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Northwestern University

Working with Northwestern and INVO

Unlike corporations where employees are unable to start a company with information gained while employed, academia is markedly different.  University employees who want to found new companies based on their research are not perceived by their employers as potential competitors. Thus, university employees are typically not required to leave their academic employment in order to start a company. 

Related Northwestern policies

Northwestern, like all academic institutions, has a variety of rules that may be applicable to a researcher’s plans to start a company, including policies on intellectual property, conflict of interest, conflict of commitment, sponsored research, and outside consulting. Gaining University approval to start a new company is based on the full disclosure of proposed activities as they may pertain to these policies. See these policies on Northwestern's Policies website.

The encouragement and support of startup company formation by Northwestern does not change Northwestern’s other policies which remain fundamental to the University and its governance, such as the policies on conflict of interest, consulting, and other policies contained in the faculty handbook and elsewhere.

Rules on company positions

Northwestern employees on full time appointment or on partial leave (including half-time leave) may not be operating officers of such a commercial licensee. The positions of an operating officer, particularly in a startup, are normally considered to be “all-consuming” and would therefore create a conflict of commitment with the university appointment. Such positions include, without limitation, those of president, vice president, chief executive officer (CEO), chief operating officer (COO), chief financial officer (CFO) and chief technical officer (CTO). “Allowed” positions include: part-time employment (other than operating officers’ positions) in such a company which does not interfere with the Northwestern appointment; consulting within the provisions of Northwestern’s consulting policy, membership or chairmanship of a technical advisory board; or membership or chairmanship on a company’s board of directors.

Northwestern faculty who wish to see the creation of a startup company but remain primarily committed to his/her Northwestern appointment should arrange for the employment of a CEO to take on the task of organizing and managing the startup.

Working with INVO

The first three steps for the academic employees contemplating the formation of a new company based on their research are to:

  1. Disclose the invention;
  2. Disclose for potential conflicts of interest/effort; and
  3. Familiarize themselves with Northwestern’s licensing agreements.

Disclose the invention

If the basis for starting the company is a discovery made in the laboratory, an invention disclosure needs to be submitted to INVO. If this is your first interaction with INVO, it may be helpful to consult with an INVO invention manager who handles similar technologies in advance of submitting the disclosure.  Please call our office so that an invention manager can be assigned.  INVO will determine whether there is protectable intellectual property (IP) associated with the discovery. Read more about Invention Disclosure.

Northwestern will decide whether to pursue intellectual property protection or not.  If Northwestern decides not to pursue IP protection, the invention will be released to the inventor, and the inventor will be free to pursue it on his /her own.  The inventor will also be responsible for the legal costs associated with the IP and startup.  If Northwestern decides to protect the invention, it will file a patent application and cover the legal costs associated with the application. Once the patent is issued, a startup may license the technology from Northwestern to gain the rights to develop and commercialize it.  This process is broadly described as “technology transfer.”   

Disclose for potential conflicts of interest/effort

The second disclosure relates to the inventor’s compliance with institutional conflict-of-interest and conflict-of-commitment policies. Such conflicts are a hot topic in the national media, professional organizations, and journals, as well as in hallway gossip. Being accused of having a conflict can severely damage one’s reputation and future prospects. The federal agencies and academic entities have become quite attentive in enforcing their conflicts policies. Northwestern’s policies in this area can be accessed online. 

A conflict-of-commitment occurs when outside activities interfere with an individual’s responsibilities under his or her academic position. Typically, institutional consulting policies allow academic personnel to spend a set amount of time per week or month doing outside professional work, which may include helping to launch a new company. A conflict-of-interest exists when an individual’s personal interests (e.g., equity holdings in a startup company) are perceived to influence that person’s judgment when exercising his or her academic employment duties. Institutions require that the individual disclose and manage uch potential conflicts. Because conflict-of-interest management can be a complicated business, especially if a researcher contemplates a startup company while remaining an academic employee, it is essential that the constraints on permissible activities are well understood. Conflict-of-interest management plans, are above all, concerned with protecting vulnerable parties, such as graduate students and human subjects participating in the research, who are under the charge of the academic entrepreneur. 

Inventors should consult with their department chair and dean, as soon as they are ready to get serious about forming a new company, to lay out plans and receive feedback . What is most important is that it is not about whether you think there is a conflict or not, but whether someone else might perceive one. When in doubt, disclose. It can save you a lot of heartache later on. 

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