BILL ANALYSIS Ó ----------------------------------------------------------------------- |Hearing Date:June 17, 2013 |Bill No:AB | | |630 | ----------------------------------------------------------------------- SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Ted W. Lieu, Chair Bill No: AB 630Author:Holden As Amended:June 3, 2013 Fiscal:No SUBJECT: Architects. SUMMARY: Specifies that no person may use an architect's instruments of service, as specified, without written consent, contract or agreement specifically authorizing that use, and declares that the bill is a clarification of existing law and does not take away any right otherwise granted by law. Existing law: 1)Licenses and regulates the practice of architecture under the Architects Practice Act by the California Architects Board (CAB) within the Department of Consumer Affairs (DCA). (Business and Professions Code (BPC) § 5500 et seq.) 2)Mandates that protection of the public shall be the highest priority for the CAB, and that whenever the protection of the public is inconsistent with other interests sought to be promoted, the protection of the public shall be paramount. (BPC § 5510.15) 3)Defines the practice of architecture and provides that an architect's professional services may include the following: (BPC § 5500.1 (b)) a) Investigation, evaluation, consultation, and advice; b) Planning, schematic, and preliminary studies, designs, work drawings, and specifications; c) Coordination of the work of technical and special consultants; AB 630 Page 2 d) Compliance with generally applicable codes and regulations, and assistance in the governmental review process; e) Technical assistance in the preparation of bid documents and agreements between clients and contractors; f) Contract administration; and, g) Construction observation. 4)Requires an architect to use a written contract when providing professional services to a client, and requires the contract to include a description of the procedure to be used by either party to terminate the contract. (BPC § 5536.22) 5)Provides copyright protection under the Federal Copyright Act for original works of authorship, including "architectural work" created in any tangible medium of expression. (Title 17 United States Code (USC) § 102) 6)Defines "architectural work" to mean the design of a building as embodied in any tangible medium of expression, including a building, architectural plans, or drawings. The work includes the overall form as well as the arrangement and composition of spaces and elements in the design, but does not include individual standard features. (17 USC § 101) This bill: 1)Specifies that no person may use an architect's instruments of service, as specified, without written consent, contract or agreement specifically authorizing that use. 2)Declares that the bill is a clarification of existing law and does not take away any right otherwise granted by law. FISCAL EFFECT: This bill has been keyed "non-fiscal" by Legislative Counsel. COMMENTS: 1.Purpose. This bill is sponsored by the American Institute of Architects, California Council (AIACC) to clarify in plain English that the services provided by an architect, otherwise known as an Instrument of Service, cannot be used without written consent, AB 630 Page 3 contract or agreement of the architect. According to the Author, AB 630 attempts to clarify that a person or entity must have contractual authorization to use the work, or Instruments of Service, prepared by an architect. By clarifying existing law in plain English, the objective is to establish a clear law that can be used to avoid timely and costly arguments when an unauthorized user attempts to use the Instruments of Services prepared by an architect. 2.Background. Like other professionals, architects provide a service to their clients. Those Instruments of Service, which include planning, schematic and preliminary studies, designs, working drawings, specifications, are used to develop buildings and structures. Importantly, architects provide a service and not a product. The service cannot be bought and sold except by the architect, with the consent of the architect, or by the client if the architect has transferred ownership of the intellectual property to the client. While the law prohibits unauthorized use of architects' Instruments of Service, architects find themselves in situations where a person believes he/she bought the plans, owns them, and has the right to use them. An example of this scenario is when an architect prepares the plans for the client, the plans are reviewed and approved by the local building department and a building permit is issued. The client sells the property before it is developed, saying the approved architectural plans are a part of the transaction. The new owner of the property believes he/she owns the plans (the Instruments of Service) and can use them to develop the property as he/she sees fit. However, unless the contract allows the client to transfer the license to use the Instruments of Service to another person, or the new property owner enters into an agreement with the architect, the new owner is not allowed to use the architect's Instruments of Service. The requirement that a user have a license to use an architect's Instrument of Services allows the architect to protect him/herself and the public, e.g., performing construction administration services to ensure the project is constructed according to the plans. The new property owner described above would not have to honor the construction administration services portion of the contract between the architect and original owner as the new property owner does not have a contractual agreement with the AB 630 Page 4 architect. 3.Instruments of Service. The term "Instruments of Service" is commonly used in relation to architectural service and practices and is defined as the "representations, in any medium of expression now known or later developed, of the tangible creative work performed by the architect and the architect's consultants under their respective professional services agreements. Instruments of Service may include, without limitation, studies, surveys, models, sketches, drawings, specifications, and other similar materials." The latest amendments narrow the bill's focus to those Instruments of Service involving "planning, schematic and preliminary studies, designs, working drawings and specifications." 