BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 819|
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                                 THIRD READING


          Bill No:  AB 819
          Author:   Charles Calderon (D), et al
          Amended:  8/16/10 in Senate
          Vote:     27 - Urgency

           
           SENATE PUBLIC SAFETY COMMITTEE  :  7-0, 6/29/10
          AYES:  Leno, Cogdill, Cedillo, Hancock, Huff, Steinberg,  
            Wright
           
          SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  : 77-0, 6/2/09 - See last page for vote


           SUBJECT  :    Intellectual property piracy

           SOURCE  :     Author


           DIGEST  :    This bill doubles the fines in existing law for  
          violations related to piracy or counterfeiting of specified  
          marks registered with the Secretary of State or registered  
          on the Principal Register of the United States Patent and  
          Trademark Office.

           Senate Floor Amendments  of 8/16/10 are chaptering  
          amendments to protect this bill and SB 803 (Wright).  In  
          relevant part, each bill amends Section 653w of the Penal  
          Code.

           ANALYSIS  :    Existing law makes it a crime for a person to  
          willfully manufacture, intentionally sell, or knowingly  
                                                           CONTINUED





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          possess for sale any counterfeit mark registered with the  
          Secretary of State or registered on the Principal Register  
          of the United States Patent and Trademark Office.  Existing  
          law imposes specified imprisonment and fines based upon the  
          number of counterfeit marks involved in the offense and if  
          the person is an individual or a business entity.  Existing  
          law also specifies certain imprisonment and fines for a  
          subsequent conviction of this offense and provides other  
          specified penalties if the conduct that was the basis of  
          the conviction has directly and foreseeably caused death or  
          great bodily injury to another through reliance on the  
          counterfeited item for its intended purpose.

          Existing law makes it a crime for a person to knowingly and  
          willfully transfer or cause to be transferred any sounds  
          that have been recorded on a phonograph record, disc, wire,  
          tape, film, or other article on which sounds are recorded,  
          with intent to sell or cause to be sold, or to use or cause  
          to be used for commercial advantage or private financial  
          gain through public performance, the article on which the  
          sounds are so transferred, without the consent of the  
          owner.  Existing law specifies certain penalties for a  
          violation of these provisions, and certain other provisions  
          regarding the transportation of an article with the  
          knowledge that the sounds thereon have been so transferred  
          without the consent of the owner, if the offense involves  
          the transfer or transportation, or conduct causing that  
          transfer or transportation, of not less than 1,000 of the  
          articles.  Existing law also specifies certain other  
          penalties for any other violation of these provisions and  
          for a second or subsequent conviction.

          Existing law makes it a crime for any person to transport  
          or cause to be transported for monetary or other  
          consideration within the state, any article containing  
          sounds of a live performance with the knowledge that the  
          sounds thereon have been recorded or mastered without the  
          consent of the owner of the sounds of the live performance.  
           Existing law specifies certain penalties for a violation  
          of these provisions if the offense involves transporting or  
          causing to be transported not less than 1,000 articles.   
          Existing law also specifies certain other penalties for any  
          other violation of these provisions and for a second or  
          subsequent conviction.







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          Existing law makes it a crime for any person to record or  
          master or cause to be recorded or mastered on any article,  
          with the intent to sell for commercial advantage or private  
          financial gain, the sounds of a live performance with the  
          knowledge that the sounds thereon have been recorded or  
          mastered without the consent of the owner of the sounds of  
          the live performance.  Existing law specifies certain  
          penalties for a violation of these provisions if the  
          offense involves the recording, mastering, or causing the  
          recording or mastering of at least 1,000 articles.   
          Existing law also specifies certain other penalties for any  
          other violation of these provisions and for a second or  
          subsequent conviction.

          Existing law provides that a person is guilty of failure to  
          disclose the origin of a recording or audiovisual work if,  
          for commercial advantage or private financial gain, he/she  
          knowingly advertises, sells, rents, manufactures, or  
          possesses for those purposes, a recording or audiovisual  
          work that does not disclose the name of the manufacturer,  
          author, artist, performer, or producer, as specified.   
          Failure to disclose the origin of a recording or  
          audiovisual work is punishable by imprisonment in a county  
          jail, imprisonment in the state prison, or a fine, or by  
          both imprisonment and a fine, as specified, depending on  
          the number of articles of audio recordings or audiovisual  
          works involved, and whether the offense is a first offense,  
          or second or subsequent offense.

          Existing law provides that every person who operates a  
          recording device in a motion picture theater while a motion  
          picture is being exhibited, for the purpose of recording a  
          theatrical motion picture and without the express written  
          authority of the owner of the motion picture theater, is  
          guilty of a public offense and shall be punished by  
          imprisonment in a county jail not exceeding one year, by a  
          fine not exceeding $2,500, or by both that fine and  
          imprisonment.

