By: Ellis S.B. No. 1190 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to technology development and transfer by institutions of 1-3 higher education. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle H, Title 3, Education Code, is amended 1-6 by adding Chapter 153 to read as follows: 1-7 CHAPTER 153. CENTERS FOR TECHNOLOGY DEVELOPMENT AND TRANSFER 1-8 Sec. 153.001. DEFINITIONS. In this chapter: 1-9 (1) "Center" means an office, department, or other 1-10 organizational unit established under this chapter. 1-11 (2) "Governing board" has the meaning assigned by 1-12 Section 61.003. 1-13 (3) "Institution of higher education" has the meaning 1-14 assigned by Section 61.003. 1-15 (4) "Organization" has the meaning assigned by Section 1-16 1.201, Business & Commerce Code. 1-17 (5) "Person" has the meaning assigned by Section 1-18 1.201, Business & Commerce Code. 1-19 (6) "Technology" means the application of scientific 1-20 knowledge for practical purposes and includes inventions, 1-21 discoveries, trade secrets, copyrighted materials, tools, machines, 1-22 materials, processes to do work, processes to produce goods, 1-23 processes to perform services, processes to carry out other useful 1-24 activities, trademarks, and computer software. 1-25 Sec. 153.002. FINDINGS. The legislature finds that: 2-1 (1) it is essential to the continued economic growth 2-2 and diversification of this state that technology development and 2-3 transfer be promoted and expanded; 2-4 (2) the students, scientists, researchers, faculty, 2-5 and staff of the institutions of higher education of this state 2-6 have developed and, in all likelihood, will continue to develop 2-7 technology that will contribute to the continued growth and 2-8 diversification of the state's economy; 2-9 (3) the electorate of this state authorized the 2-10 legislature to allow for the programs created by this chapter by 2-11 adopting Section 52-a, Article III, Texas Constitution; and 2-12 (4) an institution of higher education is authorized 2-13 to engage in technology development and transfer activities under 2-14 the authority provided to its governing board and other state and 2-15 federal law. 2-16 Sec. 153.003. CREATION OF CENTERS. (a) An institution of 2-17 higher education, subject to approval by its governing board, is 2-18 authorized to establish centers to manage, transfer, market, or 2-19 otherwise commercialize technology owned by it or in which it owns 2-20 an interest. 2-21 (b) Each center shall be administered within an institution 2-22 of higher education. 2-23 (c) Centers may provide services to multiple institutions of 2-24 higher education. An institution of higher education may contract 2-25 with a center under the control of a governing board other than its 2-26 own. 3-1 Sec. 153.004. OPERATION OF CENTERS. (a) To the extent 3-2 authorized by its governing board, an institution of higher 3-3 education, through a center established under this chapter, may: 3-4 (1) accept and administer funds, including state 3-5 appropriations, gifts, grants, contracts, and donations, to aid in 3-6 the establishment, maintenance, and operation of the center or to 3-7 aid in the discovery, development, protection, or commercialization 3-8 of technology; 3-9 (2) solicit and enter into agreements to fund the 3-10 discovery, development, protection, and commercialization of 3-11 technology; 3-12 (3) make technology owned or controlled by it 3-13 available to persons for commercial applications through license 3-14 agreements, assignments, or other forms of transfer; 3-15 (4) acquire interests in and ownership of technology; 3-16 (5) provide business, scientific, and engineering 3-17 services and technical assistance to persons engaged in the 3-18 development, manufacture, or marketing of technology in which it 3-19 owns an interest; 3-20 (6) acquire insurance and pay premiums on insurance of 3-21 any kind and in amounts considered necessary and advisable to 3-22 accomplish the purposes of this chapter; 3-23 (7) establish and operate corporations, either for 3-24 profit or not for profit, and limited liability companies for the 3-25 development and commercialization of technology and convey equity 3-26 interests in such entities; and 4-1 (8) engage in other related activities required to 4-2 achieve the purposes of this chapter. 