BILL ANALYSIS Ó
AB 2880
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Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 2880
(Committee on Judiciary) - As Amended March 15, 2016
SUBJECT: STATE INTELLECTUAL PROPERTY
KEY ISSUE: IN ORDER TO STRENGTHEN THE STATE'S STATUTORY
FRAMEWORK ON STATE-OWNED INTELLECTUAL PROPERTY AND TO ENSURE
THAT THE RIGHTS OF THE PUBLIC ARE PROTECTED, SHOULD STATE
AGENCIES BE PROVIDED with ADDITIONAL GUIDANCE IN THE
ADMINISTRATION OF THE STATE'S INTELLECTUAL PROPERTY, CONSISTENT
WITH RECOMMENDATIONS ISSUED BY THE STATE AUDITOR?
SYNOPSIS
The well-publicized Yosemite National Park trademark dispute not
only put a spotlight on the federal government's intellectual
property rights, but also raised questions about the State of
California's intellectual property rights, as well.
Specifically, it prompted the Committee to pose the following
question: does a third-party contractor who enters into a
contract with the state acquire any intellectual property rights
over products and services a contractor creates and provides to
the public that is funded with public dollars, even after the
contract expires?
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During this Committee's investigation, it learned that
California's statutory framework relating to the state's
management of its intellectual property could be improved. In
2010, the State Auditor issued a report that provided
recommendations to the Legislature on how it could improve its
administration of copyrights, trademarks, patents, and trade
secrets. In 2012, the Legislature enacted AB 744 (Perez, Chap.
463, Stats. 2012) which requires the Department of General
Services (DGS) to develop guidance to assist state agencies in
managing intellectual property. This bill builds on the
framework established by AB 744 by implementing a number of the
State Auditor's recommendations, and improving state contracts
where state-owned intellectual property is at stake.
In summary, this bill does all of the following: (1) clarifies
existing law that public agencies may own, license, and register
intellectual property, and provides that such intellectual
property is still accessible under the California Public Records
Act; (2) provides policy guidance to DGS on factors state
agencies should consider when deciding whether to sell or
license state-owned intellectual property; (3) enables DGS to
include guidelines in its State Contracting Manual on how state
agencies should manage its intellectual property; (4) requires
state agencies, when entering into a contract, to consider the
guidance, policies, and procedures developed by DGS on
intellectual property; and (5) prohibits a state contract that
waives the state's intellectual property unless DGS has
consented to the waiver. This bill is sponsored by the
Committee.
The Electronic Frontier Foundation (EFF), who opposes the bill
unless it is amended, believes that the bill's provision which
clarifies that public agencies may own, license, and register
intellectual property would allow state and local government the
power to suppress the dissemination of government-funded works
for nearly a century after creation. However, given that this
bill explicitly provides that a public entity's ability to have
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intellectual property does not prevent that entity from
disclosing the information under the California Public Records
Act, EFF's argument appears to be unpersuasive.
SUMMARY: Strengthens the statutory framework on rules,
processes, and procedures relating to state intellectual
property and provides additional guidance to state agencies to
manage and protect the state's intellectual property.
Specifically, this bill:
1)Requires the Department of General Services (DGS) to include
the factors of the state's best interest, maintaining public
access, and the discouragement of unauthorized economic gain
when developing factors for state agencies that decide to sell
or license intellectual property.
2)Requires DGS to develop sample language for an advisory
provision stating that a waiver of the state's intellectual
property rights is subject to the approval of DGS and that the
lack of that approval renders an attempted waiver void as
against public policy.
3)Provides that a public entity may own, license, and if it
deems it appropriate, formally register intellectual property
it creates or otherwise requires. Further provides that a
public entity's intellectual property right shall not preclude
the public entity from disclosing any information otherwise
accessible under the California Public Records Act (CPRA).
Further provides that a disclosure under the CPRA shall not be
construed as waiving any rights afforded under the federal
Copyright Act.
4)Provides that the maintenance and development of processes,
procedures, or policies in connection with DGS' duties
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relating to intellectual property, as provided, shall be
exempt from California's Administrative Procedure Act, similar
to other DGS contracting rules.
5)Requires all state agencies to consider the processes,
procedures, or policies developed by DGS relating to
intellectual property, as provided.