4.Written Contracts and Copyrights. Current law already provides protections for an architectural work under Federal Copyright law and state contract law. If a person improperly uses or transfers architectural work, an architect can pursue legal action in a federal court and seek injunctive relief or compensation ranging from $200 to $150,000 for each infringement. In addition, if a contract prohibits the transfer of architectural work, then an architect can sue for a breach of contract in state civil court. If an architect's written contract does not state whether the right of the original client to use the architectural work can be transferred to another person, it is implied that the only person who is authorized to use the architectural work is the client who signs the contract. The Sponsor believes this bill will remove any ambiguity as to who is authorized to use an architectural work. In addition, if a written contract is silent on the transfer rights of an architectural work, this bill would prohibit the use of an architect's work without permission, even if that was not the intent. Generally, this would pose no problem, since anyone other than the original client should seek permission from the architect to use his or her work. However, since copyright protection for a work can last anywhere from 70 years following the life of the author to 120 years after the date of publication, a situation may arise in which the architect will not be available to grant permission, even if it is sought. 5.CAB Concerns. Although the CAB supports the bill, in its support letter CAB raises two concerns. First, the CAB points out, "?these proposed provisions may be more appropriate in the Civil Code or the general provisions of the Business and Professions Code, rather than the Architects Practice Act. This is because the CAB has no AB 630 Page 5 regulatory authority over consumers/clients . . ." Second, the CAB is concerned that, "?these well-intended provisions could be abused by an architect simply terminating a contract even though the payment for services is current. This would leave the consumer/client in the untenable position of having to negotiate with the architect to continue the project and ultimately use the Instruments of Service." Staff notes that the ability for an architect to abuse the contracting process by terminating the contract and leaving the client in the position of having to again negotiate with the architect already appears to be a possibility under current law. It is unclear how this bill would change those dynamics. 6.Arguments in Support. The American Institute of Architects California Council (AIACC) writes in support of the bill: "AB 630 seeks to add to state law language that clarifies in plain and simple English that a person must have permission to use the work, or Instruments of Service, prepared by an architect. [AIACC's] hope is AB 630 will give architects a tool to educate a person who is trying to illegally use the Instruments of Services prepared by the architect, and hopefully avoid timely and costly arguments . . . Importantly, architects provide a service and not a product. The service cannot be bought and sold except by the architect or, if by third parties, with the consent of the architect." AIACC further states, "While the federal Copyright Act does prohibit the unauthorized use of architects' Instruments of Service, architects find themselves in situations where a person believes he/she bought the plans, owns them, and has the right to use them . . . A survey the AIACC conducted early last year of architectural firms in California showed that a sizeable percentage (nearly 50%) of the firms that responded have encountered a person attempting to use their Instruments of Service without permission." According to the CAB , "AB 630 solves the problem of architects' Instruments of Service being used without their consent in the event a party other than the original client takes over a project. In some cases, the architect has not been paid for their professional services, the original client enters bankruptcy, and a bank subsequently takes over the project believing they own the Instruments of Service. In this situation, the architect's Instruments of Service are subsequently used to construct the project without the architect being compensated for the professional AB 630 Page 6 services, and potentially without the services and construction documents being complete and compliant with codes and standards." 7.Policy Consideration : Should these provisions be in the Architects Practice Act? The CAB has questioned whether the provisions contained in this bill should be placed within the Act or even within the Business and Professions Code. The CAB has pointed out that the law mandates that the protection of the public shall be the highest priority of the CAB (BPC § BPC § 5510.15), and that this bill is aimed at benefiting licensees rather than the public. More importantly, CAB states that the Board cannot enforce the provisions of the bill, since the CAB has jurisdiction over licensees and this bill is aimed at clients, who are not accountable to the CAB. CAB suggests the amendments should be better placed in the Civil Code rather than in the Act. In response, the Sponsor points out that there are other provisions in the Act that are not enforced by the CAB. BPC § 5536.25 provides that if after the architect has signed and stamped plans and the plans are subsequently changed, then the architect shall not be held liable for those changes. BPC § 5536.27 grants an architect immunity for services provided without compensation in response to a declared emergency. The Sponsor indicates that although each of these provisions is within the Architects Practice Act, they are not administered or enforced by the CAB. SUPPORT AND OPPOSITION: Support: American Institute of Architects, California Council (Sponsor) California Architects Board Opposition: None on file as of June 12, 2013. Consultant:G. V. Ayers