Penn State’s Protection Racket, 21: Outside Activities

We are into Penn State’s policy on “Private Consulting Practice,” HR80. We arrive at, finally, a definition of “outside activity”–since one can be involved in outside consulting or merely go AWOL:

Outside consulting or other professional activity or service, paid or unpaid, that is beyond the scope of the individual’s University employment responsibilities.

We can re-write to eliminate the obtuse style:

Any professional activity beyond the scope of employment.

The only qualifier that remains is “professional.” We should reasonably interpret “scope of the individual’s University employment responsibilities” as those “reasonable” assigned duties referred to in the policy on academic freedom. What’s assigned is that for which one has been employed. But for faculty, it’s nuts that anything that’s not assigned is somehow properly regarded as “outside.”

There are then at least three meanings of “outside” at work. In one (here in HR80), “outside” means accepting payment from other than the university. In another, “outside” means anything beyond assigned duties. In a third, “outside” means something that isn’t obviously connected with one’s faculty activities, assigned or otherwise. Here, of course, the policy claims to control everything that isn’t subject to the university’s control as employment. That means, this is beyond a non-compete covenant–it purports to control even activities that cannot possibly compete.

Such consulting or other professional activity or service is in the general area of expertise for which the faculty member is employed by the University.

Now we get the positioning–“in the general area of expertise”–which isn’t the to-be-defined-by-a-head “field of expertise” but rather something more “general,” an “area.” And there’s included as an added bonus an entirely different definition, for “outside commitment”:

Outside commitment involves the use of the employee’s expertise, the practice of his or her profession, or any activity that contributes to the employee’s professional competence and development.

We return to “employee” rather than “faculty member,” and now an outside commitment is “any activity that contributes to the employee’s professional competence and development” (as if contributing to professional competence is not somehow development). What a horror ride it is to read this stuff and realize it is policy at a major public university. It can only be a source of nastiness. I can’t imagine any faculty member reading this stuff and going–whew, I’m sure glad to work at Penn State now!

The nuts of HR80 is that faculty can consult for about 4 days a month, with approval, with conditions–won’t interfere with “University duties or other contractual obligations to the University”; enhances “professional stature or academic proficiency”; and

Shall not adversely affect the University’s interests or mission or violate University policies or regulations including, but not limited to, policies or regulations related to intellectual property, conflict of interest, private consulting, use of University’s name or its resources, etc.

I love it when some clueless drafter uses “including but not limited to etc.” Gosh, that’s so encompassing one might just not draft at all. As for policies “related to intellectual property” perhaps it would be better to reference policies that “concern” intellectual property–or how about just IP01. And there, we find, an assertion to disclose inventions (and non-inventions) within a field of expertise (to be defined, apparently, by a head) or developed with “University facilities or resources.” Embedded, then, in HR80 is a prohibition against developing inventions (of whatever sort) and not disclosing them to the university–even when the university has no ownership interest in those inventions. Perhaps there’s an argument for “just in case,” such as “just in case the inventor also has an obligation to assign the invention to a company that has sponsored research.” But then, why would any head approve an “outside activity” if it was related at all to a current sponsored project in which the faculty member also participated? Yeah, dunno, policy is not remedy for negligence, but folks still try.

HR80 ends with a walkback for activities that are “expected” “as part of normal scholarly activities” but which are “not regulated by this Policy.” The list starts with “these include but are not limited to:”

  • Presentations at professional meetings and other similar gatherings
  • Peer review of articles and grant proposals
  • Leadership positions in professional societies
  • Preparation of scholarly publications
  • Editorial services for educational or professional organizations
  • Service on advisory committees or evaluation panels for governmental funding agencies, nonprofit foundations, or educational organizations
  • Service with accreditation agencies (e.g., AAALAC, AAHRPP, etc.)
  • Conducting workshops for professional societies
  • Musical and other creative performances and exhibitions, if there is an expectation in the faculty member’s discipline that he/she will engage in such performances or exhibitions

Again, the drafting strategy is to define outrageously broadly, stipulate something narrow, and then walk back ambiguously on the outrageous broadness. That way, everything is captured, something important is addressed, and nothing is released except expressly. Thus, the moloch administrator slouches forward.

There’s a bunch of details then in HR80 that we will pass over to get to things still juicy–namely a bit at the end in “Appendix A” regarding intellectual property “issues,” presented as a series of bullet points.

All faculty are required to sign the Penn State Intellectual Property Agreement 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.

