Legislature(2003 - 2004)

01/22/2004 03:03 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 282-UNIVERSITY EMPLOYEE RESEARCH CONTRACTS                                                                                 
                                                                                                                                
Number 0050                                                                                                                     
                                                                                                                                
CHAIR WILSON announced that the  first order of business would be                                                               
HOUSE BILL  NO. 282,  "An Act relating  to contracts  between the                                                               
University  of Alaska  and its  employees  involving research  or                                                               
other development  of intellectual property and  to the authority                                                               
of the president  of the University of  Alaska regarding employee                                                               
contracts for development of intellectual property."                                                                            
                                                                                                                                
Number 0101                                                                                                                     
                                                                                                                                
JIM  POUND,  Staff  to Representative  Hugh  Fate,  Alaska  State                                                               
Legislature, presented  HB 282 on behalf  of Representative Fate,                                                               
sponsor.  He  explained that HB 282 will allow  the University of                                                               
Alaska to compete in the  research and development arena.  Across                                                               
the nation universities  have moved towards a research  role as a                                                               
means  of  supplementing  the  high  cost  of  education.    This                                                               
research  has resulted  in inventions  and innovations  that have                                                               
moved into the private sector  and sometimes created a profit, he                                                               
said.                                                                                                                           
                                                                                                                                
MR. POUND told  the members that the University  of Alaska system                                                               
has been involved in research,  but seldom development because of                                                               
the lack  of financial incentives  based on the  Alaska Executive                                                               
Branch Ethics Act.   He said AS 39.52.10, which  is a declaration                                                               
of policy,  discourages those officers from  acting upon personal                                                               
or   financial   interests   in   the   performance   of   public                                                               
responsibilities.     In  AS  39.52.170  outside   employment  is                                                               
restricted.    A  public  employee may  not  render  services  to                                                               
benefit a personal or financial  interest, or engage in or accept                                                               
employment  outside  of  the  agency   the  employee  serves,  he                                                               
explained.                                                                                                                      
                                                                                                                                
MR. POUND  said this legislation  will give the president  of the                                                               
university  a recruitment  tool whereby  he/she will  be able  to                                                               
negotiate an  intellectual property  agreement with  a researcher                                                               
who could  then develop  a product  that is  commercially viable.                                                               
Based  on that  negotiation,  the researcher  and the  university                                                               
could  both  benefit   financially  from  commercial  enterprises                                                               
through sales,  entrepreneurial activities, or development  of an                                                               
industry here in Alaska.   This agreement would allow researchers                                                               
to continue advancing  their work, which helps  to maintain staff                                                               
stability at the  university.  Mr. Pound  summarized his comments                                                               
by  saying that  this legislation  will bring  quality staff  who                                                               
will  be  working  on  projects   that  could  bring  new  ideas,                                                               
industry, and  new non-general  fund money  to the  University of                                                               
Alaska.  He asked the members to support HB 282.                                                                                
                                                                                                                                
Number 0259                                                                                                                     
                                                                                                                                
CHAIR  WILSON stated  for the  record that  Representative Cissna                                                               
has joined the meeting.                                                                                                         
                                                                                                                                
Number 0269                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  asked what  would prevent an  employee from                                                               
taking his/her product home or  to some other organization.  What                                                               
in  this  agreement encourages  the  employee  to remain  at  the                                                               
university and share in the profits?                                                                                            
                                                                                                                                
Number 0306                                                                                                                     
                                                                                                                                
MR. POUND responded that there  would be initial negotiations and                                                               
a  contract between  the  university  and the  researcher/faculty                                                               
member.   He explained  that the  advantages for  researchers are                                                               
the  use  of  university   facilities,  equipment,  and  graduate                                                               
student staff  to assist  him/her, which  would not  be available                                                               
outside of  the university  system.   Once the  research produces                                                               
results there  would already be a  contract in place for  a joint                                                               
venture   between  the   university   and   the  researcher,   he                                                               
reiterated.                                                                                                                     
                                                                                                                                
Number 0352                                                                                                                     
                                                                                                                                
REPRESENTATIVE   GATTO  posed   a  hypothetical   example  of   a                                                               
[researcher] who saw  the election problems in  Florida, and then                                                               
went  on to  develop  an optical  scanner in  his  garage.   Even                                                               
though this person  works at the university,  does the university                                                               
have any claim on his/her  [invention], he asked.  Representative                                                               
Gatto pointed  out that  the university  could make  the argument                                                               
that  during this  individual's  years of  employment he/she  had                                                               
plenty of ideas on developing an  optical scanner.  He asked what                                                               
rights the university would have in a case like this.                                                                           
                                                                                                                                