6)Provides that for contracts entered into after January 1,
2017, all of the following shall apply:
a) A state agency shall not enter into a contract under
this article that waives the state's intellectual property
rights unless the state agency, prior to execution of the
contract, obtains the consent of the department to the
waiver.
b) An attempted waiver of the state's intellectual property
rights by a state agency that violates #6a) shall be deemed
void as against public policy.
EXISTING LAW:
1)Declares that the Legislature supports the use of efficient
models to develop and streamline infrastructures, policies,
and processes for the management of intellectual property
developed under state funding in order to stimulate economic
development in the state while, at the same time, minimize the
costs of administering policies in this area. (Government
Code Section 13988. All further statutory references are to
the Government Code, unless otherwise indicated.)
2)States that it is the intent of the Legislature that the
rights of state agencies and departments to track and manage
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intellectual property created with any state funds shall be
interpreted as to promote the benefit of the public. Further
states that it is the intent of the Legislature that DGS have
access to information about intellectual property created by
state employees and by state-funded research, consistent with
state and federal laws and regulations governing access to
this information. (Ibid.)
3)Requires DGS to track intellectual property generated by state
employees or with state funding. (Section 13988.2.)
4)Requires DGS to develop a database that includes, but is not
limited to, tracking intellectual property, as described. The
database shall be updated every three years after its
commencement in 2015. (Ibid.)
5)Requires DGS to do all of the following:
a) Develop factors that state agencies should consider when
deciding whether to sell their intellectual property or
license it to others.
b) Develop an outreach campaign informing state agencies of
their rights and abilities concerning intellectual property
created by their employees.
c) Develop sample invention assignment agreements that
state agencies can consider if they believe it is necessary
to secure the rights to potentially patentable items
created by their employees on worktime using state
resources.
d) Develop sample language for licenses or terms-of-use
agreements that state agencies can use to limit the use of
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their intellectual property by others to only appropriate
purposes. (Ibid.)
6)Authorizes state agencies and departments to share records and
information related to intellectual property generated by
state employees or with state funding with the department.
(Section 13988.3.)
7)Provides that where the Legislature directs or authorizes DGS
to maintain, develop, or prescribe processes, procedures, or
policies in connection with the administration of its duties,
as provided, the actions by the department shall be exempt
from the Administrative Procedure Act, as described. Further
provides that these provisions shall apply to actions taken by
DGS with respect to the State Administrative Manual and the
State Contracting Manual. (Section 14615.1.)
8)Establishes specific rules that shall apply to all contracts,
including amendments, entered into by any state agency for
services to be rendered to the state, as provided. (Public
Contract Code Section 10335.)
FISCAL EFFECT: As currently in print this bill is keyed fiscal.
COMMENTS: Last year, a well-publicized trademark dispute arose
between the National Park Service (the federal entity that
manages federal parks) and Delaware North Company (the departing
Yosemite concessioner) over attractions and facilities in
Yosemite National Park.
Background on the Yosemite legal dispute. For the last 23
years, the Delaware North Company operated as the concessionaire
in Yosemite National Park under a contract with the National
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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 the National Park
Service awarded the new contract, Delaware North Company sued
the National Park Service for breach of contract and asserted
compensation for various trademarks associated with Yosemite
National Park. It is still unclear whether Delaware North
Company actually has legitimate property interests in the
trademarks associated with Yosemite Park.
Delaware North's federal complaint suggests it received its
rights from the previous concessionaire, The Curry Company. In
a federal complaint lodged with the United States Court of
Federal Claims, Delaware North Company alleges that it acquired
the trademarks and intellectual property rights from the prior
concessionaire. (Complaint, DNC Parks & Resorts at Yosemite
Inc., v. United States, No. 15-1034C (Ct.Cl. September 17, 2015)
[herein, Complaint, supra].) Delaware North Company contends
that prior to 1993, the Curry Company provided visitor services
at Yosemite for more than 100 years. (Ibid.) The Curry Company
built significant improvements in Yosemite with its own capital,
including The Ahwahnee, Yosemite Lodge, and Curry Village.
