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9 University Industry Interactions It has frequently been suggested in recent years that a major increase in university-industry engineering research should take place in orde to enhance the financial base for universities and to help support the needed increase in doctoral enrollments. A study of such relationships, entitled University-Indlustry Research Relationships, was published by the National Science Board (NSB) in 1982.57'58 ~ ~ investigation of views held by,~niversities and companies, the following were found to be the principal motives for increasing ~,niversity-industry research: Industrial motivations: 1. To obtain access to manpower {students and professors J. 2. To obtain a window on science and technology. 3. To solve a problem or to get specific information unavailable elsewhere. 4. To obtain prestige or enhance the comp~ny's image. 5. To make use of an economical resource. 6. To provide general support of technical excellence. 7. To be good local citizens or to foster good community relations. 8. To gain access to Diversity facilities. . . . . University motivations: 1. Industry provides a new source of money, which helps diversify the ,.niversity's funding base. 2. Industrial money involves less red tape than governmen 104

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UNIVERSITY-IND US TR Y INTERN C TIONS 105 money, and the reporting requirements are not as time consuming. 3. Industrially sponsored research provides student exposure to real-world research problems. 4. Industrially sponsored research provides a chance to work on an intellectually challenging research program that may be of immediate importance to society. 5. Currently, some government funds are available for applied research, based on a joint effort between university and industry. 6. Such research will provide better training for the increasing number of graduates going to industry. The National Science Board study also foiled that only a small frac- t~on of university research money comes from industry. In 1981 the funding sources were as follows: ROD in Universities and Colleges, 1981 Source of Funds($ miHionJ Percent Federal government4,100 65.0 Industry240 3.8 Universities and colleges1,490 23.6 Other480 7.6 6,310 100.0 However, these figures represent aLl research funding for all schools and colleges within the universities. For engineering schools, the per- cent coming from industry is substantially higher than 3.8 percent, as was shown in Table 24. For the 30 universities in Table 24, the percent- age coming from industry was approximately 15 percent. The predominant view of those surveyed in the NSB study57 is that the major source of research limping ~ universities will continue to be the federal government. Some industrial respondents ~ that study expressed the option that the amount of industrial funding could be increased but that it could not be expected to fill any large funding drop by the federal government. In particular, the following caution was sounded: Companies do intend to draw more direct ties to universities, but resources are limited, and they already support the university research endeavor through taxes. It is important to remember that industry has to pursue a direction which strengthens its own long-term interests, arid the university must pursue a direction based on its function in society. These directions can intersect but to a limited extent. Only the government has the resources and network capabili

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106 ENGINEERING GRADUATE EDUCATION AND RESEARCH ties to monitor the complex U.S. research system and ensure that we have a broad technical base. [Ref. 57] Nevertheless, universities and industries age showing increasing interest in developing closer relationships, and many companies that have longstanding relationships with academia have demonstrated their sensitivity to the different purposes of these two societal insti- tutions and have found ways to make their associations mutually fruitful. A major way that universities and industries can benefit through closer ties is by the development of groups sometimes known as advi- sory councils or visiting committees. Such groups can provide two-way communication, helping universities to evolve their programs in con- cert with industrial needs and helping to keep industry in touch with what is going on in academia. Frequently, instead of reporting to a dean of engineering, such a group is appointed by and is advisory to the president or chancellor of an institution. In such cases the dean meets regularly with the committee, but when the committee speaks it is with an independent voice, directly to the top officer. A committee of this type not only can be a powerful and beneficial voice within an academic institution, it can also speak with competence and authority in public forums, for example, to state legislatures and to Congress. This report will not undertake to review all of the information pub- lished in University-Industry Research Relationships but will under- score certain potential problem areas together with possible directions that might be taken. The problem areas are these: {1) the appropriate nature of industrially sponsored research, {2) patent problems, [31 con- sultingrelationships, and {4J conflicts of interest. The Appropriate Nature of Industrially Sponsored Research Industrial organizations, by their very nature, are in the business of developing products or services that can be sold at a profit. Universi- ties, on the other hand, are in the business of producing educated people and basic knowledge. Industrial organizations need to develop proprie- tary positions on new products or processes, and often they must impose conditions of confidentiality on their research and develop- ment activities. But Diversities are in the opposite position: by virtue of the nature of universities, the knowledge they develop should be freely available to all. Public universities especially are often required by legislative action to operate under "fishbowl" conditions, with the knowledge they develop made available for the public good and not for a

