BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2880


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          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           |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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                                                                    AB 2880


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          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.








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          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  








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            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  








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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.   
            (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  








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            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,  








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          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  








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          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  








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          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