BILL NUMBER: AB 819 INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Charles Calderon FEBRUARY 26, 2009 An act to add Chapter 5.8 (commencing with Section 13849) to Title 6 of Part 4 of the Penal Code, relating to intellectual property piracy, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 819, as introduced, Charles Calderon. Intellectual property piracy. Existing law establishes various crime prevention and prosecution programs. This bill would establish the Intellectual Property Piracy Prevention and Prosecution Program to fund grants for local law enforcement and district attorneys for purposes of preventing and prosecuting intellectual property piracy, as specified. The bill would establish the Intellectual Property Piracy Prevention and Prosecution Fund, which would be continuously appropriated and which would be funded by private and state sources, including, contingent on the enactment of an unspecified Assembly bill, an annual appropriation from the General Fund to bring the balance in the fund to $50 million. This bill would declare that it is to take effect immediately as an urgency statute. Vote: 2/3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Chapter 5.8 (commencing with Section 13849) is added to Title 6 of Part 4 of the Penal Code, to read: CHAPTER 5.8. INTELLECTUAL PROPERTY PIRACY PREVENTION AND PROSECUTION ACT OF 2009 13849. (a) This act shall be known and may be cited as the Intellectual Property Piracy Prevention and Prosecution Act of 2009. (b) The Legislature finds and declares the following: (1) According to a 2007 study by the Institute for Policy Innovation, intellectual property piracy, meaning the theft of movies, music, software, and video games, costs the United States economy fifty-eight billion dollars ($58,000,000,000) each year. (2) The problem of intellectual property piracy continues to grow worse. A 2005 Gallup study found that 5 percent of Americans had purchased, copied, or downloaded counterfeit music in the preceding year. By 2007, this number had jumped to 9 percent. The percentage of respondents that admitted buying a pirated movie rose from 3 percent in 2005, to 6 percent in 2007. At the same time, once robust DVD sales have flattened over the past few years, while CD shipments to retailers have plummeted. (3) The effect of intellectual property piracy on California and its citizens is particularly dire. Intellectual property piracy adversely affects the California economy, eliminates jobs, and damages industry. According to the Business Software Alliance, in 2003, software piracy alone cost the California economy more than 13,000 jobs, over eight hundred two million dollars ($802,000,000) in wages and salaries, over one billion dollars ($1,000,000,000) in retail sales of business software applications, and roughly two hundred thirty-nine million dollars ($239,000,000) in total tax losses. (4) This act will send a strong signal that California is committed to protecting the intellectual property created by California's innovation and entertainment industries. (5) By creating a technical advisory committee, California will be able to draw upon the expertise and insight of those on the front lines of the antipiracy effort. (6) Grants awarded pursuant to this act will be used to foster innovation and to provide local law enforcement and prosecutors the tools they need to effectively fight intellectual property piracy. (7) Finally, by safeguarding the legitimate sale of intellectual property, California will increase its tax base, and stimulate the economy. (c) Funds provided under this program are intended to ensure that law enforcement and prosecutors are equipped with the necessary personnel and equipment to combat successfully intellectual property piracy, which includes piracy of movies, music, software, and video games. 13849.1. (a) There is hereby established in the Department of Justice, a program of financial assistance for law enforcement and district attorneys' offices, designated the Intellectual Property Piracy Prevention and Prosecution Program. All funds appropriated to the Department of Justice for the purposes of this chapter shall be administered and disbursed by the Attorney General in consultation with the Intellectual Property Piracy Prevention and Prosecution Advisory Committee as established in Section 13849.3 and shall, to the extent feasible, be coordinated with funds derived pursuant to Section 13849.3 and private grants or private donations that are made available for these purposes. (b) All funds designated for use for purposes of this chapter shall be deposited in the Intellectual Property Piracy Prevention and Prosecution Fund, which is hereby established. The fund shall be under the direction and control of the office of the Attorney General. Notwithstanding Section 13340 of the Government Code, moneys in the fund are hereby continuously appropriated for the purposes specified in this chapter. (c) The advisory committee shall review grant applications and, on a majority vote of the membership, submit those applications to the Attorney General for formal approval. (d) The advisory committee shall monitor and audit the use of grant funds. (e) Grant money shall be used exclusively to combat intellectual property piracy within the state. Grants shall be made on an annual basis, and may not be used to pay existing staff, absent extraordinary circumstances and approval by the Attorney General. Grant recipients may receive funding for no more than three years without submitting another grant application. Grants shall only be made to applicants with an existing budget dedicated to fighting intellectual property piracy. (f) In order to receive a grant, prospective recipients shall agree in writing to the following terms, as conditions of receiving a grant: (1) The recipient is authorized to accept grant funds under all applicable state and local laws. (2) The recipient will vigilantly safeguard grant funds and ensure that use of the grant funds fully comports with the purposes specified in the