The most frequent issues that arise with consulting agreements are summarized below. The following information is not to replace legal advice that you are encouraged to seek out when entering into a contract, but rather is intended to be general guidance.
Employment Status of the Faculty Consultant
It often helps if companies hiring faculty consultants understand from the outset that the consultant is an employee of the University of Colorado with pre-existing obligations to the Regents. One of the most important obligations the company needs to know about is the Regent and Administrative Policy Statement dealing with Discoveries and Patents (the “Intellectual Property Policy” or “IP Policy”).
The following phrase is suggested for the intellectual property rights clauses and should provide sufficient notice: "Company X acknowledges Consultant is an employee of the University of Colorado with pre-existing obligations to disclose and to assign all intellectual property rights to the Regents consistent with the Policy provided as Exhibit A and made a part of this agreement." Incorporating the Policy as an exhibit will help avoid making conflicting obligations to two entities. If the company is unwilling to include this phrase and allow the IP Policy to be included as part of the consulting contract, contact the Office of University Counsel (OUC), who will be happy to talk with the company to explain the circumstances.
In most cases, it is necessary for the company to disclose proprietary information to the faculty/consultant. In so doing, the company will want assurances in the contract that the faculty consultant will keep their proprietary information confidential.
Confidentiality can be tricky for a faculty member involved with open, free exchanges of information in a public research university setting. It can also be dangerous in that disclosing confidential information intentionally or unintentionally can be a criminal offense as opposed to a civil offense which carries with it attendant penalties. It may be wise, therefore, to limit the amount of confidential information the faculty consultant receives to the absolute minimum and to insist that any and all such information is transmitted be in writing and marked "confidential." That way, the faculty consultant will know precisely what information they are responsible for keeping confidential. It is also a good idea to write into the contract that any verbal transmission of "confidential information" be reduced to writing within thirty days and sent to the consultant, and a copy to the institution, marked 'confidential."
Finally, many consulting agreements will either have no time limitation on keeping information confidential or will include an unreasonably long time period. It may be helpful to specify the time period and keep it to a reasonable minimum. Two to three years is normal and time periods longer than five years may become hard to manage and to keep track of.
Sometimes consulting agreement may seek to limit what you can write about, over and above any confidentiality provisions. You will want to review any such language in light of your intentions to publish at a later date.
Intellectual Property Rights
Companies normally would like to have all patents and other intellectual property assigned to them as a condition of the consulting arrangement. It may be possible to make such assignments when the work is done without the use of university resources, in the company's facilities and outside the scope of the faculty member's primary university responsibilities. An assignment of patent rights, however, may only be made after disclosing any new invention to the university. The Office of University Counsel and the CU Innovations Office will determine the degree to which the university will assert rights to any new invention based on the circumstances of the invention's derivation.
Remember that this is a personal agreement - the university will not be responsible for defending you or paying any claims should there be a dispute. Faculty consultants normally provide advice which can be accepted or rejected by the Company and usually the faculty/consultant has no control over how the results are used in practice and you may want this taken into account in the consulting agreement. You may also be required to have proper insurance for the liability exposure you face under the agreement.
Choice of Law
Most consulting agreements will indicate that the laws of a particular state or country will be used in any dispute. If you agree to any venue but Colorado, you may have to hire an attorney and physically litigate any dispute in that state or country. This could be very costly and inconvenient.
All consulting activity should conform with the faculty one-sixth rule requirements. Individual departments may have additional policies as well.