4-3 (b) Property and services of institutions of higher 4-4 education may be used to achieve the purposes of this chapter. 4-5 Sec. 153.005. PROGRAMS. (a) To the extent authorized by 4-6 its governing board, an institution of higher education, through a 4-7 center, may operate programs to provide assistance to persons in 4-8 commercializing technology owned by it or in which it has an 4-9 interest. Assistance may include providing monetary support or 4-10 nonmonetary support, including the use of premises, computers, 4-11 computer software, telecommunications terminal equipment, office 4-12 equipment and supplies, machinery, custodial services, utilities, 4-13 or other services that are customarily treated as overhead expenses 4-14 by institutions of higher education. 4-15 (b) The policies and procedures to be used by an institution 4-16 of higher education to assess the qualifications of persons 4-17 participating in a center's programs, including objective criteria 4-18 for admission and for the measurement of progress and standards for 4-19 continuance or termination of participation, shall be approved by 4-20 the institution's governing board. 4-21 Sec. 153.006. SUPPORT OF CENTERS. In order to carry out the 4-22 purposes of this chapter and to support the activities of centers 4-23 described in this chapter, to the extent authorized by its 4-24 governing board, an institution of higher education may: 4-25 (1) enter into agreements establishing royalties, 4-26 fees, and other consideration for technology developed in whole or 5-1 part by it; 5-2 (2) accept equity interests in organizations that 5-3 license, manage, or otherwise administer rights to technology 5-4 belonging to it or under its control in exchange for such rights, 5-5 in whole or in part; 5-6 (3) accept equity interests in organizations that 5-7 license or otherwise have rights in its technology as consideration 5-8 for its providing monetary, business, scientific, or engineering 5-9 services or technical assistance; 5-10 (4) use income from the commercialization of 5-11 technology to fund the activities of the center; 5-12 (5) solicit, accept, and administer gifts, grants, and 5-13 donations; and 5-14 (6) enter into such other business arrangements as may 5-15 be appropriate for achieving the purposes of this chapter. 5-16 Sec. 153.007. NO FIDUCIARY DUTY. Except as otherwise 5-17 provided by law, a governing board, an institution of higher 5-18 education, a university system, a center, or any employee or member 5-19 of those entities does not owe a fiduciary duty to any person 5-20 claiming an interest in consideration received by a university 5-21 system or an institution of higher education in exchange for 5-22 technology. 5-23 SECTION 2. This Act takes effect September 1, 2001. 5-24 COMMITTEE AMENDMENT NO. 1 5-25 Amend S.B. 1190 (senate engrossment) by inserting the 5-26 following at the end of proposed Chapter 153, Education Code (on 6-1 page 5, between lines 22 and 23): 6-2 Sec. 153.008. BIENNIAL REPORT. Not later than December 1 of 6-3 each even-numbered year, the Texas Higher Education Coordinating 6-4 Board shall report to the governor and to the legislature regarding 6-5 activities conducted at institutions of higher education under this 6-6 chapter. The form of the report shall be developed by the Texas 6-7 Higher Education Coordinating Board in consultation with 6-8 institutions of higher education and shall include the following 6-9 measures for each institution of higher education: 6-10 (1) revenues received from licenses, royalties, fees, 6-11 cashed-in equity and other forms of income permitted by this 6-12 chapter; 6-13 (2) the number of shares of stock or other equity 6-14 interest held under agreements created pursuant to this chapter; 6-15 (3) the fair market value of stock or other equity 6-16 interests held in publicly-traded enterprises created pursuant to 6-17 this chapter; 6-18 (4) new invention disclosures received; 6-19 (5) the number of new patent applications filed and 6-20 new patents granted; 6-21 (6) the number of new license agreements executed; 6-22 (7) the number of new corporations, partnerships or 6-23 other business entities established to commercialize intellectual 6-24 property owned by the institution of higher education; and 6-25 (8) direct expenditures for all activities conducted 6-26 under this chapter. 7-1 Brown of Brazos