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Technology-friendly legislation quietly advances: Bills could spur patent commercialization and more

February 12, 2007

A handful of bills pending in the General Assembly could have a major impact on Indiana's high-tech sector.

Legislation under consideration could stimulate increased commercialization of patented Indiana technology, channel more money toward development of alternative fuels, require regular review of Indiana's certified technology parks, and more.

Tech leaders are optimistic about the chances their agenda will be approved.

"It's the reason we married up with CICP," said Ron Brumbarger, chairman of TechPoint, a trade association for Indiana high-tech companies. "It helps give us a seat at the table with the big boys."

In January, TechPoint merged into the Central Indiana Corporate Partnership, an association of CEOs from the state's largest firms. CICP already was the parent of BioCrossroads, the initiative aimed at spurring the life sciences sector.

A new tax incentive for patents is perhaps highest on techies' 2007 wish list. Three pending bills would exempt 50 percent of income from patented products or services that are developed and produced in Indiana. Patent holders could shield up to $5 million annually for 10 years, if the most generous version of the legislation is approved.

The idea is for Indiana to become the most patent-friendly state, said Brumbarger, who is CEO of Carmel-based Web developer Bit-Wise Solutions. Indiana could establish a tax environment that's as welcoming to innovation as Connecticut's is to insurance, or Delaware's is to business incorporation.

But the key, he said, is to make sure the incentive is powerful enough to attract attention from scientists and venture capitalists.

"We don't want to put it out there as an economic development strategy and then have it be so wishy-washy that nobody pays attention to it," he said. "You've got to get serious about it."

The patent-incentive legislation is designed with startups in mind, said Sen. David Ford, R-Hartford City, chairman of the Senate's Economic Development and Technology Committee. Two versions of the bill cap the annual abatement at $1 million, a figure with much more potential impact on small firms.

"Most of our job growth comes from new companies, the startup companies," Ford said. "This is a way to jump-start some companies that might move very quickly."

There is some disagreement over priorities. Take SB 106, proposed by Sen. Timothy Lanane, D-Anderson. It would require Indiana to devote $10 million annually from its 21st Century Research and Technology Fund to the development of alternative fuels. Techies expect the 21st Century Fund will be renewed with at least its previous $37.5 million annual appropriation. But some are wary about earmarking so much for one purpose.

"That's money that comes from research somewhere else," Ford said. "We've always tried to say, 'You bring us the ideas. If they're commercializeable, we'll devote some state money.'"

Another bill under consideration would require the state to review each of its 18 certified technology parks every four years. The program, which uses state money to develop infrastructure conducive to high-tech firms, has been criticized because some of the rural parks haven't spawned or attracted much activity.

"Nothing in that arena should be permanent. Things change," he said. "They ought to be required to re-earn their stripes every so often."

The Venture Capital Tax Credit, which allows investors in approved high-tech firms to write off part of their outlay, appears headed for renewal until 2012. A measure extending the credit already has been approved by the Senate and is under consideration in the House. Ford said he proposed making the program permanent, but backed away when he found his peers preferred a regular review.

Indiana Legislative Insight Publisher Ed Feigenbaum said he's not surprised to see tech legislation moving ahead.

Tech leaders have cultivated support from key leaders of both the House and Senate party caucuses. And every time the media report another Hoosier auto manufacturing plant scheduled to be shuttered, the need to diversify Indiana's economy becomes more painfully clear.

"Legislators understand that the hightech and life sciences industries are vital to the state's future. There's going to be a little bit less of an education effort needed ... and a lot more attention paid to the actual details," he said. "People realize we're not an agrarian and heavy-manufacturing state anymore."
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