BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 2249 (Cooley) - State parks ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 2, 2016 |Policy Vote: N.R. & W. 9 - 0, | | | JUD. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 8, 2016 |Consultant: Narisha Bonakdar | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 2249 prohibits a concession contract from providing a contracting party with a trademark or service mark of the names associated with a state park. Fiscal Impact: One-time costs of $50,000 to $150,000 (General Fund) to the California Department of Parks and Recreation (CDPR) to develop regulations. Unknown, potentially significant costs, to ensure compliance with anti-trademarking provisions and to provide required appeals process, if requested. Unknown cost for potential litigation for contested contract awards. (See staff comments) Background: California Department of Parks and Recreation. CDPR manages AB 2249 (Cooley) Page 1 of ? California's state park system, comprised of 280 State Parks, State Natural Reserves, State Historic Parks, State Historic Monuments, State beaches, State Recreation Areas, State Vehicular Recreation Areas, State Seashores and State Marine Parks that are visited by over 67 million visitors each year. Together, State Park System lands protect and preserve culturally and environmentally sensitive structures and habitats, threatened plant and animal species, ancient Native American sites, historic structures and artifacts. Under existing law, the CDPR may enter into contracts for the construction, maintenance, and operation of concessions within units of the state park system, and describes the process through which concession bids are solicited and selected. Currently, CDPR has approximately 200 contracts with vendors. Concession contracts are required, with specified exceptions, to be awarded to the best responsible bidder. The best responsible bidder is a bidder who will (1) operate the concession consistent with the contract; (2) operate in a manner fully compatible with and complimentary to the characteristics, features, and theme of the park; and (3) operate in the best interests of the state and the public (Public Resources Code § 5080.05). Alternatively, the director of CDPR is authorized to negotiate or renegotiate a contract under specific conditions, including the bid process failed to produce a best responsible bidder. Existing law also requires all concession contracts to contain several provisions, including: a. Maximum term shall be 10 years, unless under certain conditions, as described. b. If the concession contract is for construction, development and operation of a multiple-unit lodging facility with an initial cost of more than $1.5 million, the maximum term may be 50 years. AB 2249 (Cooley) Page 2 of ? c. Every concessionaire shall submit to CDPR all sales and use tax returns and provide an annual financial statement. Every concessionaire is subject to audit by CDPR. d. The state is not obligated to purchase any improvement made by the concessionaire if a contract is terminated for substantial breach. The Case for the Trademark Clause. This bill was sparked by a recent, well publicized, contract dispute involving Yosemite National Park. For the last 23 years, the Delaware North Company was the concessionaire operating visitor services and facilities within Yosemite National Park under a contract with the National Park Service. In 2015, the National Park Service rebid the contract and awarded a new 15 year concession contract to Aramark who was the successful bidder. After Delaware North lost the contract they sued the federal government for "breach of an implied contract" and other alleged bidding issues. They also asserted they were entitled to compensation for various trademarks and other intellectual property rights they had registered while they were the concessionaire in Yosemite. According to Delaware North, some of the trademark registrations were acquired by Delaware North from the Curry Company, the previous concessionaire, along with other Curry Company assets, and some were newly registered by Delaware North after they became the concessionaire. Among the names they claim to have a registered trademark property right for are "The Ahwahnee," "Yosemite Lodge," "Wawona," "Curry Village," and "Badger Pass," all of which are well-known venues within Yosemite National Park. Also, the Delaware North Company claims to have a registered trademark for the name "Yosemite National Park" and the iconic Half Dome used on logos and other merchandise sold through the gift shop. Delaware North has asserted that it is entitled to compensation for the value of its trademarks and other intellectual property rights in Yosemite National Park which it claims is valued at $51 million. The National Park Service has countered that the AB 2249 (Cooley) Page 3 of ? value is closer to $1.63 million, and alleges that many of the trademarks were registered without its knowledge or consent. The National Park Service has also filed a petition with the United States Patent and Trademark Office seeking to cancel the disputed trademarks. Delaware North offered to let the park keep the names while the legal process plays out. But, rather than risk an injunction that might interrupt service at Yosemite, the National Park Service removed the contested names from various signs, bridges, and other places within the park, and renamed the venues, at a total cost of $1.7 million. For example, the historic