application for the grant funds, as approved or modified by the advisory committee. (3) Grant funds shall be used to augment, but shall not be used to supplant, a grant recipient's budget. (4) If the grant funds are used for the purpose of investigation, litigation, or prosecution, any remedy, settlement, judgment, or restitution award shall provide for full reimbursement to the Intellectual Property Piracy Protection and Prosecution Fund of all grant funds used for that investigation, litigation, or prosecution. (5) The recipient shall notify the advisory committee in writing of litigation or prosecution results, including any settlement, judgment, or other resolution, within 30 days. (6) The recipient shall notify the advisory committee in writing of the status of all outstanding investigations, litigation, or prosecutions funded in whole or in part by the grant six months after the funds are disbursed, and every 12 months thereafter until all disbursed funds have been expended and reported on. (7) The recipient shall fully cooperate with the advisory committee and its agents in providing all information and documents concerning the use of grant funds. (8) Except as otherwise expressly agreed by the advisory committee, within 60 days after the conclusion of the investigation, litigation, or prosecution, training, or other activity for which the disbursement was awarded, the recipient shall return all unused funds to the advisory committee by check made payable to the Intellectual Property Piracy Prevention and Prosecution Fund. (9) If grant funds are used for the production of any materials, the recipient shall permit the Attorney General's office and the advisory committee to use and distribute those materials without restriction, for their intended purposes. (10) The advisory committee is authorized to audit, review, and inspect the recipient's activities, books, documents, papers, and records during the project and thereafter for three years following the final allocation of funds. 13849.2. (a) The Intellectual Property Piracy Prevention and Prosecution Advisory Committee is hereby established for the purpose of formulating a comprehensive written strategy for addressing intellectual property piracy prevention and prosecution throughout the state, and to advise the Attorney General on the appropriate disbursement of funds to local law enforcement agencies and district attorneys' offices. (b) In formulating that strategy, the committee shall identify various priorities for law enforcement attention regarding the following: (1) The apprehension and prosecution of criminal organizations, networks, and groups of individuals engaged in the theft of, counterfeiting of, or unauthorized distribution, sale, or reproduction of, the following types of intellectual property: (A) Movies. (B) Music. (C) Computer software. (D) Video games. (2) The investigation and prosecution of violations of criminal and civil provisions of law, including, but not limited to, Sections 653h, 653s, and 653w. (3) The advising of local law enforcement and district attorneys regarding current aspects of intellectual property piracy, in order to respond quickly to the most serious threats of piracy. (c) The advisory committee, which shall meet at least four times per year, shall consist of 10 members, of whom six shall be appointed by the Governor, two by the Speaker of the Assembly, and two by the Senate Committee on Rules. Members shall be paid a one hundred dollar ($100) per diem for each meeting, as well as all necessary travel expenses. The advisory committee shall be composed of the following members: (1) At least two representatives of the general public. (2) At least one representative with demonstrable knowledge of the movie industry. (3) At least one representative with demonstrable knowledge of the music industry. (4) At least one representative with demonstrable knowledge of the computer software industry. (5) At least one representative with demonstrable knowledge of the video gaming industry. (6) At least one representative with experience in law enforcement, specifically relating to intellectual property piracy offenses. (7) At least one representative with experience prosecuting intellectual property piracy offenses at the local, state, or federal level. (d) In deciding which grant applications to fund, the advisory committee shall consider the following factors: (1) The purpose for which the funds are sought. (2) The proposal's specificity, including whether the proposal identifies anticipated costs, along with materials and personnel to be used. (3) The anticipated public benefit. (4) The ability of the advisory committee to audit the use of the funds. (5) The number, amount, and use of previous grants awarded to the prospective recipient, if any. (e) Members of the advisory committee shall be entitled to the same immunity from liability that is provided to public employees. 13849.3. (a) All defendants convicted of committing an intellectual property piracy offense shall, in addition to any other punishment and restitution order, be required to pay an additional penalty of ____ dollars ($____) which shall be payable to the Intellectual Property Piracy Prevention and Prosecution Fund. (b) The fund may also accept private donations. (c) (1) On July 1, 2010, and every July 1, thereafter, the Legislature hereby appropriates from the General Fund to the Intellectual Property Piracy Prevention and Prosecution Fund sum sufficient to bring the balance in the Intellectual Property Piracy Prevention and Prosecution Fund to fifty million dollars ($50,000,000). In no event shall an annual appropriation from the General Fund be made if the fund has a balance of fifty million dollars ($50,000,000) or more. (2) This subdivision shall be contingent upon the enactment of AB ____ of the 2009-10 Regular Session. SEC. 2. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to ensure public peace against the accelerating problem of intellectual property piracy, it is necessary for this act to take effect immediately.