determine such appropriateness and addresses the conditions under which a project may be conducted by the University. According to Regulation 4, it is appropriate for University faculty members to participate in tasks and investigations which lead to the extension of knowledge or to increased effectiveness in teaching. Routine tasks of a "commonplace type" and tests of a purely commercial character, however, are precluded. Work is to be conducted so as to be generally useful with the right of publication reserved to the University; results of the research are to be the property of the University; and sponsors must pay all direct and indirect costs of a project.
At the President’s Retreat, an advisory group developed a first draft of a proposed revision considered consistent with the University’s teaching, research and public service missions and responsive to changes in the University’s expanding research relationships with industry. At that time, the advisory group did not attempt a revision of that portion of the policy entitled, Principles Underlying Regulation 4. Additional work, including both substantive and technical changes, remains to be carried out, as does an analysis of the effect of any changes on existing policies. Work will proceed in the Office of the President to: 1) refine the recommended revision to Regulation 4; 2) review related policies that are formally part of Regulation 4; and 3) draft revised underlying principles. This work is expected to conclude no later than January 31, 1999, when it is expected to be forwarded to the Chancellors, Laboratory Directors and Academic Senate for consideration.
2. Develop a new policy structure for managing intellectual property rights granted
to University research partners
University campuses and Laboratories are increasingly called upon to enter into new and complex research relationships with industry in support of the University's research, education, and public service missions. In response to these evolving relationships, the President established as a priority for action in 1998 consideration of new University policy parameters and practices concerning patent rights arrangements with industry research partners. In response to this charge, on October 1, 1998, Senior Vice President Kennedy submitted to Chancellors, Laboratory Directors, and the Academic Council for consideration a proposed Presidential policy establishing principles for University decisions regarding the granting of rights to research results to University research partners. This proposed policy supports a more decentralized and flexible authority and guidance structure based upon such principles.
The proposed policy would provide campus negotiators with the flexible authority and guidance necessary to develop, negotiate, and execute a broad range of patent rights arrangements tailored to the individual circumstances of each industry-supported project or program. Such revised authority and guidance would be accompanied by appropriate accountability mechanisms to support campuses and Laboratories in carrying out the University mission, meeting legal and fiduciary obligations, and protecting the institution from inappropriate risk.
The core policy principles and related guidance would provide direction for the growing number of faculty and administrators involved in establishing new forms of research relationships with industry, and would maintain policy consistency across campuses and Laboratories. In addition, the principles would provide University negotiators with a basis to support positions taken during sometimes difficult contract negotiations. Under the proposed policy, the levels of authority delegated to each University site would be based upon its individual preference, capability, and resource commitment and would be delineated in a Memorandum of Understanding between the Office of the President and each campus or Laboratory.
It is anticipated that campus, Laboratory and Academic Council comments on the proposed policy will be received and considered early in 1999 after which the President will issue the new policy.
3. Develop appropriate organization, staffing and accountability for research interactions
with industry
The issuance of a more flexible University policy structure for managing intellectual property rights coupled with granting greater local authority to negotiate such rights for industry research partnerships, makes it imperative for the University to establish appropriate organization, staffing and accountability related to this function. It is critically important for the University to staff properly its expanding research interactions with industry. University employees charged with developing relationships with industry must possess special traits, experiences, and capabilities if the University is to be successful in this area. These individuals generally must have a strong technical and subject-area background, be experienced in negotiating with industry, understand intellectual property issues, and appreciate the interests, principles, and organization of the University. In addition, local organizational structures and staff responsibilities should be reviewed to ensure that sponsored research, technology transfer, licensing, conflict-of-interest, and related functions are appropriately integrated.
The Office of the President will issue a call for proposals in 1999 asking Chancellors and Directors to consider their interest, current capabilities, and commitment of resources in seeking expanded authority to negotiate and execute intellectual property arrangements for unique industry research partnerships under the new Presidential policy and related guidance. They will be asked to discuss proposed internal administrative staffing commitments for managing expanded authority; give descriptions of operational linkages between administrative offices and how each would be integrated in management of that authority; describe the approach to ensuring appropriate academic consultation and sharing of responsibility in carrying out the expanded authority; outline the experience and capabilities of key individuals; and summarize local approaches to ensure accountability to faculty interests, to policy principles, and to good business practices.
