BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 744
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          Date of Hearing:   April 12, 2011

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER 
                                     PROTECTION
                                 Mary Hayashi, Chair
              AB 744 (John A. Pérez) - As Introduced:  February 17, 2011
           
          SUBJECT  :   Office of Intellectual Property. 

           SUMMARY  :   Creates the Office of Intellectual Property (OIP) for 
          purposes of identifying and providing policy guidance for state 
          agency management of intellectual property (IP) developed by 
          state employees or with state funds.  Specifically,  this bill  :  

          1)Establishes the OIP in the Business, Transportation and 
            Housing (BTH) Agency. 

          2)Requires OIP to IP generated by state employees and 
            state-funded research. 

          3)Requires OIP to develop the following: 

             a)   A database to track IP using specified categories;

             b)   A sample maintenance plan of an IP inventory; 

             c)   Factors that state agencies should consider when 
               deciding whether to sell IP or license it to others; 

             d)   An outreach campaign informing state agencies of their 
               rights and abilities concerning IP created by their 
               employees; 

             e)   Sample invention assignment agreements that state 
               agencies can consider to secure rights to patentable items 
               created by their employees; and, 

             f)   Sample language for licenses or terms-of-use agreements 
               that state agencies can use. 

          4)Authorizes state agencies and departments, upon request, to 
            share records and information related to IP generated by state 
            employees and state-funded research. 

          5)Prohibits current and former OIP employees from divulging IP 








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            information not expressly allowed or public.
           
          6)Exempts University of California (UC) IP, except when 
            contracted and funded by a state agency.
           
          7)Exempts IP governed by the California Stem Cell Research and 
            Cures Bond Act.

          8)Creates the following definitions: 

             a)   "Agency" to mean BTH; 

             b)   "Intellectual property" to mean tangible assets subject 
               to statutory protection under applicable patent, copyright, 
               and trademark law.  IP includes, but is not limited to, 
               inventions, industrial designs, identifying marks and 
               symbols, electronic publications, trade secrets, and 
               literary, musical, artistic, photographic, and film works; 
               and, 

             c)   "Office" to mean OIP.

          9)Makes legislative findings and declarations. 

           EXISTING LAW  permits various state agencies to enter into 
          contracts and agreements, create liabilities, and develop, own, 
          and control the use of IP developed by the state.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of this bill  .  According to the author's office, "To 
          date there is no clear accounting of what IP the state owns or 
          the types of agreements state agencies have entered into.  Three 
          reports on the issue have expressed the need to establish a 
          centralized IP tracking system.  This disjointed system 
          ultimately costs the state more money.  As technology continues 
          to advance, state agencies without sufficient knowledge of how 
          to protect IP will become increasingly vulnerable to 
          unauthorized use and inability to capitalize on reduced 
          contracts costs or increasing revenue to the state.  AB 744 sets 
          up the framework to determine what IP the state owns and informs 
          state agencies of their rights and abilities to protect the 
          state's IP." 








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           Background  .  IP typically consists of copyrights, trademarks, 
          patents, and trade secrets.  In November 2000, the Bureau of 
          State Audits (BSA) published the report, "State-Owned IP," which 
          found that many state agencies have insufficient knowledge about 
          IP they own and incomplete written policies on managing IP.  
          This could result in state agencies failing to act against 
          individuals and entities that inappropriately use the state's IP 
          by profiting from products developed at state expense, 
          unauthorized use of trademarks, and state patents.  BSA 
          recommendations include developing an outreach campaign 
          informing state agencies of their rights and abilities 
          concerning IP and establishing guidelines for state agencies to 
          administer their IP.  The BSA report identified more than 
          113,000 items of state-owned IP across 125 state agencies, but 
          estimated that there were more.  

          State owned IP and IP developed with state funds have been the 
          subject of numerous bills, legislative hearings, ballot 
          initiatives, studies, audits, and reports that discuss IP policy 
          from a broad, nonspecific perspective down to very specific IP, 
          such as IP that may be produced by the stem cell research 
          projects the state will pay for under the recently enacted 
          Proposition 71.  Further, this bill can be characterized as 
          advancing the public policy goal of the state simply knowing 
          what IP it has developed and begin to make a coordinated effort 
          to manage it effectively for the public benefit.  Under this 
          bill, OIP would be required to identify state IP, and establish 
          and periodically update guidelines for state agencies to 
          appropriately administer their IP.  These guidelines would 
          include policies about when products should be considered IP, 
          when products should be placed in the public domain, and when 
          agencies should sell or license their IP.  OIP would also be 
          required to develop an outreach campaign to help state agencies 
          understand their rights with respect to their IP and to develop 
          sample agreements to effectuate the state's rights to IP 
          developed by state employees.  

           Previous Legislation  .  AB 819 (Calderon), Chapter 351, Statutes 
          of 2010, doubled the fines in existing law for violations 
          related to piracy or counterfeiting of specified marks 
          registered with the Secretary of State or registered on the 
          Principal Register of the United States Patent and Trademark 
          Office.









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          AB 479 (DeVore) of 2007, would have required the Little Hoover 
          Commission to study whether third-party review is necessary to 
          ensure proper assignment of IP rights in connection with 
          state-funded research conducted by universities, private 
          companies and other entities.  This bill was held in the 
          Assembly Judiciary Committee. 

          AB 1456 (Mullin) of 2007, would have created the OIP for 
          purposes of identifying and providing policy guidance for state 
          agency management of IP developed by state employees or with 
          state funds.  This bill was amended to address an unrelated 
          issue.

          AB 2721 (Mullin) of 2006, would have created the OIP to track 
          state-funded inventions and establish policies for state-funded 
          IP.  This bill was held in the Senate Governmental Organization 
          Committee.

          ACR 252 (Mullin), Chapter 190, Resolutions of 2004, asked the 
          California Council on Science and Technology (CCST) to create a 
          special study group to develop recommendations on how the state 
          should treat IP made under state contracts, grants and 
          agreements.  The scope of the study was expanded in 2005, under 
          ACR 24 (Mullin), Chapter 111, Resolutions of 2005, to include 
          contracts, grants and agreements developed under the stem cell 
          initiative (Proposition 71) to ask CCST to report on how the 
          commercialization of technology developed with the investment of 
          taxpayer dollars could generate some public benefit, and to 
          request that CCST establish a review group to review and comment 
          on the study.  

          AB 1616 (Montanez) of 2003, would have created the California 
          Intellectual Property Rights Act to encourage innovation in the 
          sciences, creativity in the arts, and free and open government 
          by providing that no state agency shall have the right to 
          protect, assert, or exploit state-owned trade secrets, 
          patentable inventions or patented inventions.  This bill also 
          would have provided that all copyrights in works made for hire 
          by state employees or contractors were to be dedicated to the 
          public domain.  This bill was held in the Senate Judiciary 
          Committee. 

          SB 875 (Escutia) of 1999, which originally would have 
          established OIP in the Trade and Commerce Agency to inventory, 
          market and protect the state's IP, was amended to instead 








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          require the Director of General Services to create a special 
          advisory committee to develop recommendations concerning how the 
          state should organize and manage the cataloging, marketing, 
          licensing, and legal protection of all IP owned or controlled by 
          the state.  This bill was held in the Assembly Appropriations 
          Committee.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file. 

           Opposition 
           
          None on file. 
           
          Analysis Prepared by  :    Joanna Gin / B.,P. & C.P. / (916) 
          319-3301