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UNIVER SIT Y-IND US TR Y INTERAC TIONS 107 select few. Thus, there is an automatic mismatch of purposes between industrial organizations and universities, and these purposes must be brought into reasonable harmony if productive collaboration is to occur. As a general rule, the closer a university comes to the activity of product development, the less likely it is that the purposes of the uni- versity will be well served. Product development can be highly crea- tive, but it is a process of specialization bringing knowledge to a focus on a specific item or service. University faculties and students serve their publics best when they produce information that is broadly gener- alizable. In this manner they can influence the development of their own fields and make contributions of greater potential value to the public welfare then if they engage in the kind of focusing activity that emphasizes a particular product. The process of product development usually involves only a small proportion of activity that is generalizable in nature. A proportionally large amount of time must be devoted to solving the difficult problems that arise in reducing on idea to practice but which are by their nature low in generalizable content. The welfare of the universities' students is at stake if they are exten- sively engaged in product development activities while they are still students. While it is certainly true that exposure to product develop- ment is valuable for an engineering student, it is questionable whether a large time commitment to the "reduction-to-practice" phase is an appropriate use of the short time that a student, whether,~ndergraduate or graduate, is in the university setting. Such a time commitment can crowd out the opportunity to acquire a wide spectrum of fundamental and transferable knowledge that a student may need throughout his or her career. If the further condition of secrecy is imposed, then one of the principal advantages of an academic setting is lost, namely, the oppor- tunity to share knowledge and to learn from one's colleagues. Finally, there is the possibility that students may unknowingly be bent to the hidden purposes of others if proprietary and potentially profitable prod- ucts are in view. Because of the foregoing considerations, industrially sponsored research in universities should be free of secrecy constraints and should be as general as possible so that the learning experiences of the students are transferable to a variety of future needs. An exception to the matter of secrecy might be made for limited periods of time to permit the filing of patent applications, but other than that, the imposition of secrecy can limit a student's opportunity to gain the most from his or her educational experience. In a similar manners an industrially sponsored project, to be appropriate for universities, should also be free from

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108 ENGINEERING GRADUATE EDUCATION AND RESEARCH potential conflicts of interest on the part of the faculty principal investi- gator. If the investigator, for example, is also on officer of the firm sponsoring the research or has a substantial interest in the firm, the course of the project may be directed towards the firm's interests rather then those of the student. Further, the incentive for secrecy in such a case is increased on the part of the faculty investigator regardless of any formal contract provisions against secrecy, because the proprietary position of his or her film con be enhanced through secrecy. Such barri- ers between students and other students or faculty can inhibit a stu- dent's reaming experiences. Patents The ownership of so-called intellectual property-usually meaning patents and copyrights is a vexing problem for universities, particu- larly as industry increasingly enters the picture. When a company funds all or nearly all of a project that results in a patentable device or process, the industrial sponsor naturally feels that it should have some privileged position vis-a-vis that patent. Yet some universities take the position that all ownership rights should be vested in the university and that the sponsor should pay for a royalty-bearing license if it wishes to use the patent. Public interest groups have some- times insisted that publicly supported universities should adopt a pol- icy of total ownership by the universities, because to grant ownership to private businesses, they say, would subvert public resources to pri- vate purposes. In support of their view, they point out that industrial sponsors rarely pay for all the costs of university projects and that efforts to impose overhead charges by universities are often met with resistance. It is also asserted that students who come to a university for an education should not find themselves in a position of serving private interests. These issues are heavily loaded with value judgments and political philosophies; however, if meaningful industry-university partner- ships are to be developed, resolutions must be found. On the part of industry, there must be a readiness to pay full costs, including overhead costs, if the sponsor expects to have a privileged position regarding ensuing patents or copyrights. On the part of the university, there should be a willingness to grant ownership of the patent to such a full sponsor, or which is virtually the same thing to grant a royaltyfree exclusive license. If the sponsor provides less than full funding, then some appropriately scaled lesser rights should be granted. If full funding is provided by the university, then full ownership of any resulting pat- ent rights should be with the university.