(Ibid.) The Curry Company developed and used registered and
unregistered trademarks and servicemarks in its operations,
including the Half-Dome logo design, "The Ahwahnee" hotel name
and logo design, and "Go Climb A Rock." (Ibid.) The Curry
Company's final concession contract included terms which
provided that if there was a successor concessionaire, the Curry
Company would be required to sell its possessory interest in its
improvements, and all other property used or held for use in
connect with its Yosemite operations. (Ibid.) Additionally,
any successor concessionaire would be required to purchase the
Curry Company's possessory interests and other property for fair
value. (Ibid.) And of course, that successor concessionaire was
the Delaware North Company.
The United States' Answer to the federal complaint does not
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dispute several of Delaware North's allegations. In fact, in
the Answer filed by the United States, the United States admits
that the Curry Company registered trademarks, servicemarks, and
logos in connection with its operation including the Half-Dome
logo and "The Ahwahnee" hotel name. (Answer, DNC Parks &
Resorts at Yosemite Inc., v. United States, No. 15-1034C (Ct.Cl.
September 17, 2015) [herein, Answer, supra].) The United States
also admits that the Curry Company was required to sell its
possessory and property interests, and that the Delaware North
Company was required to purchase those possessory and property
interests. (Ibid.) Although the litigation is still pending,
if the Delaware North Company's allegations are true, the legal
dispute would seem to be more about the valuation of the
trademark rights, and not on the ownership. In other words, as
disagreeable as it is, the Delaware North Company might have
actual and legitimate property interests in certain trademarks
associated with Yosemite National Park.
To better understand the dispute, this Committee spoke with
state agencies to determine the health of the state's
intellectual property. The trademark dispute between the
National Park Service and Delaware North put a spotlight on
governmental intellectual property rights, and posed the
following question for the state: does a third-party contractor
who enters into a contract with the state acquire any
intellectual property rights over products and services a
contractor creates and provides to the public that is funded
with public dollars, even after the contract expires? In 2000
and 2011, the State Auditor issued recommendations to the
Legislature to take steps to help state agencies manage and
protect the State's intellectual property. (State Auditor
report 2000-110, State-Owned Intellectual Property:
Opportunities Exist for the State to Improve Administration of
Its Copyrights, Trademarks, Patents, and Trade Secrets.) In
2012, the Legislature enacted AB 744 (Perez, Chap. 463, Stats.
2012), which requires the Department of General Services (DGS)
to develop guidance to assist state agencies in managing
intellectual property. The guidance is developed by a working
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group consisting of attorneys from various state agencies who
have expertise in intellectual property. Under current law,
nothing requires a state agency to review, comply with, or even
consider the guidance of the working group.
This Committee has learned that some state agencies, including
California State Parks, have taken steps to develop policies and
procedures to protect the intellectual property rights of the
state and the public; however, most state agencies have not done
so. Indeed, the lack of a robust intellectual property
framework has led to confusion among state agencies, loose and
informal practices, and possibly confusion among state and
federal courts. Several recent court decisions have held that
state agencies need legislative authority to hold intellectual
property rights. In light of the recent Yosemite trademark
issue and the recent court decisions, this bill builds on the
framework established by AB 744 in order to assist state
agencies manage and protect the state's intellectual property
rights, particularly in state contracts where state-owned
intellectual property is at stake.
Summary of the bill: In summary, this bill does all of the
following: (1) clarifies existing law that public agencies may
own, license, and register intellectual property; (2) provides
policy guidance to the Department of General Services (DGS) on
factors state agencies should consider when deciding whether to
sell or license state-owned intellectual property; (3) enables
DGS to include guidelines in its State Contracting Manual on how
state agencies should manage its intellectual property; (4)
requires state agencies, when entering into a contract, to
consider the guidance, policies, and procedures developed by DGS
on intellectual property; and (5) prohibits a state contract
that waives the state's intellectual property unless DGS has
consented to the waiver.
This bill clarifies existing law to allow public entities to own
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and hold intellectual property, while maintaining the public's
protection under the California Public Records Act. Several
recent court cases have held that state agencies cannot own or
hold intellectual property rights unless the Legislature
provides the agency with that explicit authority ("in the
absence of an affirmative grant of authority to obtain and hold
copyrights, a California public entity may not do so" (City of
Inglewood v. Teixeira (C.D.Cal. 2015), relying on County of
Santa Clara v. Superior Court (2009) 170 Cal.App.4th 1301)).
