BILL ANALYSIS                                                                                                                                                                                                    Ó





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular Session


          AB 2249 (Cooley)
          Version: May 27, 2016
          Hearing Date: June 28, 2016
          Fiscal: Yes
          Urgency: No
          TH   


                                        SUBJECT
                                           
                                     State Parks

                                      DESCRIPTION  

          This bill provides, commencing January 1, 2017, that a  
          concession contract awarded to a contracting party shall not  
          provide any interest in a trademark or service mark in the name  
          or names associated with a state park venue, or its historical,  
          cultural, or recreational resources.  This bill would also  
          preclude contracting parties who pursue claims in violation of  
          the above provision, or in bad faith without reasonable cause as  
          determined by a court, from being awarded concession contracts,  
          as specified.

                                      BACKGROUND  

          Late last year, the National Park Service (NPS) became embroiled  
          in litigation with a former long-term concessionaire called  
          Delaware North over intellectual property rights to place names  
          in Yosemite National Park.  During the course of its concession  
          contract, Delaware North filed for trademark protection of  
          several place names in the park, including "Yosemite National  
          Park," "The Ahwahnee," "Curry Village," "Wawona" and "Badger  
          Pass."  According to a recent news story, "[a]fter losing the  
          lucrative, 15-year Yosemite concession contract to a subsidiary  
          of the Philadelphia-based Aramark Sports & Entertainment,  
          [Delaware North] sued the park service in claims court for what  
          it says is the value of its intellectual property, the  
          trademarks."  (Michael Doyle, U.S. Steps Up Fight Over Yosemite  
          Names, Asking Trademarks Be Canceled, Sacramento Bee (March 18,  








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          2016)  [as of June 22, 2016].)  The Sacramento  
          Bee reports:

            Amid the contract competition, Delaware North had valued its  
            overall "intangible" property in Yosemite at $51 million, with  
            the trademarks pegged at $44 million and other assets such as  
            a customer database at $7 million.   The lawsuit asserted that  
            the park service's "failure to require Aramark to purchase and  
            pay fair value for the property" hurt Delaware North.   
            (Michael Doyle, Yosemite Concessionaire Wants $44 Million for  
            Trademarked Park Names, Fresno Bee (January 5, 2016)  
             [as  
            of June 22, 2016].)

          Responding to the suit, the U.S. Department of the Interior has  
          filed a petition with the Trademark Trial and Appeal Board to  
          cancel Delaware North's contested trademark registrations,  
          stating "[t]he fame or reputation of the National Park Service  
          is such that, when the trademarks are used with [Delaware  
          North's] goods or services, a connection with the National Park  
          Service is presumed," and notes that the appeal board "can  
          cancel trademarks that falsely suggest a connection with  
          persons, institutions, or national symbols."  (U.S. Steps Up  
          Fight Over Yosemite Names, Asking Trademarks Be Canceled,  
          Sacramento Bee.)  

          This bill responds to the problems confronting the National Park  
          Service by both declaring that contracts entered into with the  
          Department of Parks and Recreation (State Parks) after January  
          1, 2017, cannot provide a contracting concessioner with an  
          interest in a trademark or service mark, and by precluding the  
          State Parks from awarding a concession contract to any party  
          that claims a trademark or service mark in violation of this  
          restriction, or pursues an interest in such a trademark or  
          service mark in bad faith without reasonable cause as determined  
          by a court.

                                CHANGES TO EXISTING LAW
           
           Existing federal law  , Article I, Section 8 of the United States  
          Constitution, provides that Congress shall have the power to  
          "promote the progress of science and useful arts by securing for  
          limited times to authors and inventors the exclusive right to  
          their respective writings and discoveries."







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           Existing federal law  , the Lanham Act, provides the owner of a  
          federally registered mark with protection against use of similar  
          marks if confusion might result.  (15 U.S.C. 1051 et seq.)

           Existing law  , the Model State Trademark Law, allows any person  
          who adopts and uses a trademark or service mark in California to  
          register that mark with the Secretary of State, and renders  
          liable any person who infringes upon the use of such a mark, as  
          specified.  (Bus. & Prof. Code Sec. 14200)

           Existing law  makes the following definitions:
           "Trademark" means any word, name, symbol, or device, or any  
            combination thereof, used by a person to identify and  
            distinguish the goods of that person, including a unique  
            product, from those manufactured or sold by others, and to  
            indicate the source of the goods, even if that source is  
            unknown; and
           "Service mark" means any word, name, symbol, or device, or any  
            combination thereof, used by a person to identify and  
            distinguish the services of that person, including a unique  
            service, from the services of others, and to indicate the  
            source of the services, even if that source is unknown.  (Bus.  
            & Prof. Code Sec. 14202.)