          This bill doubles the fines that may be imposed for a  
          violation of any of the above provisions.

          Statutory law that became inoperative on January 1, 2010,  







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          provided that it was a crime, punishable by a fine not  
          exceeding $2,500, imprisonment in a county jail for a  
          period not exceeding one year, or by both that fine and  
          imprisonment for a person located in California who knew  
          that a particular recording or audiovisual work was  
          commercial, to knowingly electronically disseminate all or  
          substantially all of that commercial recording or  
          audiovisual work to more than 10 other people without  
          disclosing his/her 
          e-mail address, and the title of the recording or  
          audiovisual work.  That statutory law also provided that a  
          minor who violated these provisions was punishable by a  
          fine not exceeding $250 for a first or second offense and  
          by a fine not exceeding $1,000, imprisonment in a county  
          jail, or by both that fine and imprisonment for a third or  
          subsequent violation.

          This bill again makes operative those provisions and would  
          double the fines that may be imposed for a violation of  
          those provisions.  By creating a new crime, this bill  
          imposes a state-mandated local program.

          Existing law provides that, in addition to any other  
          penalty or fine, a court shall order any person who has  
          been convicted of any violation of certain provisions of  
          law relating to the transfer or transportation of  
          misappropriated recorded music, the transportation of an  
          article containing unauthorized recordation of sounds of  
          live performances, the unauthorized recording of sounds of  
          live performances, or the failure to disclose the origin of  
          a recording or audiovisual work to make restitution to the  
          owner or lawful producer, or trade association acting on  
          behalf of the owner or lawful producer, of the phonograph  
          record, disc, wire, tape, film, or other device or article  
          from which the sound or visual images were derived that  
          suffered economic loss resulting from the violation.   
          Existing law provides how value is to be determined for the  
          purpose of calculating restitution.

          This bill also requires a court to order restitution when  
          the person has been convicted of violating certain other  
          provisions of law relating to the manufacture or sale of a  
          counterfeit registered mark and the electronic transmission  
          of all or substantially all of a commercial recording or  







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          audiovisual work.

          This bill states 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 $58,000,000,000 each year.

          2. The problem of intellectual property piracy continues to  
             grow worse.  A 2005 Gallup study found that five percent  
             of Americans had purchased, copied, or downloaded  
             counterfeit music in the preceding year. By 2007, this  
             number had jumped to nine percent. The percentage of  
             respondents that admitted buying a pirated movie rose  
             from three percent in 2005, to six 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 $802,000,000 in wages and  
             salaries, over $1,000,000,000 in retail sales of  
             business software applications, and roughly $239,000,000  
             in total tax losses.

          4. Intellectual property piracy poses a significant threat  
             to consumers, who, through no fault of their own, are  
             often deceived or deliberately misled, or both deceived  
             and deliberately misled, as to the nature of purchased  
             products, whereby pirated goods are palmed off,  
             including in electronic form, as legitimate authorized  
             goods.

          5. A growing number of criminal organizations worldwide are  
             involved in intellectual property piracy.

          6. This act will send a strong signal that California is  
             committed to protecting the intellectual property  







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             created by California's innovation and entertainment  
             industries.

          7. Finally, by safeguarding the legitimate sale of  
             intellectual property, California will increase its tax  
             base, and stimulate the economy.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  8/6/10)

          California District Attorneys Association
          California State Sheriffs' Association
          Los Angeles County Sheriff's Department
          Motion Picture Association of America


           ARGUMENTS IN SUPPORT  :    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 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; and software publishing $355 million.

            "Not only is digital piracy a direct threat to the  
            industry, but its effects are felt by state and local  







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            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.

            "This is not just an LA problem. Digital piracy reaches  
            across the state, affecting the Silicon Valley and its  
            computer industry.  According to the Business Software  
            Alliance, in 2003, software piracy alone cost the  
            California economy more than 13,000 jobs, $802 million in  
            wages and salaries, over $1 billion in retail sales of  
            business software applications, and roughly $239 million  
            in total tax losses."


           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Anderson, Arambula, Beall,  
            Blakeslee, Blumenfield, Brownley, Buchanan, Caballero,  
            Charles Calderon, Carter, Chesbro, Conway, Cook, Coto,  
            Davis, De La Torre, De Leon, DeVore, Duvall, Emmerson,  
            Eng, Evans, Feuer, Fletcher, Fong, Fuentes, Fuller,  
            Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman,  
            Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,  
            Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie  
            Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,  
            Niello, Nielsen, John A. Perez, V. Manuel Perez,  
            Portantino, Price, Ruskin, Salas, Saldana, Silva,  
            Skinner, Smyth, Solorio, Audra Strickland, Swanson,  
            Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
          NO VOTE RECORDED:  Bill Berryhill, Tom Berryhill, Block


          RJG:mw  8/16/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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