Text: HSB00515                          Text: HSB00517
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House Study Bill 516

Bill Text

PAG LIN
  1  1    Section 1.  Section 523G.3, subsection 2, Code 1999, is
  1  2 amended by striking the subsection.
  1  3    Sec. 2. Section 523G.3, Code 1999, is amended by adding the
  1  4 following new subsections:
  1  5    NEW SUBSECTION.  6A.  "Fund" means the invention developer
  1  6 administration and enforcement fund created pursuant to
  1  7 section 523G.3C.
  1  8    NEW SUBSECTION.  10.  "Office" means the secretary of
  1  9 state's office as provided in chapter 9.
  1 10    Sec. 3.  NEW SECTION.  523G.3A  POWERS AND DUTIES OF THE
  1 11 OFFICE AND THE ATTORNEY GENERAL.
  1 12    1.  The office shall administer and enforce the provisions
  1 13 of this chapter and may do all of the following:
  1 14    a.  Adopt rules necessary to administer and enforce this
  1 15 chapter in accordance with chapter 17A.
  1 16    b.  Investigate the business and business records of
  1 17 invention developers and conduct necessary investigations.
  1 18    c.  Administer oaths and affirmations, subpoena witnesses,
  1 19 receive evidence, and require the production of business
  1 20 records relating to an investigation.
  1 21    d.  Apply to district court for the issuance of an order
  1 22 requiring a person's appearance before the office, if the
  1 23 person has refused to obey a subpoena issued by the office.
  1 24 The person may also be required to produce documentary
  1 25 evidence germane to the subject of the investigation.  A
  1 26 failure to obey a court order under this subsection
  1 27 constitutes contempt of court.
  1 28    e.  Issue an order directed at an invention developer to
  1 29 cease and desist from engaging in an act which is in violation
  1 30 of this chapter or a rule adopted by the office.  The order
  1 31 shall be based on an investigation which provides reasonable
  1 32 evidence of a violation.  The office may apply to district
  1 33 court in order to enforce the order.  A failure to obey a
  1 34 court order under this subsection constitutes contempt of
  1 35 court.
  2  1    2.  Upon request of the office, the attorney general may
  2  2 assist the office by bringing a legal action necessary in
  2  3 order to carry out the provisions of this section.
  2  4    Sec. 4.  NEW SECTION.  523G.3B  REQUIREMENTS FOR
  2  5 REGISTRATION.
  2  6    1.  The following are requirements for registration under
  2  7 this chapter:
  2  8    a.  An invention developer shall file a registration
  2  9 statement with the office not later than May 1 of each year.
  2 10 The registration statement shall contain all of the following
  2 11 information:
  2 12    (1)  The name and address of the invention developer.
  2 13    (2)  The name and address of each owner, officer, or other
  2 14 official of the invention developer's business.  However, if
  2 15 the invention developer is a corporation, the registration
  2 16 statement shall contain the names and addresses of the chief
  2 17 executive officer and the members of the board of directors.
  2 18    (3)  A description of the invention development services
  2 19 offered.
  2 20    (4)  A copy of each form of contract used by the invention
  2 21 developer.
  2 22    (5)  A copy of the invention developer's most recent
  2 23 financial statement, including balance sheets and related
  2 24 statements of income of the invention developer, prepared in
  2 25 accordance with generally accepted accounting principles,
  2 26 audited by a certified public accountant, and dated not more
  2 27 than twelve months prior to the date of the application.
  2 28    (6)  The total number of customers who have contracted with
  2 29 the invention developer in this state during the invention
  2 30 developer's preceding fiscal year.
  2 31    (7)  The invention developer's gross income from the
  2 32 invention development business in this state during the
  2 33 invention developer's preceding fiscal year.
  2 34    (8)  The number of customers who have received from the
  2 35 invention developer's services an amount of money in excess of
  3  1 the amount of money paid by those customers to the invention
  3  2 developer pursuant to a contract.  The amount received by a
  3  3 customer reported on the statement shall only include income
  3  4 earned from the successful development, promotion, licensing,
  3  5 publishing, exhibiting, or marketing of the customer's
  3  6 invention pursuant to the contract executed between the
  3  7 invention developer and the customer.
  3  8    b.  The invention developer shall submit an annual
  3  9 registration fee accompanying the registration statement to
  3 10 the office in the amount of two hundred fifty dollars.  The
  3 11 fee shall be deposited into the invention developers
  3 12 administration and enforcement fund as provided in section
  3 13 523G.3C.
  3 14    c.  The invention developer shall submit a copy of evidence
  3 15 of financial responsibility as required by section 523G.6
  3 16 accompanying the registration statement.
  3 17    2.  The office shall issue a certificate of compliance to
  3 18 an invention developer who has complied with the registration
  3 19 requirements of this section.
