BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 744 (J Perez) - Office of Intellectual Property.
          
          Amended: June 18, 2012          Policy Vote: GO 9-2  Judiciary 
          3-1
          Urgency: No                     Mandate: No
          Hearing Date: August 16, 2012                     Consultant: 
          Bob Franzoia  
          
          SUSPENSE FILE.


          Bill Summary: AB 744 would establish the Office of Intellectual 
          Property in the Department of General Services (department).  
          This bill would authorize the office to carry out various powers 
          and duties relating to assisting a state agency in the 
          management and development of intellectual property developed by 
          state employees or with state funding.

          Fiscal Impact: Up to $350,000 in 2012-13 and 2013-14 to develop 
          legally supported policies for identifying, and procedures for 
          protecting, intellectual property.
              Up to $700,000 annually for 1.5 staff counsels, three 
              associate governmental program analysts, one staff services 
              manager, one executive assistant and one office technician 
              with potentially offsetting state agency workload savings.
              Cost split approximately 80 percent General Fund and 20 
              percent special funds.
              Unknown increase in General Fund and special fund revenue 
              to the extent the processes formalized by this bill relating 
              to intellectual property result in royalties to the state.

          Background: In its November 2011 report Intellectual Property: 
          An Effective Policy Would Educate State Agencies and Take Into 
          Account How Their Functions and Property Differ, the Bureau of 
          State Audits noted the following:

          - The state has not enacted a statutory framework nor 
          implemented the recommendations made in a 2000 audit report.
          - Fifty-three percent of the state agencies that responded to 
          the bureau survey think the state should establish statewide 
          guidance for managing and protecting intellectual property.
          - Four state control agencies do not think they are responsible 








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          for providing policies or guidance to other state agencies for 
          managing and protecting intellectual property.
          - The four state agencies the bureau visited had only limited 
          written policies, and the way in which they addressed their 
          rights varied.
          - The Department of Health Care Services generally retains the 
          rights to intellectual property created by a contractor.
          - Certain contracts the California Energy Commission has with 
          its researchers gives the researchers the rights, but it can and 
          has earned royalties.  Between 2008-09 and 2010-11, it received 
          $2.6 million in royalties.
          - The California Department of Transportation sold licenses to 
          its employee-developed intellectual property and generated 
          $51,500 in revenue.
          - To move forward, the state will need to clearly articulate the 
          goals of any policy related to intellectual property.

          Proposed Law: This bill defines "intellectual property" to mean 
          intangible assets subject to statutory protections under 
          applicable patent, copyright, and trademark law.  Intellectual 
          property 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.

          Staff Comments: The report suggested the Legislature and 
          Governor should consider whether establishing a mechanism to 
          track the State's intellectual property
          would be beneficial.  This bill requires the department develop 
          a database for the tracking of intellectual property by category 
          of protection, date of creation, owner of intellectual property, 
          grantee, state agency or granting entity, sources of funding, 
          and status of licensing, including invention utilization 
          updates.

          This bill exempts from the definition of state funding, the 
          California Film and Television Tax Credit Program, likely 
          denying the state an opportunity to at least obtain a share of 
          intellectual property from musical, artistic, photographic or 
          film works, all of which are specified in the definition of 
          intellectual property proposed by the bill.

          The provisions of the bill do not apply to intellectual property 
          agreements governed by the California Stem Cell Research and 








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          Cures Bond Act.

          Proposed Author Amendments: Proposed author amendments would 
          require the office to track intellectual property commencing 
          2015 and every three years thereafter and clarify the 
          application of existing University of California and California 
          State University contract provisions.