S.B. 263

1

SMALL BUSINESS INNOVATION RESEARCH
2 2014 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Jerry W. Stevenson
5 House Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Technology Commercialization and Innovation Act by allowing
10 small businesses to apply for grants and loans under the act.
11 Highlighted Provisions:
12 This bill:
13 . defines small business;
14 . allows small businesses, in addition to institutions of higher education, to apply for
15 Technology Commercialization and Innovation Program grants and loans;
16 . provides for rulemaking by the Governor's Office of Economic Development; and
17 . makes technical changes.
18 Money Appropriated in this Bill:
19 This bill appropriates in fiscal year 2014-15:
20 . to the Governor's Office of Economic Development, as a one-time appropriation:
21 . from the General Fund $3,400,000, for Technology Commercialization and
22 Innovation Program grants and loans.
23 Other Special Clauses:
24 This bill takes effect on July 1, 2014.
25 Utah Code Sections Affected:
26 AMENDS:
27 63M-1-702 , as last amended by Laws of Utah 2011, Chapter 392

28 63M-1-703 , as last amended by Laws of Utah 2011, Chapter 392
29 63M-1-704 , as last amended by Laws of Utah 2011, Chapter 392
30
31 Be it enacted by the Legislature of the state of Utah:
32 Section 1. Section 63M-1-702 is amended to read:
33 63M-1-702. Purpose.
34 (1) (a) The Legislature recognizes that the growth of new industry and expansion of
35 existing industry requires a strong technology base, new ideas, concepts, innovations, and
36 prototypes.
37 (b) [These generally come from] Growth in industry frequently results from
38 technological innovation generated by strong research [colleges and universities] institutions of
39 higher education and by small businesses.
40 (c) Technical research in Utah's [colleges and universities] institutions of higher
41 education should be enhanced and expanded, particularly in those areas targeted by the state for
42 economic development.
43 (d) Most states [are enhancing] enhance their research base by direct funding, usually
44 on a matching basis.
45 (e) The purpose of this part is to catalyze and enhance the growth of these technologies
46 by:
47 (i) encouraging interdisciplinary research activities in targeted areas [and by];
48 (ii) facilitating the transition of these technologies out of the [university] higher
49 education environment into industry where the technologies can be used to enhance job
50 creation[.]; and
51 (iii) supporting the commercialization of technologies developed by small business to
52 enhance job creation.
53 (f) The Legislature recognizes that one source of funding is [in matching] to match
54 state funds with federal funds and industrial support to provide and develop [the needed] new
55 technologies.
56 (2) The Legislature recommends that the governor consider the allocation of economic
57 development funds for the Technology Commercialization and Innovation Program to be
58 matched by industry and federal grants on at least a [two-for-one] two-to-one basis for

59 [colleges and universities] institutions of higher education in the state that offer [any] doctoral
60 degrees, and on a one-to-one basis for small businesses that are developing new technologies.
61 (3) (a) The Legislature recommends that the funds be allocated on a competitive basis:
62 (i) to the various [colleges and universities] institutions of higher education in the state
63 [and];
64 (ii) to companies working in partnership with [colleges and universities] institutions of
65 higher education to commercialize their technologies[.]; and
66 (iii) to small businesses that are developing promising technologies.
67 (b) The funds made available should be used to support:
68 (i) interdisciplinary research in the Technology Commercialization and Innovation
69 Program in technologies that are considered to have potential for economic development in
70 [this] the state and to help transition these technologies out of [the colleges and universities]
71 institutions of higher education and into industry[.]; and
72 (ii) small businesses in commercializing their promising technologies that have the
73 potential to increase economic development in the state.
74 Section 2. Section 63M-1-703 is amended to read:
75 63M-1-703. Definitions.
76 As used in this part:
77 (1) "Business team consultant" means an experienced technology executive,
78 entrepreneur, or business person who:
79 (a) is recruited by the office through a request for proposal process to work directly
80 with a college or university in the Technology Commercialization and Innovation Program; and
81 (b) works with the institution to facilitate the transition of its technology into industry
82 by assisting the institution in developing strategies, including spin out strategies when
83 appropriate, and go-to-market plans, and identifying and working with potential customers and
84 partners.
85 (2) "Direct license" means [the licensing] a written license agreement between a
86 company and a Utah [college or university of] institution of higher education related to
87 technology developed at the [college or university for] institution of higher education with the
88 intent of commercializing the technology or facilitating its transition into industry.
89 (3) "Institution of higher education" means:

