California passes state law prohibiting state park concessionaires from owning trademarks

“Half Dome as Viewed from Glacier Point, Yosemite National Park” by Diliff. Licensed under CC BY-SA 3.0.

On Wednesday, September 21st, California Governor Jerry Brown signed Assembly Bill 2249 into law. The new state law, which was approved by California’s state senate on August 23rd, governs concessionaires operating at California state parks and their ability to manage intellectual property related to their business operations within those parks. Also known as the California Heritage Protection Act, the new law prohibits concessionaires from claiming trademark rights for names associated with the historical, cultural or recreational resources of the park in which it operates its business.

The California state law states that state park concession contracts are prohibited from providing a contracting party with trademark or service mark interests for names associated with a state park venue. Any such contracts offering trademark or service mark interests will be considered void and unenforceable under the terms of this law as of January 1st, 2017. Concessionaires who make a legal claim to trademark rights on names associated with state park resources will be disqualified from further consideration as a bidder on California state park concession contracts.

The California Heritage Protection Act was introduced to the California state assembly by Assemblymember Ken Cooley this February. Perhaps the biggest reason why this state law was proposed in the first place is California’s desire to avoid a trademark dispute like the one playing out between the National Park Service (NPS) and a former concessionaire at Yosemite National Park, which is situated in the Sierra Nevada mountain range region of California. Indeed, the state law mentions Yosemite and many of the facilities whose names are tied up in a complaint for breach of contract regarding the sale of trademark assets. As the new state law notes, “A legal claim by any individual to have a trademark right to a name or names associated with a venue within a state park derogates the interests of California and the shared history of Californians, and it is indicative of the lack of the individual’s fitness to serve as a steward of the state’s cherished cultural heritage and places.”

Last September, DNC Parks & Resorts at Yosemite, a subsidiary of Buffalo, NY-based hospitality and food service management firm Delaware North, filed a complaint in the U.S. Court of Federal Claims (Fed. Cl.). The suit alleges that NPS breached an express concessions service contract and indicated that DNC Parks sought damages related to unfair competition charges for a new concession contract at Yosemite.

Included among the charges made by DNC Parks against NPS is that the federal agency signed a concessions agreement with a new concessionaire for the park which did not require the new concessionaire, a subsidiary of food service and facilities manager Aramark (NYSE:AMRK) of Philadelphia, PA, to purchase intangible assets of DNC Parks including trademark rights. DNC Parks maintains that when it signed its concessions contract with NPS back in October 1993, it was required by NPS to purchase trademark assets from Curry Company, which had operated concessions at Yosemite for more than a century. These trademark assets included the Half-Dome logo design depicting one of Yosemite’s most iconic rock formations as well as the name and logo for the Ahwahnee Hotel. According to DNC Parks’ suit, the non-negotiable, pre-determined price for those intangible assets was $61.5 million, or about $115 million in 2015 dollars.

When NPS signed the new concessions contract for Yosemite with Aramark, it did not require Aramark to purchase those trademarks and other intangible assets from DNC Parks. This is despite the fact that the DNC Parks contract stated that a successor concessionaire providing services in Yosemite must purchase property from DNC Parks related to its Yosemite business operations. DNC Parks alleges that Aramark’s Yosemite subsidiary is required to pay the fair value of DNC’s trademarks, both those acquired from Curry and others developed by DNC, as well as Internet-related assets and a customer database of more than 720,000 customers, each entry including 75 informational fields. The complaint includes a total of two complaints for breach of contract.

The legal dispute which has played out since this complaint was filed has bordered on acrimonious at times. In response to DNC Parks’ breach of contract complaint, NPS decided to temporarily change the name of many attractions at the park, including the Ahwanhee, the Wawona Hotel and Curry Village. Those are now known as the Majestic Yosemite Hotel, the Big Trees Lodge and Half Dome Village, respectively. The cost of the temporary change was $1.7 million but this pales in comparison to the reported $51 million that Delaware North’s subsidiary is seeking for the sale of its intangible properties. The cost of the Yosemite-related trademarks alone is $44 million, according to DNC Parks. For its part, NPS has valued DNC Park’s intangible properties at $3.5 million.

To contest DNC Parks’ trademark rights, NPS has reportedly filed a petition with the Trademark Trial and Appeal Board (TTAB) at the U.S. Patent and Trademark Office asking the board to invalidate the Yosemite-related trademarks held by DNC Parks. This May, however, TTAB announced that it would not overturn the validity of the trademarks, allowing Delaware North and its subsidiary to move forward with its suit. While Delaware North has maintained that it’s protecting its business interests with the legal action, quotes published in The Washington Post from a Yosemite spokesperson paint DNC Parks as nearly duplicitous, stating that the Delaware North subsidiary applied for trademarks without notifying NPS.

The California Heritage Protection Act will not affect the outcome of DNC Parks’ breach of contract complaint against NPS because Yosemite is a national park and not a state park. It should, however, prevent the same fate from befalling any of the 280 park units which are managed by the California Department of Parks and Recreation.

Interestingly, a report published in The Northern California Record included comments from a senior Delaware North communications official which indicated that the company supported the new state law and agreed that companies should not be forced to pay for trademark assets as a condition of operating concessions in public parks. The Delaware North representative did note, however, that as a state law the California Heritage Protection Act did not do anything to alleviate the situation at Yosemite.