BILL ANALYSIS Ó
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 744|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 744
Author: John A. Pérez (D)
Amended: 8/24/12 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMM. : 9-2, 6/12/12
AYES: Wright, Calderon, Corbett, De León, Evans,
Hernandez, Padilla, Wyland, Yee
NOES: Anderson, Walters
NO VOTE RECORDED: Berryhill, Cannella
SENATE JUDICIARY COMMITTEE : 3-1, 6/26/12
AYES: Evans, Corbett, Leno
NOES: Harman
NO VOTE RECORDED: Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 65-4, 1/30/12 - See last page for vote
SUBJECT : Intellectual Property
SOURCE : Author
DIGEST : This bill requires the Department of General
Services (DGS) to carryout various powers and duties
relating to assisting a state agency in the management and
development of intellectual property developed by state
CONTINUED
AB 744
Page
2
employees or with state funding, including, among other
duties, developing a database of state-owned intellectual
property using specified data starting January 1, 2015.
Senate Floor Amendments of 8/24/12 clarify that "state
funding" for purposes of this bill, shall also not include
any fees, taxes, fines or penalties assessed, collected, or
received by an air pollution control district or air
quality management district, including those that are state
authorized but are not remitted to a state agency except as
a pass-through funding agency. SB 170 (Pavley), Chapter
586, Statutes of 2011, clarifies that local air districts
have the authority to negotiate intellectual property
payments as part of grants they make for the development of
new clean air technologies. With that in mind, the South
Coast Air Quality Management District (SCAQMD) wanted to be
clear that non-state funds included the above. According
to the author's office, these amendments have been
requested by SCAQMD.
ANALYSIS : 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.
Existing state law, the California Uniform Trade Secrets
Act, generally provides for the protection of trade
secrets, and provides that a holder of a trade secret may
recover damages for loss due to misappropriation of a trade
secret.
Article I, Section 8 of the United State Constitution
provides that Congress shall have the power to "promote the
progress of science and useful arts by securing for limited
times to authors and inventors the exclusive right to their
respective writings and discoveries."
Existing federal law provides for the copyright, which is a
form of protection provided to the authors of "original
works of authorship," including literary, dramatic,
musical, artistic, and certain other intellectual works.
This protection is available to both published and
unpublished works. The length of a copyright depends on
CONTINUED
AB 744
Page
3
the nature of authorship, with most copyrights lasting 70
years after the author's death, while copyrights on works
for hire last for 120 years from the date of the work's
creation.
The Bayh-Dole Act allows for the transfer of exclusive
control over many government funded inventions to
universities and businesses operating with federal
contracts for the purpose of further development and
commercialization. The contracting universities and
businesses are then permitted to exclusively license the
inventions to other parties. The federal government,
however, retains "March-in" rights to license the invention
to a third party, without the consent of the patent holder
or original licensee, where it determines the invention is
not being made available to the public on a reasonable
basis.
Proposition 71, known as the "California Stem Cell Research
and Cures Initiative," was adopted by the electorate in
November 2004. The initiative provides $3 billion in state
financing for stem-cell research and requires the creation
of the California Institute for Regenerative Medicine to
regulate stem cell research and provide funding, through
grants and loans, for this research and research
facilities.
This bill:
1. Requires DGS to (a) commencing January 1, 2015, and
every three years thereafter, to track IP generated by
state employees or with state funding; (b) develop a
database to track specified information about IP
generated by state employees or with state funding; (c)
develop a sample maintenance plan of an inventory of IP;
(d) develop factors that state agencies should consider
when deciding whether to sell their IP or license it to
others; (e) develop an outreach campaign informing state
agencies of their rights and abilities concerning IP;
(f) develop sample invention assignment agreements that
state agencies may use to secure rights to potentially
patentable items created by their employees using state
resources; and, (g) develop sample language for licenses
or terms-of-use agreements to limit the use of their IP
CONTINUED
AB 744
Page
4
by others to only appropriate purposes.
2. Makes it explicit that these provisions do not apply to
the use of "expressive works" created by non-state
employees or without state funding.
3. Defines "expressive works" to mean a play, book,
magazine, newspaper, musical composition, audiovisual
work, radio or television program, work of art, work of
political or newsworthy value, or an advertisement or
commercial announcement for any of these works, if it is
fictional or nonfictional entertainment, or a dramatic,
literary, or musical work.
4. Defines "intellectual property" to mean intangible
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.
5. Defines "databases" to mean compilations of data,
typically generated from research, sometime from one
source, but often combined from many sources.
6. Authorizes state agencies and departments, upon request,
to share with DGS records and information related to IP
generated by state employees or with state funding.
7. Prohibits any employee and former employees of DGSfrom
divulging IP information not expressly allowed.