           Existing law  authorizes the Department of Parks and Recreation  
          to enter into contracts for the construction, maintenance, and  
          operation of concessions within units of the state park system  
          for the safety and convenience of the general public in the use  
          and enjoyment of, and the enhancement of recreational and  
          educational experiences at, units of the state park system.   
          (Pub. Resources Code Sec. 5080.03.)

           Existing law  specifies that all contracts authorizing occupancy  
          of any portion of the state park system for a period of more  
          than two years shall be awarded to the best responsible bidder.   
          "Best responsible bidder" means the bidder, as determined by  
          specific standards established by the department, which, as  
          determined by the department, will operate the concession: (1)  
          consistent with the contract; (2) in a manner fully compatible  
          with, and complimentary to, the characteristics, features, and  
          theme of the unit in which the concession will be operated; and  
          (3) in the best interests of the state and public.  (Pub.  
          Resources Code Sec. 5080.05.)








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           This bill  adds to the definition of "best responsible bidder" a  
          bidder who will operate a concession in a manner that protects  
          the state's trademark and service mark rights in the names  
          associated with a state park venue and its historical, cultural,  
          and recreational resources.

           This bill  states that commencing on January 1, 2017, a  
          concession contract shall not provide the contracting party with  
          a trademark or service mark interest in the name or names  
          associated with a state park venue, or its historical, cultural,  
          or recreational resources, and shall not serve as the basis for  
          any legal claim that the contracting party has that interest, as  
          specified.  Any part of a contract or other agreement that  
          violates this provision shall be void and unenforceable.

           This bill  provides that if a concessionaire makes a legal claim  
          or assertion to have a trademark or service mark interest in  
          violation of the above provision, the concessionaire shall  
          forfeit the right to bid on future state park concession  
          contracts, as specified.

           This bill  states that a bidder on a concession contract shall  
          not be awarded a contract if either of the following applies:
           the bidder has made a legal claim or assertion to have a  
            trademark or service mark interest in violation the above  
            provision; or
           a court has determined that the bidder has made a legal claim  
            or assertion to have a trademark or service mark interest in  
            the name or names associated with a state or federal park  
            venue, or its historical, cultural, or recreational resources,  
            without reasonable cause and in bad faith.

           This bill  directs the department to adopt regulations to provide  
          a bidder who is denied a contract award with written notice of  
          that denial and an opportunity to rebut the basis for the  
          contract denial at a formal hearing.

           This bill  provides that if a current or former concessionaire  
          files a federal or state trademark or service mark application  
          for a trademark or service mark that incorporates or implies an  
          association with a state park venue, or its historical,  
          cultural, or recreational resources, and the state files a  
          successful opposition or cancellation with respect to that  
          trademark or service mark application, the concessionaire shall  
          be responsible for the state's attorney fees, costs, and  







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          expenses associated with that opposition or cancellation.

           This bill  provides that it shall not be construed to impact a  
          contracting party's valid trademark or service mark rights that  
          were held before the concession contract was awarded.

           This bill  makes related findings and declarations.

                                        COMMENT
           
           1.Stated need for the bill
           
          According to the author:

            AB 2249 is a "Heritage Protection Bill" for our state which we  
            believe can influence concession practices beyond the bill's  
            formal legal reach as law.  Despite being on the National  
            Register of Historic Places, a U.S. National Park's outgoing  
            concessionaire filed papers to trademark numerous Yosemite  
            National Park sites' names.  This has now forced a name change  
            to such storied California venues as the Ahwahnee Hotel, Curry  
            Village and the Wawona Hotel as part of this ongoing  
            litigation.

            In response to this dispute, AB 2249 protects historic  
            California state park trademarks.  It does so by prohibiting  
            concessionaires from claiming ownership of a name associated  
            with a California state park and further declares that if a  
            bidder makes such a claim, they are disqualified from bidding  
            on future contracts.  A state law cannot unilaterally undo  
            what the Yosemite concessionaire has done.  The authors  
            believe, however, that the ideas embodied in AB 2249 can and  
            should influence the resolution of the federal dispute while  
            also setting a firm state policy.  AB 2249's impact rests on  
            the premise that a concessionaire's business is incompatible  
            with a trademark or claim of ownership of park facilities  
            which they have been entrusted with as a steward.   
            California's treasured heritage sites are a part of our  
            state's public trust and it is self-evident that the state  
            would never approve giving away the inherent value associated  
            with those historic names and places. AB 2249 assures this.

