Guidelines for Faculty Consulting Agreements
Policies
The main Penn State policies and procedures relating to faculty consulting
activities include the following:
Amount of Consulting Allowed
All those individuals who carry the rank of Penn State faculty are
allowed to engage in consulting up to a maximum of four days per month
during their appointment period. There are two other limitations:
1) consulting activities may not interfere with the performance of University
duties or other contractual obligations of the University and 2) the consulting
activities should enhance the faculty member's professional stature or
academic proficiency.
Required Approval
Faculty members are required to inform their department head or campus
executive officer of the nature, type and extent of their consulting activities
(undertaken with or without compensation) so that the department head or
campus executive officer may judge the appropriateness of the consulting
activity in relation to the performance of the faculty member's regular
duties.
A faculty member may not provide special service to the Commonwealth
of Pennsylvania for additional compensation without the prior written approval
of the President of the University per HR42
- Payment of Personal Compensation by a State Agency or Department of the
Commonwealth.
Required Reporting
Per HR80 department heads and campus executive officers are required
to report annually to their vice president or dean concerning the levels
and amount of private consulting by faculty and staff within their authority.
Responsibility for Private Professional Services
Per HR80 the University assumes no responsibility for private professional
services performed by members of its faculty. The name of the University
is not in any way to be connected with the service rendered or the results
obtained. The faculty member must make it clear that his or her consulting
work is a personal matter. He or she must not use the official stationery
of the University nor stationery having a University address or a University
telephone number.
A faculty member shall not accept or retain employment which would
bring him or her as an expert or in any other capacity, into conflict of
commitment or in competition with the interests and purposes of the University
or the Commonwealth of Pennsylvania and federal agencies.
Use of University Facilities and Resources
FN14 prohibits the use of University facilities and resources including
specialized equipment, specialized software, supplies and services for
faculty consulting activities. This does not preclude use of standard
office facilities including e-mail, internet, local telephone, PCs, etc.,
subject to a test of reasonableness. Faculty consultants may access
University facilities in the same manner available to non-University personnel.
The utilization of University resources for consulting purposes must be
approved by University administrators and documented in a Memorandum of
Understanding. The Memorandum of Understanding clearly identifies
the extent and nature of the facilities being utilized and establishes
use charges based on the cost to the University of maintaining said facilities.
The financial officer of the College or administrative unit should establish
the appropriate charge out rate.
Involvement of Students and Staff
The involvement of students and staff in faculty consulting activities
should be undertaken with caution. Faculty may not involve students
or staff in consulting activities within the scope of the student's or
staff member's University duties. Faculty may hire students or staff
to assist with faculty consulting activities outside the scope of the student's
or staff member's University duties. Such arrangements require the
full knowledge and approval of University administrators and must be codified
in a Memorandum of Understanding. Safeguards must be instituted on
a case-by-case basis to ensure that the performance of University duties
and the scholarly mission of the University are not compromised.
In particular, faculty must avoid even the appearance of directing students
into research activities that serve their own personal interests at the
expense of scholarly achievement.
Rate of Compensation and Tax Consequences
The University will not comment on or offer input regarding the rate
of compensation or the tax consequences associated with faculty consulting
activities.
Intellectual Property Issues
-
All faculty are required to sign the Penn State Intellectual Property Agreement
(http://www.research.psu.edu/ipo/faculty_staff/IPA%20Form%202.pdf)
which states that all faculty agree as a condition of employment by the
University to abide by the University's Intellectual Property Policies
and Procedures and to assign to the University all rights to intellectual
property developed (a) with the use of University facilities or resources
or (b) in the field of expertise and/or within the scope of responsibilities
covered by their employment/appointment/association with the University.
-
Faculty may, within the scope of a consulting agreement, assign rights
to intellectual property developed under consulting agreements to organizations
engaging their services where the organization has a legitimate prior claim
to the technology being developed. Examples include consulting activity
leading to the refinement of an organization's existing product or process
or to a development for which the organization has background patents or
prior art claims.
