BILL ANALYSIS Ó AB 2880 Page 1 ASSEMBLY THIRD READING AB 2880 (Committee on Judiciary) As Amended March 15, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Judiciary |9-0 |Mark Stone, Wagner, | | | | |Alejo, Chau, Chiu, | | | | |Cristina Garcia, | | | | |Holden, Maienschein, | | | | |Ting | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |20-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, | | | | |Bonta, Calderon, | | | | |Chang, Daly, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, McCarty, | | | | |Holden, Jones, | | | | |Obernolte, Quirk, | | | | |Santiago, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ AB 2880 Page 2 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 relating to intellectual property, as provided, shall be exempt from California's Administrative Procedure Act, similar to other DGS contracting rules. AB 2880 Page 3 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 6) a) above, 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 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 AB 2880 Page 4 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. (Government Code 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 AB 2880 Page 5 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. (Government Code 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. (Government Code 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: According to the Assembly Appropriations Committee: 1)DGS leads the state's Intellectual Property Work Group, which is developing policies, procedures, and processes to implement existing law regarding intellectual property. The incremental workload associated with implementing this bill will therefore be minor and absorbable. 2)DGS's costs to review proposed agency contract provisions waiving intellectual property rights would be reimbursed by AB 2880 Page 6 the contracting agency. These costs should not be significant for any single agency. 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. 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. In 2012, the Legislature enacted AB 744 (Perez), Chapter 463, Statutes of 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 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. 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, AB 2880 Page 7 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 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 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 use, this bill also provides that AB 2880 Page 8 the state's intellectual property rights do not preclude a public entity from disclosing information otherwise accessible under the California Public Records Act - consistent with the State Auditor's recommendation. 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. 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. 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. 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 AB 2880 Page 9 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. Analysis Prepared by: Eric Dang / JUD. / (916) 319-2334 FN: 0002969