Number 0392                                                                                                                     
                                                                                                                                
MR.  POUND responded  that in  a case  such as  the one  posed by                                                               
Representative  Gatto, there  would be  a lawsuit  involved.   It                                                               
would  be necessary  to determine  how much  of the  university's                                                               
resources  were  involved  in  the  development  of  the  optical                                                               
scanner  and how  much of  the  development was  done in  his/her                                                               
garage.                                                                                                                         
                                                                                                                                
REPRESENTATIVE GATTO asked for  clarification that the university                                                               
would initiate a lawsuit in a case like this.                                                                                   
                                                                                                                                
MR. POUND responded that is correct.                                                                                            
                                                                                                                                
Number 0431                                                                                                                     
                                                                                                                                
WENDY   REDMAN,   Vice   President  for   University   Relations,                                                               
University  of  Alaska,  testified  in  support  of  HB  282  and                                                               
answered   questions  from   the   members.     The  issue   that                                                               
Representative  Gatto brought  up  addresses  how the  university                                                               
plans  to  make  money,  which   is  through  joint  patents  and                                                               
copyrights, she said.  The university  does have a right to claim                                                               
a portion  [of the profits as  a result of research  developed at                                                               
the university].   She  explained that it  varies from  campus to                                                               
campus and  project to  project as  to the  portion of  patent or                                                               
copyright produced  by faculty  members during  a time  he/she is                                                               
employed.   This  would  really have  to go  to  the courts,  Ms.                                                               
Redman commented,  because even if  a person developed  a product                                                               
in the garage,  if he/she were employed by the  university at the                                                               
time, it is likely the university  would be entitled to a portion                                                               
of the patent or copyright.                                                                                                     
                                                                                                                                
Number 0501                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  asked if  staff members  occasionally enter                                                               
into an agreement  with the university at the  beginning of their                                                               
employment.   He asked if  staff come  to the university  with an                                                               
idea  and  ask  for  the  use  of  their  facilities  to  develop                                                               
something.                                                                                                                      
                                                                                                                                
MS. REDMAN responded that it has  not been a normal occurrence in                                                               
the  past, but  it is  becoming much  more common  now.   This is                                                               
particularly true  of high-technology fields where  students come                                                               
out  of  college   with  good  ideas,  but   not  the  laboratory                                                               
facilities  at their  disposal.   She noted  that it  is becoming                                                               
more common to recruit those kinds of faculty.                                                                                  
                                                                                                                                
Number 0578                                                                                                                     
                                                                                                                                
CHAIR WILSON  asked if the university  hires non-teaching faculty                                                               
to do research or is it mandatory that researchers also teach.                                                                  
                                                                                                                                
MS.  REDMAN responded  that  faculty can  be  hired for  research                                                               
[purposes]; however, the  research cannot be paid  for with state                                                               
funds.   If a faculty  member has  a research grant  which covers                                                               
his/her  salary  100  percent,  plus  the  overhead  to  run  the                                                               
laboratory, then  this faculty  member would  not have  to teach.                                                               
She  added that  the  University of  Alaska  has many  productive                                                               
research faculty.                                                                                                               
                                                                                                                                
CHAIR WILSON  asked what  advantage there  is for  individuals to                                                               
work with the  university if it is necessary for  them to provide                                                               
the grants to pay all the expenses.                                                                                             
                                                                                                                                
MS. REDMAN responded  that the advantage is  that the researchers                                                               
will be  working with peers,  graduate students, and  have access                                                               
to laboratory space  that they could not  [otherwise provide for]                                                               
themselves.   The university also  assists in  getting inventions                                                               
patented.    An  added  benefit  of  being  associated  with  the                                                               
university occurs when working with  research institutes that are                                                               
affiliated with [other] colleges and universities, she said.                                                                    
                                                                                                                                
Number 0689                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER  prefaced her question by  saying that she                                                               
is uncertain  if this relates  to [HB  282].  She  explained that                                                               
the  Native   community  is  concerned   about  [the   theft  of]                                                               
intellectual  property in  terms of  cultural stories  and myths.                                                               
For example,  if someone documents  [stories and myths]  and then                                                               
capitalizes  on them,  there  is concern  that  these stories  or                                                               
myths either would not be correct  or would be taken and used for                                                               
capital gain.   Representative Kapsner  asked how that  would fit                                                               
in [HB 282].                                                                                                                    
                                                                                                                                
Number 0729                                                                                                                     
                                                                                                                                
MR.  POUND responded  that unless  the individual  [who took  the                                                               
stories]  was a  university  employee, it  would  have no  effect                                                               
whatsoever.                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER asked:   What if [the  individual who took                                                               
the stories or myths] was a university employee?                                                                                
                                                                                                                                
