Executive Policy 12.206 Executive Policy 12.206


Policy for Ethical Guidelines in the Conduct of Technology Transfer Activities


Executive Policy Chapter 12, Research
Executive Policy EP 12.206, Policy for Ethical Guidelines in the Conduct of Technology Transfer Activities
Effective Date: October 2020 Prior Dates Amended: N/A
Responsible Office: Office of the Vice President for Research and Innovation Governing Board of Regents Policy RP 12.211, Ethical Guidelines in the Conduct of Technology Transfer Activities (Approved August 2020)
Review Date: 3-Year Review Cycle

I. Purpose

This Executive Policy implements the authority conferred upon the University of Hawai‘i by Act 38, Session Laws of Hawai‘i, 2017, to establish a regulatory framework and compliance program to ensure that technology transfer activities sponsored by the University comply with specific ethical principles in the State Ethics Code.

II. Definitions

“State Ethics Code” is Chapter 84, Hawai‘i Revised Statutes.

“Act 38” refers to Act 38, Session Laws of Hawai‘i, (2017) effective on June 19, 2017. Act 38 facilitates the University’s contribution to research commercialization and economic development in the State by exempting University-sponsored technology transfer activities from specific sections of the State Ethic Code provided that the technology transfer activities comply with a policy framework and compliance program established by the University.

“Act 39” refers to Act 39, Session Laws of Hawai‘i (2017) effective on July 1, 2017. Act 39 provides express statutory authority to allow the University to use its public resources to commercialize inventions or discoveries generated by or at the University.

“Technology Transfer” is the process by which new discoveries and inventions created by University personnel are selected, developed, and transferred through various business arrangements to the larger economy as potentially viable commercial products or services.

III. Executive Policy

Many parties contribute to the transfer of new technologies invented or discovered at the University to the larger society. These parties include the following: (a) the individual University inventor(s); (b) the external research sponsors, including federal agencies, that provide external funds and other support for the inventor’s research activities; (c) the University that provides facilities, equipment, professional and technical support personnel, and administrative infrastructure to manage the development and transfer process; and (d) the private entrepreneurs, private investors, and the commercial business enterprises that invest in, license, develop, and transform the discovery into economically viable commercial products or services.

In the early stages of invention and discovery, the University as the supporting institution and the individual inventors shoulder, comparatively, much more of the burdens and risks than during the later stages of technology transfer. During the early stages, both the University and the individual inventor often perform multiple functions, must satisfy conflicting fiduciary duties, and must balance competing time commitments. As the inventions are developed and refined, and as the potential for commercial viability becomes more evident, private investors and entrepreneurs may seek greater participation and may assume more of the risks and economic rewards to drive the transfer process forward. During the later stages when the invention is developed into a mature, viable commercial product, the role of the University may be limited to a passive, minority participant in the economic venture as opposed to an active sponsor. The responsibilities of the inventor, too, may be narrowed as roles are differentiated and as the commercializing entity builds a private workforce to perform the tasks of manufacturing, marketing, financing and internal management or administration.

Because of the mix of public and private resources and personnel participating in the technology transfer process, and because of their unique goals and objectives which may evolve over the life cycle of the product, ethical conflicts of interest may arise during the course of technology transfer. For the purposes of this policy, ethical conflicts of interest can be grouped into three types: conflicts of purpose; conflicts of loyalty; conflicts of commitments.

Conflicts of purpose arise when public resources placed at the disposal of the University are used to support or promoted commercial activities that may generate significant profit or benefit for private individuals or private organizations. Conflicts of loyalty arise where a University decision maker has multiple fiduciary duties that may conflict with each other and may bias the decision. Conflicts of commitment, as used in this policy, arise when a University employee must allocate and balance limited time and attention among multiple activities and institutional obligations.

A. General Policy

University resources may be used to support and promote the commercialization of University-generated technology, even where there may be economic returns to private entities participating in the technology transfer process, so long as the public interests and benefits are adequately identified and protected, the core missions of the University are not adversely affected, the various conflicts of loyalty and commitments are disclosed, mitigated, and managed, and the allocation of anticipated newly-created economic value among the various participating interests is reasonable and commensurate with the risks undertaken and contributions made by each participant.

The identification, mitigation, and management of the various conflicts of interests for a specific technology transfer shall be set forth in a conflict of interest management plan. Because these interests may change over the life cycle of the transfer process, conflict of interest management plans must be periodically reviewed to adapt to changing circumstances.

With respect to conflicts of purpose, in deciding whether to sponsor technology transfer activities, the University must identify the public benefits to be gained and there must be a general alignment of the sponsorship of technology transfer actives with the mission of the University.

In conducting these technology transfer activities, the University must avoid, mitigate, or manage conflicts of loyalty or conflicts of commitments. This mitigation of conflicts may include divestiture of financial interests, or recusal from decision making, or formal reallocation of work load or time commitments. If conflicts are unavoidable, the conflicts should be managed, including full disclosure of the nature and extent of the conflict to other parties to the transaction.

