Service and Fee for Service Agreements

Given Yale’s status as a non-profit institution, research, training and teaching conducted at Yale should be beneficial to the general public and/or advance Yale’s educational and research mission, and not solely or primarily for the commercial benefit of an external party. Research, clinical trials, training and other educational activities funded at Yale by external entities are processed through OSP.

There have been other agreements, generally characterized as “service agreements” in which Yale will do work such as providing medical services at a local clinic or “fee for service” type work.   In the typical “fee for service” agreement, the external entity would have ownership of research results, including intellectual property (IP), and impose obligations of confidentiality on Yale, possibly including preventing or severely restricting publications.  Such terms and conditions are not normally acceptable to Yale as such terms and conditions associated with research conducted at Yale should allow Yale to control the research (conduct of the research rests with the faculty person), the results of such research should be available to the public through publication and presentation, and Yale should own new IP resulting from the engagement.  Accordingly, “fee for service” agreements will only be negotiated and approved under limited circumstances.

When can Yale enter into a Fee-for-Service Agreement?

The following guidelines should be used to determine if OSP should negotiate and approve a Service Agreement:

  1. The contract does not compromise the right to publish and disclose academically interesting research results.
  2. Yale does not incur any undue liability in the Service Agreement.  The Sponsor indemnifies Yale in accordance with the indemnification polices associated with Corporate Sponsored Research Agreement.
  3. Yale only grants ownership to the Sponsor of patentable inventions and copyrightable works directly related to services being provided to the Sponsor.  Yale will retain ownership of all pre existing intellectual property associated with its own research tools or research techniques.
  4. Only Service Agreements which allow for complete recovery of all costs (including, without limitation, full F&A costs) will be approved.
  5. The Service Agreement does not involve work which is routine or incidental to the activities of the Sponsor, such as that which could be conducted by industrial vendor.  Rather, the Service Agreement should involve some unique resource or research expertise which justifies the service being conducted at Yale as opposed to by a commercial third party or the Sponsor itself.
  6. The Service Agreement does not utilize facilities, equipment or intellectual property which are restricted to academic, not for profit research only, or interfere with regular research or teaching activities.
  7. The Service Agreement does more than simply advance the commercial interests of the Sponsor as a work for hire.  The service agreement also advances educational, patient-care or research benefits to Yale or some other important public interest is advanced.
  8. Any Service Agreement that implicates private business use, such as through non standard IP terms or restrictions on publication, must be approved by OGC and the tax office.  Any Service Agreement that appears to generate UBIT shall be approved by OGC and the tax office.

Tax Concerns with Service Agreements

Service Agreements at Yale may also create economic concerns in that such activities may incur unrelated business income tax (UBIT) liability, may constitute “private business use” for purposes of tax-exempt bond financing calculations, and/or have Yale competing inappropriately with for-profit organizations.  Federal tax law imposes limits on how much “private business use” may be conducted in tax-exempt bond financed facilities.  If research is determined to be primarily for the benefit of the Sponsor and not the public interest, it may be considered “private business use”, so Yale must monitor the extent of these activities.

Funds received for work that is unrelated to Yale’s tax-exempt purposes, as determined by the taxing authorities, also may be subject to payment of UBIT.  Although it is not inappropriate to have some UBIT, Yale must monitor the income and usage that generates the UBIT, and departments must be aware that they will be responsible for paying any UBIT. 

Note: OSP is responsible for the negotiation and administration of Technical Service Agreements and Fee for Service Agreements.  Hospital Affiliation Agreements, Personnel (Rent-A-Doc) Agreements, Professional Clinical Services Agreements, and Managed Care Agreements are managed by the Office of General Counsel.