During 1999, Memoranda of Understanding granting expanded authority and establishing related accountability will be negotiated with each University site based upon such proposals.
4. Develop an integrated approach to issues relating to outside professional activities
and relationships, including conflicts of interest and involvement of students and postdocs
The University’s array of policies related to conflict of commitment and conflict of interest were adopted over the years to address a variety of research, academic, and business regulations and procedures. While the policies have been appropriately updated, they have not been coalesced into a set of policies within an overarching principle. In response to a perceived need to review current policies and to respond to recommendations from the President's Retreat, in the Spring of 1998 an Administrative Task Force was appointed by the President.
The Task Force was charged with assessing whether current policies are clear and comprehensive enough to guide faculty, staff and administrators in making wise professional decisions to achieve the appropriate balance between University and outside activities and to assure that there is no inappropriate entanglement of private interest and University obligations. The University's policies on relationships with industry in research and technology transfer and on student involvement in outside activities were also reviewed during the course of this study.
The Task Force first compiled all relevant University policies and compared them with those at University’s "Comparison 8" universities (Harvard, Stanford, MIT, Yale, Illinois, Michigan, SUNY, and Virginia) and at HHMI, Cal Tech, Cornell, Texas, Washington and Ohio. Information was also compiled on practices within the University and at other institutions.
After reviewing and assessing the efficacy of present University policies, the Task Force decided to address these issues in two parts, issuing a first report in March 1998 that focused on conflict of commitment issues. While this report recognized that existing University policies and guidelines provide the necessary oversight for a majority of activities, the Task Force recommended the following be considered: 1) adoption of a consolidated University policy statement on Conflicts of Commitment; 2) adoption of a requirement that all faculty and designated staff file an expanded annual report of outside activities and financial interests; 3) adoption of a requirement that department chairs discuss conflict of commitment and interest policies with faculty and staff and review their annual reports; 4) establishment of clear conditions under which employment in an outside company is permissible, including activities that might require prior written approval; 5) establishment of a requirement that faculty and designated staff (if appropriate) take "entrepreneurial" leaves of absence with prior approval before accepting an executive position or managerial or line responsibility in an outside company; 6) establishment of a requirement that leaves of absence for entrepreneurial purposes deserve scrutiny and that leaves beyond some specified amount of time will normally not be approved; and 7) clarification of the limits on time allowed for outside activities for faculty.
The Office of the President, with a subcommittee of the Academic Council, is drafting revised Academic Personnel Manual (APM) Policy to incorporate each recommendation; a first draft of revised APM 025 is expected to be issued for review in the near future.
The Task Force's second report will be submitted to the President in January 1999. It will focus on four complex areas with a potential for conflict of interest: 1) employment of students in research projects in which the staff or faculty member has a related financial interest; 2) cases in which an inventor has a financial interest in a potential licensee of University technology; 3) amendment of the Patent Policy to enable University faculty to obtain written approval to continue research on inventions released to them by the University; and 4) the need to assure an appropriate separation between a physician-researcher's financial, medical, and scientific objectives as they relate to human subjects.
5. Establish systemwide Web and database services to support University faculty/industry
relationships in research and technology transfer
Recent advances in communications technology, exemplified by the exponential growth of the World Wide Web, have created important opportunities to use electronic communications and related tools to support enhanced University research and technology relationships with industry.
During the past year, a range of University Web-based information resources targeted to University faculty and researchers, industry personnel and University administrators have been established on a priority basis. In addition, a strong infrastructure has been put in place to support further development and "real-time" maintenance of such information resources.
There has been considerable progress on a "UC expertise" database comprising profiles of University faculty scientific areas of interest. This database is being developed under a University partnership established in late 1997 with the Web-based information resource company, Community of Science (COS). University researchers have entered nearly 8,000 profiles into the database, which has nationwide application in the support of University faculty research collaboration with academicians and businesses.
In addition, companies across the country interested in the University’s research activities now have access to a comprehensive abstracts database of federally-supported University research in progress, located on the University Office of Technology Transfer home page. Industry representatives may use this database, updated monthly, to locate appropriate University faculty for research collaborations and sponsored project support. Searchable information on University organized research units, centers, and institutes is included on this site, with an additional database that enables companies to search for technology licensing opportunities from campuses and Laboratories throughout the system.
