Sponsored Research, Equity, and Licensing of Technology: Institutional conflicts of interest can be introduced simply by the institution having a license agreement with, or an equity position in, a company sponsoring a faculty member's research. When an institution has a license agreement with a company sponsoring research in the inventor's lab, or even with another faculty member, there may be a bias to accept terms and conditions that are more favorable to the company in order to facilitate the company's success.
Other opportunities to obtain equity abound. Equity positions are often accepted in lieu of licensing fees or reduced royalties, or sometimes in lieu of indirect costs. From a financial viewpoint, the upside possibilities are great, with potential returns far exceeding lost income or opportunity costs. Such arrangements, however, may bring into question a university's role in subsidizing the company through lower-cost research programs or through provisions of "free" laboratory space.
Endowment management and institutional initiative to create venture funds to invest in faculty start-ups are also candidates for institutional conflict-of-interest management.
(Recognizing and Managing Personal Conflicts of Interest. Council on Government Relations (COGR), Winter 2002., p. 33)