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UNIVERSITY-INDUSTRY INTERACTIONS 109 Universities have become somewhat more aggressive in seeking pat- ent income than in the past, sometimes acting under urging from their trustees that they should function more as income-producing enter- prises. In some cases the urgings are accompanied by examples of cases in which the incomes have been quite large. Yet the record shows that for most universities the income from patents is small. In the NSB study mentioned above, information on patent income was sought from the 36 universities believed to be the most successful in gaining patent income. The responses gave the following information: 57 Frequency Table: Total Patent Royalties Received by Sample of Universities 1980and 1981 Frequency Gross Income 1980 1981 0-$ 99,999 10 7 $100,000-$199,999 3 4 $200,000-$299,999 3 2 $300,000-$399,999 3 0 $40D,000-$499, 999 0 1 Over $500,000 6 8 25 22 Thus, half of the responding universities in 1981 had royalty incomes of less than $200,000 each, and only eight had incomes exceeding $500,000. From these incomes must be deducted the costs of adminis- tering the patent programs, including the legal costs incurred in the patenting process, and the costs of marketing licenses. Even though the income may be welcome to the sponsoring universities, it is very small in comparison to their overall programs. On the other hand, income accruing to the individual inventors- who are usually full-time employees of the university- has occasion- ally been significant, sometimes reaching into the tens of thousands of dollars. A legitimate question arises concerning how much additional income should be given to a full-time university employee who pro- duces a lucrative patent, and whether the reward structure of the uni- versity is unduly skewed in the process. Most university employees do not work in areas where patents are even possible. Faculty in the humanities and social sciences where the question of patents is gen- erally irrelevant- might well argue that their contributions have more long-range value to society than does a patent whose lifetime is limited. Even within the engineering school many faculty work on very funda- mental topics. If unduly large amounts of extra income go to those who produce patents, there may be anunw~nted drawing away from work in

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110 ENGINEERING GRADUATE EDUCATION AND RESEARCH fundamental, unpatentable fields toward areas where patents might result. This could produce an unfortunate effect on university research if it resulted in a drift away from fundamental areas of research in which universities are expected to excel. Nevertheless, universities usually provide for sharing patent income with the inventors. The National Science Board study shows that the sharing typically ranges from 15 percent to 50 percent of net royalty income, sometimes with a sliding scale that provides a decreasing per- centage as the royalty income increases.57 For full-time employees, it could be argued that the inventor has already received a salary for the activity that produced the patent and that the major share of royalty income should go to reimburse the institution that paid the salary. Of course, such a consideration would not apply if the inventor is a student who is not a paid employee in the activity that produced a patent. Somewhat similar considerations apply in the cane of other intellec- tual activities, the types usually protected by copyright. Prominent among these are textbooks, videotapes, and computer programs. The same general principle described for patents should apply to all of these: if the activity is funded as a work assignment by the university, then ownership and income should belong to the university, with the author perhaps receiving a nominal award. If the activity is conducted sub- stantially outside of university auspices, the university should seek no rights. Consulting It is usually held that participation in consulting work is healthy for the faculty of a professional school such as engineering. A 1978 survey showed that 62 percent of engineering faculty engaged in paid consult- ing of some kind, the most for any field.59 Consulting activity is an important way for faculty to maintain contact with professional prac- tice and it helps them stay at the cutting edge of technology. Otherwise, school course work could become increasingly abstract and analytical and fail to provide the appropriate touchstone with current practice that is vital in ~ high-quality educational program. It is also the case that faculty consulting sometimes results in research contracts that are placed with the universities, thus enhancing the educational opportu- nities for students. In fact, it is difficult to envision substantial increases in industry-university research cooperation without the ena- bling influence of direct faculty contacts of the kind represented by consulting. In spite of these benefits, consulting by faculty members often comes