  3 20    Sec. 5.  NEW SECTION.  523G.3C  INVENTION DEVELOPERS
  3 21 ADMINISTRATION AND ENFORCEMENT FUND.
  3 22    1.  An invention developers administration and enforcement
  3 23 fund is created in the state treasury under the control of the
  3 24 office.  The fund is composed of registration fees collected
  3 25 by the office pursuant to section 523G.3B, and moneys
  3 26 appropriated by the general assembly or available to and
  3 27 obtained or accepted by the office from the United States or
  3 28 private sources for placement in the fund.
  3 29    2.  Moneys in the fund are subject to an annual audit by
  3 30 the auditor of state.  The fund is subject to warrants written
  3 31 by the director of revenue and finance, drawn upon the written
  3 32 requisition of the secretary of state or a person designated
  3 33 by the secretary of state.
  3 34    3.  Moneys in the fund are appropriated to the office and
  3 35 shall be used exclusively for purposes necessary in order to
  4  1 administer and enforce the provisions of this chapter as
  4  2 determined by the office, and may be used to reimburse
  4  3 expenses incurred by the attorney general in bringing a legal
  4  4 action pursuant to this chapter.
  4  5    4.  The office shall not in any manner directly or
  4  6 indirectly pledge the credit of the state.
  4  7    5.  Section 8.33 shall not apply to moneys in the fund.
  4  8 Notwithstanding section 12C.7, moneys earned as income,
  4  9 including as interest, from the fund shall remain in the fund
  4 10 until expended as provided in this section.
  4 11    Sec. 6.  Section 523G.4, subsection 2, Code Supplement
  4 12 1999, is amended by adding the following new paragraph:
  4 13    NEW PARAGRAPH.  d.  A copy of a current registration
  4 14 certificate issued pursuant to section 523G.3B.
  4 15    Sec. 7.  Section 523G.6, subsections 1 and 2, Code 1999,
  4 16 are amended to read as follows:
  4 17    1.  An invention developer shall maintain as security
  4 18 evidence of financial responsibility as approved by the
  4 19 commissioner office.  The security shall be either a bond or
  4 20 cash deposit in an amount which is equal to the greater of
  4 21 either ten percent of the invention developer's gross income
  4 22 from the invention development business in this state during
  4 23 the invention developer's preceding fiscal year, or twenty-
  4 24 five thousand dollars.  The commissioner office shall approve
  4 25 the security before the invention developer renders or offers
  4 26 to render invention development services in this state.  The
  4 27 invention developer shall have ninety days beginning on the
  4 28 first day of the invention developer's new fiscal year to
  4 29 change the security as necessary to conform to the
  4 30 requirements of this subsection.
  4 31    2.  A surety who issues a bond must be approved by the
  4 32 commissioner office.  A copy of the bond shall be filed in a
  4 33 manner and according to procedures approved by the
  4 34 commissioner office.  A cash deposit shall be filed with the
  4 35 treasurer of state in a manner and according to procedures
  5  1 approved by the treasurer of state in consultation with the
  5  2 commissioner office.  The treasurer of state shall not refund
  5  3 a deposit until sixty days following either the date that the
  5  4 invention developer has ceased doing business in the state or
  5  5 a bond has been filed with the commissioner office in
  5  6 compliance with this section.
  5  7    Sec. 8.  Section 523G.9, subsection 7, Code 1999, is
  5  8 amended to read as follows:
  5  9    7.  A violation of this chapter or a rule adopted by the
  5 10 commissioner office pursuant to this chapter is a violation of
  5 11 section 714.16.  The remedies and penalties provided by
  5 12 section 714.16, including but not limited to provisions
  5 13 relating to injunctive relief and penalties, apply to
  5 14 violations of this chapter.
  5 15    Sec. 9.  Section 523G.9, Code 1999, is amended by adding
  5 16 the following new subsection:
  5 17    NEW SUBSECTION.  8.  Upon request of the office, the
  5 18 attorney general may institute a legal proceeding on behalf of
  5 19 the state against a person in order to enforce the provisions
  5 20 of this chapter.
  5 21    Sec. 10.  ADMINISTRATION AND ENFORCEMENT.  The division of
  5 22 insurance and the secretary of state shall cooperate in order
  5 23 to efficiently transfer authority to administer and enforce
  5 24 this chapter by January  1, 2001.  The secretary of state's
  5 25 office shall adopt rules necessary and to be effective by
  5 26 January 1, 2001, in order to administer and enforce this
  5 27 chapter.
  5 28    Sec. 11.  DIRECTIONS TO IOWA CODE EDITOR.  The Iowa Code
  5 29 editor shall, unless impracticable, transfer chapter 523G, as
  5 30 amended by this Act, to a new chapter within title I, subtitle
  5 31 4, of the Code.
  5 32    Sec. 12.  1992 Iowa Acts, chapter 1114, section 13, is
  5 33 repealed.
