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Yosemite Trademark Spat Leads to Enactment of California Heritage Protection Act

January 16, 2017News & Recent Developments

Photo of Yosemite | Feature Image for Blog Post Discussing California's Heritage Protection Act and Prohibition on Obtaining Trademarks Associated with California State Parks

On January 1, 2017, the California Heritage Protection Act ("CHPA") went into effect. Boiled down to its essence, the CHPA prohibits concessionaires at California's state parks from claiming trademark rights in names associated with a California state park venue or its historical, cultural, or recreational resources. The CHPA, and the very specific fact scenario it outlaws, is the direct result of what happens when a trademark dispute is exposed to the bright lights of the media and massive public outrage ensues.

The California Heritage Protection Action Protects Trademarks Associated with State Parks

On February 22, 2016, California State AssemblyMember Ken Cooley introduced the CHPA into the California State Assembly. On August 23, 2016, the California State Senate approved the CHPA. On September 21, 2016, California Governor Jerry Brown signed the CHPA into law.

The CHPA amends §§ 5080.05 and 5080.18 of the California Public Resources Code and adds § 5080.22. Here's a redline showing the additions and deletions:

5080.5
(a) Except as provided in Section 5080.16, 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.
(b) Except as provided in Section 5080.16, 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, that,  as determined by the department, will operate the concession (1) consistent with the contract, (2) in a manner fully compatible with, and complimentary complementary 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. public, and (4) 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. For purposes of this section, a bidder who would be subject to subdivision (b) of Section 5080.22 is not a best responsible bidder.

5080.18
All A  concession contracts contract  entered into pursuant to this article shall contain, but are is  not limited to, all of the following provisions:
(a) (1) The maximum term shall be 10 years, except that a term of more than 10 years may be provided if the director determines that the longer term is necessary to allow the concessionaire to amortize improvements made by the concessionaire, to facilitate the full utilization of a structure that is scheduled by the department for replacement or redevelopment, or to serve the best interests of the state. The term shall not exceed 20 years without specific authorization by statute. Except as provided in Section 5080.16, all renewals of concession contracts pursuant to this paragraph shall be subject to competitive bidding requirements.
(2) The maximum term shall be 50 years if the concession contract is for the construction, development, and operation of multiple-unit lodging facilities equipped with full amenities, including plumbing and electrical, that is anticipated to exceed an initial cost of one million five hundred thousand dollars ($1,500,000) in capital improvements in order to begin operation. The term for a concession contract described in this paragraph shall not exceed 50 years without specific authorization by statute. Except as provided in Section 5080.16, all renewals of concession contracts pursuant to this paragraph shall be subject to competitive bidding requirements.
(3) Notwithstanding paragraph (1), a concession agreement at Will Rogers State Beach executed prior to December 31, 1997, including, but not limited to, an agreement signed pursuant to Section 25907 of the Government Code, may be extended to exceed 20 years in total  may be may be awarded for up to 50 years in  length without specific authorization by statute, upon approval by the director and pursuant to a determination by the director that the longer term is necessary to allow the concessionaire to amortize improvements made by the concessionaire that are anticipated to exceed one million five hundred thousand dollars ($1,500,000) in capital improvements. Any extensions granted pursuant to this paragraph shall not be for more than 15 years.
(b) Every concessionaire shall submit to the department all sales and use tax returns and, at the request of the department, provide an annual financial statement prepared or audited by a certified public accountant.
(c) Every concession shall be subject to audit by the department.
(d) A performance bond shall be obtained and maintained by the concessionaire. In lieu of a bond, the concessionaire may substitute a deposit of funds acceptable to the department. Interest on the deposit shall accrue to the concessionaire.
(e) The concessionaire shall obtain and maintain in force at all times a policy of liability insurance in an amount adequate for the nature and extent of public usage of the concession and naming the state as an additional insured
(f) Any discrimination by the concessionaire or his or her agents or employees against any person because of the marital status or ancestry of that person or any characteristic listed or defined in Section 11135 of the Government Code is prohibited.
(g) To be effective, any modification of the concession contract shall be evidenced in writing.
(h) Whenever a concession contract is terminated for substantial breach, there shall be no obligation on the part of the state to purchase any improvements made by the concessionaire.
(i) If a concessionaire makes a legal claim or assertion to have a trademark or service mark interest in violation of subdivision (a) of Section 5080.22, the concessionaire shall forfeit the right to bid on future state park concession contracts to the extent authorized by federal law.
(j) If a current or former concessionaire in bad faith 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 expenses associated with that opposition or cancellation.

5080.22
(a) (1) A concession contract awarded pursuant to Section 5080.05, 5080.16, or 5080.23 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.
(2) This subdivision does not constitute a change in, but is declaratory of, existing law.

