BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2880


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          ASSEMBLY THIRD READING


          AB  
          2880 (Committee on Judiciary)


          As Amended  May 31, 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 while still  
          protecting public access under the Public Records Act.   
          Specifically, this bill:


          1)Requires the Department of General Services (DGS), when  
            developing factors on the state's consideration of its  
            intellectual property, to also develop factors about making  
            intellectual property available in the public domain, or  
            granting the use of their intellectual property to others,  
            including but not limited to, the state's best interest,  
            maintaining public access, and preventing improper economic  
            gain through the unauthorized use of state owned 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.


          3)Provides that to the extent not inconsistent with the rights  
            of the public to obtain, inspect, copy, publish and otherwise  
            communicate information under the California Public Records  
            Act, the California Constitution as provided, and under the  
            First Amendment to the United States Constitution, a state  
            entity may own, license, and if it deems it appropriate,  
            formally register intellectual property it creates or  
            otherwise acquires.


          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, a state agency shall not enter into a contract under  
            this article that fails to address the issue of intellectual  
            property rights unless the state agency, prior to execution of  
            the contract, obtains the consent of the Department of General  
            Services.


          7)Provides that when a state entity creates a work that is  
            otherwise subject to copyright protection, the work shall be  
            deemed to be released into the public domain unless the state  
            entity reasonably determines any of the following:


             a)   The work has commercial value and the release would  
               jeopardize the integrity of the work.


             b)   The release would infringe upon the property interests  
               of a third party.


             c)   The release would detrimentally affect the state's  
               interests in its trademarks, service marks, patents, or  
               trade secrets.  


          8)Provides that if a state entity reasonably determines that a  
            work shall not be released into the public domain as provided,  








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            the entity shall catalog those works and submit the  
            information to the department for the purpose of tracking  
            intellectual property generated by state employees or with  
            state funding as provided.


          9)States that nothing in this bill requires a state entity to  
            own, license, or formally register intellectual property that  
            it creates or otherwise acquires.


          10)Provides that provisions of the bill shall not apply to the  
            use of expressive works created by nonstate employees or  
            without state funding.


          11)Requires a state entity to do the following if the entity  
            pursues an action for copyright infringement:


             a)   Prior to sending a takedown notification, a state entity  
               shall reasonably consider in good faith whether the  
               allegedly infringing material constituted fair use.  


             b)   No state entity shall elect to receive statutory damages  
               as provided under the federal Copyright Act of 1976 (17  
               United States Code (U.S.C.) Section 504(c)) except in cases  
               of willful infringement where there is no evidence of fair  
               use.


             c)   Upon a court's finding that the party defending the  
               infringement action engaged in fair use, the state shall  
               waive statutory damages.


          12)Establishes that any work released into the public domain  
            shall be deemed a public record.








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          13)Prohibits a public agency from denying a public records  
            request for a record that is otherwise public on grounds that  
            the information requested is protected by federal Copyright  
            Act.  A request for such a record shall only be denied if one  
            of the following applies: 


             a)   The public interest in disclosure is clearly outweighed  
               by the facts of the particular case demonstrate that the  
               public interest served by not disclosing the record clearly  
               outweighs the public interest served by disclosure of the  
               record as provided in the Public Records Act.


             b)   The record in question is exempt under express  
               provisions of the Public Records Act.


          14)Provides that a public agency that releases a public record  
            that is subject to copyright protection as provided shall  
            issue the requesting party a license to use the record in a  
            manner that is consistent with the rights provide under the  
            Public Records Act and that is considered acts of fair use  
            under the federal Copyright Act.  The license may restrict the  
            holder from using the record for a commercial use only if such  
            use would result in economic harm to the public agency or to  
            the public's interest.


          15)Makes various findings concerning the management of  
            intellectual property and the Legislature intends for the  
            state's intellectual property to be managed in a way that  
            encourages a release into the public domain whenever it is  
            feasible and appropriate and does not interfere with the  
            public's right to access records.