Although it has always been the intent of the Legislature to
ensure that California agencies can own, hold, and acquire
intellectual property, this bill clarifies existing law by
explicitly providing that a California public entity may own,
license, and if deemed appropriate, register intellectual
property. In order to maintain the public's right to
information and to allow for derivative use, this bill also
provides that the state's intellectual property rights does not
preclude a public entity from disclosing information otherwise
accessible under the California Public Records Act - consistent
with the State Auditor's recommendation.
In her report, the State Auditor acknowledged the concern that
allowing state ownership of intellectual property might restrict
the dissemination of information; however, this concern is
addressed by clarifying that information would still be subject
to the California Public Records Act-which is exactly what this
bill aims to do. In the 2000-110 Auditor Report, the Auditor
write:
One concern arising from state ownership of intellectual
property is that ownership conflicts with the principle of
open government-as embodied in the California Public Records
Act-by restricting the dissemination of information. The
argument is that state agencies could use intellectual
property laws to deny access to information they create that
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would otherwise be accessible. In at least one state, this
threat exists because materials to which access is limited by
copyright or patents can be legally withheld from the public.
However, since California does not have similar exclusions,
this threat seems remote. Even so, the State can answer this
concern by clarifying existing law to declare its intent that
protection under intellectual property laws does not preclude
state agencies from disclosing otherwise accessible
information. Such a clarification, while not requiring state
agencies to disclose material kept confidential under trade
secret laws, would enable state agencies to provide access to
material protected by other intellectual property laws.
(State Auditor report 2000-110, State-Owned Intellectual
Property: Opportunities Exist for the State to Improve
Administration of Its Copyrights, Trademarks, Patents, and Trade
Secrets. [Emphasis added].)
This bill provides DGS with additional policy guidance and
factors that state agencies should consider when they decide to
sell or license state-owned intellectual property. Under
current law, DGS is required to develop factors to assist state
agencies that decide to sell or license state-owned intellectual
property. This Committee has learned the DGS and the
Intellectual Property Working Group have been working diligently
in crafting an Intellectual Property Model Management Plan. In
order to provide the Intellectual Property Working Group with
additional policy guidance in crafting the plan, this bill
requires state agencies to also consider the following factors:
the state's best interest, public access to information, and the
discouragement of unauthorized economic gain. Additionally, to
ensure that the work done by the Intellectual Property Working
Group is not done for naught, this bill requires a state agency
to consider the guidelines developed by DGS when the state
agency enters into a contract.
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This bill makes it easier for DGS to adopt rules relating to
intellectual property to be included in the State Contract
Manual. According to the State Auditor, the State Contract
Manual (SCM), a document that provides guidance to state
agencies on rules and procedures for state contracting, does not
provide any guidance on how a state agency should manage its
intellectual property. This bill clarifies the statutory
authority for DGS to adopt rules and procedures in its SCM to
include guidance to state agencies about how to manage
intellectual property.
This bill strengthens California's contracts in order to protect
the State's intellectual property. In light of the recent
Yosemite trademark issue, this Committee is particularly
concerned about the waiver of the State's intellectual property
rights. Of course, there are instances when it might be
appropriate for a contractor to have certain property rights
over works that a contractor creates for the state. For
example, when the State commissions an artist to create a mural,
the State may decide that it is appropriate for the artist to
maintain certain rights over that work (e.g. right to reproduce,
distribute, or sublicense).
To ensure that the State is acting properly to protect its
rights, and to allow the State to have some flexibility and
discretion when it is appropriate, this bill prohibits any
contract that waives the state's intellectual property unless
DGS has provided consent to the contracting state agency. To
ensure that parties that contract with the state have notice of
these waiver provisions, this bill also requires DGS to develop
sample language advising a party what happens if a state agency
waives its intellectual property rights.
This bill implements several State Auditor recommendations
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relating to the state's intellectual property. As previously
stated, the State Auditor issued a report in 2000 that made
recommendations to the Legislature about adopting policies to
improve the state's administration of its intellectual property.
