05/11/2022 03:15 PM House LABOR & COMMERCE

           HB 344-INTELLECTUAL PROPERTY OF EMPLOYEES                                                                        
                                                                                                                                
3:19:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced that the  first order of business would                                                               
be HOUSE BILL NO. 344,  "An Act relating to employee intellectual                                                               
property."                                                                                                                      
                                                                                                                                
CO-CHAIR FIELDS stated  that HB 344 is a bill  by the House Labor                                                               
and Commerce Committee by way of Senator Jesse Kiehl.                                                                           
                                                                                                                                
3:20:30 PM                                                                                                                    
                                                                                                                                
SENATOR JESSE KIEHL, Alaska State  Legislature, presented HB 344.                                                               
He  thanked  the  co-chairs  for  taking up  an  issue  that  was                                                               
discussed earlier in the session  and making it a committee bill.                                                               
He explained  that HB 344  is designed to provide  protection for                                                               
innovation and innovators in Alaska  and aligns with similar laws                                                               
passed  in recent  years by  Washington, Kansas,  California, and                                                               
Minnesota.   He said the  premise of the  bill is to  protect the                                                               
intellectual property of  an employee who innovates  on their own                                                               
time, but the bill does  not change the well-established law that                                                               
when someone  is working  for the  boss, the  boss owns  the work                                                               
product.  The bill clarifies,  he continued, that when someone is                                                               
working  on their  own  time  with their  own  equipment and  not                                                               
employing their boss's resources, then  the boss cannot claim the                                                               
person's work  product as theirs  and cannot ask the  employee to                                                               
sign an employment  contract that says otherwise.   Senator Kiehl                                                               
related that an  Alaskan brought this issue  to the legislature's                                                               
attention  and   his  understanding  is  that   this  Alaskan  is                                                               
currently  in   litigation.    He  specified   that  nothing  the                                                               
legislature does  can or  should affect  an ongoing  lawsuit, and                                                               
this is seen  in an applicability clause so  that the legislature                                                               
doesn't  step over  that  line with  this bill.    This bill,  he                                                               
added, is  designed to  make the  rules clear  for the  future so                                                               
that  employees and  businesses  know where  the  rules are,  and                                                               
everyone  can work  and innovate  and enjoy  the fruits  of their                                                               
industry.                                                                                                                       
                                                                                                                                
3:22:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NELSON  stated he understands that  HB 344 relates                                                               
to employees,  but inquired about  student research  that creates                                                               
an  invention  and  then  the university  claims  credit  for  or                                                               
utilizes that [invention] afterwards.                                                                                           
                                                                                                                                
SENATOR KIEHL replied that in  most situations where a student is                                                               
working  on a  research project  with a  university, the  student                                                               
would be  using the university's  laboratories and  equipment and                                                               
probably getting a  stipend from a university  grant.  Therefore,                                                               
he said, the  student would be under the terms  of the bill using                                                               
the boss's equipment and on the  boss's paid time, so any patents                                                               
coming  from   that  research  would   probably  adhere   in  the                                                               
university   under  the   usual  sharing   agreements  that   the                                                               
university has with its professors.                                                                                             
                                                                                                                                
3:23:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCARTY spoke  about the  originality of  thought                                                               
and how someone formulates because  they have grabbed information                                                               
from other  places, such as working  for a company and  sharing a                                                               
dialogue of  thought.   He inquired  about the  point at  which a                                                               
business  is  involved in  the  formulation  of a  thought,  even                                                               
though an  employee goes home.   He further inquired  about where                                                               
the differentiation  exists for  an employer  on this  concept of                                                               
original  thought and  transition of  information in  formulating                                                               
new ideas that may be directly related to the employment.                                                                       
                                                                                                                                
SENATOR  KIEHL responded  that the  bill's  language gives  clear                                                               
guidelines regarding that, and if  trade secret is involved it is                                                               
clear  cut.   He  drew attention  to page  1,  lines 9-10,  which                                                               
provide a topical  guideline.  He posed an example  of a computer                                                               
programmer  doing   information  technology  (IT)   security  for                                                               
McCarty Industries.   If on his spare time at  home and not using                                                               
McCarty  Industries  computers,  the programmer  creates  a  game                                                               
called  First  Person  Shooter,  it  is  unrelated,  and  McCarty                                                               
Industries   doesn't  have   any   right   to  the   programmer's                                                               
intellectual property in the game.   However, he continued, if on                                                               
his spare  time at home and  on his own computer,  the programmer                                                               
creates  an  anti-virus  program,  then there  is  a  significant                                                               
overlap  of   the  actual  research  and   development  that  the                                                               
programmer is doing  for McCarty Industries and  then there would                                                               
be potential employer claim to that intellectual property.                                                                      
                                                                                                                                
3:27:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCARTY   asked  how   a  no-compete   clause,  a                                                               
contractual agreement for employment, would  fit into the bill or                                                               
whether  the  bill  would eliminate  the  no-compete  clause  for                                                               
employers.                                                                                                                      
                                                                                                                                
SENATOR KIEHL  answered that nothing  in the bill would  impact a                                                               
non-compete  provision.    He  said  the  bill  deals  only  with                                                               
ownership of the intellectual property.                                                                                         
                                                                                                                                
3:28:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  observed  that   the  fiscal  note  states  the                                                               
legislation does not contain a  provision for penalties, nor does                                                               
it grant  enforcement powers  to the  Wage and  Hour [component].                                                               
He related  that Title 23  empowers the [Department of  Labor and                                                               
Workforce Development]  and says  the department may  enforce all                                                               
state labor  laws.  Given the  bill would add a  section in Title                                                               
23, he  asked whether it is  fair to say that  under AS 23.05.060                                                               
the department may  enforce all state labor laws  should the bill                                                               
pass.   He  said [the  bill would  create] a  currently undefined                                                               
enforcement authority  within the  department.   He said  he also                                                               
thinks that an affected employee  would retain a private right of                                                               
action  just like  they would  in the  event of  wage theft.   He                                                               
further  asked whether  an employee  would be  protected both  by                                                               
state enforcement capacity and through private right of action.                                                                 
                                                                                                                                
SENATOR KIEHL  deferred to his staff  member, Cathy Schlingheyde,                                                               
to answer the question.                                                                                                         
                                                                                                                                
3:29:15 PM                                                                                                                    
                                                                                                                                
CATHY  SCHLINGHEYDE, Staff,  Senator  Jesse  Kiehl, Alaska  State                                                               
Legislature, on  behalf of Senator  Kiehl, responded that  HB 344                                                               
specifically  contemplates a  private right  of action  where the                                                               
employee can address the employer.   She said she doesn't believe                                                               
that  the state  would  be able  to enforce  this,  but she  will                                                               
confirm that and get back to the committee.                                                                                     
                                                                                                                                
3:29:39 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
3:29:52 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced that HB 344 was held over.