BILL ANALYSIS Ó AB 744 Page 1 ASSEMBLY THIRD READING AB 744 (John A. Pérez) As Introduced January 23, 2012 Majority vote BUSINESS & PROFESSIONS 6-0 APPROPRIATIONS 12-0 ----------------------------------------------------------------- |Ayes:|Hayashi, Allen, Butler, |Ayes:|Fuentes, Blumenfield, | | |Eng, Hill, Ma | |Bradford, | | | | |Charles Calderon, Campos, | | | | |Chesbro, | | | | |Gatto, Hall, Hill, | | | | |Ammiano, Mitchell, | | | | |Solorio | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Establishes 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 Department of General Services (DGS). 2)Requires OIP to track IP generated by state employees and state-funded research, commencing January 1, 2017, and every five years thereafter. 3)Requires OIP to include the summary of state-owned property referenced in a specific 2011 State Auditor's report in an IP database before January 1, 2018, and to update that database every five years thereafter. 4)Requires OIP to develop the following: a) A database tracking IP that includes specified information; 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 AB 744 Page 2 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. 5)Provides that failure to include an item in the database does not create any presumption regarding ownership. 6)Authorizes state agencies and departments, upon request, to share records and information related to IP generated by state employees and state-funded research, notwithstanding any other law. 7)Prohibits current and former OIP employees from divulging IP information not expressly allowed or public. 8)Exempts IP or IP related agreements administered by University of California (UC) Regents, subcontractors of the UC Regents, and California State University Trustees from the provisions of this bill, except when under a funding agreement with a state agency for the performance of research. 9)Exempts IP agreements governed by the California Stem Cell Research and Cures Bond Act. 10)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 : According to the Assembly Appropriations Committee, first-year General Fund costs in the range of $400,000 for the OIP to develop guidelines, a database, outreach campaign, and sample language, and ongoing costs in the range of $300,000 assuming three staff for the office. COMMENTS : According to the author, "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. AB 744 Page 3 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." 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. 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. Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916) 319-3301 FN: 0003053