Ahwahnee Hotel, which is listed on the National Register of Historic Places as a National Historic Landmark, is being renamed "the Majestic Yosemite Hotel." The dispute has outraged many park visitors who see the trademark claims as violating the public trust and the deeply held understanding that the national parks are national treasures that belong collectively to the people of the country. Proposed Law: This bill establishes the California Heritage Protection Act. Specifically, the bill: 1)Prohibits a concession contract from providing a contracting party with a trademark or service mark of the names associated with a state park. 2)Makes several legislative findings and declarations regarding the public interest and historical significance served by national, state, and regional parks, including Yosemite National Park. 3)Modifies the definition of best responsible bidder, for purposes of existing law governing the awarding of concession contracts for state parks, to include that the bidder shall operate the concession in a manner that protects the state's AB 2249 (Cooley) Page 4 of ? trademark and service mark rights in the names associated with a state park and state park resources. 4)Provides that a concessionaire, who makes a legal claim to have a trademark or service mark interest in a state park in violation of the law, shall forfeit the right to bid on future state park concession contracts, to the extent authorized by federal law. 5)Provides that a concessionaire who files an application for a trademark or service mark associated with a state park or state park resources that is successfully opposed or cancelled by the state, shall be responsible for the state's attorney's fees and costs. 6)Prohibits a concession contract awarded for a state park from providing the contracting party with a trademark or service mark interest in the name or names associated with a state park or state park resources, or from serving as the basis for any legal claim that the contracting party has such an interest. 7)Prohibits a bidder from being awarded a state park concession contract if the bidder has made a legal claim or assertion to have a trademark associated with a state park in violation of this statutory prohibition, or if a court has determined that the bidder has made a claim to have a trademark or service mark interest in the name or names associated with a state or federal park venue without reasonable cause and in bad faith. 8)Requires CDPR to adopt regulations to provide a bidder who is denied a contract award on the basis of trademark claims with written notice and an opportunity to rebut the denial at a formal hearing. 9)Provides that a provision of a concession contract or other agreement that violates these provisions shall be void and unenforceable. AB 2249 (Cooley) Page 5 of ? 10) Provides that this bill's prohibition on state park concession contracts providing the basis for a trademark claim in the name or names associated with a state park 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. 11) States that the bill is declaratory of existing law. Staff Comments: Purpose. According to the author, the current concessionaire of Yosemite National Park has operated there since 1993 but recently lost the bid to renew their contract. In response, they claimed the names of several Yosemite landmarks as their intellectual property. Unable to resolve the dispute, the National Park Service has re-named the Ahwahnee Hotel, Curry Village and the Wawona Hotel. This bill will prevent similar claims in state parks. Current contracts. The contract typically used by CDPR for state park concessions in California expressly prohibits a concessionaire from obtaining a trademark claim in any name or logo associated with a state park, and provides that any such trademark that might be created during the period of the contract shall continue in CDPR's exclusive ownership upon termination of the Contract. While this is the current practice at CDPR, this bill would ensure that such protections continue to apply in the future. CDPR's fiscal. According to the CDPR, "The Department cannot comply with the requirements of this bill within existing resources, therefore, this bill would have General Fund implications. Additional costs would be associated with developing regulations and the additional workload to research the background of potential concessionaires." CDPR estimates one-time costs of $150,000 (General Fund) to AB 2249 (Cooley) Page 6 of ? develop regulations, and approximately $335,000 annually (General Fund) for staff to research potential concessionaires, amend current concession contracts; hold appeals hearings, if requested; and conduct outreach on this new law. It is not clear that the level of resource-intensive, research accounted for in CDPR's fiscal is intended; however, this interpretation highlights a potentially costly ambiguity in the bill given that CDPR's interpretation will guide implementation. The author may wish to clarify that CDPR may allow contract bidders to self-certify compliance with the law, and to only require CDPR to deny or end a contract if it becomes aware of a violation. Potential litigation? The CDPR notes the "likelihood of additional Departmental costs for Attorney General Representation due to contested contract awards. For context, billing for representation by the Attorney General in a recent contested concession contract award was $80,000. That case was considered straightforward and uncomplicated." -- END --