BILL ANALYSIS                                                                                                                                                                                                    



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          CONCURRENCE IN SENATE AMENDMENTS
          AB 819 (Charles Calderon)
          As Amended  August 12, 2010
          2/3 vote.  Urgency
           
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          |ASSEMBLY:  |77-0 |(June 2, 2009)  |SENATE: |34-0 |(August 18,    |
          |           |     |                |        |     |2010)          |
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           Original Committee Reference:    PUB. S.  

           SUMMARY  :   Doubles the current fines for crimes relating to  
          intellectual property piracy.

           The Senate amendments  :

          1)Find and declare the following:

             a)   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 billion each year;

             b)   The problem of intellectual property piracy continues to  
               grow worse.  A 2005 Gallup study found that 5% of Americans  
               had purchased, copied, or downloaded counterfeit music in  
               the preceding year.  By 2007, this number had jumped to 9%.  
                The percentage of respondents that admitted buying a  
               pirated movie rose from 3% in 2005 to 6% in 2007.  At the  
               same time, once robust DVD sales have decreased over the  
               past few years, while CD shipments to retailers have  
               plummeted;

             c)   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 million in wages and salaries, over $1 billion in  
               retail sales of business software applications, and roughly  
               $239 million in total tax losses;

             d)   Intellectual property piracy poses a significant threat  








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               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;

             e)   A growing number of criminal organizations worldwide are  
               involved in intellectual property piracy;

             f)   This act will send a strong signal that California is  
               committed to protecting the intellectual property created  
               by California's innovation and                     
               entertainment industries; and,

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

          2)Change the fine for persons who willfully manufacture,  
            intentionally sell, or knowingly 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, as follows: 

             a)   When the offense involves less than 1,000 of the  
               articles described in this subdivision, with a total retail  
               or fair market value less than that required for grand  
               theft as defined in Penal Code Section 487, and if the  
               person is an individual, he or she shall be punished by a  
               fine of not more than $10,000 instead of $5,000, or by  
               imprisonment in a county jail for not more than one year,  
               or by both that fine and imprisonment; or, if the person is  
               a business entity, by a fine of not more than $200,000  
               instead of 100,000;

             b)   When the offense involves 1,000 or more of the articles  
               described in this subdivision, or has a total retail or  
               fair market value equal to or greater than that required  
               for grand theft as defined in Penal Code Section 487, and  
               if the person is an individual, he or she shall be punished  
               by imprisonment in a county jail not to exceed one year, or  
               in the state prison for 16 months, or two or three years,  
               or by a fine not to exceed $500,000 instead of $250, 000 or  
               by both that imprisonment and fine; or, if the person is a  
               business entity, by a fine not to exceed $1 million instead  








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               of $500,000;

             c)   Upon a subsequent conviction, if the person is an  
               individual, he or she shall be punished by a fine of not  
               more than $100,000 instead of $50,000 or by imprisonment in  
               a county jail for not more than one year, or in the state  
               prison for 16 months, or two or three years, or by both  
               that fine and imprisonment; or, if the person is a business  
               entity, by a fine of not more than $400,000 instead of  
               $200,000; and, 

             d)   Any person who has been convicted of a violation of Item  
               2) a) above and who, by virtue of 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  
               shall, if the person is an individual, be punished by a  
               fine of not more than $100,000 instead of $50,000 or by  
               imprisonment in the state prison for two, three, or four  
               years, or by both that fine and imprisonment; or, if the  
               person is a business entity, by a fine of not more than  
               $400,000 instead of $200,000.

          1)Increase the fine for those who 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 from $250,000 to  
            $500,000 if the offense involved the transfer or  
            transportation, or conduct causing that transfer or  
            transportation, of not less than 1,000 of the articles.  A  
            person who has transported less than 1,000 articles will have  
            the find increased from $25,000 to $50,000.  A second or  
            subsequent conviction shall receive an increased find from  
            $100,000 to $200,000.

          2)Increase the fine for every person who offers for sale or  
            resale, or sells or resells, or causes the sale or resale, or  
            rents, or possesses for these purposes, any sounds that have  
            been recorded on a phonograph record, disc, wire, tape, film  
            or other article with knowledge that the sounds thereon have  
            been so transferred without the consent of the owner from  








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            $10,000 to $20,000 if the offense involved not less than 100  
            articles.  A second or subsequent conviction shall receive an  
            increased fine from $25,000 to $50,000.

          3)Increase the fine for every person who offers for sale or  
            resale, or sells or resells, or causes the sale or resale, or  
            rents, or possesses for these purposes, any sounds that have  
            been recorded on a phonograph record, disc, wire, tape, film  
            or other article with knowledge that the sounds thereon have  
            been so transferred without the consent of the owner from  
            $5,000 to $10,000 if the offense involved less than 100  
            articles.  A second conviction shall receive an increased fine  
            from $10,000 to $20,000.  A third or subsequent conviction for  
            the conduct described in this paragraph shall receive an  
            increased fine from $25,000 to $50,000.

