BILL ANALYSIS Ó SENATE COMMITTEE ON NATURAL RESOURCES AND WATER Senator Fran Pavley, Chair 2015 - 2016 Regular Bill No: AB 2249 Hearing Date: June 14, 2016 ----------------------------------------------------------------- |Author: |Cooley | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Version: |May 27, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Matthew Dumlao | | | | ----------------------------------------------------------------- Subject: State parks BACKGROUND AND EXISTING LAW Under existing law, the Department of Parks and Recreation (DPR) may enter into contracts for the construction, maintenance, and operation of concessions within units of the state park system. Existing law also describes the steps required to solicit and select concession contract bids, including the criteria for selecting a concession bid. Concession contracts are required, with specified exceptions, to be awarded to the best responsible bidder. The best responsible bidder is a bidder who will (1) operate the concession consistent with the contract; (2) operate in a manner fully compatible with and complimentary to the characteristics, features, and theme of the park; and (3) operate in the best interests of the state and the public (Public Resources Code § 5080.05). Alternatively, the director of DPR is authorized to negotiate or renegotiate a contract under specific conditions, including the bid process failed to produce a best responsible bidder. Existing law also requires all concession contracts to contain several provisions, including: a. Maximum term shall be 10 years, unless under certain AB 2249 (Cooley) Page 2 of ? conditions, as described. b. If the concession contract is for construction, development and operation of a multiple-unit lodging facility with an initial cost of more than $1.5 million, the maximum term may be 50 years. c. Every concessionaire shall submit to DPR all sales and use tax returns and provide an annual financial statement. Every concessionaire is subject to audit by DPR. d. The state is not obligated to purchase any improvement made by the concessionaire if a contract is terminated for substantial breach. This bill was sparked by a recent, well publicized, contract dispute involving Yosemite National Park. For the last 23 years, the Delaware North Company was the concessionaire operating visitor services and facilities within Yosemite National Park under a contract with the National Park Service. In 2015, the National Park Service rebid the contract and awarded a new 15 year concession contract to Aramark who was the successful bidder. After Delaware North lost the contract they sued the federal government for "breach of an implied contract" and other alleged bidding issues. They also asserted they were entitled to compensation for various trademarks and other intellectual property rights they had registered while they were the concessionaire in Yosemite. According to Delaware North, some of the trademark registrations were acquired by Delaware North from the Curry Company, the previous concessionaire, along with other Curry Company assets, and some were newly registered by Delaware North after they became the concessionaire. Among the names they claim to have a registered trademark property right for are "The Ahwahnee," "Yosemite Lodge," "Wawona," "Curry Village," and "Badger Pass," all of which are well-known venues within Yosemite National Park. Also, the Delaware North Company AB 2249 (Cooley) Page 3 of ? claims to have a registered trademark for the name "Yosemite National Park" and the iconic Half Dome used on logos and other merchandise sold through the gift shop. Delaware North has asserted that it is entitled to compensation for the value of its trademarks and other intellectual property rights in Yosemite National Park which it claims is valued at $51 million. The National Park Service has countered that the value is closer to $1.63 million, and alleges that many of the trademarks were registered without its knowledge or consent. The National Park Service has also filed a petition with the United States Patent and Trademark Office seeking to cancel the disputed trademarks. Delaware North offered to let the park keep the names while the legal process plays out. But, rather than risk an injunction that might interrupt service at Yosemite, the National Park Service removed the contested names from various signs, bridges, and other places within the park, and renamed the venues, at a total cost of $1.7 million. For example, the historic Ahwahnee Hotel, which is listed on the National Register of Historic Places as a National Historic Landmark, is being renamed "the Majestic Yosemite Hotel." The dispute has outraged many park visitors who see the trademark claims as violating the public trust and the deeply held understanding that the national parks are national treasures that belong collectively to the people of the country. PROPOSED LAW This bill would establish the California Heritage Protection Act. This act would prohibit a concession contract from providing a contracting party with a trademark or service mark of the names associated with a state park. Specifically, this bill would: AB 2249 (Cooley) Page 4 of ? 1. Make several legislative findings and declarations regarding the public interest and historical significance served by national, state, and regional parks, including Yosemite National Park. Find and declare that California state parks are held in trust for the people of California, that a legal claim to a trademark right in a name or a names associated with a state park derogates the interests of California, and that making such a claim is indicative of the claimants lack of fitness to serve as a steward of state parks. Find and declare that an agreement entered into by a California state agency that compromises the interests of Californians is "ultra vires" and, therefore, beyond that agencies legal authority to enter. 