(b) To the extent consistent with federal law, a bidder shall not be awarded a contract pursuant to Section 5080.05, 5080.16, or 5080.23 if either of the following applies:
(1) The bidder has made a legal claim or assertion to have a trademark or service mark interest in violation of subdivision (a).
(2) 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.
(c) The department shall adopt regulations to provide a bidder who is denied a contract award based on subdivision (b) with written notice of that denial and an opportunity to rebut the basis for the contract denial at a formal hearing.
(d) Commencing January 1, 2017, a provision of a contract or other agreement entered into pursuant to Section 5080.05, 5080.16, or 5080.23 that violates subdivision (a) shall be void and unenforceable.
(e) This section 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.
 Before examining the plain language of the CHPA, let's get a quick overview on what prompted the enactment of the CHPA.

The Yosemite Trademark Dispute That Led to the CHPA

The CHPA was enacted to prevent a very specific trademark dispute that has garnered significant media attention. DNC Parks & Reports at Yosemite, Inc. ("DNCY"), a concessionaire at Yosemite for more than 22 years, filed trademark applications, and obtained trademark registrations, for BADGER PASS, WAWONA, CURRY VILLAGE, THE AHWAHNEE, and YOSEMITE NATIONAL PARK. The National Park Service ("NPS") filed a petition to cancel the marks, which the Trademark Trial and Appeal Board ("TTAB") instituted as Cancellation No. 92063225. Rather than litigate at the TTAB, DNCY initiated a lawsuit in the U.S. Court of Federal Claims, which led to the TTAB cancellation proceeding being suspended pending the outcome of the lawsuit. The documents filed in the TTAB cancellation proceeding can be accessed here: TTAB Cancellation No. 92063225.

In short, DNCY claims that, when it signed its concessions agreement with NPS, it was required to purchase trademark assets from the prior concessionaire, Curry Company, but now that Yosemite Hospitality, LLC is taking over as the new concessionaire, NPS is not requiring Yosemite Hospitality to purchase the trademark assets from DNCY. More details are disclosed in DNCY's Motion to Suspend for Civil Litigation, which includes a copy of its federal complaint as an exhibit. The spat led NPS to change the name of park attractions from The Ahwanhee, Wawona Hotel, and Curry Village to the Majestic Yosemite Hotel, Big Trees Lodge, and Half Dome Village. Of course, NPS' decision to change the names of these landmarks led to public outrage. It also led to the CHPA.

A Deeper Look at the CHPA

With the DNCY v. NPS trademark dispute in mind, the CHPA has become California law. But what does the CHPA really have to say about trademark rights vis-a-vis names associated with a California park venue?

Parsing the Exact Language of the CHPA as It Relates to Trademarks

I think we know what California was trying to accomplish with the CHPA. But what does it actually accomplish? Let's take a look-see:

  • § 5080.05(b)(4) defines "best responsible bidder" as the bidder that the Department of Parks and Recreation determines will operate the 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."
    • Look-see take: This doesn't seem to be a statutory provision that a bidder or concessionaire can violate. So while this provision requires the Department to consider trademarks as a factor in determining a best responsible bidder, it doesn't actually have a substantive affect. In addition, it would have been nice to more clearly define the phrase "names associated with a state park venue or its historical, cultural, or recreational resources," which is repeated in several other CHPA statutory sections. It's an incredibly broad and amorphous phrase.
  • § 5080.18(i) states that if a concessionaire claims a trademark right in violation of Section 5080.22(a), then the concessionaire forfeits its right to bid on future state park concession contracts.
    • Look-see take: As mentioned below, § 5080.22(a) prohibits a concessionaire from claiming trademark rights based on rights derived from a concession contract. But what if the concession contract does not purport to provide the concessionaire with trademark rights and the concessionaire claims trademark rights by virtue of its use in commerce rather than by virtue of the contract? Technically speaking, this does not appear to be a violation of § 5080.18(i).
  • § 5080.18(j) states that, if a concessionaire files a federal or state trademark application in bad faith for a trademark that incorporates or implies an association with a California state park venue or its historical, cultural, or recreational resources, and the state files an opposition or cancellation and wins, then the concessionaire is on the hook for the state's attorneys' fees, costs, and expenses.
    • Look-see take: This provision seems to only be directed at filing a federal or state trademark application and does not address claiming trademark rights by virtue of use in commerce. Also, last time I checked, there were no oppositions or cancellations of state trademarks (unless you are counting a lawsuit seeking cancellation as a remedy, which I don't think was contemplated). Also, what constitutes "bad faith" under this section? If there's not explicit law prohibiting a concessionaire from claiming trademark rights in a mark it is using in commerce, where's the bad faith?
  • § 5080.22(a)(1) states that a concession contract shall not provide the contracting party with trademark rights in names associated with a California state park venue or its historical, cultural, or recreational resources and that the concession contract shall not serve as the basis for a legal claim that the contracting party has a trademark interest.
    • Look-see take: Same deal here. Even if the contract does not provide the concessionaire with trademark rights, why can't the concessionaire make a claim based on use in commerce?
  • § 5080.22(b) states that a bidder shall not be awarded a contract if (1) the bidder has made a legal claim in violation of Section 5080.22(a) or (2) if a court has determined that the bidder has made a legal claim to a trademark for a name associated with a state or federal park venue or its historical, cultural, or recreational resources without reasonable cause and in bad faith.
    • Look-see take: § 5080(b)(2) is the first time we see something akin to a prohibition on claiming trademark rights for a name associated with a California state park or its historical, cultural, or recreational resources. Of course, it doesn't actually prohibit that, it just prohibits awarding a contract to a bidder who has made such a claim.
  • § 5080.22(d) states that any provision of a contract that violates Section 5080.22(a) will be void after January 1, 2017.
    • Look-see take: § 5080.22(d) is self-explanatory. However, again, this provision does not prohibit someone from claiming trademark rights based on use.
  • § 5080.22(e) says that Section 5080.22 won't affect any trademark rights owned by the concessionaire before the concession contract was awarded.
    • Look-see take: § 5080.22(e) seems to indicate that, if a concessionaire continues to use its pre-existing trademark(s) once it has been awarded a concession contract, its pre-existing trademark(s) won't be transformed into a "name associated with a state park venue or its historical, cultural, or recreational resources." But what if after being awarded a concession contract, a concessionaire adopts a newly created trademark of its own choosing and uses it for a very long time in a state park venue—does that mark become a name associated with a state park venue?