(State Auditor report 2000-110, supra.) While many of the
Auditor's recommendations were implemented by AB 744, this bill
implements several more of the recommendations. Although the
State Auditor cannot officially support or oppose legislation,
at the Committee's request, the State Auditor provided a letter
to the Committee, indicating that this bill would implement
several of its recommendations made in her 2000-110 report. In
the letter, the State Auditor writes:
AB 2880 would, if enacted, address four key recommendations
made in our audit report on intellectual property:
Our office previously recommended that the Legislature
designate a lead agency to oversee intellectual property in
California and require that lead agency to develop factors
that should be taken into consideration when deciding how and
when to protect the State's interests in intellectual
property. Prior legislation designated the Department of
General Services as that lead agency and directed it to
develop those factors. AB 2880 specifies what those factors
should include, and is consistent with our recommendation.
(AB 2880, Sec. 1).
Our office previously recommended that the Legislature clarify
state law to specifically allow a public entity to own,
license, and if appropriate, register intellectual property it
creates or acquires. Our office also recommended that state
law clarify that a public entity's intellectual property
rights would not preclude the public entity from disclosing
any information otherwise accessible under the California
Public Records Act. AB 2880 would implement both of those
recommendations. (AB 2880, Sec. 2)
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Our office previously recommended that the Legislature should
consider whether the public is best served when the State uses
standard contract language that essentially gives vendors the
right to use and sell the intellectual property they develop
under state-funded contracts. AB 2880 would address this
recommendation by prohibiting a contract entered into on or
after January 1, 2017 from waiving the State's intellectual
property rights unless the Department of General Services
consents to that waiver. (AB 2880, Sec. 4).
ARGUMENTS IN OPPOSITION: The Electronic Frontier Foundation
(EFF), in opposition unless amended, believes that this bill
would grant state and local government the power to suppress the
dissemination of government-funded works, even with the Public
Record Act exemption provided in the bill. The EFF writes:
The bill represents a significant shift away from California's
role as one of the strongest state contributors to the public
domain.
The purpose of copyright law is to incentivize creativity by
granting a monopoly over a work for a limited time. However,
such incentives are unnecessary when the resources are
provided from the taxpayer. As a result, Congress has
expressly excluded all work done by federal government
employees from the scope of copyright, so that taxpayers can
immediately benefit from new contributions to the public
domain. AB 2880 would chart a different course by granting
state and local governments the power to assert copyrights
over taxpayer-funded work. This presents a serious issue, as
it would grant state and local government the power to
suppress the dissemination of government-funded works for
nearly a century after creation, despite the current Public
Records Act exemptions in the bill.
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The legislative history on state copyright law indicates that
the legislature never intended for all divisions of government
to have the power to assert copyright. In fact, the
legislature's approach has favored enriching the public
domain. For example, state law encourages state-funded
research to be put into the public domain where appropriate.
Publications involving consumer information and county created
geographic information system basemaps are automatically put
into the public domain under state law. In only five specific
and limited circumstances has the state legislature decided to
grant copyright authority to state employees. Those instances
are for computer software, community colleges, county boards
of education, works created by the Department of Toxic
Substances Control, and works created under contract with the
California Health and Human Services Agency.
While EFF's general concern about the government holding onto
information appears to be valid, to a certain extent, this bill
already prevents this concern. Under the bill, a public
entity's ability to have intellectual property does not preclude
that entity from making information available under California
Public Records Act. As previously mentioned, this explicit
California Public Records Act protection under the bill was
recommended by the State Auditor.
Additionally, nothing in this bill prevents anyone from using
state-owned intellectual property under the fair use doctrine.
The example cited in EFF's opposition about how "county created
geographic information system basemaps are automatically put
into the public domain under state law" is a helpful
illustration of this point. This information is in the public
domain and the public has a right to use that information for
commercial purposes (i.e. to create maps for sale). However, if
counties produced their own maps, on the other hand, and
copyrighted those maps, the public could still obtain and use
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them, and even extract and transform the information into
another work for commercial purposes without violating the
county's copyright. The distinction is when someone reprints or
simply duplicates the county maps, and then sells the map as
their own.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file
Opposition
Electronic Frontier Foundation (oppose unless amended)
Analysis Prepared by:Eric Dang / JUD. / (916) 319-2334
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