BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 2880 Hearing Date: 6/28/2016
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|Author: |Committee on Judiciary |
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|Version: |6/21/2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: State intellectual property
DIGEST: This bill requires state agencies, when entering into
a contract, to consider the guidance, policies, and procedures
developed by the Department of General Services (DGS) on
intellectual property. This bill also provides that for
contracts entered into after January 1, 2017, a state agency
must consider the intellectual property rights of both the state
and the contracting party unless the state agency prior to
execution of the contract, obtains the consent of DGS.
ANALYSIS:
Existing law:
1)Provides that contracts by state agencies for services
rendered to the state are, with certain exceptions, of no
effect unless and until approved by DGS.
2)Imposes various requirements with respect to contracts for
services rendered to the state.
3)Requires DGS to develop factors for state agencies to consider
in deciding whether to sell or license their intellectual
property.
4)Exempts from the Administrative Procedure Act certain actions
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to maintain, develop, or prescribe processes, procedures, or
policies by DGS that are required or authorized by the
Legislature with respect to the general operations of the
department or the awarding of state contracts.
This bill:
1)Requires all state agencies to consider the processes,
procedures, or policies developed by DGS relating to
intellectual property, as provided.
2)Provides that for contracts entered into after January 1,
2017, a state agency shall consider the intellectual property
rights of both the state and the contracting party unless the
state agency prior to execution of the contract, obtains the
consent of DGS.
3)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.
Background
Intellectual property. The term "intellectual property"
describes products of the
mind, such as ideas, inventions, and creations. Unlike real
property such as land, intellectual property is intangible. As
a type of personal property, however, intellectual property is
protected by law. There are four primary types of intellectual
property: copyrights, trademarks, patents, and trade secrets.
Taken as a whole, federal, state, and common law provide
intellectual property owners with an extensive legal tool bag to
protect the items they create. It is important to note that
intellectual property laws enable an owner to pursue legal
remedies against any person or entity that infringes on the
owner's rights; they do not always give the owner the right to
manufacture or produce a product. Infringement includes making
unauthorized versions of the intellectual property or using it
against the owner's wishes.
Purpose of AB 2880. According to the Assembly Judiciary
Committee office, this bill stems from a trademark dispute that
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arose last year between the National Park Service (the federal
entity that manages federal parks) and Delaware North (the
departing Yosemite concessioner) over the ownership of
trademarks associated with attractions and facilities in
Yosemite National Park. This trademark dispute 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 it
creates and provides to the public that is funded with public
dollars, even after the contract expires?
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.
Unfortunately, most state agencies have not established such
policies or procedures. In 20000, the State Auditor issued a
report with 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 DGS to develop
guidance to assist state agencies in managing intellectual
property. The guidance is developed by an advisory group of
attorneys from various state agencies who have expertise in
intellectual property. Nothing under the law requires a state
agency to review or even consider the guidance developed by the
advisory group. Yet, despite these efforts to protect the
intellectual property rights of the state, not all of the
recommendations suggested by the Auditor have been enacted. For
example, the State Contract Manual (SCM), a document that
provides guidance to state agencies on rules and procedures for
state contracting, does not provide guidance on how a state
agency should manage its intellectual property.
This bill attempts to correct these deficiencies as follows: (1)
By enabling DGS to include the intellectual property guidelines
that it has developed in its State Contracting Manual in order
to assist state agencies manage contracts that involve
intellectual property; (2) By requiring state agencies, when
entering into a contract, to consider the guidance, policies,
and procedures developed by DGS on intellectual property; and,
(3) By requiring all state contracts to address the issue of
intellectual property rights unless DGS provides otherwise.
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State Auditor's Report. In November 2000, a report by the
Bureau of State Audits on State-Owned Intellectual Property
concluded:
"[M]any state agencies are not sufficiently knowledgeable about
the intellectual property they own. Lacking adequate knowledge
of their intellectual property ownership and rights, state
agencies could fail to act against those who use the State's
intellectual property inappropriately. Inappropriate use
includes unauthorized use of state trademarks and improperly
profiting on products developed at state expense. Further . . .
state-level direction for administering intellectual property is
limited. The few state laws that address intellectual property
do so in a piecemeal fashion . . . [and] state agencies have
either no or incomplete written policies for managing their
intellectual property."
That report further noted that although more than 113,000 items
of state-owned intellectual property were identified, the state
likely owns more. Finally, the report contained several
recommendations:
The Legislature should clarify state law to specifically
allow all state agencies to own and, if necessary, formally
register intellectual property they create or otherwise
acquire when it is deemed to be in the public's best
interest.
The Legislature should designate a single state agency
as the lead for developing overall policies and guidance
related to state-owned intellectual property.
Finally, the Legislature should consider whether the
interest of the public is best served when the State uses
standard contract language that essentially gives
contractors a free license to use and sell intellectual
property they develop for the State.
Comments. The most recent amendments (June 21) narrowed the
scope of this bill significantly and removed the concerns that
had been expressed by numerous entities and organizations.
However, Assembly Judiciary Committee staff indicates that they
cannot confirm that all entities have removed their opposition.
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Prior/Related Legislation
AB 2249 (Cooley, 2016) establishes the California Heritage
Protection Act which would prohibit a concession contract from
providing a contracting party with a trademark or service mark
of the names associated with a state park. (Pending in Senate
Judiciary Committee)
AB 744 (John Perez, Chapter 463, Statutes of 2012) among other
things, authorized DGS to carry out various powers and duties
relating to assisting a state agency in the management and
development of intellectual property developed by state
employees or with state funding.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
None received
OPPOSITION:
None received