90 (a) a state institution of higher education as defined in Section 53B-3-102 ; or
91 (b) a private institution of higher education in the state accredited by a regional or
92 national accrediting agency recognized by the United States Department of Education.
93 [(3)] (4) "Licensee" means:
94 (a) a company that executes or is in the process of executing a direct license; or
95 (b) a sublicensee of the technology from a direct license.
96 (5) "Small business" means a business that:
97 (a) has 25 or fewer employees;
98 (b) is organized for profit;
99 (c) operates primarily within the United States;
100 (d) has a principal place of business in the state, including a manufacturing or service
101 location; and
102 (e) is independently owned and operated.
103 [(4)] (6) "Technology Commercialization and Innovation Program" means
104 [university-based,]:
105 (a) a federal- and industry-supported cooperative research and development
106 [programs.] program based at an institution of higher education; or
107 (b) a federally- and state-supported program for funding technologically innovative
108 small businesses.
109 Section 3. Section 63M-1-704 is amended to read:
110 63M-1-704. Administration -- Grants and loans.
111 (1) The Governor's Office of Economic Development shall administer this part.
112 (2) (a) (i) The office may award Technology Commercialization and Innovation
113 Program grants or issue loans [to the various colleges, universities, and licensees in the state
114 for the purposes of this part.] under this part to an applicant that is:
115 (A) an institution of higher education;
116 (B) a licensee; or
117 (C) a small business.
118 (ii) If loans are issued under Subsection (2)(a)(i), the Division of Finance may set up a
119 fund or account as necessary for the proper accounting of the loans.
120 (b) [The Governor's Office of Economic Development shall develop] In accordance

121 with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the office shall make rules
122 for a process to determine whether [a college or university] an institution of higher education
123 that receives a grant under this part must return the grant proceeds or a portion of the grant
124 proceeds if the technology that is developed with the grant proceeds is licensed to a licensee
125 that:
126 (i) does not maintain a manufacturing or service location in the state from which the
127 licensee or a sublicensee exploits the technology; or
128 (ii) initially maintains a manufacturing or service location in the state from which the
129 licensee or a sublicensee exploits the technology, but within five years after issuance of the
130 license the licensee or sublicensee transfers the manufacturing or service location for the
131 technology to a location out of the state.
132 (c) A repayment by [a college or university] an institution of higher education of grant
133 proceeds or a portion of the grant proceeds [shall come only] may only come from the proceeds
134 of the license established between the licensee and the [college or university] institution of
135 higher education.
136 (d) (i) [A licensee] An applicant that is a licensee or small business that receives a
137 grant under this part shall return the grant proceeds or a portion of the grant proceeds to the
138 office if the [licensee] applicant:
139 (A) does not maintain a manufacturing or service location in the state from which the
140 [licensee] applicant exploits the technology; or
141 (B) initially maintains a manufacturing or service location in the state from which the
142 [licensee] applicant exploits the technology, but within five years after issuance of the grant,
143 the [licensee] applicant transfers the manufacturing or service location for the technology to an
144 out-of-state location.
145 [(ii) A repayment by a licensee that receives a grant shall come only from the proceeds
146 of the license to that licensee.]
147 [(iii) A repayment by a licensee shall be prorated based only on the number of full
148 years the licensee operated in the state from the date of the awarded grant.]
149 (ii) A repayment by an applicant shall be prorated based on the number of full years the
150 applicant operated in the state from the date of the awarded grant.
151 (iii) A repayment by a licensee that receives a grant may only come from the proceeds

152 of the license to that licensee.
153 (3) (a) Funding allocations shall be made by the office with the advice of the State
154 Advisory Council for Science and Technology and the board.
155 (b) Each proposal shall receive the best available outside review.
156 (4) (a) In considering each proposal, the office shall weigh technical merit, the level of
157 matching funds from private and federal sources, and the potential for job creation and
158 economic development.
159 (b) Proposals or consortia that combine and coordinate related research at two or more
160 [colleges and universities] institutions of higher education shall be encouraged.
161 (5) The State Advisory Council on Science and Technology shall review the activities
162 and progress of grant recipients on a regular basis and assist the office in preparing an annual
163 report on the accomplishments and direction of the Technology Commercialization and
164 Innovation Program.
165 Section 4. Appropriation.
166 Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, for
167 the fiscal year beginning July 1, 2014, and ending June 30, 2015, the following sums of money
168 are appropriated from resources not otherwise appropriated, or reduced from amounts
169 previously appropriated, out of the funds or accounts indicated. These sums of money are in
170 addition to any amounts previously appropriated for fiscal year 2015.
171 To Governor's Office of Economic Development
172 From General Fund, one-time

$3,400,000

173 Schedule of Programs:
174 Technology Commercialization and Innovation
175 Program for grants and loans $3,400,000
176 Section 5. Effective date.
177 This bill takes effect on July 1, 2014.




Legislative Review Note
as of 2-27-14 1:40 PM

Office of Legislative Research and General Counsel