This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The opinion is based solely on the facts and circumstances as stated below and was approved by the Commission on August 25, 1995.

May a university contract with a company to perform research and development activities relating to the use of dyes as a pesticide when the dyes were development by a university faculty member who is the company's president and who owns thirty- three percent (33%) of the company's outstanding common stock?

    The Mississippi Ethics Commission is restricted to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, Mississippi laws outside the jurisdiction of the Commission and internal rules and regulations of the state governmental entity are not addressed by this opinion.

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered part of this opinion.

The purpose of this letter is to request an opinion from the Ethics Commission.

A number of years ago, one of our faculty members developed certain dyes which now may have application as agricultural pesticides. There are no patents involved, and the intellectual property is simply the expertise of the faculty member.

The faculty member is a principal in a start-up company attempting to further develop and market these dyes as agricultural pesticides. The faculty member serves as president of the company and owns 33% of the outstanding common stock. The company has begun to attract governmental grants to perform research on these dyes and their application, and the company has a need to contract with a university to perform these research and development activities. Specifically, the company desires to contract with the University, and this contract could involve the faculty member affiliated with the company as well as other faculty members.

It would appear that Section 25-4-105(4)(d) of the Mississippi Code indicates that the acceptance by the University of a contract from this company would not place the faculty member in violation of Mississippi law. However, an opinion on this matter by the Mississippi Ethics Commission would be greatly appreciated.

The pertinent conflict of interest laws to be considered here are:

Code Section 25-4-103(c), (d), (f)(i)(ii), (g)(v), (h), (j), (k)(i)(ii) and (p)(i)(ii)(iii):

"(c) 'Business' means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a non-profit corporation or other such entity, association or organization receiving public funds.

(d) 'Business with which he is associated' means any business or which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

0) 'Intellectual property' means any formula, pattern, compilation, program, device, method, technique or process created primarily as a result of the research effort of an employee or employees of an institution of higher learning of the State of Mississippi.

(k) 'Material financial interest' means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00);

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."

Code Section 25-4-105(3)(a) and (4)(d) states:

"(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(d) May be a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent: (i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or (ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant."

    Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is that the contract between the University and the faculty member's company does not violate the above cited Code Section 25-4-105(3)(a).

    The above conclusion is based on the dye being an "intellectual property" as defined in the above cited Code Section 25-4-103(j). Therefore, the contract between the University and the faculty member's company involves research and development of an "intellectual property" complying with the exception set forth in the above cited Code Section 25-4-105(4)(d)(ii).
 
 

Ronald E. Crowe Executive Director