Another group of University databases brings together detailed data pertaining to the University’s research and licensing relationships with various companies. The information in these databases is available under restricted-access via the Web and can be used, for example, to help the University avoid entering into agreements with conflicting intellectual property commitments.
In the coming year, efforts will be directed at enhancing the quality and impact of these Web-based resources including encouraging their broader use through a variety of marketing activities. In addition, a new database capability will be developed in-house to facilitate direct access to University faculty profiles for use in electronic research administration by the campuses and to provide greater access to this information by small and medium-sized California businesses. Plans are underway to develop Web interfaces that make it considerably easier to locate the full range of University’s electronic resources related to industry/University research and technology transfer, and to navigate more successfully through the University's organizational and programmatic complexities. A nine-member advisory group will continue to provide strategic guidance in support of this priority area.
6. Consider academic recognition and incentives for technology transfer activities
The President’s retreat advisory group on faculty incentives recommended that academic personnel criteria on promotions be expanded to allow consideration of technology transfer activities for faculty who can engage these processes, and when such activities have appropriate academic stature. The Academic Senate was asked to consider the need for changes to Academic Personnel policy so faculty recognition might adequately reflect and encourage technology transfer activities.
This recommendation has now been considered by the University Committee on Academic Personnel (UCAP) of the Academic Senate. After members consulted with Divisional Committees on Academic Personnel, they concluded that specific wording changes to Academic Personnel policy are not warranted. While they agreed that technology transfer activities play a vital role in University’s research and educational missions, there was consensus that sufficient flexibility exists within the current personnel review system to ensure that technology transfer activities are given credit in the faculty evaluation process. UCAP members identified examples of technology transfer activities that could easily qualify as evidence in evaluating teaching, research, professional competence or public service. What is important is that each faculty member present technology transfer involvement in a way that shows a clear link to the review criteria. It was suggested that Academic Vice Chancellors might collaborate with department chairs to assist faculty in articulating this linkage. The ultimate revision and reissuance of University Regulation 4 as discussed in item 1, above, is expected to be useful in clarifying this linkage.
7. Consider steps the University can take to contribute further to the State's economic
development
In the last year, the University held two universitywide meetings of faculty and administrators with interests in economic development issues to explore the University’s role in economic development. The group of University employees involved in these meetings accomplished the following: 1) established a conceptual framework from which future economic development-related activities could stem; 2) began work on a report to be completed within six months that will expand upon a vision for University’s role and make several concrete recommendations; and 3) initiated a process to generate continued activity on this matter within the University and to seek external input. The group suggested that an ongoing Regents Information Item might be a useful adjunct to the report currently under development.
OTHER ACTIVITIES IN SUPPORT OF UNIVERSITY RELATIONSHIPS WITH INDUSTRY
8. President’s Industry-University Cooperative Research (IUCR) Program
The IUCR was established in 1997 to foster collaborative research in targeted fields critical to California's economy. The 1998 State Budget provided an augmentation of $7 million, bringing the State's contribution to the program to $12 million, which together with $3 million of University funds and an estimated $16.6 million in matching contribution from California industry will allow the IUCR to add two matching grant research programs in communications and information sciences research to existing programs in biotechnology, semiconductor manufacturing, and digital media research. The program will further expand its base in fiscal year 2000.
The IUCR program is one of the State's principal mechanisms for making targeted investments in areas of research of strategic importance to the economy. To ensure California's future economic well-being, it remains essential to invest in new research necessary to fuel the creation of new products and technologies that will be developed in industry and will boost productivity and jobs in the State. IUCR research projects create new knowledge that helps keep California businesses more competitive, accelerates worldwide investment in the California economy, speeds creation of high paying jobs for Californians, and improves the State’s health, food production, and natural environment.
The competitive matching grant programs created by the IUCR program have been carefully selected by industry and University experts for their dual importance to California's economically important entrepreneurial high technology businesses and to the University's goals for expanding basic research and education. Each program focuses on an area of the global economy in which California is poised for or has recently attained worldwide leadership, and aims to partner University researchers and students not only with established companies, but also with promising young companies. To date, two-thirds of participating firms are small businesses and more than one-third have fifty or fewer employees.
