BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 224|
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THIRD READING
Bill No: AB 224
Author: Portantino (D)
Amended: 9/1/09 in Senate
Vote: 27 - Urgency
SENATE JUDICIARY COMMITTEE : 5-0, 8/27/09
AYES: Corbett, Harman, Florez, Leno, Walters
ASSEMBLY FLOOR : Not relevant
SUBJECT : Uniform Commercial Code: security interest in
tangible
property
SOURCE : Directors Guild of America, Inc.
DIGEST : This bill extends the sunset date in the Uniform
Commercial Code on provisions dealing with licensee's as
defined in Section 9321 of the Commercial Code.
ANALYSIS : Existing law provides that a licensee in
ordinary course of business takes its rights under a
nonexclusive license fee of a security interest in the
intangible property created by the licensor and takes its
leasehold interest free of a security interest in the goods
created by the lessor, as specified. This provision of the
Uniform Commercial Code (UCC) is scheduled to sunset on
January 1, 2010.
This bill extends the sunset date of that provision to
CONTINUED
AB 224
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January 1, 2013.
Background
Article 9 of the UCC covers security interests in personal
property. It was rewritten and modernized by the Uniform
Law Commission (ULC, formerly the National Conference of
Commissioners on Uniform State Laws) in the late 1990s and
in the process the ULC addressed security interests in
general intangible property (such as intellectual
property). Every state has adopted Article 9 as revised,
and became effective in California on July 1, 2001.
The 1999 revisions to Article 9 of the UCC created rights
for licensees of general intangibles such as intellectual
property comparable to the rights of buyers of goods in the
ordinary course of business. (U. Com. Code Sec. 9231.)
When California was considering adoption of the revised
Article 9 of the UCC, the Directors Guild of America, Inc.
and the Screen Actors Guild expressed concerns about how
the proposed revision to Section 9321 would affect their
operations. According to these groups, exclusive licenses
granted to investors and others who may have perfected
security interests or rights to proceeds from a film
production (employees, for example) may end up with
diminished rights to security interests in the goods (the
film) that may be asserted by nonexclusive licensees (for
example, DVD rental stores).
Prior Legislation
AB 2302 (Assembly Judiciary Committee), Chapter 567,
Statutes of 2006 . Extended the sunset date to January 1,
2010.
SB 283 (Sher), Chapter 235, Statutes of 2003 . Extended the
sunset date to January 1, 2007.
SB 45 (Sher), Chapter 991, Statutes of 1999 . Enacted
Section 9321 as part of a revision of Article 9 of the
Uniform Commercial Code.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
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SUPPORT : (Verified 9/1/09)
Director's Guild of America, Inc. (source)
Uniform Law Commission
ARGUMENTS IN SUPPORT : The sponsor of this bill, the
Directors Guild of America, Inc., believes that another
sunset extension is necessary to maintain the status quo
regarding Section 9321. According to both the UCL and the
sponsors of this bill, the extension is also necessary in
order to allow the involved parties to evaluate the effect
of Section 9321 on exclusive and nonexclusive licensees in
the context of existing and continually evolving technology
to deliver goods (e.g., such as "streaming media to cell
phones").
RJG:cm 9/1/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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