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UTIIVERSITY-INDUSTRY INTERACTIONS TABLE 25 Professional Activity of Engineering Faculty, by Type of Institution: 1978-1979 (mean hours per week) 111 Doctorate Nondoctorate Institutions Institutions 46.0 23.2 3.2 6.0 10.3 (4.8la (Della l 1 .21a 3.2 All activities Instructional activities Research Public service and administration Total outside income-producing activities Consulting Publication Other Continuing education and professional enrichment . aNumbers in parentheses are breakdowns of the total outside income-producing . . . actlvltles. SOURCE: Activities of Science and Engineering Faculty in Universities and 4-year Colleges: 1978-1979 (Washington, D.C.: National Science Foundation, NSF 81-3231. 49.1 15.5 14.7 10.0 5.8 {3.3)a {l.7la (o.8la 3.0 under fire, and it is appropriate to consider the reasons for this criti- cism. One source of criticism stems from the fact that most people react adversely to the image of a professor who, instead of teaching classes, is off doing consulting and perhaps reaping enormous financial rewards in the process. Sometimes the reaction to this image is to conclude that professors in professional schools do not need to be paid competitive salaries because of the presumed outside income. How- ever, the data shown in Table 25, taken from a special survey conducted by the National Science Foundation,s9 do not support this image. The first thing that most people find surprising in such surveys is the length of the workweek of the average faculty member. Table 25 shows that the workweek for faculty in Ph.D.-gr~nting universities averaged 49.1 hours, and in non-Ph.D.-granting universities, 46.0 hours.* Of the total workweek in Ph.D.-granting universities, an average of only 3.3 hours was spent in consulting, and 2.5 hours ~ other outside activities, such as textbook writing. Oddly, and again contrary to popular impres- s~on, faculty in non-Ph.D.-granting institutions spend even more time in outside activities: 4.8 hours per week ~ consulting and 5.6 hours in other activities. Table 25 also shows some results that are not surpris * A 1982-1983 survey of faculty in the University of California showed an average workweek of 60.6 hours in university-related activities, divided as follows: instruc- tion-27.S hours; research-23.9 hours; university service-4.8 hours; professional activities and public service-4.4 hours. No data were included on consulting.

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112 ENGINEERING GRADUATE EDUCATION AND RESEARCH ma: faculty in doctorate institutions spend less time in instructional activities than do those in nondoctorate institutions { 15.5 hours versus 23.2 hours) and more time In research { 14.7 hours versus 3.2 hours J . Tables 26, 27, and 28 show other comparisons between groups of faculty. Table 26 shows that engineering faculty who possessed doc- toral degrees had a mean workweek of 50.0 hours, and those without doctorates had a mean workweek of 41.4 hours. Doctorate faculty spent less time in instructional activities and more time in research than did nondoctorate faculty, which is in accord with common con- ception. Contrary to the usual impression, however, doctorate faculty spent less time in consulting (3.4 hours J than did nondoctorate faculty {4.9 hours). Table 27 compares engineering faculty against science faculty at doc- torate institutions. Engineering faculty in general engage in more instructional activities and in less research than do other groups. {Note that these relationships are reversed when the comparison is with social scientists. J Engineers also consult more. Table 28 deals with nondoctorate institutions, showing that engi- neering faculty in these institutions have significantly longer work- weeks than other groups. The time of engineering faculty spent in instructional activities is greater than that of faculty in the life sciences and social sciences but slightly less than that spent by faculty in the physical sciences. Engineering faculty time spent in consulting {4.8 TABLE 26 Professional Activity of Engineering Faculty, by Possession of Doctor's Degree: 1978-1979 {mean hours per week) Doctorate Nondoctorate Faculty Faculty _ _ . All activities 50.0 41.4 Instructional activities 16.9 21.2 Research 14.0 1.5 Public service and administration 9.0 7.8 Total outside income-producing activities 7.0 8.0 Consulting (3 41a (4.9la Publication l3 oh (1.3la Other to 61a (l.9la Continuing education and professional enrichment 3.1 2.8 aNumbers in parentheses are breakdowns of the total outside income-producing . . . actlmtles. SOURCE: Activities of Science and Engineering Faculty in Universities and 4-year Colleges: 1978-1979 "Washington, D.C.: National Science Foundation, NSF 81-3231.

