BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 2249 (Cooley)
Version: May 27, 2016
Hearing Date: June 28, 2016
Fiscal: Yes
Urgency: No
TH
SUBJECT
State Parks
DESCRIPTION
This bill provides, commencing January 1, 2017, that a
concession contract awarded to a contracting party shall not
provide any interest in a trademark or service mark in the name
or names associated with a state park venue, or its historical,
cultural, or recreational resources. This bill would also
preclude contracting parties who pursue claims in violation of
the above provision, or in bad faith without reasonable cause as
determined by a court, from being awarded concession contracts,
as specified.
BACKGROUND
Late last year, the National Park Service (NPS) became embroiled
in litigation with a former long-term concessionaire called
Delaware North over intellectual property rights to place names
in Yosemite National Park. During the course of its concession
contract, Delaware North filed for trademark protection of
several place names in the park, including "Yosemite National
Park," "The Ahwahnee," "Curry Village," "Wawona" and "Badger
Pass." According to a recent news story, "[a]fter losing the
lucrative, 15-year Yosemite concession contract to a subsidiary
of the Philadelphia-based Aramark Sports & Entertainment,
[Delaware North] sued the park service in claims court for what
it says is the value of its intellectual property, the
trademarks." (Michael Doyle, U.S. Steps Up Fight Over Yosemite
Names, Asking Trademarks Be Canceled, Sacramento Bee (March 18,
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2016) [as of June 22, 2016].) The Sacramento
Bee reports:
Amid the contract competition, Delaware North had valued its
overall "intangible" property in Yosemite at $51 million, with
the trademarks pegged at $44 million and other assets such as
a customer database at $7 million. The lawsuit asserted that
the park service's "failure to require Aramark to purchase and
pay fair value for the property" hurt Delaware North.
(Michael Doyle, Yosemite Concessionaire Wants $44 Million for
Trademarked Park Names, Fresno Bee (January 5, 2016)
[as
of June 22, 2016].)
Responding to the suit, the U.S. Department of the Interior has
filed a petition with the Trademark Trial and Appeal Board to
cancel Delaware North's contested trademark registrations,
stating "[t]he fame or reputation of the National Park Service
is such that, when the trademarks are used with [Delaware
North's] goods or services, a connection with the National Park
Service is presumed," and notes that the appeal board "can
cancel trademarks that falsely suggest a connection with
persons, institutions, or national symbols." (U.S. Steps Up
Fight Over Yosemite Names, Asking Trademarks Be Canceled,
Sacramento Bee.)
This bill responds to the problems confronting the National Park
Service by both declaring that contracts entered into with the
Department of Parks and Recreation (State Parks) after January
1, 2017, cannot provide a contracting concessioner with an
interest in a trademark or service mark, and by precluding the
State Parks from awarding a concession contract to any party
that claims a trademark or service mark in violation of this
restriction, or pursues an interest in such a trademark or
service mark in bad faith without reasonable cause as determined
by a court.
CHANGES TO EXISTING LAW
Existing federal law , Article I, Section 8 of the United States
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."
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Existing federal law , the Lanham Act, provides the owner of a
federally registered mark with protection against use of similar
marks if confusion might result. (15 U.S.C. 1051 et seq.)
Existing law , the Model State Trademark Law, allows any person
who adopts and uses a trademark or service mark in California to
register that mark with the Secretary of State, and renders
liable any person who infringes upon the use of such a mark, as
specified. (Bus. & Prof. Code Sec. 14200)
Existing law makes the following definitions:
"Trademark" means any word, name, symbol, or device, or any
combination thereof, used by a person to identify and
distinguish the goods of that person, including a unique
product, from those manufactured or sold by others, and to
indicate the source of the goods, even if that source is
unknown; and
"Service mark" means any word, name, symbol, or device, or any
combination thereof, used by a person to identify and
distinguish the services of that person, including a unique
service, from the services of others, and to indicate the
source of the services, even if that source is unknown. (Bus.