            To prevent concessionaires from co-opting state landmarks, AB  
            2249 puts forth three key ideas:  First, this bill clarifies  
            that an awarded food or lodging contract does not entitle a  







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            company to any legal claim of a trademark. No State Parks  
            official has the authority to agree to contractual terms that  
            fail to safeguard the interests of California by offering a  
            public trademark to a private corporation.  Second, this bill  
            specifically prohibits concessionaires from claiming ownership  
            of a name associated with a California state park.  Finally, a  
            concessionaire who asserts a claim of this type will no longer  
            be viewed as a fit partner to contract with California state  
            parks. AB 2249 permanently disqualifies a concessionaire from  
            consideration for future contracts if they attempt a trademark  
            claim.

           2.Safeguarding state intellectual property
           
          Trademarks are distinctive marks that are used by individuals or  
          entities to identify the source of their products or services to  
          consumers, thus, distinguishing those products or services from  
          those of other entities.  These marks also protect consumers by  
          preventing the public from being misled as to the origin or  
          quality of a product or service.

          Both federal and state law allow for the registration of  
          trademarks, providing an owner with the right to exclude others  
          from using a specific mark or from using one confusingly similar  
          to their mark.  As federal registration is not required, many  
          companies who transact business solely within California do not  
          federally register their trademarks.  California's Model State  
          Trademark Law provides that trademarks may be registered with  
          the Secretary of State, although registration is not required to  
          protect them, since trademark rights also arise under common law  
          as a result of actual use in the marketplace.  Federal and state  
          trademark laws also provide remedies to holders of trademarks  
          and service marks - the equivalent mark for providers of  
          services - against those who infringe upon their mark.

          This bill helps preserve the state's interest in trademarks and  
          service marks closely connected with places and historical,  
          cultural, or recreational resources in units of the State Parks.  
           It precludes park concessionaires from coopting or developing  
          brand identities in connection with sites to which they have  
          been given temporary guardianship or control by clearly stating  
          that concession contracts entered into or renewed after January  
          1, 2017, shall not serve as the basis for any legal claim that  
          the contracting party has a trademark or service mark interest  
          in the name or names associated with a state park venue, or its  







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          historical, cultural, or recreational resources.

          This bill would also preserve the state's interest in trademarks  
          and service marks closely connected with places and historical,  
          cultural, or recreational resources in units of the State Parks  
          by disqualifying concessionaires who attempt to, or have  
          attempted to, infringe upon these or similar interests from  
          receiving future concession contracts.  First, this bill would  
          provide that a bidder on a concession contract shall be  
          disqualified from receiving that contract, or any future state  
          park concession contract, if they assert a trademark or service  
          mark interest in the name or names associated with a state park  
          venue, or its historical, cultural, or recreational resources,  
          on the basis of a contract award made after January 1, 2017.   
          Second, a bidder who is determined to have made a legal claim or  
          assertion to a trademark or service mark interest in the name or  
          names associated with either a state or federal park venue, or  
          its historical, cultural, or recreational resources, without  
          reasonable cause and in bad faith as determined by a court would  
          also be ineligible to receive a concession contract under this  
          bill.  This second ineligibility provision would cover bad faith  
          claims made either before or after January 1, 2017.

          However, this bill would also require that concessionaires  
          determined to be ineligible for a concession contract must still  
          be afforded written notice of the denial and an opportunity to  
          rebut the basis for the denial at a formal hearing.  This notice  
          and hearing procedure ensures that any concessionaire adversely  
          impacted by a determination of ineligibility under this bill's  
          provisions is afforded some measure of basic due process.  This  
          bill would also provide that it does not impact a contracting  
          party's valid trademark or service mark rights held before a  
          concession contract was awarded, thereby preserving any  
          intellectual property interest in such marks acquired before the  
          concessionaire's contractual relationship with the state began.

           3.Attorney fees
           
          This bill would also provide that if a current or former  
          concessionaire files a federal or state trademark or service  
          mark application for a trademark or service mark that  
          incorporates or implies an association with a state park venue,  
          or its historical, cultural, or recreational resources, and the  
          state files a successful opposition or cancellation with respect  
          to that trademark or service mark application, the  







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          concessionaire shall be responsible for the state's attorney  
          fees, costs, and expenses associated with that opposition or  
          cancellation.