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UN7VERSI TY-IND US TR Y INTERN C TIONS TABLE 27 Professional Activity of Science and Engineering Faculty for Doctorate Institutions, by Field: 1978-1979 {mean hours per week) 113 Life Physical Social Engineering Sciences Sciences Sciences All activities 49. 1 50.6 49.6 48. 1 Instn~ctional activities - 15.5 13.4 13.8 18.2 Research 14.7 18.8 20.5 10.5 Public service and administration 10.0 11.0 8.0 8.4 Total outside income-producing activities 5.8 3.6 3.9 4.8 Consulting (3.3Ja (o.8la (1. 11a (0.91a Publication (Lola (2. 11a (2.5)a {3.6Ja Other (o.8la lo.7~a to.3la (o.3la Continuing education and professional enrichment 3.0 3.9 3.4 6.1 aNumbers in parentheses are breakdowns of the total outside income-producing . . . activities. SOURCE: Activities of Science and Engineering Faculty in Universities and 4-year Colleges: 1978-1979 "Washington, D.C.: National Science Foundation, NSF 81-3231. TABLE 28 Professional Activity of Science and Engineering Faculty for Nondoctorate Institutions, by Field: 1978-1979 {mean hours per week) Life Physical Social Engineering Sciences Sciences Sciences All activities 46.0 43.2 42.1 40.6 Instructional activities 23.2 21.0 23.9 19.4 Research 3.2 6.5 3.8 5.9 Public service and administration 6.0 8.5 6.8 6.5 Total outside income-producing activities 10.3 1.7 2.7 2.1 Consulting (4 8)a (o 31a (o s)a (o s)a Publication (4 41a (o 61a (1 6)a (1.4la Other (l.2)a (o 9)a (o 6)a t0.2)a Continuing education and professional enrichment 3.2 5.5 4.9 6.7 aNumbers in parentheses are breakdowns of the total outside income-producing activities. SOURCE: Activities of Science and Engineering Faculty in Universities and 4-year Colleges: 1978-1979 (Washington, D.C.: National Science Foundation, NSF 81-3231.

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1 14 ENGINEERING GRADUATE EDUCATION AND RESEARCH hours per week) is substantially higher than for the other groups jO.3 to 0.5 hours per week). The general conclusions to be drawn from these tables is that engi- neering faculty members have a long workweek and spend less of it in outside activities than is generally thought. In spite of this reassurance, there have been cases ~ which faculty consulting has been excessive, leading to neglect of university duties. University administrators need to be alert to such transgressions and certainly should not tolerate them. Most universities have policies that permit and even encourage consulting, usually limited to one day per week, but also require that all of a faculty member's responsibilities to the university simultane- ously must be fulfilled. A faculty member should regard teaching as a prime responsibility; it is hard to see how this responsibility is being met properly if a professor is consulting when a class is scheduled, perhaps leaving a teaching assistant to meet with the class. But teach- ing is not the only such responsibility. A professor's graduate students have a major claim on his or her time, even though such time may not be formally scheduled. The institution also has a claim on the faculty member, for such things as institutional governance, curriculum development, and peer faculty review. Finally, in a research university, there is a major expectation that a faculty member will initiate and lead significant research projects. Ill the aggregate, these activities consti- tute what is meant by "meeting one's responsibilities to the univer- sity." Even though it is admittedly sometimes difficult to form appropriate value judgments regarding whether an individual is fulfill- ing his or her responsibilities, the task of doing so cannot be avoided. Consulting is just one of the many elements that must go into the total evaluation of a professor's contributions to the institution. Another source of criticism of faculty consulting is that the faculty member is competing against regular consulting firms but operating from a sheltered position. The argument is that a faculty member is protected by receiving a full-time salary and thus can unfairly compete with a regular consulting firm that has many overhead costs to bear. There seems to be little justification for faculty members' placing themselves ~ this kind of position. If the practice of unfairly compet- ing with regular firms is carried to excess, faculty could even find themselves the targets of unwelcome legislative action. Furthermore, most of the kinds of projects that would be involved in such competi- tion would probably be relatively routine and repetitive. If such projects are repetitive, it is unlikely that the faculty member could successfully argue that the consulting activity is at the cutting edge, and thus of maximum benefit to his or her teaching.