What's curious to me is why California didn't simply prohibit someone (concessionaire or otherwise) from using and/or owning trademark rights in a name associated with a California state park? Something like 15 U.S.C. § 1502(b), which prohibits registering trademarks for the United States flag or coat of arms or other insignia of the United States. In fact, California actually has a corresponding statute protecting the U.S. flag and insignia,namely, California Business & Professions Code § 1205(c). Was this an oversight? Was the legislature too focused on the Yosemite trademark dispute to include a simple statutory section prohibiting trademark use and ownership?

Does the CHPA Prevent Claiming Federal Trademark Rights?

Can the CHPA prevent a concessionaire from claiming trademark rights in a trademark that it is using in interstate commerce? Obviously, depending on the trademark adopted by the concessionaire, there could be other problems, such as geographic descriptiveness and proper ownership. But let's say those are not at issue.

The first thing that comes to mind is the rule (originating at the Trademark Trial and Appeal Board ("TTAB")) that use in commerce only creates trademark rights when the use is lawful. This is a principle that the Ninth Circuit formally adopted in CreAgri v. USANA Health Sciences. 474 F.3d 626, 630 (9th Cir. 2007) ("A question of first impression in this circuit, we also agree with the PTO's policy and hold that only lawful use in commerce can give rise to trademark priority.")

But I can think of two issues with the application of the rule in this context. First, the CHPA didn't explicitly make it illegal to claim trademark rights in a name associated with a state park venue based on use in interstate commerce. And second, the CHPA is a state statute. The lawful use requirement as used at the TTAB and by federal courts typically deals with whether the use is lawful under federal law. It's unclear as to whether using a trademark that violates state law would prevent claiming federal rights. In fact, the Central District of California has explicitly asked the question. Veronica's Auto Insurance Services Inc. v. Veronica's Services, Inc., 2014 U.S. Dist. LEXIS 173153, *14 (C.D. Cal. 2014) ("Further, it appears unsettled whether this unlawful use theory applies only to the laws of the United States, or whether it would apply equally to uses that violate state laws.")

Does the California Trademark Act Prevent Claiming California Trademark Rights?

California's Model State Trademark Act is codified at California Business and Professions Code §§ 14200 - 14272. I've taken a look through the provisions and just don't see anything that would prohibit claiming trademark rights based on use in commerce in this context.

CHPA: On the Books, But Not in the Courts

The CHPA is on the books now. But will it ever see the inside of a courtroom? Doubtful. To get a court to interpret the relationship between the CHPA and federal and state trademark law, a very specific scenario would have to arise in which a concessionaire claims trademark rights in a name associated with a California state park. And by doing so, the concessionaire would have to be willing to forfeit the right to bid on all future California state park concession contracts. Sure, I guess it could happen. But it seems unlikely, especially anytime soon. Until then, the CHPA will join numerous other California statutory provisions collecting dust (and there's more than you think). You know—like the statutory provision that you look up in the annotated codes and on Westlaw or Lexis only to discover that there has never, ever been any judicial decision interpreting it.

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