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.