USU fights ban on private stock
In May, Utah began a process to lift the current ban on state investments of private stock.
Such a move would require a state constitutional amendment.
President Kermit L. Hall signed the proposal to the Legislature early this month for an amendment to be added to Article VI, Section 29 of the Utah Constitution.
Steve Kubisen, director of the Office of Technology Management and Commercialization, said, “The amendment would allow a clearer path for equity (shares of stock) to be owned by the university.”
Although it is now possible for Utah universities to hold equity in start-up companies, passing such an amendment would make the process much easier and quicker, he said.
When start-up or spin-off companies stemming from Utah State University research are developed, the school is compensated through royalties. An amendment would allow the university to generate bigger returns, he said.
The state constitution now bars state ownership in private stock. This would change if the amendment were added to the constitution. Kubisen said he believes it will go through.
“There’s a reasonable chance,” he said. “The governor is behind it.”
After studying the matter, Utah’s Constitutional Revision Commission added Gov. Michael Leavitt’s request to a list of other review items May 10, Kubisen said.
Kubisen moved to Utah from Pennsylvania to help with this project and others, he said. He and Brent Miller, vice president for Research and director of Federal Relations, formulated a proposal for the amendment, which they submitted to the USU Executive Committee in early September.
The committee decided the university would support the amendment.
Miller said, “We discussed this in the Executive Committee and decided to support a constitutional amendment that the university could secure, hold and dispose of intellectual properties coming from USU.”
John DeVilbiss, executive director of Public Relations and Marketing, said it was proposed, “The University support the constitutional amendment that would, for Utah State University purposes, authorize the university to hold equity.”
In the actual position statement USU submitted to the state in support of the amendment, there are two drafts. Both drafts would “expressly allow the state to hold and/or dispose of an equity interest acquired in connection with the sale, license or other transfer of intellectual property developed in whole or in part by a public institution.”
The university is recommending the adoption of Draft 1, because it is more positively stated than Draft 2. They are also suggesting the word “secure” be added to “holding and disposing” of equity.
Utah’s two public research universities are USU and the University of Utah. While USU has taken a positive stance concerning the amendment, Utah has declared its position to be neutral.
Proponents believe the change would be a positive shift for faculty and staff members, because it would encourage more research and development. Kubisen said it would foster economic development in Utah and possibly lead to higher-paying jobs.
Several businesses and ideas that evolved from research done at USU have traveled out of state. The amendment would allow the university to gain from such companies.
Businesses in which USU would be allowed to own equity are centered at areas such as agriculture, engineering, the Space Dynamics Lab, biotechnology, robotics and software companies, Kubisen said.
This would encourage inventors, professors and researchers to stay in Utah instead of moving to states that already allow universities to benefit from their equity interest holdings in spin-off companies, he said.
Opponents to the amendment say public institutions, funded by public taxpayers, should not be allowed to invest in public businesses, Kubisen said.
Constitutional amendment approval will require majority support from voters and two-thirds consent from the Legislature.
-emilieholmes@cc.usu.edu