Amendment 2 aims to legalize an already common practice

One of the more unsung issues of the upcoming election is Amendment 2. This amendment to the state constitution would legalize the already existing practice of universities exchanging intellectual property for stock in corporations.

Intellectual property is the patents and discoveries that come about from university research, according to Raymond Gesteland, U vice president of research. In return for these marketable commodities, companies give the university shares of their stock.

“Everybody wins with this amendment,” Gesteland said. “It’s a slam dunk.”

When the Utah constitution was written in 1896, it was decided among lawmakers that the state could not be allowed to hold shares in private companies. This was decided because of the fear of risking taxpayer funds in a potentially unsuccessful venture. Amendment 2 still prohibits the state from direct monetary investments into private companies, thus eliminating the direct risk of losing taxpayer money.

The amendment, however, has its share of detractors. One argument raises the issue of state interest in private companies. While the state may not be risking its money, it would still have shares in the company’s stock. This means the state would have an interest in the company’s success, and could lead to a conflict of interest.

That interest also leads to a fear of insider trading. For example, the state could sell its stock prior to passing regulations that could harm the company and lower the value of the stock.

Opponents argue this situation could be unethical and harmful to competing companies.

On the other side of the coin lies the fact that Amendment 2 will not only have a direct effect on the status quo, but also it would only protect it from potential legal attacks.

Some proponents say the arguments regarding insider trading and potential conflicts of interest are moot due to the current existence of the practice and the lack of the negative consequences.

“Both the U and USU have been doing this for some time now,” Gesteland said. “This amendment won’t change much, except to clarify the legality of the matter.”

The potential economic returns that result from the practice are high. Many states have already passed similar legislation and studies indicate that the states have benefited financially. The sports drink Gatorade came into existence because of stock trades with the University of Florida, as did the Internet search engine Google, which came out of Stanford.

Both enterprises have generated millions in revenue.

The Utah Senate approved putting the amendment on the ballot by a margin of 23-0 and the Utah House of Representatives by a vote of 68-2.

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