Getting Started with Your Startup: Best Practices for Faculty

Lehigh is supportive of faculty and students becoming inventors and starting companies – whether or not these companies are based on Lehigh technology. Inventor-associated startup companies (“startups") are both opportunities and challenges for Lehigh. Entrepreneurial activity must be balanced, which may or may not be allowed. These relationships may require active management to assure openness in research, academic freedom for trainees, and clear understanding about how conflicts of interest (COI)   and financial conflicts of interest (fCOI) for faculty startups are to be managed.

 

University/OTT Responsibilities

OTT makes licensing decisions based on its judgment about technology transfer to achieve the best possible benefit to the public.

OTT takes several steps to effectively transfer the technology while managing conflict of interest. First, OTT markets all Lehigh technology to ensure fair and open access to potential licensees. Startups should not receive or be perceived as receiving preferential treatment. Second, Lehigh faculty/employees are not allowed to represent the potential licensee and must not negotiate directly with OTT. Third, OTT licensing agreements may be exclusive or non-exclusive depending on what is most suitable for a given technology. Finally, the faculty member’s startup must be reviewed for any actions that present a potential conflict of interest, specifically:

  • If, after thorough marketing, OTT determines that an inventor-affiliated company is an appropriate licensee, then it documents its marketing results and summarizes the rationale for its licensing decision.
  • The inventors must disclose any interest (e.g. consulting fees and/or stock options) in the startup.
  • The faculty member must agree to separate University responsibilities from company responsibilities.
  • OTT may proceed with licensing only if the conflict is deemed manageable by Lehigh.

 

Inventor Responsibilities

Inventors, especially faculty inventors, are responsible for separating University duties for research and education from personal financial interests in the company.

Inventors must:
  • Separate and clearly distinguish ongoing University research from work being conducted at the company.
  • Serve only in advisory or consultative roles at the company, as opposed to managerial roles or titles (e.g., CEO, Chief Scientific Officer, Vice President, etc.) suggesting management responsibility.
  • Take a leave of absence if engaging in a management role.
  • Consult both ORI and your Department Chair prior to engaging students/advisees in any work for your startup.
Inventors must not:
  • Negotiate with the University on behalf of the company.
  • Receive gifts or sponsored research from the company.
  • Involve research staff or other University staff in activities at the company. Company personnel cannot be affiliated with the University.
  • Involve company personnel in Lehigh research.
  • Use University facilities for company purposes.

     
‘Pipelining’

Many times, inventors wish to continue to do research at Lehigh in the area of interest to their startup. Lehigh is particularly concerned that University resources will be used to benefit the company, especially new companies that do not have their own facilities or many employees (i.e., a “virtual” company). Lehigh should not be the research or development arm of a startup. If a new follow-on or improvement invention is developed after the original dominating technology has been licensed to the startup, OTT may still market it to all potentially interested parties. Exclusive licenses will not always be granted to the startup, even if there is no other interest. In cases where the original technology dominates the subsequent developments, sometimes a nonexclusive license will suffice. Any new license is subject to conflict of interest review and approval.

 

Option and License Agreements to Inventor Startups

Inventors are expected to wind down ongoing research in the particular area that is going to be commercialized by the startup.

An option agreement is often used to reserve rights to a technology so that the company can begin exploring funding opportunities in order to actually acquire the rights in question. A startup company sometimes prefers to take an option to a license, rather than an outright license itself. OTT may grant options for any time period up to one year in duration. Inventors are required to stop initiating new work on the technology at Lehigh (that is, using University resources) when the technology is either licensed to a company or has been optioned to a company. Since it may take several months to wind down ongoing research, it is important that inventors plan accordingly and begin the wind-down of the Lehigh activities before either the licensing or optioning takes place.

It’s important for inventors to understand that this policy covering options and licenses is intended to enable inventors to succeed in translating their technologies into use without jeopardizing the mission or funding status of Lehigh University.

 

Forms for Startups

Lehigh Commercialization Report Form
Lehigh Development Report Form