BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2249| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2249 Author: Cooley (D), Bigelow (R) and Gray (D), et al. Amended: 8/18/16 in Senate Vote: 21 SENATE NATURAL RES. & WATER COMMITTEE: 9-0, 6/14/16 AYES: Pavley, Stone, Allen, Hertzberg, Hueso, Jackson, Monning, Vidak, Wolk SENATE JUDICIARY COMMITTEE: 7-0, 6/28/16 AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen ASSEMBLY FLOOR: 80-0, 6/2/16 - See last page for vote SUBJECT: State parks SOURCE: Author DIGEST: This bill establishes the California Heritage Protection Act, which prohibits a concession contract from providing a contracting party with a trademark or service mark of the names associated with a unit of the state park system. This bill further requires that a concessionaire forfeit the right to bid on future state parks concession contracts if the concessionaire makes a legal claim or assertion to a trademark or service mark of the historical, cultural, or recreational resources in a state park unit. AB 2249 Page 2 Senate Floor Amendments of 8/18/16 add double jointing language to avoid chaptering out issues with SB 1473 (Senate Natural Resources and Water Committee). ANALYSIS: Existing law: 1)Allows the Department of Parks and Recreation (DPR) to enter into concession contracts within units of the state park system. Existing law describes the process required to solicit and select concession contract bids. a) 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). b) Alternatively, the director of DPR is authorized to negotiate or renegotiate a contract under specific conditions, including if the bid process failed to produce a best responsible bidder. 2)Requires all concession contracts to contain several provisions, including: a) Maximum term shall be 10 years, unless under certain conditions, as described. b) A concession contract may exceed 50 years if it involves the construction, development and operation of a multiple-unit lodging facility with an initial cost of more than $1.5 million. AB 2249 Page 3 c) Every concessionaire shall submit to DPR all sales and use tax returns and provide an annual financial statement. Every concessionaire is subject to audit by DPR. d) The state is not obligated to purchase any improvement made by the concessionaire if a contract is terminated for substantial breach. This bill: 1)Makes several legislative findings and declarations regarding the public interest and historical significance served by national, state, and regional parks, including Yosemite National Park. This bill finds and declares that California state parks are held in trust for the people of California, that a legal claim to a trademark right in a name or a names associated with a state park derogates the interests of California, and that making such a claim is indicative of the claimants lack of fitness to serve as a steward of state parks. This bill finds and declares that an agreement entered into by a California state agency that compromises the interests of Californians is "ultra vires" and, therefore, beyond that agency's legal authority to enter. 2)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 trademark and service mark rights in the names associated with a state park and state park resources. 3)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. AB 2249 Page 4 4)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. 5)Prohibits, commencing January 1, 2017, 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. States that this prohibition is declaratory of existing law. 6)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. 7)Requires DPR 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. 8)Provides that a provision of a concession contract or other agreement that violates these provisions shall be void and unenforceable. 9)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. AB 2249 Page 5 Background 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 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 AB 2249 Page 6 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. Comments Impact on National Park concession contracts. While this bill targets concession contracts in state parks, it includes provisions to encourage concessionaires to follow the same rules when entering into contracts with national parks. This bill makes a concessionaire ineligible for a state park concession contract if a court determined that the concessionaire made a legal claim to have a trademark interest in the name or names associated with a state or federal park venue. Thus, while the state cannot dictate the terms of contracts in federal parks, this bill is attempting to use the possibility of losing future concession contracts in state parks as motivation to avoid making trademark claims in national parks. Related/Prior Legislation SB 1473 (Committee on Natural Resources and Water, 2016) allows concession contracts at Will Rogers State Beach to be awarded for up to 50 years if the anticipated capital improvements will exceed $1.5 million. Amendments were also added to avoid AB 2249 Page 7 conflicts with AB 2249. The bill passed the Assembly and has been ordered to the Senate for concurrence. AB 744 (Perez, Chapter 463, Statutes of 2012) required 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, Chapter 711, Statutes of 2007) repealed California's Trademark Law and replaced it with the Model State Trademark Law, making numerous changes, including: (1) reducing the registration period from 10 to five 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: One-time costs of $50,000 to $150,000 (General Fund) to DPR 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. SUPPORT: (Verified 8/12/16) AB 2249 Page 8 California Insurance Commissioner Dave Jones California State Treasurer John Chiang California Association of Professional Scientists California Association of Recreation and Park Districts California State Parks Foundation California Park and Recreation Society East Bay Regional Park District Sierra Club California OPPOSITION: (Verified 8/12/16) None received ARGUMENTS IN SUPPORT: At the core of the arguments in support is the notion that state parks are part of the state's public trust and that this bill is essential to protecting the integrity of California's treasured state parks. The author argues that to prevent concessionaires from co-opting state landmarks, this bill puts forth three key ideas. First, this bill clarifies that an awarded food or lodging contract does not entitle a company to any legal claim of a trademark. No State Park 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. This bill permanently disqualifies a concessionaire from consideration for future contracts if they attempt a trademark claim. This bill's impact rests on the premise that a state park concessionaire's business is incompatible with a trademark or claim of ownership of park facilities which they have been entrusted with as a steward, but which still remain the property of the state. The author asserts that 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 AB 2249 Page 9 with those historic names and places. ASSEMBLY FLOOR: 80-0, 6/2/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon Prepared by:Matthew Dumlao / N.R. & W. / (916) 651-4116 8/19/16 18:49:20 **** END ****