          4)Increase the fine for any person who transports or causes to  
            be transported for monetary or other consideration within this  
            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 from $250,000 to $500,000 if the offense  
            involved the transportation or causing to be transported of  
            not less than 1,000 articles.

          5)Increase the fine for any person who transports or causes to  
            be transported for monetary or other consideration within this  
            state, more than 100 articles 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 from $25,000 to $50,000 if  
            the offense involved the transportation or causing to be  
            transported of less than 1,000 articles.  A second or  
            subsequent conviction shall receive an increased fine of  
            $200,000 instead of $100,000.

          6)Increase the fine for any person who offers for sale or  
            resale, or sells or resells, or causes the sale or resale, or  
            rents, or possesses for these purposes, more than 100 articles  
            containing sounds of a live performance with knowledge that  
            the sounds thereon have been so recorded or mastered without  
            the consent of the owner of the sounds of a live performance  
            from $10,000 to $20,000.  A second conviction for this offense  
            shall receive an increased fine from $25,000 to $50,000.









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          7)Increase the fine for any person who, offers for sale or  
            resale, or sells or resells, or causes the sale or resale, or  
            rents, or possesses for these purposes, less than 100 articles  
            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  
            from $5,000 to $10,000 if the offense involved the  
            transportation or causing to be transported of less than 1,000  
            articles.  A second or subsequent conviction shall receive an  
            increased fine of $20,000 instead of $10,000.  A third  
            conviction shall receive an increased fine of $50,000 from  
            $25,000. 

          8)Increase the fine for any person who records or masters or  
            causes 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  
            from $250,000 to $500,000 if the offense involves the  
            recording, mastering, or causing to be recorded or mastered at  
            least 1,000 articles.

          9)Increase the fine for any person who records or masters or  
            causes 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  
            from $25,000 to $50,000 if the offense involves the recording,  
            mastering, or causing to be recorded or mastered at less than  
            1,000 articles.  The fine for a second or subsequent  
            conviction shall be increased from $100,000 to $200,000. 

          10)Increase the fine for any person who is guilty of failing to  
            disclose the origin of a recording or audiovisual work if, for  
            commercial advantage or private financial gain, he or she  
            knowingly advertises or offers for sale or resale, or sells or  
            resells, or causes the rental, sale or resale, or rents, or  
            manufactures, or possesses for these purposes, any recording  
            or audiovisual work, the cover, box, jacket, or label of which  
            does not clearly and conspicuously disclose the actual true  
            name and address of the manufacturer thereof and the name of  
            the actual author, artist, performer, producer, programmer, or  
            group thereon from $250,000 to $500,000 if the offense  








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            involves the advertisement, offer for sale or resale, sale,  
            rental, manufacture, or possession for these purposes, of at  
            least 100 articles of audio recordings or 100 articles of  
            audiovisual works.  If the offense involves less than 100  
            articles of audio recordings, the fine shall be increased from  
            $25,000 to $50,000.  A second or subsequent conviction shall  
            see a fine increase from $100,000 to $200,000.

          11)Increase the fine 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 from $2,500 to $5,000.

          12)Increase the fine for any person, except a minor, who is  
            located in California, who, knowing that a particular  
            recording or audiovisual work is commercial, knowingly  
            electronically disseminates all or substantially all of that  
            commercial recording or audiovisual work to more than 10 other  
            people without disclosing his or her e-mail address, and the  
            title of the recording or audiovisual work from $2,500 to  
            $5,000.  Any minor who violates the aforementioned shall see a  
            fine increased from $500 to $1,000.  A third or subsequent  
            conviction of a minor shall receive an increased fine from  
            $1,000 to $2,000. 

          13)Make this bill a contingent enactment.
           
          AS PASSED BY THE ASSEMBLY,  this bill created the Intellectual  
          Property Piracy Prevention and Prosecution Program to fund  
          grants for local law enforcement and district attorneys for the  
          purposes of preventing and prosecuting intellectual property  
          piracy.  

           FISCAL EFFECT  :   According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS  :   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  








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          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 Los Angeles 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 Los Angeles cost nearly $134  
          million in state income taxes; $63.5 million in sales taxes; $2  
          million in Los Angeles City business taxes.

          "This is not just a Los Angeles 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."

          Please see the policy committee for a full discussion of this  
          bill.
           

          Analysis Prepared by  :    Nicole J. Hanson / PUB. S. / (916)  
          319-3744 


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