2. Modify the definition of best responsible bidder, for purposes of existing law governing the awarding of concession contracts for state parks, to include that the bidder shall operate the concession in a manner that protects the state's trademark and service mark rights in the names associated with a state park and state park resources. 3. Provide that a concessionaire who makes a legal claim to have a trademark or service mark interest in a state park in violation of the law, shall forfeit the right to bid on future state park concession contracts, to the extent authorized by federal law. 4. Provide that a concessionaire who files an application for a trademark or service mark associated with a state park or state park resources that is successfully opposed or cancelled by the state, shall be responsible for the state's attorney's fees and costs. 5. Commencing January 1, 2017, prohibit a concession contract awarded for a state park from providing the contracting party with a trademark or service mark interest in the name or names associated with a state park or state park resources, or from serving as the basis for any legal claim that the contracting party has such an interest. AB 2249 (Cooley) Page 5 of ? State that this prohibition is declaratory of existing law. 6. Prohibit a bidder from being awarded a state park concession contract if the bidder has made a legal claim or assertion to have a trademark associated with a state park in violation of this statutory prohibition, or if a court has determined that the bidder has made a claim to have a trademark or service mark interest in the name or names associated with a state or federal park venue without reasonable cause and in bad faith. 7. Require DPR to adopt regulations to provide a bidder who is denied a contract award on the basis of trademark claims with written notice and an opportunity to rebut the denial at a formal hearing. 8. Provide that a provision of a concession contract or other agreement that violates these provisions shall be void and unenforceable. 9. Provide that this bill's prohibition on state park concession contracts providing the basis for a trademark claim in the name or names associated with a state park shall not be construed to impact a contracting party's valid trademark or service mark rights that were held before the concession contract was awarded. ARGUMENTS IN SUPPORT At the core of the arguments in support is the notion that state parks are part of the state's public trust and that this bill is essential to protecting the integrity of California's treasured state parks. The author argues that "to prevent concessionaires from co-opting state landmarks, this bill puts forth three key ideas. First, this bill clarifies that an awarded food or lodging contract does not entitle a company to any legal claim of a AB 2249 (Cooley) Page 6 of ? trademark. No State Park official has the authority to agree to contractual terms that fail to safeguard the interests of California by offering a public trademark to a private corporation. Second, this bill specifically prohibits concessionaires from claiming ownership of a name associated with a California State Park. Finally, a concessionaire who asserts a claim of this type will no longer be viewed as a fit partner to contract with California State Parks. This bill permanently disqualifies a concessionaire from consideration for future contracts if they attempt a trademark claim. This bill's impact rests on the premise that a state park concessionaire's business is incompatible with a trademark or claim of ownership of park facilities which they have been entrusted with as a steward, but which still remain the property of the state. The author asserts that California's treasured heritage sites are a part of our state's public trust and it is self-evident that the state would never approve giving away the inherent value associated with those historic names and places. ARGUMENTS IN OPPOSITION None received. COMMENTS Impact on National Park concession contracts: While this bill targets concession contracts in state parks, it includes provisions to encourage concessionaires to follow the same rules when entering into contracts with national parks. This bill would make a concessionaire ineligible for a state park concession contract if a court determined that the concessionaire made a legal claim to have a trademark interest in the name or names associated with a state or federal park venue. Thus, while the state cannot dictate the terms of contracts in federal parks, this bill is attempting to use the possibility of losing future concession contracts in state parks as motivation to avoid making trademark claims in national parks. Double referred: The Rules Committee referred this bill to both the Committee on Natural Resources and Water and the Committee on Judiciary. Therefore, if this bill passes this committee, it will be referred to the Committee on Judiciary, which will consider the issues within their jurisdiction. AB 2249 (Cooley) Page 7 of ? SUPPORT California Association of Professional Scientists California Association of Recreation and Park Districts California State Parks Foundation Dave Jones, Insurance Commissioner, Department of Insurance Sierra Club California OPPOSITION None Received -- END --