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          16)States that the Legislature recognizes that state agencies  
            and departments have different intellectual property needs,  
            and finds that a statewide and uniform approach to manage the  
            state's intellectual property should provide state agencies  
            and departments reasonable levels of discretion that promote  
            releasing information into the public domain, and protect the  
            state from unauthorized economic gain, but still ensure the  
            public's right of access to public records.


          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  
            the contracting agency.  These costs should not be significant  
            for any single agency.


          COMMENTS:  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.









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          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.  Indeed, recent court  
          decisions have stated that public agencies need express  
          legislative authority to hold intellectual property rights which  
          is inconsistent with current practice.


          Summary of the bill:  In summary, this bill does all of the  
          following:  1) clarifies existing law that state agencies may  
          own, license, and register intellectual property to the extent  
          not inconsistent with the rights of the public to obtain,  
          inspect, copy, publish and otherwise communicate information  
          under the California Public Records Act, the California  
          Constitution as provided, and under the First Amendment to the  
          United States Constitution; 2) provides policy guidance to DGS  
          on factors state agencies should consider when deciding whether  
          to sell or license state-owned intellectual property, including  
          making intellectual property available in the public domain,  
          granting the use of its intellectual property; 3) provides that  
          when a state entity creates a work that is otherwise subject to  
          copyright protection, the work shall be deemed to be released  
          into the public domain unless the state entity reasonably  
          determines specific criteria as provided; 4) provides that if a  
          state entity reasonably determines that a work shall not be  
          released into the public domain as provided, the entity shall  
          catalog the works and submit the information to DGS for the  
          purpose of tracking intellectual property generated by state  
          employees or with state funds; 5) enables DGS to include  
          guidelines in its State Contracting Manual on how state agencies  
          should manage its intellectual property; 6) requires state  
          agencies, when entering into a contract, to consider the  
          guidance, policies, and procedures developed by DGS on  
          intellectual property; and 7) prohibits a state agency from  








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          entering into a contract as provided that fails to address the  
          issue of intellectual property rights unless the state agency,  
          prior to execution of the contract, obtains the consent of DGS.


          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 state 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, this bill also provides that the state's  
          intellectual property authority only to the extent that it is  
          not inconsistent with the California Public Records Act, the  
          California Constitution, or the First Amendment of the United  
          States Constitution.


          To prevent public agencies from using copyright law to  
          circumvent the spirit and purpose of the California Public  
          Records Act, this bill prohibits a public agency from denying a  
          public records request for a record that is otherwise public on  
          grounds that the information requested is protected by federal  
          Copyright Act; public agencies may only use existing exemptions  
          under the Public Records Act.  










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          This bill also recognizes that there might be instances when an  
          unscrupulous party will use the Public Records Act to circumvent  
          rights provided under federal copyright law.  This bill provides  
          that a public agency that releases a public record that the  
          state seeks to protect under copyright law shall issue the  
          requesting party a license to use the record in a manner that is  
          consistent with the rights provide under the Public Records Act  
          and that is considered acts of fair use under the federal  
          Copyright Act; however, the license may restrict the holder from  
          using the record for a commercial use only if such use would  
          result in economic harm to the public agency or to the public's  
          interest.


          To further promote the state's policy of open government and to  
          allow the public to continue to use information produced by  
          California government without the fear violating copyright law,  
          this bill requires a state entity-prior to sending a takedown  
          notification-to reasonably consider in good faith whether the  
          allegedly infringing material constituted fair use.  Moreover,  
          no state entity shall elect to receive statutory damages in a  
          copyright infringement case except in cases of willful  
          infringement.  And even at the end of any potential litigation a  
          court finds that the party defending the infringement action  
          engaged in fair use, the state shall waive statutory damages.


          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 Advisory 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 preventing  
          improper economic gain through the unauthorized use of state  
          owned intellectual property.  Additionally, to ensure that the  
          work done by the Intellectual Property Advisory Group is not  
          done for naught, this bill requires a state agency to consider  
          the guidelines developed by DGS when the state agency enters  








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          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 requires a state entity, when entering into a  
          contract, to address the issue of intellectual property unless  
          DGS has provided consent to the contracting state agency.




          Analysis Prepared by:                                             
          Eric Dang / JUD. / (916) 319-2334  FN: 0003277



















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