BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 744 (J. Perez)
As Amended June 18, 2012
Hearing Date: June 26, 2012
Fiscal: Yes
Urgency: No
BCP:rm
SUBJECT
Office of Intellectual Property
DESCRIPTION
This bill would establish the Office of Intellectual Property in
the Department of General Services.
The bill would require the Office of Intellectual Property to
track intellectual property generated by state employees or with
state funding, as specified, and to develop the following: a
database to be used for that tracking; a sample maintenance
plan; factors that state agencies should consider in deciding
whether to sell or license their intellectual property; an
outreach campaign; sample invention assignment agreements; and
sample language for licenses or terms-of-use agreements.
This bill would also provide that state agencies and departments
may, upon request, share records and information related to
intellectual property generated by state employees or state
funded research with the Office of Intellectual Property. This
bill would prevent employees from disclosing any particulars of
that information for which public disclosure is restricted by
law, except as specified.
This bill would exempt intellectual property, or intellectual
property related agreements administered by the Regents of the
University of California, the subcontractors of the Regents, and
the Trustees of the California State University, as specified,
and intellectual property agreements governed by the California
Stem Cell Research and Cures Bond Act from its scope.
(more)
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BACKGROUND
Federal law provides for the protection of intellectual property
rights through the federal patent and copyright law. Generally
speaking, copyright law applies to "original works of
authorship," and includes works of art and other intellectual
works (such as computer programs, data compilations, and maps).
Copyright attaches to a work as soon as it is tangibly created,
and may be registered with the U.S. Copyright Office. Patent
law applies to inventions (such as scientific advances, devices,
and sometimes business processes). Generally speaking, a patent
must be obtained from the U.S. Patent and Trademark Office
before its owner has legal rights over the intellectual
property. Both copyright and patent law give the legal holder
of the copyright or patent the ability to control the use and
dissemination of the intellectual property. Both federal and
state laws cover the registration of trademarks, providing an
owner with the right to exclude others from using a specific
mark or using one confusingly similar to that mark.
Additionally, California's Trademark Law provides that
trademarks may be registered with the Secretary of State,
although registration is not required to protect them as
trademark rights also arise under common law as a result of
actual use.
Considering the numerous types of intellectual property that may
be created by the State of California and its agencies, the
state has a compelling interest in ensuring that the property is
adequately protected. In November 2000, a report by the Bureau
of State Audits on State-Owned Intellectual Property concluded:
ÝM]any state agencies are not sufficiently
knowledgeable about the intellectual property they
own. Lacking adequate knowledge of their intellectual
property ownership and rights, state agencies could
fail to act against those who use the State's
intellectual property inappropriately. Inappropriate
use includes unauthorized use of state trademarks and
improperly profiting on products developed at state
expense. Further . . . state-level direction for
administering intellectual property is limited. The
few state laws that address intellectual property do
so in a piecemeal fashion . . . Ýand] state agencies
have either no or incomplete written policies for
managing their intellectual property.
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That report further noted that although more than 113,000 items
of state-owned intellectual property were identified, the state
likely owns more. Finally, the report contained several
recommendations:
The Legislature should clarify state law to
specifically allow all
state agencies to own and, if necessary, formally
register intellectual property they create or
otherwise acquire when it is deemed to be in the
public's best interest.
The Legislature should designate a single state agency
as the lead
for developing overall policies and guidance related
to state-owned
intellectual property. . . .
Finally, the Legislature should consider whether the
interest of
the public is best served when the State uses standard
contract
language that essentially gives contractors a free
license to use
and sell intellectual property they develop for the
State.
Subsequently, ACR 252 (Mullin, Chapter 190, Statutes of 2004)
requested the California Council on Science and Technology
(CCST) to create a special study group to develop
recommendations to the Governor and the Legislature on how the
state should treat intellectual property created under state
contracts, grants, and agreements. In 2005, ACR 24 (Mullin,
Chapter 111, Statutes of 2005) requested the CCST to expand the
scope of the study group to include contracts, grants, and
agreements developed under Proposition 71 and to study how the
commercialization of technology developed with taxpayer dollars
in the form of contracts, grants, and agreements could generate
some public benefit. The final report in response to those
requests was published in January 2006. In February of 2006, AB
2721 (Mullin) was introduced to establish the Office of
Intellectual Property and to stipulate various intellectual
property policies for the State of California. That bill failed
to pass out of the Senate Governmental Organization Committee.
Subsequently, AB 1456 (Mullin) was introduced in March of 2007
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to similarly establish the Office of Intellectual Property to
track intellectual property, develop an outreach campaign, and
various advisory materials. That bill was held in the Senate
Appropriations Committee.
This bill would similarly establish the Office of Intellectual
Property in the Department of General Services and, among other
things, require the office to track intellectual property
generated by state employees with state funding and develop a
database to track intellectual property.