MR.  POUND said  intellectual property  does cover  copyrights on                                                               
written material.   He pointed  out that  under this bill  a two-                                                               
party   agreement  exists   between   the   researcher  and   the                                                               
university.  In this instance, there are three parties involved.                                                                
                                                                                                                                
CHAIR  WILSON asked  Ms. Redman  what  would happen  if a  Native                                                               
professor at the university used [family stories and myths].                                                                    
                                                                                                                                
MS.   REDMAN  commented   that   she   understands  the   dilemma                                                               
Representative Kapsner  is addressing.   This bill does  not deal                                                               
with intellectual property and  inappropriate use of intellectual                                                               
property  by  someone  at  the   university.    There  are  other                                                               
mechanisms at  the university  to deal  with that  situation, she                                                               
added.   Ms. Redman offered  to talk in  detail about what  is in                                                               
place  to address  this kind  of situation,  and emphasized  that                                                               
this bill would not have any impact on that dilemma.                                                                            
                                                                                                                                
Number 0804                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA told the members  that her office requested                                                               
a legal opinion  on [the subject of] immunity  for the university                                                               
[with respect to a] business,  since it would be jointly involved                                                               
in  a  business  and  possible  litigation.   She  asked  if  the                                                               
university has looked into this  issue and what the ramifications                                                               
could be.                                                                                                                       
                                                                                                                                
Number 0844                                                                                                                     
                                                                                                                                
MS. REDMAN  told the members  that [immunity] is one  aspect that                                                               
would  be covered  under  this bill;  however,  it really  covers                                                               
broader kinds of  consultations.  The specific issue  of owning a                                                               
business is something the [university]  has been looking into for                                                               
a great deal of time.  Dean Case,  who is the dean of the College                                                               
of  Business   and  Management  at   the  University   of  Alaska                                                               
Anchorage,  is  very interested  in  this  [issue] and  has  been                                                               
researching  what  other  colleges and  universities  around  the                                                               
country  are doing,  she  said.   There  are  a  great number  of                                                               
colleges and  universities that have  gotten into the  process of                                                               
owning their own businesses.   This is particularly true with the                                                               
school of business, where students  take over businesses and then                                                               
turn it  over once it  is up and  running.  Ms.  Redman explained                                                               
that  some   of  these   [universities]  have   formed  501(3)(c)                                                               
[nonprofit  corporations].     Other  states   provide  liability                                                               
protection, she  added.  She said  that it is a  very interesting                                                               
issue and  offered to  provide more  information on  the research                                                               
the university has done.                                                                                                        
                                                                                                                                
Number 0929                                                                                                                     
                                                                                                                                
CHAIR  WILSON asked  Ms.  Redman for  clarification  in the  case                                                               
where an  individual who is not  an employee is given  a grant by                                                               
the university.                                                                                                                 
                                                                                                                                
MS. REDMAN responded that the  university does not normally award                                                               
grants  to  individuals  outside   of  the  university  [system];                                                               
however, the  university's attorney makes it  clear that anything                                                               
that is produced, thought of,  dreamed up, or developed under the                                                               
aegis of the university is owned by the university.                                                                             
                                                                                                                                
Number 0988                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO asked,  for example,  if the  university is                                                               
working to design  a "nano-engine" to operate  the "Spirit [Mars]                                                               
Rover"  and   someone  else  gets   the  contract,   whether  the                                                               
university absorbs the  loss or the researcher bears  some of the                                                               
financial responsibility.                                                                                                       
                                                                                                                                
MS.  REDMAN responded  that the  university  is not  anticipating                                                               
involvement  in that  level of  high-risk  endeavors.   Normally,                                                               
those  research   projects  are  accomplished   through  separate                                                               
501(c)(3)[nonprofit    corporations].       Theoretically,    the                                                               
university would  absorb the risk;  however, she  reiterated that                                                               
the  university is  not looking  at  that high-level  risk.   Ms.                                                               
Redman  said  generally the  federal  government  or the  private                                                               
sector is involved in this kind of risk.                                                                                        
                                                                                                                                
Number 1102                                                                                                                     
                                                                                                                                
MR.  POUND summarized  his comments  by saying  that this  is the                                                               
kind of  program that is  growing in  the country.   For example,                                                               
Duke  University  is  involved   with  huge  numbers  of  medical                                                               
research and development [projects]  where there are intellectual                                                               
property   agreements   between   those   researchers   and   the                                                               
university.   He told  the members when  he was  researching this                                                               
issue  he   used  [an  Internet]  search   engine  that  provided                                                               
approximately   15,000  hits   and  almost   all  of   them  were                                                               
universities that are using this  program as an incentive to keep                                                               
highly qualified professors and researchers.                                                                                    
                                                                                                                                
Number 1145                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  moved to  report HB  282 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 282 was reported  from the                                                               
House Health, Education and Social Services Standing Committee.                                                                 

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