BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2249|
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                                   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.








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          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.








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             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.







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          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.







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          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  







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          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  







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          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)








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          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  







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          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


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