& Prof. Code Sec. 14202.)
Existing law authorizes the Department of Parks and Recreation
to enter into contracts for the construction, maintenance, and
operation of concessions within units of the state park system
for the safety and convenience of the general public in the use
and enjoyment of, and the enhancement of recreational and
educational experiences at, units of the state park system.
(Pub. Resources Code Sec. 5080.03.)
Existing law specifies that all contracts authorizing occupancy
of any portion of the state park system for a period of more
than two years shall be awarded to the best responsible bidder.
"Best responsible bidder" means the bidder, as determined by
specific standards established by the department, which, as
determined by the department, will operate the concession: (1)
consistent with the contract; (2) in a manner fully compatible
with, and complimentary to, the characteristics, features, and
theme of the unit in which the concession will be operated; and
(3) in the best interests of the state and public. (Pub.
Resources Code Sec. 5080.05.)
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This bill adds to the definition of "best responsible bidder" a
bidder who will operate a concession in a manner that protects
the state's trademark and service mark rights in the names
associated with a state park venue and its historical, cultural,
and recreational resources.
This bill states that commencing on January 1, 2017, a
concession contract shall not provide the contracting party with
a trademark or service mark interest in the name or names
associated with a state park venue, or its historical, cultural,
or recreational resources, and shall not serve as the basis for
any legal claim that the contracting party has that interest, as
specified. Any part of a contract or other agreement that
violates this provision shall be void and unenforceable.
This bill provides that if a concessionaire makes a legal claim
or assertion to have a trademark or service mark interest in
violation of the above provision, the concessionaire shall
forfeit the right to bid on future state park concession
contracts, as specified.
This bill states that a bidder on a concession contract shall
not be awarded a contract if either of the following applies:
the bidder has made a legal claim or assertion to have a
trademark or service mark interest in violation the above
provision; or
a court has determined that the bidder has made a legal claim
or assertion to have a trademark or service mark interest in
the name or names associated with a state or federal park
venue, or its historical, cultural, or recreational resources,
without reasonable cause and in bad faith.
This bill directs the department to adopt regulations to provide
a bidder who is denied a contract award with written notice of
that denial and an opportunity to rebut the basis for the
contract denial at a formal hearing.
This bill provides that if a current or former concessionaire
files a federal or state trademark or service mark application
for a trademark or service mark that incorporates or implies an
association with a state park venue, or its historical,
cultural, or recreational resources, and the state files a
successful opposition or cancellation with respect to that
trademark or service mark application, the concessionaire shall
be responsible for the state's attorney fees, costs, and
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expenses associated with that opposition or cancellation.
This bill provides that it 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.
This bill makes related findings and declarations.
COMMENT
1.Stated need for the bill
According to the author:
AB 2249 is a "Heritage Protection Bill" for our state which we
believe can influence concession practices beyond the bill's
formal legal reach as law. Despite being on the National
Register of Historic Places, a U.S. National Park's outgoing
concessionaire filed papers to trademark numerous Yosemite
National Park sites' names. This has now forced a name change
to such storied California venues as the Ahwahnee Hotel, Curry
Village and the Wawona Hotel as part of this ongoing
litigation.
In response to this dispute, AB 2249 protects historic
California state park trademarks. It does so by prohibiting
concessionaires from claiming ownership of a name associated
with a California state park and further declares that if a
bidder makes such a claim, they are disqualified from bidding
on future contracts. A state law cannot unilaterally undo
what the Yosemite concessionaire has done. The authors
believe, however, that the ideas embodied in AB 2249 can and
should influence the resolution of the federal dispute while
also setting a firm state policy. AB 2249's impact rests on
the premise that a concessionaire's business is incompatible
with a trademark or claim of ownership of park facilities
which they have been entrusted with as a steward.
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. AB 2249 assures this.