The programs are proving important to young faculty and to students. Nearly one quarter of participating faculty hold entry level or assistant professor appointments. Moreover, as the IUCR programs expand, they will create unique research training opportunities for as many as 500 undergraduates, graduate students, and postdoctoral scholars each year. Program matching grants have been awarded to investigators at each of the nine campuses.
9. Successful Campus and Faculty-Centered Licensing Programs
Progress continues on the implementation of the "distributed" approach to the University technology transfer program envisioned in the March 1994 final report of the Ad Hoc Technology Transfer Advisory Committee. Under this approach, each campus and Laboratory is encouraged to work with the systemwide Office of Technology Transfer (OTT) to develop a unique technology transfer program suited to its goals, resources and desire to take on particular responsibilities. By the end of fiscal year 1998, individual programs to carry out the licensing function in close proximity to the faculty and other academic researchers had been firmly established on five campuses (Berkeley, Irvine, Los Angeles, San Diego and San Francisco) and at all three University-managed DOE Laboratories. In addition, the Davis campus had begun to define the parameters of a campus-based licensing office that is likely to initiate operations in fiscal year 1999. Policy and legal support as well as a variety of other technology transfer infrastructure services continued to be provided for the entire University system by OTT in the Office of the President.
Each of the campus-based offices reported increases in key technology transfer measures associated with discoveries from University research that have the potential to be developed into new products and processes that serve the public benefit. In fiscal year 1998, the University received 742 invention disclosures, added 242 new U.S. patents to its patent portfolio, entered into 177 license and option agreements, and received $88.5 million in total licensing revenues associated with its patent program. The University of California was once again identified as having generated more technology transfer revenues than any other university technology transfer program according to the national survey conducted by the Association of University Technology Managers (AUTM).
UC-managed DOE Laboratory technology transfer operations also reported increases on key measures. A total of 354 new inventions were disclosed at the Laboratories, 139 U.S. patents issued related to inventions in the Laboratory portfolios, and 41 licenses and options were executed. Total royalty and fee income for the Laboratory patent program surpassed $2.5 million.
10. The President’s Engineering Advisory Council and the State Engineering Budget
The President’s Engineering Advisory Council (PEAC) was reestablished in 1996 after a hiatus of more than ten years to provide guidance on engineering education at the University, insights into developments in the high technology industry, and plans for how the University may appropriately work to sustain this critical industry sector in California.
The Council has met with the Deans of Engineering three times since being reestablished. The main agenda has been an analysis of how many students should be graduating from University engineering programs. PEAC members were presented with data on workforce levels in the high technology industries and on the predicted growth of various sectors. Based on this data and on the experience of individual Council members, the Council recommended to the President that the University increase the production of engineering and computer science graduates. This recommendation was fulfilled by the Governor’s request for an additional $6 million for the University to use in training 800 more undergraduates and graduates in engineering and computer sciences in fiscal year 2000. It is intended that this growth rate be sustained through fiscal year 2006, with a total of 4,000 additional student FTE. PEAC will be of assistance in working to sustain this growth in the State budget during the coming five years.
11. Industry Visitors to University
In recent years, the increase in the University’s general interactions with industry has led to an increase in the number of industry visitors involved with research activities at University facilities. One particularly challenging aspect of industry visitors conducting research at the University concerns the appropriate treatment of resulting intellectual property. University policy requires that all persons employed by the University and all non-employees who use University research facilities and/or receive gift, grant, or contract funds through the University execute a University Patent Acknowledgement agreeing to assign rights in inventions and patents to the University. Experience has shown that some visitors are uncomfortable with or refuse to sign the standard University Patent Acknowledgement. The most common reasons given by visitors for this reticence is confusion over references in the Acknowledgment form itself to an employer/employee relationship and the breach of prior obligations to their primary employer. Participants in the January 1997 President’s Retreat concluded that this University policy tends to interfere with some University/industry interactions and is ignored by some University faculty and visitors. University employees and students encounter comparable dilemmas when they visit industry research laboratories. Thus, one recommendation arising from the Retreat called for a University policy that supports a "fluid" interface between industry visitors to University laboratories and University visitors to industry laboratories. During 1999, the University will consider how best to address these circumstances in support of increased University/industry interactions and consistency with the University’s core mission.