Honolulu, Hawaii


RE: H.B. No. 425

H.D. 1

S.D. 1




Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii




Your Committee on Higher Education, to which was referred H.B. No. 425, H.D. 1, entitled:




begs leave to report as follows:


The purpose and intent of this measure is to facilitate the University of Hawaii's contribution to research commercialization and economic development by specifying that certain sections of the State Code of Ethics do not apply to technology transfer activities sponsored by the University.


Your Committee received testimony in support of this measure from the University of Hawaii System, Hawaii Venture Capital Association, Sultan Ventures, XLR8UH, Hawaii Business Roundtable, and Chamber of Commerce Hawaii. Your Committee received testimony in opposition to this measure from the Hawaii State Ethics Commission and Common Cause Hawaii.


Your Committee finds that the commercialization of intellectual property created by basic and applied research at the University of Hawaii greatly benefits the State by diversifying employment opportunities, creating a more robust innovation sector, introducing better performing products, and providing a potential economic return on the public resources committed to the University. Your Committee further finds that supporting contributions by the University of Hawaii to the economic health and diversification of the State is a matter of statewide concern.


Your Committee heard testimony from the University of Hawaii that the current uncertainty surrounding the application of the State Ethics Code to individual technology transfer activities at the University deters potential financial partners. However, your Committee also heard the concerns of the Hawaii State Ethics Commission that exempting a broad category of activities from the State Ethics Code would set a dangerous precedent and take away from the strength inherent in a uniform ethics code.


Your Committee has requested that the University of Hawaii submit to your Committee on Higher Education the current Board of Regents policies and procedures that comprise the University's regulatory framework for technology transfer activities. Your Committee recognizes the complexities in determining the best oversight for technology transfer activities at the University of Hawaii, but is willing to further the discussion on this measure in hopes that a reasonable resolution can be reached.


Your Committee has amended this measure by:


(1) Requiring the University of Hawaii to submit a report regarding technology transfer activities to the Legislature every year instead of in odd-numbered years only;


(2) Inserting language that repeals this measure on June 30, 2022; and


(3) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.


As affirmed by the record of votes of the members of your Committee on Higher Education that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 425, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 425, H.D. 1, S.D. 1, and be referred to your Committee on Judiciary and Labor.


Respectfully submitted on behalf of the members of the Committee on Higher Education,