The proposed economic arrangements must be reviewed by disinterested University officers, ethical screens must be established, and confidential information sequestered. If the conflicts cannot be avoided or satisfactorily managed, a waiver of the ethic requirements otherwise applicable may be granted, but only where necessary to allow the activity to occur and only if the waiver is narrowly tailored, and limited in scope and duration.

B. Policy Guidance for Specific Areas

The State Ethics Code sets forth general ethical principles that apply throughout the state and across a wide range of activities. Under Act 38, six specific sections of the State Ethics Code do not apply to technology transfer activities sponsored by the University, so long as those activities comply with a compliance framework and policy established and administered by the University in these six areas of concern.

The following sections provide specific University policy guidance for these six (6) areas of concern:

1. Use of Confidential Information. [State Ethics Code, Section 84-12]

In general, proprietary or confidential information about University discoveries or inventions and any potential business arrangements for the commercialization of such inventions may be protected from public disclosure as permitted under applicable exceptions to the State’s Open Records law or the Open Meetings law. In addition, specific disclosure and exchange of confidential information between the University and private parties may be allowed to facilitate business negotiations and promote commercialization of University-affiliated discoveries or inventions. The University may develop and use industry-standard forms for Non-Disclosure Agreements or similar confidentiality agreements to establish the procedures, conditions, and safeguard to exchange and disclose confidential information for prospective commercialization arrangements.

2. Fair Treatment and Use of Public resources. [State Ethics Code, Section 84-13]

The University may use its public resources, such as its laboratory facilities and equipment and its administrative infrastructure to produce commercial products or services that, as a necessary consequence, may generate economic benefits to private organizations or individuals. This use of public resources is permissible so long as there is a clear identification of potential public benefits created by these commercial products and services, and if the proposed activity is consistent with the mission and purpose of the University and its programs. In addition, any business arrangements for the use of University resources should reflect standard business terms and conditions, should be negotiated at arm’s length, and must be
approved by University decision makers who do not have conflicts of loyalty for the particular transaction.

3. Conflicts of Interests. [State Ethics Code, Section 84-14]

In the context of University-sponsored technology transfer, conflicts of interest arise for the individual faculty or research staff who contribute directly to the invention or discover of the technology as a University employee and who may simultaneously have an economic interest in a private entity that participates in the technology transfer.

Remunerative arrangements between a University employee and a private entity that is commercializing a University invention or discovery must be timely disclosed to the University. These economic interests may include employment contracts, consulting arrangements with the private entity, or equity ownership, loans, or other forms of financial participation.

A conflict of interest management plan must be developed and approved to handle these remunerative arrangements. The management plan may require divestiture or avoidance of the conflicts under appropriate circumstances. If divestiture is not feasible, the University may establish ethical screens among the parties, and may require recusal of the interested party from participating in discussions or negotiations of the business arrangements.

Individualized conflict of interest management plan for specific particular technology transfer commercialization project shall be established and approved pursuant to appropriate University Administrative Procedures.

Decision-makers with oversight responsibility and authority over any aspect of the technology transfer must be free of conflicts, including financial interests. Ethical screens should be established, limited authority may be re-delegated to avoid fiduciary conflicts of interest, and recusals may be required where appropriate.

Conflicts of time commitments must be identified and resolved in compliance with any applicable collective bargaining agreement provision, rule or regulation, including, assurances, where applicable, that the cumulative commitment of an individual’s time comports with the requirements of the research sponsor and the University’s human resources policies.

4. Contracts with Employee-controlled Entities. [State Ethics Code, Section 84-15]

In certain technology transfer circumstance the University employee primarily responsible for inventing the technology may seek permission to hold a controlling ownership interest in an entity that is specifically created to commercialize the technology. For example, the inventor may sometimes seek permission to be retained as the “chief scientific officer” in a commercial business, or may be asked to identify and develop business markets for the product, or may be retained to explain the technology and market the product. These employee-controlled business entities may often seek to have a continuing economic arrangement with the University, such as licensing a University patent, sponsoring further research by the University, or permitting the University to have an ownership interest.

The University may enter such proposed business arrangements with a private company, notwithstanding the responsibilities held by the University employee in the private company, so long as the business terms of the contract are negotiated at arm’s length by disinterested University administrators, are within the range of terms customarily considered by the relevant industry to be fair and reasonable, and are part of an approved conflict of interest management plan.

5. Retroactively Voiding Contracts. [State Ethics Code, Section 84-16]

The University may fashion appropriate remedies, including but not limited to voiding technology transfer and IP commercialization contracts, may enter into other settlements, or may fashion remedial measures, to address ethical violations. The authority to address and resolve violation of the University policies with respect to technology transfer shall reside with the President, or the President’s designee.

6. Restrictions on Post-Employment. [State Ethics Code, Section 84-18]

University employees who participate actively in inventing or developing the technology may often have employment opportunities with the private entity to further develop the technology, or help commercialize the product to market, or represent the entity in further dealings with the University. Such post-employment opportunities may be allowed, if the public and the University’s interests are adequately protected, notwithstanding any time-bar restrictions for post-employment activities under the State Ethics Code.