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UNIVERSITY-INDUSTR Y INTERACTIONS 115 A final criticism of faculty consulting is political in nature. Some groups have insisted that faculty consulting should be prohibited alto- gether, at least from public universities. To do otherwise, they claim, is to divert public resources to private interests and to work to the disad- v~ntage of society. They have particularly directed their attention to consulting for petroleum and chemical firms, the nuclear power indus- try, and defense firms. In California, court action has been brought against the University of California, because, it is claimed, the activi- ties of the university's huge Agricultural Experiment Station have served principally to benefit rich farmers, to the detriment of other segments of society. In the case of the experiment station, faculty con- sulting is not specifically at issue, because outside consulting activity is prohibited for faculty associated with the station, but the overall issue is the same: it is claimed that special influences, backed by money, are brought to bear on the university to divert its attention in ways that will benefit those special interests and disadvantage others. There is no easy answer to such charges. Different views of the vary- ing advantages and disadvantages will always be a function of personal value judgments and political opinions regarding the fashion in which society should be structured. However, it is generally agreed that fac- ulty consulting is beneficial to students, to universities, and to society, provided it meets the conditions discussed here. Industry-university research also provides benefits to all, again provided it meets the condi- tions outlined. If universities were to sever all relationships with indus- try, as advocated by some, they would tend toward a closed-in, "ivory tower" character even more than they do now. Universities are already criticized on that account in some quarters, and further movement in that direction is hardly to be sought. Some universities require their ha11-time faculty members to report their outside activities, and proposals have been made that they should also be required to report the specific identities of the organizations for which they consult, the amount of time spent, and the income derived. It would seem that no invasion of privacy is involved in asking faculty to report the names of the organizations for whom they consult, and the amount of time spent. After all, they are full-time employees of their universities, and their employers would surely be within their rights in asking for such information. Also, the public interest would be served by having this information available, although there might well be different rules for public and private universities. However, the report- ing of outside income does seem to be an invasion of privacy, since it provides no infonnation relating to the employers' interests that c~n- not be gained from a full reporting of time spent. Income information,

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116 ENGINEERING GRADUATE EDUCATION AND RESEARCH even though it may be collected by universities on a confidential basis, could be forced into the public domain by use of the Freedom of Infor- mation Act, and could be used for the unwarranted harassment of individuals. Faculty Conflicts of Interest The discussion so far raises the question of the kinds of faculty involvement with industry that are appropriate and of those that are inappropriate. It has already been asserted that faculty consulting is desirable, if controlled, and the same has been said about industry- university research cooperation. However, recent dramatic develop- ments in the fields of computers and genetic engineering have raised the question of faculty codes of conduct to prevent conflicts of interest. It would seem inappropriate for a faculty member to be a principal investigator within a university on a project that is funded by a com- pany for which the faculty member simultaneously is an officer, a director, or a significant owner Owning, say, 5 percent or more of the company!. The prospect of conflicts of interest arising are too great to be tolerated in such a situation. Even if a faculty member successfully avoided actual improprieties in such a case, the suspicions on the part of other faculty and students could be so great that the welfare of the educational enterprise could be damaged. The question of service simultaneously as a principal investigator on an industry-funded project and as a consultant for the same company is somewhat more clouded. Some have proposed that such relationships should be prohibited, but it should be noted that industry-university research contracts often would not come to pass if it were not for preexisting consulting relationships. To prohibit such connections would be to forfeit major benefits in exchange for a questionable gain. Such relationships should be reported and subjected to regular review by the university administration but should not be prohibited. Findings and Recommendations 1. Closer ties between industry and engineering education should be fostered. Such ties can take many for ~ ., s, such as increased industrially sponsored research; faculty consulting; industry financial support of graduate fellowships, modem equipment, facilities, and departmental expense. An especially beneficial form of industry-university coopera- tion is the establishment of industrial advisory councils to provide input to cam pus administrations and governmental bodies.

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UNIVERSITY-IND USTR Y INTERACTIONS 117 2. Industrially sponsored research ~ Diversities should be free of secrecy constraints and should be as general as possible so that the learning experiences of the students can be transferred to a variety of future needs. 3. With respect to patents and other intellectual property, industrial sponsors should be prepared to pay full costs, including overhead, if they expect to have special rights with respect to such property. In such cases of full cost sponsorship, Diversities should grant ownership of the patent or other intellectual property to the sponsor, or grant a roy- altyfree exclusive license. 4. Outside consulting by faculty members should be encouraged, provided it supports and helps improve the academic programs of the university. Consulting of a routine sort should be discouraged, as should consulting that is competitive with regular consulting organiza- tior~s. However, h~-time faculty members should limit their consult- ing and other outside activities so that Diversity responsibilities are not interfered with. 5. Faculty members must scrupulously avoid conflicts of interest. It is inappropriate for a faculty member to be a principal investigator within a university on a project funded by a company for which the faculty member is simultaneously an officer, a director, or a significant owner.