September 21-23, 2005
ITEM 128-115-R0905 Proposed Revision of Policy 407 - Approval of University System Employee Equity Interest and/or Business Participation.
THAT: The Board of Regents adopt the attached revision of Policy 407 concerning the Approval of University System Employee Equity Interest and/or Business Participation required by MCA 20-25-109.
EXPLANATION: Montana State University-Bozeman, Montana Tech of the University of Montana and the University of Montana-Missoula seek to revise Policy 407 in order to conform the policy more closely to Montana law and to more clearly describe the employee-business relationships that require Board of Regents needs to approval and at what point that approval is necessary.
This revision is tailored to more closely parallel the requirements of MCA 20-25-109, which requires the Board of Regents to approve the following business relationships involving an MUS employee: (a) receiving equity or financial participation from a developed technology or invention, (b) serving on the Board of Directors or governing entity of a business and/or (c) accepting employment from a business entity.
This revision also clarifies that approval to engage in one of the above relationships must occur prior to the relationships commencing but removes the requirement to submit licensing agreements in connection with this approval request. There are several reasons for this recommended change.
First, while licensing agreements and employee-business relationships are related – they are both part of the research commercialization process – they need to be treated as separate events. It is often in the interest of the MUS, business entities, and an MUS employee to enter into a business relationship well after a formal licensing agreement is executed. For example, the opportunity to sit on a company’s board might arise only after a licensed technology leads to significant commercial success.
Second, while MCA 20-25-109 clearly requires approval from the Board for the described business relationships it does not require or recommend that the Board evaluate either various technologies or technology licensing agreements. The latter are already managed carefully by each campus’ technology transfer office and will continue to be so regardless of changes to Board Policy 407.
Third, licensing agreements often contain descriptions of intellectual property or information a company or MUS treats as confidential trade secrets or business information under terms of a sponsored research agreement. Board review of licensing agreements, as an added criterion to the approval required under MCA 20-25-109, would greatly encumber an otherwise straightforward and open-to-the-public procedure related to approval of an employee-business relationship without adding substantial value to the decision process.
Finally, MUS campuses already have well-developed conflict of interest policies in effect and are required to maintain such policies in order to receive federal funds from the National Science Foundation and the Department of Health & Human Services. To the extent a potential conflict of interest results from the business activities of an employee, including those listed in MCA 20-25-109, each campus is already required to address the conflict in accordance with the federally mandated policies.
Attachments: Proposed revision of Policy 407
Copy of MCA 20-25-109