BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 819
                                                                  Page  1

          Date of Hearing:   May 13, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    AB 819 (Calderon) - As Amended:  May 6, 2009 

          Policy Committee:                              Public  
          SafetyVote:  7-0

          Urgency:     Yes                  State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill creates the Intellectual Property Piracy Prevention  
          and Prosecution Program (IPPPPP) to provide grants for local law  
          enforcement and district attorneys to prevent and prosecute  
          intellectual property piracy, which includes piracy of movies,  
          music, software, and video games.  Specifically, this bill: 

          1)Creates within the Department of Justice (DOJ), the IPPPPP, a  
            program of financial assistance for law enforcement and  
            district attorneys' offices. 

          2)Creates a continuous appropriation from the GF of an  
            unspecified amount to maintain the IPPPP Fund, administered  
            DOJ, at $50 million at the start of every fiscal year. 

          3)Requires grant money to be used exclusively to fight  
            intellectual property piracy within California. Grants shall  
            be made on an annual basis, and may not be used to pay  
            existing staff, absent extraordinary circumstances. 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.

          4)Establishes the IPPPP Advisory Committee, as specified, to  
            formulate a comprehensive strategy for addressing intellectual  
            property piracy prevention and prosecution in California, and  
            to advise DOJ on the appropriate disbursement of funds to  
            local law enforcement agencies and district attorneys'  
            offices. 









                                                                  AB 819
                                                                  Page  2

          5)Is contingent upon the enactment of AB 711 (Calderon), which  
            attempts to recoup use tax from businesses operating in  
            California. AB 711 states the Legislature's intent that the  
            revenues paid by qualified purchasers that are deposited into  
            the General Fund be annually appropriated to the Intellectual  
            Property Piracy Prevention and Prosecution Fund, as created by  
            AB 819. AB 711, a majority vote bill that could raise an  
            estimated $600 million, is also contingent upon enactment of  
            AB 819. 

           FISCAL EFFECT
           
          1)Ongoing continuously appropriated GF costs in the range of $50  
            million. The bill creates a continuous appropriation from the  
            GF to the IPPPP Fund that requires the Fund to maintain a  
            minimum $50 million balance on July 1 of every year.  
            Undetermined annual GF costs for grants, presumably in a  
            similar range.  

            (It is not clear how the continuous GF appropriation in this  
            bill relates to the provision in AB 711 specifying legislative  
            intent that "revenues deposited into the GF" - presumably all  
            revenues related to AB 711 - "be annually appropriated to the  
            IPPPP Fund.")

          2)Administrative costs to DOJ and the advisory committee, which  
            is authorized to audit and review grantee activities and  
            records, would likely be in the range of 5% of the grant  
            program.  

           COMMENTS
           
          Rationale. The author's intent is to provide law enforcement  
          with funding to enforce entertainment piracy.   
           
           According to the author, "California remains the capital of the  
          motion picture and television industry as well as a center for  
          the recording and software industries. In terms of economic  
          activity, television and movies generated a total of $42.2  
          billion, split almost equally between payroll expenditures and  
          payments to vendors. Approximately 266,000 people were directly  
          employed in the motion picture and television industry in  
          California, with an average salary of $80,600. When indirect  
          employment resulting from the industry is factored in, the  
          number of people working in California as a result of television  








                                                                  AB 819
                                                                  Page  3

          and movies totals over 500,000. 

          "Although piracy is a global problem, a recent study by the Los  
          Angeles County Economic Development Corporation (LAEDC) notes  
          that it affects the L.A. region disproportionately due to the  
          concentration of the entertainment industry there. LAEDC  
          estimates that in 2005 losses to the motion picture industry  
          from piracy were $2.7 billion; the sound recording industry $851  
          million; software publishing $355 million. 

          "Not only is digital piracy a direct threat to the industry, but  
          its effects are felt by state and local government in the form  
          of lost tax revenues. 

          "According to the same LAEDC study, piracy affecting the  
          entertainment industry just in LA cost nearly $134 million in  
          state income taxes; $63.5 million in sales taxes; $2 million in  
          LA City Business Taxes. 


            

           Analysis Prepared by  :    Geoff Long / APPR. / (916) 319-2081