Report Title:

Limited Liability Company; Patents

 

 

Description:

Creates an optional "public purpose company" designation for LLCs.  Requires an LLC with a public purpose company designation to exercise its right to exclude conferred by any patent it has an interest in for a public purpose.  Establishes reporting requirements.  Effective 7/1/2050.  (SD2)

 

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1503

TWENTY-FIFTH LEGISLATURE, 2009

H.D. 1

STATE OF HAWAII

S.D. 2

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO LIMITED LIABILITY COMPANIES.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The legislature finds that:

     (1)  Intellectual property is an essential source of competitive advantage in a global economy;

     (2)  Inventors and other creators of intellectual property are an important engine of sustainable economic growth;

     (3)  Whether working independently or employed by corporations, the vast majority of inventors and other creators of intellectual property have neither the collective representation, institutional strength, nor the financial resources necessary to exercise and enforce their property rights;

     (4)  Hawaii needs to attract inventors and build its reputation as a center of innovation to diversify and strengthen its economy;

     (5)  Protecting labor and environmental standards in Hawaii depends, in part, upon strengthening labor and environmental standards both nationally and internationally;

     (6)  The right conferred by the grant of a patent is the right to exclude others from making, using, offering for sale, or selling the invention in the United States or importing the invention into the United States; and

     (7)  This right to exclude can serve a public interest.

     The purpose of this Act is to require limited liability companies that opt to be designated a public purpose company by the director of commerce and consumer affairs to exercise the right to exclude conferred by any patent for public purposes.

     SECTION 2.  Chapter 428, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§428-    Public purpose company designation; use of the right to exclude; reporting.  (a)  Any limited liability company organized under this chapter may opt to be designated a public purpose company by the director.  Designation as a public purpose company is irrevocable. 

     (1)  A public purpose company means a limited liability company that:

         (A)  Is organized under this chapter for a business purpose;

         (B)  Significantly furthers the accomplishment of one or more charitable or educational purposes within the meaning of Section 170(c)(2)(B) of the Internal Revenue Code of 1986, 26 United States Code section 170(c)(2)(B);

         (C)  Was formed only for the accomplishment of charitable or educational purposes;

         (D)  Does not have as a significant purpose the production of income or the appreciation of property; provided that the fact that a company produces significant income or capital appreciation shall not, in the absence of other factors, be conclusive evidence that a significant purpose of the company is the production of income or the appreciation of property; and

         (E)  Was not formed and is not operated to accomplish any political or legislative purposes within the meaning of Section 170(c)(2)(D) of the Internal Revenue Code of 1986, 26 United States Code section 170(c)(2)(D).

     (2)  A limited liability company designated a public purpose company by the director shall use the right to exclude conferred by any and all patents in which it has an interest through assignment or license for the purpose of:

          (A)  Creating and retaining good jobs within the State as well as throughout the United States;

          (B)  Strengthening labor rights nationally and internationally; provided that for purposes of this paragraph, "labor rights" means the four basic rights set forth in Article 23 of the Universal Declaration of Human Rights, as adopted and proclaimed by the General Assembly of the United Nations on December 10, 1948; and

          (C)  Enhancing environmental protection nationally and internationally.

     (b)  In addition to any other reporting requirement, each limited liability company designated a public purpose company shall file with the director an annual statement of the purposes for which the company used the right to exclude.

     (c)  The director shall include a list of all public purpose companies in the state on the department's website and in the department's annual report."

     SECTION 3.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

     SECTION 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2050.