To prevent concessionaires from co-opting state landmarks, AB
2249 puts forth three key ideas: First, this bill clarifies
that an awarded food or lodging contract does not entitle a
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company to any legal claim of a trademark. No State Parks
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. AB 2249 permanently disqualifies a concessionaire from
consideration for future contracts if they attempt a trademark
claim.
2.Safeguarding state intellectual property
Trademarks are distinctive marks that are used by individuals or
entities to identify the source of their products or services to
consumers, thus, distinguishing those products or services from
those of other entities. These marks also protect consumers by
preventing the public from being misled as to the origin or
quality of a product or service.
Both federal and state law allow for the registration of
trademarks, providing an owner with the right to exclude others
from using a specific mark or from using one confusingly similar
to their mark. As federal registration is not required, many
companies who transact business solely within California do not
federally register their trademarks. California's Model State
Trademark Law provides that trademarks may be registered with
the Secretary of State, although registration is not required to
protect them, since trademark rights also arise under common law
as a result of actual use in the marketplace. Federal and state
trademark laws also provide remedies to holders of trademarks
and service marks - the equivalent mark for providers of
services - against those who infringe upon their mark.
This bill helps preserve the state's interest in trademarks and
service marks closely connected with places and historical,
cultural, or recreational resources in units of the State Parks.
It precludes park concessionaires from coopting or developing
brand identities in connection with sites to which they have
been given temporary guardianship or control by clearly stating
that concession contracts entered into or renewed after January
1, 2017, shall not serve as the basis for any legal claim that
the contracting party has a trademark or service mark interest
in the name or names associated with a state park venue, or its
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historical, cultural, or recreational resources.
This bill would also preserve the state's interest in trademarks
and service marks closely connected with places and historical,
cultural, or recreational resources in units of the State Parks
by disqualifying concessionaires who attempt to, or have
attempted to, infringe upon these or similar interests from
receiving future concession contracts. First, this bill would
provide that a bidder on a concession contract shall be
disqualified from receiving that contract, or any future state
park concession contract, if they assert a trademark or service
mark interest in the name or names associated with a state park
venue, or its historical, cultural, or recreational resources,
on the basis of a contract award made after January 1, 2017.
Second, a bidder who is determined to have made a legal claim or
assertion to a trademark or service mark interest in the name or
names associated with either a state or federal park venue, or
its historical, cultural, or recreational resources, without
reasonable cause and in bad faith as determined by a court would
also be ineligible to receive a concession contract under this
bill. This second ineligibility provision would cover bad faith
claims made either before or after January 1, 2017.
However, this bill would also require that concessionaires
determined to be ineligible for a concession contract must still
be afforded written notice of the denial and an opportunity to
rebut the basis for the denial at a formal hearing. This notice
and hearing procedure ensures that any concessionaire adversely
impacted by a determination of ineligibility under this bill's
provisions is afforded some measure of basic due process. This
bill would also provide that it does not impact a contracting
party's valid trademark or service mark rights held before a
concession contract was awarded, thereby preserving any
intellectual property interest in such marks acquired before the
concessionaire's contractual relationship with the state began.
3.Attorney fees
This bill would also provide that if a current or former
concessionaire files a federal or state trademark or service
mark application for a trademark or service mark that
incorporates or implies an association with a state park venue,
or its historical, cultural, or recreational resources, and the
state files a successful opposition or cancellation with respect
to that trademark or service mark application, the
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concessionaire shall be responsible for the state's attorney
fees, costs, and expenses associated with that opposition or
cancellation.
Generally in the United States, the "American rule" is that
parties are to bear their own costs in civil litigation. In
Alyeska Pipeline Co. v. Wilderness Society (1975) 421 U.S. 240,
the United States Supreme Court held that it was the province of
the legislative branch to craft exceptions to the "American
rule," and that courts were not free to shift such costs absent
express legislative authorization. (Id. at 269-270.) In 1977,
the Legislature enacted Code of Civil Procedure Section 1021.5,
which appeared to be "in significant measure ? an explicit
reaction to the United States Supreme Court's Alyeska decision."