C. Relationship of this Executive Policy to Other Legal and Contractual Requirements.

Notwithstanding this policy, technology transfer activities conducted at the University must comply with specific, applicable federal regulations and with requirements of the State Ethics Code that are otherwise applicable. Activities must also follow specific terms and conditions imposed by the research sponsor, such as the reservation of a non-exclusive license to any intellectual property developed as a result of the sponsored research. In cases where other legal or contractual obligations exist, such as requirements in applicable collective bargaining agreements, this executive policy is intended to supplement but not supplant these other legal or contractual requirements.

1. Federal Regulation.

If certain limitations or restrictions on responsibilities and authority regarding conflicts of interest are prescribed by applicable federal laws or regulations, those federal laws or regulations, take precedence over any guidance set forth in this policy. These superseding federal regulations include, for example, regulations for Small Business Innovation Research (“SBIR”), or Small Business Technology Transfer (“STTR”), or federal regulations regarding Research Misconduct, and Financial Conflict of Interest.

2. Applicable Provisions of the State Ethics Code.

Act 38, Session Laws of Hawai‘i, (2017) exempted University-sponsored technology transfer activities from six enumerated sections of the State Ethics Code [Sections 84-12, 84-13, 84-14, 84-15, 84-16, and 84-18].  Under Act 38, the State Ethics Commission retains jurisdiction to administer other sections of the State Ethics Code, such as for example gift disclosure and restrictions under Section 84-11, for University technology transfer activities, and retains jurisdiction to administer all sections of the State Ethics Code for other University activities not related to technology transfer activities.

3. Other University Executive Policies.

The University has policies and procedures governing outside employment interests or conflict of interest. See, for example, EP 12.214. To the extent possible, these policies must be followed in technology transfer activities.

4. Collective Bargaining Agreements.

Nothing in this executive policy shall be interpreted to deprive, impair, or diminish any existing collectively bargained benefit proved to an employee at the University, nor shall this executive policy supersede the rights of the employees’ exclusive bargaining representative.

When University technology is patented and licensed to a third party, the University and the inventors may share in any economic return generated by the license, such as fees or royalties. The University may not enter into or perform any third party agreement that materially alters or contradicts privileges, rights, and benefits conferred upon the exclusive bargaining representative and/or any member of a public employee union at the University by a collectively bargained agreement.

Confidentiality of commercial proprietary information shall be observed, provided, however, that information relating to a participating faculty member’s technology transfer activities may be disclosed to the extent necessary to evaluate the participating faculty member’s application for tenure or promotion under applicable collective bargaining agreements.

A faculty member’s participation in University-approved technology transfer activities may materially affect the workload, outside compensation, teaching assignments, professional responsibilities, tenure and promotion, patent and copyright and other provisions of the collective bargaining agreement. The development of appropriate equivalents in accordance with R.P. 9.214 and applicable collective bargaining agreement provisions shall give due consideration to the nature and extent of faculty member’s involvement in University-approved technology transfer activities and commercialization of intellectual property.

Any employee affected by a decision to void, rescind, or modify any technology transfer commercialization arrangement to which that employee is a party, shall be given a copy of the decision. A copy of the decision shall also be provided to the employee’s collective bargaining representative, if applicable.

D. Procedures to Resolve Conflicts of Loyalty, Conflicts of Commitments, and Conflicts in the Private Use of Public Resources.

Allegations of potential conflict of loyalty, conflict of commitment, or conflict in use of University resources for technology transfer activities shall be brought to the attention of the Vice President for Research and Innovation. The Vice President may adopt and implement reasonable procedures to address and resolve ethical conflicts of interest arising out of University-sponsored technology transfer activities. The Vice President may, on the Vice President’s own volition, initiate a review of any proposed technology transfer activity implicating University intellectual property and University resources and creating conflicts of interests.

IV. Delegation of Authority

The Office of the Vice President for Research and Innovation (OVPRI) is delegated the authority to administer these policies and issue administrative procedures. The Vice President for Research and Innovation may further delegate the authority to units or offices within OVPRI.

V. Contact Information

Office of the Vice President for Research and Innovation
Phone Number: (808) 956-5006
Email: uhovpri@hawaii.edu

VI. References

Hawai‘i Revised Statutes, Chapter 84, State Ethics Code
Regents Policy 4.201, Mission and Purpose of the University
Executive Policy 12.205, Administration of Patent and Copyright
Executive Policy 12.214, Conflicts of Interest and Commitment
State Ethics Commission, Advisory Opinion No. 92-2 (April 29, 1992)
State Attorney General Opinion No. 15-2 (November 19, 2015)
Conflict of Interest Policy for Advisors to UH Ventures, LLC
2017-2021 Agreement by and between the University of Hawai‘i Professional Assembly and the Board of Regents of the University of Hawai‘i

VII. Exhibits and Appendices

No Exhibits and Appendices found


    David Lassner    
    November 18, 2020    


technology transfer; innovation; commercialization