By Tillery H.B. No. 2356 77R6607 JSA-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the deposit of a portion of royalties received by 1-3 institutions of higher education from intellectual property to the 1-4 credit of the general revenue fund. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Subchapter A, Chapter 51, Education Code, is 1-7 amended by adding Section 51.010 to read as follows: 1-8 Sec. 51.010. CONTRIBUTION OF ROYALTIES FROM INTELLECTUAL 1-9 PROPERTY TO GENERAL REVENUE FUND. (a) In this section, "net 1-10 royalties" means the amount of royalties described by Subsection 1-11 (b) received by an institution of higher education in a period less 1-12 any amounts paid or spent by the institution during the same period 1-13 to establish, protect, or preserve the institution's ownership or 1-14 rights in intellectual property from which royalties described by 1-15 Subsection (b) are or may be derived, including costs, fees, taxes, 1-16 and reimbursements associated with patenting or registration of 1-17 intellectual property. 1-18 (b) The governing board of each institution of higher 1-19 education shall transfer to the credit of the general revenue fund 1-20 25 percent of the net royalties received by the institution in each 1-21 state fiscal year from the sale, lease, licensing, or use of 1-22 intellectual property derived or created from the efforts of the 1-23 faculty, research fellows, staff, or other personnel or students of 1-24 the institution. The governing board shall transfer the amount 2-1 required by this subsection for a fiscal year in installments as 2-2 directed by the comptroller, not less than quarterly. 2-3 (c) The comptroller shall adopt rules and procedures for the 2-4 administration and enforcement of this section, including rules for 2-5 institutions to compute, report, and transfer the appropriate 2-6 amounts required to be transferred to the general revenue fund. 2-7 The comptroller may retain from amounts appropriated to an 2-8 institution that fails to make a required transfer under this 2-9 section an amount equal to the amount of the required transfer. 2-10 SECTION 2. Subchapter F, Chapter 61, Education Code, is 2-11 amended by adding Section 61.2225 to read as follows: 2-12 Sec. 61.2225. ROYALTY SHARING REQUIRED FOR PARTICIPATION. 2-13 (a) The students of a college, university, or other entity may not 2-14 receive grants under this subchapter in any state fiscal year 2-15 unless the entity enters into an agreement with the comptroller not 2-16 later than August 1 preceding that fiscal year to contribute a 2-17 portion of its net royalties for that fiscal year from intellectual 2-18 property to the general revenue fund in the same amount and manner 2-19 as required by Section 51.010 for a public institution of higher 2-20 education. In the agreement, the entity must agree to provide the 2-21 comptroller the information the comptroller requests to administer 2-22 this section and to allow the comptroller access to the appropriate 2-23 records of the entity for that purpose. 2-24 (b) The comptroller shall collect the appropriate amounts 2-25 from an entity that enters into an agreement under Subsection (a). 2-26 If the comptroller certifies to the coordinating board that an 2-27 entity is not in substantial compliance with an agreement under 3-1 this section, the coordinating board shall immediately suspend the 3-2 payment of grants to students of the entity under this subchapter. 3-3 The coordinating board may not resume those payments until the 3-4 comptroller certifies that the entity has satisfied its 3-5 obligations, including making all required payments, under each 3-6 agreement the entity has entered into under this section. 3-7 SECTION 3. (a) This Act takes effect September 1, 2001. 3-8 (b) Section 51.010, Education Code, as added by this Act, 3-9 applies to royalties received by an institution of higher education 3-10 on or after the effective date of this Act. 3-11 (c) Section 61.2225, Education Code, as added by this Act, 3-12 applies beginning with the 2002-2003 state fiscal year.