(Woodland Hills Residents Assn., Inc. v. City Council (1979) 23
Cal.3d 917, 934.)
Section 1021.5 provides courts with authority to award
attorney's fees in actions to enforce important rights in the
public interest that confer a significant benefit on a large
class of persons. Specifically, Section 1021.5 was intended to
encourage litigation deemed to be in the public interest by
persons acting as a private attorney general. This doctrine
rests on the recognition that privately initiated lawsuits are
often essential to the effectuation of public policies embodied
in constitutional or statutory provisions, and that without some
mechanism authorizing the award of attorney fees, private
actions to enforce such public policies would be financially
impracticable. As explained recently by the California Supreme
Court, "section 1021.5 [addresses] the problem of affordability
of such lawsuits. Because public interest litigation often
yields nonpecuniary and intangible or widely diffused benefits,
and because such litigation is often complex and therefore
expensive, litigants will be unable either to afford to pay an
attorney hourly fee or to entice an attorney to accept the case
with the prospect of contingency fees, thereby often making
public interest litigation as a practical matter . . .
infeasible." (Conservatorship of Whitley (2010) 50 Cal.4th
1206, 1219 [internal citations and quotation marks omitted].)
The standard set by Section 1021.5 is rigorous and is
conditioned upon three requirements being met: (1) a significant
benefit is provided to the general public; (2) the necessity and
financial burden of private enforcement, or of enforcement by
one public entity against another public entity, are such as to
make the award appropriate; and (3) such fees should not in the
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interest of justice be paid out of the recovery, if any.
Additionally, the statute specifically provides for an important
exception to this rule when the matter involves a public agency,
as follows: "With respect to actions involving public entities,
this section applies to allowances against, but not in favor of,
public entities, and no claim shall be required to be filed
therefor, unless one or more successful parties and one or more
opposing parties are public entities." (Code Civ. Proc. Sec.
1021.5.) In other words, a public agency may not receive
attorney fees under Section 1021.5.
Costs of litigation, in contrast, are generally recoverable by
the prevailing party in civil litigation as a matter of right.
Code of Civil Procedure Section 1032 states that, "except as
otherwise expressly provided by statute, a prevailing party is
entitled as a matter of right to recover costs in any action or
proceeding." Other provisions in the Code of Civil Procedure,
such as Section 1033.5, enumerate specific items that may be
recovered as costs as well as those which cannot be claimed.
The applicable sections of California's Model State Trademark
Law do not appear to expressly bar a prevailing party from
recovering their costs in an action brought to invalidate a
trademark or service mark. Consequently, existing law currently
authorizes the state to recover its cost when it prevails in
such an action.
The types of suits that would be subject to attorney fee
shifting under this bill would largely involve a public entity
bringing suit against a private person or entity, which is not
one of the fee-shifting scenarios authorized by Section 1021.5.
Allowing fee shifting by a public entity, such as the State
Parks, against private individuals could undermine an
individual's ability to pursue judicial redress to enforce their
rights. Fears of having to pay a substantial sum in attorney
fees may disincentivize individuals from bringing meritorious
claims against the State Parks, thereby undermining an important
check on the powers exercised by the agency, particularly since
the Model State Trademark Law already authorizes parties to
recover all damages sustained as a consequence of the filing or
registration of any mark by knowingly making a false or
fraudulent representation or declaration. (See Bus & Prof Code
Sec 14240.)
4.Retroactivity
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As noted in Comment 2, this bill would declare that commencing
January 1, 2017, specified concession contracts shall not
provide a contracting party with a trademark or service mark
interest in the name or names associated with a state park
venue, or its historical, cultural, or recreational resources,
and shall not serve as the basis for any legal claim that the
contracting party has that interest. In unresolved tension,
this bill also states that this provision "does not constitute a
change in, but is declaratory of, existing law."