8. Exempts from oversight University of California IP and
that of the California State University. This bill is
to apply to a funding agreement from a state agency for
the performance of research.
9. Exempts IP governed by the California Stem Cell Research
and Cures Bond Act.
10.Stipulates that "state funding" shall not include
funding from the California Film & Television Tax Credit
Program, and these fundings agreements are to be subject
CONTINUED
AB 744
Page
5
to the model contract provisions developed pursuant to
law found in the Education Code.
11.Finds and declares the Legislature recognizes that the
licensing of or limitations on the use of IP should
accommodate free expression and therefore, the state
agencies and departments should not develop policies or
procedures to license or otherwise limit the use of the
state's IP in expressive works created by non-state
employees or without state funding.
12.Clarifies that "state funding" for purposes of this
bill, shall also not include any fees, taxes, fines or
penalties assessed, collected, or received by an air
pollution control district or air quality management
district, including those that are state authorized but
are not remitted to a state agency except as a
pass-through funding agency. Last year, SB 170 -
(Pavley), Chapter 586, Statutes of 2011, clarifies that
local air districts have the authority to negotiate
intellectual property payments as part of grants they
make for the development of new clean air technologies.
With that in mind, the SCAQMD wanted to be clear that
non-state funds included the above.
Background
The author's office notes that to date there is no clear
accounting of what intellectual property the state owns or
the types of agreements state agencies have entered into.
According to the author's office, this bill seeks to
incorporate recommendations from the following reports:
the 2011 Bureau of State Audits (BSA) report entitled,
Intellectual Property; the January 2006 California Council
on Science and Technology report entitled, Policy Framework
for Intellectual Property Derived from State-Funded
Research; and, a November 2000 BSA Report entitled,
State-Owned Intellectual Property: Opportunities Exist for
the State to Improve Administration of its Copyrights,
Trademarks, Patents, and Trade Secrets.
The 2000 BSA report found that many state agencies are not
sufficiently knowledgeable about the intellectual property
they own. The report added, "Lacking adequate knowledge of
CONTINUED
AB 744
Page
6
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." The author's office emphasizes that
this disjointed system ultimately costs the state money.
Additionally, the author's office contends that 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
contract costs or increasing revenue to the state. This
measure is intended to set up the framework to determine
what intellectual property the state owns and inform state
agencies of their rights and abilities to protect the
state's intellectual property.
What does intellectual property consist of ? The term
"intellectual property" describes products of the mind,
such as ideas, inventions, and creations. Unlike real
property such as land, intellectual property is intangible.
As a type of personal property, however, intellectual
property is protected by law.
There are four primary types of intellectual property;
copyrights, trademarks, patents, and trade secrets. A
copyright grants an exclusive legal right to reproduce,
publish, perform, display, distribute, or sell the content
and form of an original work of authorship (e.g., literary
and artistic works, maps, computer programs, audiovisual
materials, publications). A trademark is any name, word,
symbol, device, slogan, package design, or any combination
of these features (e.g., Nike, "Just Do It," the swoosh)
that identifies and distinguishes the source of goods
produced by one entity from those goods produced by others.
A patent is a property right that the federal government
grants to an owner to exclude others from making, using,
selling, or importing the patented item into the U.S.A.
(e.g., inventions, discoveries, chemical compounds). A
trade secret is any information used in an owner's
operations from which value is derived because the
information is not generally known (e.g., formulas,
recipes, computer programs).
CONTINUED
AB 744
Page
7
Taken as a whole, federal, state, and common law provide
intellectual property owners with an extensive tool bag to
protect the items they create. Although intellectual
property laws enable an owner to pursue legal remedies
against any person or entity that infringes on the owner's
rights, they do not always give the owner the right to
manufacture or produce a product. Infringement includes
making unauthorized versions of the intellectual property
or using it against the owner's wishes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, one-time
costs up to $350,000 to develop policies for intellectual
property. Ongoing costs up to $350,000 annually (with
potentially offsetting workload savings) (about 80% General
Fund, 20% special funds. Unknown increase in General Fund
and special fund revenue from royalties.
ASSEMBLY FLOOR : 65-4, 1/30/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Chesbro, Cook, Davis, Dickinson, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani,
Garrick, Gatto, Gordon, Grove, Hagman, Hall, Hayashi,
Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries,
Jones, Bonnie Lowenthal, Ma, Mendoza, Miller, Mitchell,
Monning, Nestande, Olsen, Pan, Perea, Portantino,
Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. Pérez
NOES: Conway, Donnelly, Knight, Nielsen
NO VOTE RECORDED: Cedillo, Gorell, Halderman, Harkey,
Lara, Logue, Mansoor, Morrell, Norby, V. Manuel Pérez,
Silva
DLW:d 8/27/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
CONTINUED
AB 744
Page
8
**** END ****
CONTINUED