CHANGES TO EXISTING LAW
Existing law permits various state agencies to enter into
contracts and agreements, create liabilities, and develop, own,
and control the use of intellectual property developed by the
state.
This bill would establish the Office of Intellectual Property
(Office) in the Department of General Services and would require
that Office to perform all of the following functions: (1)
commencing January 1, 2015, and every three years thereafter,
track intellectual property generated by state employees or with
state funding; (2) develop a database for the tracking of
intellectual property, as specified; (3) develop a sample
maintenance plan of an inventory of intellectual property; (4)
develop factors that state agencies should consider when
deciding whether to sell their intellectual property or license
it to others; (5) develop an outreach campaign informing state
agencies of their rights and abilities concerning intellectual
property; (6) develop sample invention assignment agreements for
state agencies; and (7) develop sample language for licenses or
terms of use agreements for state agencies. Those provisions
would not apply to the use of expressive works created by
nonstate employees or without state funding.
This bill would provide that, notwithstanding any other
provision of law, state agencies and departments may, upon
request, share records and information related to intellectual
property generated by state employees or with state funding with
the Office.
This bill would state that any employee or former employee of
the Office who has access to or knowledge of the above
information shall not divulge or make known to any person not
employed by the Office, in any manner not expressly permitted by
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law, any particulars of those records or information that is
restricted by law from public disclosure, or represents a first
publication of research results, or information pertaining to
patent rights that would not otherwise be publicly available.
This bill would exempt intellectual property or intellectual
property related agreements administered by the Regents of the
University of California, the subcontractors of the Regents of
the University of California, and the Trustees of the California
State University, except under a funding agreement from a state
agency for the performance of research. This bill would also
exempt intellectual property agreements governed by the
California Stem Cell Research and Cures Bond Act.
This bill would include related findings and declarations and
state the intent of the Legislature that the rights of state
agencies to track and manage intellectual property created with
any state funds shall be interpreted as to promote the benefit
to the public.
This bill would also state the intent of the Legislature that
the Office have access to information about intellectual
property created by state employees and by state-funded
research, consistent with state and federal laws and regulations
governing access to that information.
This bill would further state that the Legislature recognizes
that the licensing of or limitations on the use of intellectual
property should accommodate free expression, and, therefore, the
Office of Intellectual Property should not develop policies or
procedures to license or otherwise limit the use of the state's
intellectual property in expressive works created by nonstate
employees or without state funding.
COMMENT
1. Stated need for the bill
According to the author:
To date there is no clear accounting of what intellectual
property the state owns or the types of agreements state
agencies have entered into. The state should have as much
of an interest in tracking its intellectual property as it
does its physical properties. Three reports on the issue
have expressed the need to establish a centralized
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intellectual property tracking system.
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This disjointed system ultimately costs the state more
money. As technology continues to advance, state agencies
without sufficient knowledge of how to protect intellectual
property 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 intellectual property the state
owns and informs state agencies of their rights and
abilities to protect the state's intellectual property.
2. Responsibilities of the Office are based upon the Bureau of
State Audit's report on State-Owned Intellectual Property
The Bureau of State Audit's (BSA) November 2000 report on
State-Owned Intellectual Property included numerous
recommendations, embodied in this bill, to address deficiencies
found during the audit. That report recommended that the
Legislature designate a lead agency that would be responsible
for developing overall policies and guidance as to state
owned-intellectual property. The report further recommended
that the agency be responsible for:
developing an outreach campaign informing state agencies
of their rights and abilities concerning intellectual
property; and
establishing guidelines for use by state agencies in
administering their intellectual property, including
establishing policies concerning the criteria for
determining which products will be treated as intellectual
property, which should be placed into the public domain,
and factors that state agencies should consider when
deciding whether to sell their intellectual property or
license it to others.
This bill would enact a combination of those and other
recommendations, thus, creating the Office of Intellectual
Property (Office), which would generally be required to track
the state's intellectual property, develop a database for that
tracking, an outreach campaign, sample language for licenses or
terms of use, and other advisory materials. (See Comment 5 for
the list of reports used to formulate these elements.)
It should be noted that the requirement to track intellectual
property generated by state employees or with state funding
would commence on January 1, 2015 and apply every three years
thereafter. Prior to January 1, 2018, the required database
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must include the summary of state-owned intellectual property
found in the California State Auditor's Report 2011-106, but,
after January 1, 2018, and every three years thereafter, the
database must be updated using information collected by the
office. With respect to those requirements, the author notes:
Ý(BSA)] just compiled a summary of State-Owned Ýintellectual
property], so another update can wait and the priority could
be placed on providing guidance to state agencies as
requested by more than half of the agencies, departments,
boards and commissions that were surveyed for the BSA
report.