          Generally in the United States, the "American rule" is that  
          parties are to bear their own costs in civil litigation.  In  
          Alyeska Pipeline Co. v. Wilderness Society (1975) 421 U.S. 240,  
          the United States Supreme Court held that it was the province of  
          the legislative branch to craft exceptions to the "American  
          rule," and that courts were not free to shift such costs absent  
          express legislative authorization.  (Id. at 269-270.)  In 1977,  
          the Legislature enacted Code of Civil Procedure Section 1021.5,  
          which appeared to be "in significant measure ? an explicit  
          reaction to the United States Supreme Court's Alyeska decision."  
           (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23  
          Cal.3d 917, 934.)  
          Section 1021.5 provides courts with authority to award  
          attorney's fees in actions to enforce important rights in the  
          public interest that confer a significant benefit on a large  
          class of persons.  Specifically, Section 1021.5 was intended to  
          encourage litigation deemed to be in the public interest by  
          persons acting as a private attorney general.  This doctrine  
          rests on the recognition that privately initiated lawsuits are  
          often essential to the effectuation of public policies embodied  
          in constitutional or statutory provisions, and that without some  
          mechanism authorizing the award of attorney fees, private  
          actions to enforce such public policies would be financially  
          impracticable.  As explained recently by the California Supreme  
          Court, "section 1021.5 [addresses] the problem of affordability  
          of such lawsuits.  Because public interest litigation often  
          yields nonpecuniary and intangible or widely diffused benefits,  
          and because such litigation is often complex and therefore  
          expensive, litigants will be unable either to afford to pay an  
          attorney hourly fee or to entice an attorney to accept the case  
          with the prospect of contingency fees, thereby often making  
          public interest litigation as a practical matter . . .  
          infeasible."  (Conservatorship of Whitley (2010) 50 Cal.4th  
          1206, 1219 [internal citations and quotation marks omitted].)

          The standard set by Section 1021.5 is rigorous and is  
          conditioned upon three requirements being met: (1) a significant  
          benefit is provided to the general public; (2) the necessity and  
          financial burden of private enforcement, or of enforcement by  
          one public entity against another public entity, are such as to  
          make the award appropriate; and (3) such fees should not in the  







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          interest of justice be paid out of the recovery, if any.    
          Additionally, the statute specifically provides for an important  
          exception to this rule when the matter involves a public agency,  
          as follows: "With respect to actions involving public entities,  
          this section applies to allowances against, but not in favor of,  
          public entities, and no claim shall be required to be filed  
          therefor, unless one or more successful parties and one or more  
          opposing parties are public entities."  (Code Civ. Proc. Sec.  
          1021.5.)   In other words, a public agency may not receive  
          attorney fees under Section 1021.5.

          Costs of litigation, in contrast, are generally recoverable by  
          the prevailing party in civil litigation as a matter of right.   
          Code of Civil Procedure Section 1032 states that, "except as  
          otherwise expressly provided by statute, a prevailing party is  
          entitled as a matter of right to recover costs in any action or  
          proceeding."  Other provisions in the Code of Civil Procedure,  
          such as Section 1033.5, enumerate specific items that may be  
          recovered as costs as well as those which cannot be claimed.   
          The applicable sections of California's Model State Trademark  
          Law do not appear to expressly bar a prevailing party from  
          recovering their costs in an action brought to invalidate a  
          trademark or service mark.  Consequently, existing law currently  
          authorizes the state to recover its cost when it prevails in  
          such an action.

          The types of suits that would be subject to attorney fee  
          shifting under this bill would largely involve a public entity  
          bringing suit against a private person or entity, which is not  
          one of the fee-shifting scenarios authorized by Section 1021.5.   
          Allowing fee shifting by a public entity, such as the State  
          Parks, against private individuals could undermine an  
          individual's ability to pursue judicial redress to enforce their  
          rights.  Fears of having to pay a substantial sum in attorney  
          fees may disincentivize individuals from bringing meritorious  
          claims against the State Parks, thereby undermining an important  
          check on the powers exercised by the agency, particularly since  
          the Model State Trademark Law already authorizes parties to  
          recover all damages sustained as a consequence of the filing or  
          registration of any mark by knowingly making a false or  
          fraudulent representation or declaration.  (See Bus & Prof Code  
          Sec 14240.)

           4.Retroactivity
           







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          As noted in Comment 2, this bill would declare that commencing  
          January 1, 2017, specified concession contracts shall not  
          provide a contracting party with a trademark or service mark  
          interest in the name or names associated with a state park  
          venue, or its historical, cultural, or recreational resources,  
          and shall not serve as the basis for any legal claim that the  
          contracting party has that interest.  In unresolved tension,  
          this bill also states that this provision "does not constitute a  
          change in, but is declaratory of, existing law."