-
It is inappropriate for faculty consultants to assign Penn State intellectual
property to organizations engaging their services.
-
Consulting agreements should be examined to ensure that the assignment
of rights to intellectual property evolving from consulting activities
does not conflict with the Penn State Intellectual Property Agreement.
-
Faculty consultants must avoid entering into consulting agreements that
are in violation of the terms of their employment by the University.
-
By assigning intellectual property rights to organizations engaging their
services faculty consultants may: 1) be prohibited from further activities
in that field, 2) limit opportunities to profit from commercial applications
or their work, 3) limit opportunities to obtain funding from industry and
4) restrict freedom to publish.
Terms and Conditions Recommended for Inclusion in Faculty Consulting
Agreements
-
Consulting agreements should recognize that all faculty members have signed
the Penn State Intellectual Property Agreement and that Penn State intellectual
property cannot be transferred to a company via a consulting agreement.
Consulting agreements should also recognize that a faculty member's first
duty and first responsibility is to Penn State. The University recommends
including the following language: "Company agrees and understands
that Consultant is an employee of The Pennsylvania State University.
Consultant's primary responsibility is to the University. In connection
with such employment, Consultant has entered into certain agreements with
the University relating to ownership of intellectual property rights, conflicts
of interest and other matters, and is subject to certain policy statements
of the University (collectively the "Institutional Agreement"). If
any provision of this Agreement is hereinafter determined to be in conflict
with the Institutional Agreement, then the Institutional Agreement will
govern to the extent of such conflict, and the conflicting provisions of
this Agreement will not apply. Consultant is not aware of any such
conflict."
-
Consulting agreements should acknowledge the importance of documenting
the nature and scope of the consulting activities and outline a process
for preparing a written summary or minutes of the consulting activities.
All written information provided by the company to the consultant should
be clearly marked "Confidential" or "Proprietary". The University
recommends including the following language: "The Company shall from
time to time prepare a written summary or "minutes" of the consulting activities
of Consultant. Consultant shall also record all documentation relative
to Consulting Services separate from his/her other work, including work
for the University. The parties shall have the right to periodically
compare said documentation to ensure both parties have a consistent understanding
as to the scope and nature of consulting services provided hereunder."
-
Consider including language such that the consultant has the right to refuse
to accept company confidential information. The University recommends
including the following language: "Prior to disclosure of Confidential
Information hereunder, Company shall make a non-enabling summary disclosure
to Consultant so that Consultant may determine whether to accept disclosure.
Said summary shall be sufficient to enable Consultant to determine whether
the disclosure involves technology or information already under development
in Consultant's University Laboratory, or whether he/she is otherwise bound
by confidentiality concerning related information and/or technology.
Company will take reasonable precautions to clearly mark information
disclosed hereunder as "confidential" or "proprietary." Company will
provide to Consultant a written summary of the matters discussed or considered
during consulting provided hereunder in a timely manner.
The confidentiality restrictions hereunder will not apply where the
information was previously known to or developed by Consultant or Consultant's
research group, where the information is part of the public domain, or
where the information came into the possession of Consultant through no
fault or wrongdoing of Consultant."
Terms and Conditions to be Avoided in Faculty Consulting Agreements
-
Avoid accepting "fiduciary" duty or responsibility. Consultants required
to accept "fiduciary" responsibility should be covered by insurance protection
provided by the company.
-
Consulting activities should be performed in a relatively narrow and well-defined
field. Avoid broad definitions such as "Company Business".
-
Avoid or use caution in accepting exclusive consulting arrangements.
Consider the ramifications of agreeing to consult with only one company
in a broad field.
-
Carefully consider the term (duration) of the consulting agreement.
Is there an exit? Can the faculty member terminate the consulting
agreement "without cause"?
-
Carefully review any requirements for representations and warranties, especially
with regard to intellectual property issues.
May 2003