That priority is consistent with the BSA's November 2011 report,
Intellectual Property: An Effective Policy Would Educate State
Agencies and Take Into Account How Their Functions and Property
Differ, which recommended:
The Legislature and the governor should consider developing
a statewide intellectual property policy that educates state
agencies on their intellectual property rights without
creating an administrative burden. Specifically, this policy
should do the following:
Provide guidance to agencies that will give them
the understanding necessary to identify when potential
intellectual property may exist and that will provide
them with specific information on intellectual property
protections.
Recognize that not all state agencies have the
same needs and that a one-size-fits-all approach may
not be feasible. An effective policy should provide
agencies with flexibility regarding ownership of
intellectual property rights.
3. Practical ability to track intellectual property
With respect to the amount of intellectual property owned
by the state, the BSA's November 2011 report noted:
Our 2000 audit report showed that state agencies owned more
than 113,000 items of intellectual property; in our latest
survey, agencies reported owning more than nine million
items. In both 2000 and 2011, copyrights accounted for at
least 99 percent of the State's total intellectual property.
Two agencies, the California State Parks (State Parks) and
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the Department of Public Health (Public Health), reported
owning 97 percent of the total intellectual property
reported in our latest survey, most of which was
unregistered copyrights. In 2000, State Parks reported
owning at least 100,000 unregistered copyrights; in the
current survey, it reported 3.2 million. According to the
State Parks senior staff counsel, several factors were
responsible for the significant increase in the numbers of
copyrights State Parks owns. She stated that the Internet
allows the agency to publish and track copyrights more
easily now than in the past, and she also explained that
agency personnel are now more educated regarding
intellectual property. Public Health was unable to
determine the reason for the increase in its state-owned
intellectual property from 2000 to the present. According
to an auditor at Public Health, the agency does not have the
necessary records to determine the reason for the increase
because Public Health was previously part of the Department
of Health Services, which was split into two agencies in
2007. In 2000, the Department of Health Services reported
owning 725 unregistered copyrights; in the current survey,
Public Health reported 5.5 million.
Although tracking nearly 10 million items of intellectual
property may pose some logistical challenges, the provisions
that require the Office's database of intellectual property to
include the property found in that report would appear to
provide the database with a reasonable starting point. The
proposed outreach may also facilitate the process of tracking
intellectual property by making agencies aware of the property
that they do own, thus, allowing them to report that property to
the Office. Furthermore, the overall goal of identifying and
tracking the state's intellectual property would appear to be of
great benefit to the State of California. Since it may be
nearly impossible to locate all of the state's intellectual
property, the bill states that failure to include an item in the
database does not preclude that item from being considered the
property of the state.
In order to ensure that state agencies are able to provide
information to the Office concerning their intellectual
property, this bill would provide that, notwithstanding any
other provision of law, state agencies and departments may, upon
request, share records and information related to intellectual
property generated by state employees or with state funding with
the Office.
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The bill would further provide that employees of the Office may
not divulge or make known to any person not employed by the
Office, in any manner not expressly permitted by law, any
records or information for which the public disclosure is
restricted by law, represents a first publication of research
results, or information pertaining to patent rights that would
not otherwise be publicly available.
4. Findings, declarations, and intent of the Legislature with
regards to intellectual property
This bill would state the intent of the Legislature that the
rights of state agencies to track and manage intellectual
property created with any state funds shall be interpreted so as
to promote the benefit to the public. This bill would include
related findings and declarations, including the interest of the
state to facilitate, promote, and enhance technology transfer
programs that will facilitate the transfer of technology into
the marketplace for public benefit.
This bill would further state the intent of the Legislature that
the Office have access to information about intellectual
property created by state employees and state-funded research,
consistent with state and federal laws and regulations governing
access to that information. (See Comment 3.) This bill would
also include a statement that the Legislature recognizes that
the licensing of or limitations on the use of intellectual
property should accommodate free expression and, therefore, the
Office should not develop policies or procedures to license or
otherwise limit the use of the state's intellectual property in
expressive works created by nonstate employees or without state
funding.
5. Provisions of this bill are compiled from various
recommendations made as to state's intellectual property
The author's office notes that the provisions of this bill are
based upon several reports and recommendations. Those reports
include the BSA's November 2000 Report, State-Owned
Intellectual Property, the BSA's November 2011 Report,
Intellectual Property, the California's Performance Review's
report, Integrate the State's Infrastructure Research and
Development Programs, and the California Council on Science
and Technology Report, Policy Framework for Intellectual
Property Derived from State-Funded Research.
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Support : None Known
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation :
AB 1456 (Mullin, 2007) See Background.
AB 2721 (Mullin, 2006) See Background.
ACR 24 (Mullin, Chapter 111, Statutes of 2005) See Background.
ACR 252 (Mullin, Chapter 190, Statutes of 2004) See Background.
Prior Vote :
Senate Governmental Organization Committee (Ayes 9, Noes 2)
Assembly Floor (Ayes 65, Noes 4)
Assembly Appropriations Committee (Ayes 12, Noes 0)
Assembly Business, Professions and Consumer Protection Committee
(Ayes 6, Noes 0)
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