This much is true. And that’s about all that the IP Agreement does. The IP policy requires disclosure of certain inventions and non-inventions, and completion of the IP Agreement. The RIP Loop, as I have called it. Bureaucratic stupidness, as it shifts interpretation of policy from administrative prerogative to common law contracting.

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.

Bizarre. Nothing about this in the IP policy. The university has no claim whatsoever by policy to any faculty-developed IP, so how can HR80 limit faculty disposition of personal property to “legitimate prior claims”? The university has no claim; there can be no claim “prior” to the university’s claim. And as for inventions already assigned, the university has three months or before any other assignment to record the assignment in the PTO, otherwise, that assignment is void against a later assignment without notice for valuable consideration (see 35 USC 261). Those are the rules of the game–that is, federal law. Penn State should play by the law rather than trying to handwave policy to circumvent the law.

It is inappropriate for faculty consultants to assign Penn State intellectual property to organizations engaging their services.

Catch me here. If “Penn State intellectual property” means patents and copyrights owned by Penn State, then it is really not possible for faculty to assign that stuff unless they are authorized to act on behalf of Penn State. If the term means “inventions and non-inventions” owed to Penn State but not assigned, then yes, that’s a decent statement, though “inappropriate” is the wrong word. Perhaps “it is a breach of contract.” But consider, if the IP Agreement’s “hereby assign” operates, then there is nothing owed to Penn State that is not already assigned to Penn State. And if the hereby assign doesn’t operate, it is because it fails for lack of definiteness or because the IP Agreement itself fails for lack of policy authority to assert any obligation to assign, and nothing is owed or assigned to Penn State as a result of the operation of either IP policy or IP Agreement. So the statement here is just more stupidness.

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.

“Should be examined” by whom? If the university, then is the university providing legal advice to faculty? If the university examines a consulting agreement and does not object, isn’t that equivalent to a waiver of any future claim within the scope of any assignment of rights in that agreement? Given that the IP Agreement does little more than require people to abide by the IP policy (and the zombie procedures, too), and the IP policy requires disclosure but not assignment, this examination clause ought to be focused on disclosure, not assignment. A faculty inventor may indeed have an obligation to disclose (such as under the standard patent rights clause authorized by Bayh-Dole), but then any consulting agreement would have to have a scope that overlapped with the sponsored project: the thing that most needs to be examined is the scope of work of the consulting agreement, compared to the scope of work of any other projects that the faculty consultant is also involved with. It is the scope of work that matters, not the assignment of rights.

The problem is that of an investigator that sees where contracted research is heading and decides to pull out and do the inventive stuff “outside” or “later” or even “before.” NASA handled it this way:

Sec. 305. (a) Whenever any invention is made in the performance of any work under any contract of the Administration, and the Administrator determines that–

(1) the person who made the invention was employed or assigned to perform research, development, or exploration work and the invention is related to the work he was employed or assigned to perform, or that it was within the scope of his employment duties, whether or not it was made during working hours, or with a contribution by the Government of the use of Government facilities, equipment, materials, allocated funds, information proprietary to the Government, or services of Government employees during working hours; or

(2) the person who made the invention was not employed or assigned to perform research, development, or exploration work, but the invention is nevertheless related to the contract, or to the work or duties he was employed or assigned to perform, and was made during working hours, or with a contribution from the Government of the sort referred to in clause (1),

such invention shall be the exclusive property of the United States, and if such invention is patentable a patent therefor shall be issued to the United States upon application made by the Administrator, unless the Administrator waives all or any part of the rights of the United States to such invention in conformity with the provisions of subsection (f) of this section

If contracted, then the sponsor’s. If not contracted but related to the contract and made during working hours or with the sponsor’s contribution, then it is still the sponsor’s. Penn State might try flowing through something like that in its research contracts. Industry sponsors might like the gesture.

Faculty consultants must avoid entering into consulting agreements that are in violation of the terms of their employment by the University.

And now, more nonsense. Why? Well, first it states the obvious–“must avoid.” But if the university reviews all consulting agreements and doesn’t object, then whatever is allowed operates as a waiver to “terms of employment.” Notice that “terms of employment” does not have to do with policy–that’s already been covered. “Terms of employment” also does not encompass “terms of appointment” or “terms of association”–clearly the IP Agreement makes these other terms distinct. Finally, “employment” appears, for faculty, to refer to those reasonable, “assigned duties.” One cannot contract to consult so as to violate an obligation for an assigned duty. Makes sense, but is this really an IP issue independent of what has been already addressed in this list of issues? Or is it something that farted out of an administrator wanting to contribute to the list, since that was what was happening? Who can say–but it’s nonsense. Even “must avoid” is euphemistic. How about “shall not enter into”? Oh, but that would be direct. “Must avoid” is mildly threatening, but also mildly permissive. Strange nonsense.