"Generally, statutes operate prospectively only." (McClung v.
Employment Dev. Dept. (2004) 34 Cal.4th 467, 475.)
[T]he presumption against retroactive legislation is deeply
rooted in our jurisprudence, and embodies a legal doctrine
centuries older than our Republic. Elementary considerations
of fairness dictate that individuals should have an
opportunity to know what the law is and to conform their
conduct accordingly; settled expectations should not be
lightly disrupted. For that reason, the principle that the
legal effect of conduct should ordinarily be assessed under
the law that existed when the conduct took place has timeless
and universal appeal. (Landgraf v. USI Film Products (1994)
511 U.S. 244, 265 (internal citations omitted).)
"A statute does not operate [retroactively] merely because it is
applied in a case arising from conduct antedating the statute's
enactment, or upsets expectations based in prior law. Rather, a
court must ask whether the new provision attaches new legal
consequences to events completed before its enactment."
(Landgraf, 511 U.S. at 269-70 (internal citations omitted).)
"This is not to say," however, "that a statute may never apply
retroactively." (McClung, 34 Cal.4th at 475.) In California,
"[a] statute's retroactivity is, in the first instance, a policy
determination for the Legislature and one to which courts defer
absent some constitutional objection to retroactivity." (Id.,
at 475.) Under California law, "a statute may be applied
retroactively only if it contains express language of
retroactivity or if other sources provide a clear and
unavoidable implication that the Legislature intended
retroactive application." (Myers v. Philip Morris Companies,
Inc. (2002) 28 Cal.4th 828, 844.)
On the other hand, legislation which merely clarifies existing
law may be found not retroactive in effect. (See, e.g.,
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Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019,
1028.) "Courts are not to infer that legislation merely
clarifies existing law unless (1) the nature of the amendment
clearly demonstrates such an intent or (2) the legislature has
itself stated that the particular amendment is merely
declaratory of existing law." (Goldman v. Standard Ins. Co.
(9th Cir. 2003) 341 F.3d 1023, 1029.
While it may be true that concession contracts, no matter when
they were entered into, can never serve as the basis of a
trademark or service mark claim to state park venues, or
historical, cultural, or recreational resources, this particular
provision identified as declaratory of existing law clearly
indicates that it operates prospectively, beginning as it does
with the clause "commencing January 1, 2017." To resolve this
tension, the Committee may wish to offer amendments that
de-couple the principle that concession contracts cannot give
rise to specified intellectual property claims, from the new
penalties imposed on parties who make such claims after January
1, 2017.
Support : California Association of Professional Scientists;
California Association of Recreation and Park Districts;
California Department of Insurance; California Park and
Recreation Society; California State Parks Foundation;
California State Treasurer; East Bay Regional Parks District;
Sierra Club California
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation :
AB 744 (Perez, Ch. 463, Stats. 2012) requires the Department of
General Services to identify and provide policy guidance for
state agency management of intellectual property developed by
state employees or with state funds.
AB 1484 (Krekorian, Ch. 711, Stats. 2007) repealed California's
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Trademark Law and replaced it with the Model State Trademark
Law, making numerous changes, including: (1) reducing the
registration period from 10 to 5 years; (2) requiring applicants
to state whether a similar mark has been registered in this
state; (3) conforming dilution provisions to the federal "likely
to dilute" standard; (4) stating that federal case law is
persuasive authority; and (5) removing a the provision stating
that a registration constitutes prima facie evidence of the
registrant's right to use the mark in California.
Prior Vote :
Senate Natural Resources and Water Committee (Ayes 9, Noes 0)
Assembly Floor (Ayes 80, Noes 0)
Assembly Appropriations Committee (Ayes 20, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Water, Parks and Wildlife Committee (Ayes 15, Noes 0)
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