          "Generally, statutes operate prospectively only."  (McClung v.  
          Employment Dev. Dept. (2004) 34 Cal.4th 467, 475.)
           
            [T]he presumption against retroactive legislation is deeply  
            rooted in our jurisprudence, and embodies a legal doctrine  
            centuries older than our Republic.  Elementary considerations  
            of fairness dictate that individuals should have an  
            opportunity to know what the law is and to conform their  
            conduct accordingly; settled expectations should not be  
            lightly disrupted.  For that reason, the principle that the  
            legal effect of conduct should ordinarily be assessed under  
                      the law that existed when the conduct took place has timeless  
            and universal appeal.  (Landgraf v. USI Film Products (1994)  
            511 U.S. 244, 265 (internal citations omitted).)

          "A statute does not operate [retroactively] merely because it is  
          applied in a case arising from conduct antedating the statute's  
          enactment, or upsets expectations based in prior law.  Rather, a  
          court must ask whether the new provision attaches new legal  
          consequences to events completed before its enactment."   
          (Landgraf, 511 U.S. at 269-70 (internal citations omitted).)   
          "This is not to say," however, "that a statute may never apply  
          retroactively."  (McClung, 34 Cal.4th at 475.)  In California,  
          "[a] statute's retroactivity is, in the first instance, a policy  
          determination for the Legislature and one to which courts defer  
          absent some constitutional objection to retroactivity."  (Id.,  
          at 475.)  Under California law, "a statute may be applied  
          retroactively only if it contains express language of  
          retroactivity or if other sources provide a clear and  
          unavoidable implication that the Legislature intended  
          retroactive application."  (Myers v. Philip Morris Companies,  
          Inc. (2002) 28 Cal.4th 828, 844.)

          On the other hand, legislation which merely clarifies existing  
          law may be found not retroactive in effect.  (See, e.g.,  







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          Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019,  
          1028.)  "Courts are not to infer that legislation merely  
          clarifies existing law unless (1) the nature of the amendment  
          clearly demonstrates such an intent or (2) the legislature has  
          itself stated that the particular amendment is merely  
          declaratory of existing law."  (Goldman v. Standard Ins. Co.  
          (9th Cir. 2003) 341 F.3d 1023, 1029.

          While it may be true that concession contracts, no matter when  
          they were entered into, can never serve as the basis of a  
          trademark or service mark claim to state park venues, or  
          historical, cultural, or recreational resources, this particular  
          provision identified as declaratory of existing law clearly  
          indicates that it operates prospectively, beginning as it does  
          with the clause "commencing January 1, 2017."  To resolve this  
          tension, the Committee may wish to offer amendments that  
          de-couple the principle that concession contracts cannot give  
          rise to specified intellectual property claims, from the new  
          penalties imposed on parties who make such claims after January  
          1, 2017.


           Support  :  California Association of Professional Scientists;  
          California Association of Recreation and Park Districts;  
          California Department of Insurance; California Park and  
          Recreation Society; California State Parks Foundation;  
          California State Treasurer; East Bay Regional Parks District;  
          Sierra Club California

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Author

           Related Pending Legislation  :  None Known

           Prior Legislation  :

          AB 744 (Perez, Ch. 463, Stats. 2012) requires the Department of  
          General Services to identify and provide policy guidance for  
          state agency management of intellectual property developed by  
          state employees or with state funds.

          AB 1484 (Krekorian, Ch. 711, Stats. 2007) repealed California's  







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          Trademark Law and replaced it with the Model State Trademark  
          Law, making numerous changes, including:  (1) reducing the  
          registration period from 10 to 5 years; (2) requiring applicants  
          to state whether a similar mark has been registered in this  
          state; (3) conforming dilution provisions to the federal "likely  
          to dilute" standard; (4) stating that federal case law is  
          persuasive authority; and (5) removing a the provision stating  
          that a registration constitutes prima facie evidence of the  
          registrant's right to use the mark in California.

           Prior Vote  :

          Senate Natural Resources and Water Committee (Ayes 9, Noes 0)
          Assembly Floor (Ayes 80, Noes 0)
          Assembly Appropriations Committee (Ayes 20, Noes 0)
          Assembly Judiciary Committee (Ayes 10, Noes 0)
          Assembly Water, Parks and Wildlife Committee (Ayes 15, Noes 0)

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