  5 34    Sec. 13.  EFFECTIVE DATES.
  5 35    1.  Except as provided in subsection 2, this Act takes
  6  1 effect January 1, 2001.
  6  2    2.  Sections 10 and 11 of this Act, being deemed of
  6  3 immediate importance, takes effect upon enactment.  
  6  4                           EXPLANATION
  6  5    In 1992 the general assembly enacted S.F. 2189 (1992 Iowa
  6  6 Acts, ch. 1114), the "Invention Development Services Act",
  6  7 which provides for the protection of inventors from persons
  6  8 who offer to develop inventions.  The provisions are codified
  6  9 in Code chapter 523G under the administration of the insurance
  6 10 commissioner.  The original bill provided that several
  6 11 provisions relating to evidence of financial responsibility,
  6 12 enforcement and penalty provisions, and powers provided to the
  6 13 commissioner to administer and enforce the provisions are
  6 14 contingent upon an appropriation of moneys and the allocation
  6 15 of full-time equivalent positions.  In 1998, the general
  6 16 assembly enacted H.F. 2271 (1998 Iowa Acts, ch. 1119, } 6)
  6 17 which repealed Code provisions which provided for registration
  6 18 requirements and administrative and enforcement authority to
  6 19 the commissioner.
  6 20    This bill provides that the secretary of state's office
  6 21 rather than the commissioner of insurance is responsible for
  6 22 administering and enforcing the provisions of the chapter.
  6 23    The bill reinstates language repealed in 1998 that
  6 24 prescribes the power and duties of the insurance commissioner
  6 25 under Code chapter 523G (changed under the bill to the
  6 26 secretary of state's office), and provides for registration
  6 27 requirements.  The bill places the provisions in a different
  6 28 place in the Code chapter and makes stylistic changes in order
  6 29 to better conform with bill drafting practices.
  6 30    The reinstated provision authorizes the secretary of state
  6 31 to administer and enforce the provisions of the chapter,
  6 32 including the following:  the authority to adopt rules;
  6 33 conduct investigations; administer oaths; receive evidence or
  6 34 testimony including by subpoena; issue orders or apply to
  6 35 district court for the issuance of orders for the production
  7  1 of evidence; and issue orders to cease and desist from
  7  2 engaging in acts violative of the chapter.  A new provision in
  7  3 the bill allows the office to apply to district court to
  7  4 enforce such an order.
  7  5    A new provision states that upon request, the attorney
  7  6 general may assist the office in bringing a legal action
  7  7 necessary in order to carry out the provisions of the chapter,
  7  8 including by applying to district court in order to enforce an
  7  9 order or penalties.  A person who violates the chapter's
  7 10 provisions is guilty of consumer fraud as provided in Code
  7 11 section 714.16.
  7 12    The bill reinstates provisions requiring an invention
  7 13 developer to register (under the bill with the secretary of
  7 14 state's office).  The bill requires the same information in
  7 15 the registration application, the same $250 annual
  7 16 registration fee, and the same evidence of financial
  7 17 responsibility as was contained in Code section 523G.10 prior
  7 18 to its repeal.  The bill refers to these items as registration
  7 19 requirements and renumbers the provisions in a manner
  7 20 consistent with Code style.
  7 21    The bill provides a new section that requires that the $250
  7 22 registration fee must be deposited in a special fund under the
  7 23 control of the office referred to as the invention developers
  7 24 administration and enforcement fund.  The bill provides for
  7 25 the management of the fund consistent with other funds
  7 26 established in the Code.  Moneys in the fund are appropriated
  7 27 to the secretary of state's office and must be used
  7 28 exclusively to administer and enforce the provisions of this
  7 29 chapter, and may be used to reimburse expenses incurred by the
  7 30 attorney general.
  7 31    The bill requires the insurance commissioner and the
  7 32 secretary of state to cooperate in order to efficiently
  7 33 transfer authority to administer and enforce the chapter as
  7 34 amended by the bill by January  1, 2001.  The bill requires
  7 35 the secretary of state's office to adopt rules necessary in
  8  1 order to administer and enforce the chapter by January 1,
  8  2 2001.  The bill repeals a section in 1992 legislation
  8  3 providing that certain provisions relating to evidence of
  8  4 financial responsibility, registration requirements, and
  8  5 enforcement authority is implemented upon an appropriation and
  8  6 allocation of full-time equivalent positions.
  8  7    Generally, the bill takes effect on January 1, 2001, except
  8  8 for the provision concerning actions taken relating to the
  8  9 transition of administration and enforcement from the
  8 10 insurance division to the secretary of state.  That provision
  8 11 takes effect upon enactment.  
  8 12 LSB 5427HC 78
  8 13 da/gg/8
     

Text: HSB00515                          Text: HSB00517
Text: HSB00500 - HSB00599               Text: HSB Index
Bills and Amendments: General Index     Bill History: General Index

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