It seems to me that you would have to charge thesecond  federal agency
the lowest price you charge anyone - since the original funding agency
doesn't pay royalties, another federal agency shouldn't either.

Hope this helps.

Claire

Claire L. Carlson
Associate Vice President for Research
The University of Montana
Research and Sponsored Programs
University Hall 202
MIssoula, Montana  59812-4104
Phone (406) 243-5796
Fax (406) 243-5739
NOTE NEW E-MAIL ADDRESS:  xxxxxx@umontana.edu

-----Original Message-----
From: Research Administration List [mailto:xxxxxx@HRINET.ORG] On
Behalf Of Barbara Gray
Sent: Monday, September 11, 2006 10:09 AM
To: xxxxxx@HRINET.ORG
Subject: [RESADM-L] Royalties and Institutional Conflict of Interest?

The situation:  A faculty member at a public institution of higher
education invents a new instrument under a federal research grant.  The
university patents the instrument and commercializes it.  ABC Scientific
Supply has an exclusive license to make and sell the instrument, and the
univesity receives royalty payments, which are generously shared with
the inventor.  Now the same faculty member is working on a proposal to
another federal agency.  He wants to buy twenty of the instruments from
ABC Scientific to deploy in the field (meaning the university would earn
royalties on the sale).  This particular instrument allows measurements
that are important for the research that no other similar instrument on
the market can do, so a sole source procurement is justified.  Is it
appropriate for the university to pay full price for the twenty
instruments using the new grant dollars and earn the royalties, which it
will then share with the inventor/PI, or should the university charge
the new grant for the cost of the equipment minus the royalty payment
(assuming that ABC Scientific is willing to sell the equipment to the
university at this reduced price)?  I suspect there will be a difference
of opinion on this, so please share your rationale.
Thanks.
Barbara

--
Barbara H. Gray
Director of Sponsored Research
Desert Research Institute
2215 Raggio Parkway
Reno, Nevada  89512-1095
Telephone:	775-673-7381
Fax:		775-673-7459
E-mail:	xxxxxx@dri.edu
www.dri.edu

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