Faculty members should be cautious that 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.

A note of caution, that faculty members (not here “employees” as elsewhere) should not be stupid. As a note of caution, decent advice. There’s more, of course–not assigning future rights and not assigning background rights and not using IP that one does not control and not making representations with regard to fitness for a particular purpose.

Appendix A then makes recommendations for consulting contracts, again as a bulleted list.

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.

Here “Penn State intellectual property” must mean “intellectual property owned by Penn State.” The point is, faculty must make it clear they are not acting as representatives of the university. That would be clear in the nature of the consulting agreement–the contracted party is the individual, not the university. The IP Agreement is a non-issue, as it doesn’t do anything not already in IP policy, and IP policy requires disclosure. Again, disclosure would be the thing to address in a consulting agreement. As for assignment, a consulting agreement should not obligate IP that has already been obligated, regardless of how the obligation arises–IP policy, terms of employment, sponsored project contract, donor’s conditions, license, material transfer agreement, commissioned work.

Consulting agreements should also recognize that a faculty member’s first duty and first responsibility is to Penn State.

HR80 comes back around to its claim about first duty and first responsibility. These are demands that repudiate HR64 and don’t make sense in the context of the role faculty have at a university. While faculty may be expected to have a commitment to be faculty and do what faculty do and behave as members of a faculty, their first duty is the one that is first assigned to them, and their first responsibility is whatever comes first in university regulations. If what’s meant is a “duty” that takes precedence over all other duties, then I’d suggest the duty found in the statement of academic freedom is the one to look to, not loyalty to the university-as-an-administration. What the wording repeated here under “intellectual property issues” purports to mean is that assigning any IP to anyone other than the university somehow violates a faculty member’s foremost duty or responsibility. Bogus in light of HR64, but there it is.

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.”

This is more nonsense, as it advises faculty to materially misrepresent university policy.

Consultant is a faculty member. As a faculty member, consultant’s employment obligations extend to assigned duties. If the consulting does not interfere with assigned duties and there’s no non-compete covenant and no trade secret agreement, then employment is a non-issue. It’s not at all clear what agreements faculty “enter into” with regard to conflict of interest. Is this a reference to a management plan? If so, it should be spelled out and not treated in the generic. And if there is no such agreement on conflict of interest, then the recommended language here is simply untrue. The reference to “other matters” is stupid unless there are other matters, in which case those other matters should be revealed. All this general nonsense is wrapped up then in “Institutional Agreement.” The aim is to create a rule of precedence, making the consulting subordinate to university policy and any agreements the faculty member has with the university.

I can’t get into all the strangeness of making a rule of precedence part of one agreement to manage conflicts with other agreements. We might talk yes of the pitfalls of obligating the same IP to multiple parties. We might talk about the problems of setting up situations in which to comply with one contract, one has to breach another. These are real problems. But here, with consulting, the university recommends a definition that is unnecessarily broad (“Institutional Agreement”) and then expects to have control of the interpretation of that IA in dealing with any other obligation a faculty member may accept. It’s not that statements of work and obligation should not overlap without agreement of all parties as to deliverables–that’s clear–but rather that the faculty member should give up control over the interpretation of what has been contracted to either the university or the organization requesting consulting services. The exposure is that the university may then claim more rights than it is entitled to (for which see the last month of articles) and screw over the faculty member and the consulting relationship. That is, the “is determined” could mean “by a court of law with competent jurisdiction” but could also mean “by a sponsor of research who is royally pissed off,” or “by university administrators on whatever whim or misreading of their own authority they assert.”

While the university might give the general advice that a faculty member should be prudent and not agree to terms that would create a contractual conflict with the university, university administrators would do well not to play legal counsel and propose bogus language that makes them feel snug at night but does not necessarily do anything beneficial for faculty consultants.

HR80 continues with advice about documenting work and handling of confidential information–stuff loosely associated with intellectual property, but not particularly relevant other than as generic advice. Yes, there may be non-disclosure issues, non-compete issues, liability issues, PR issues, payment issues, and the like. Perhaps a guidebook for consulting would be the place to address these things, rather than an Appendix to a policy on consulting that amounts to permitting faculty a day a week to consult, with prior approval.

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