BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 550|
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THIRD READING
Bill No: SB 550
Author: Padilla (D), et al.
Amended: 5/10/11
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 8-0,
4/11/11
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Vargas, Wyland
NO VOTE RECORDED: Walters
SENATE PUBLIC SAFETY COMMITTEE : 5-2, 5/3/11
AYES: Hancock, Harman, Liu, Price, Steinberg
NOES: Anderson, Calderon
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Business: manufactured optical disc
SOURCE : Recording Industry Association of America
DIGEST : This bill allows law enforcement officials to
inspect commercial optical disc (CD or DVD) manufacturing
facilities to ensure compliance with existing laws that
require certain identifying marks on each disc, prohibits
the possession of optical disc manufacturing equipment that
has not been adapted to apply the required identifying
marks, requires optical disc manufacturers to keep certain
records, and increases fines applicable to a person who
violates the provisions regulating manufactured optical
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discs.
ANALYSIS :
Existing law:
1. Requires a person who manufactures optical discs
(including, but not limited to, CDs or DVDs) for
commercial purposes to permanently mark each disc with
either the name of the manufacturer and the state where
the disc was manufactured, or a unique identification
code (referred to in the industry as a "Source
Identification Code" or "SID Code") that is visible
without magnification or a special device.
2. Makes a person who manufactures optical disks without
these required marks guilty of a misdemeanor punishable
by a fine between $500 and $5000 for a first offense,
and up to $50,000 for a second or subsequent offense.
3. Makes a person who buys, sells, or rents an optical disc
knowing that the required identification mark is missing
or has been removed, defaced, destroyed guilty of a
misdemeanor, punishable by a jail term of up to one year
or a fine up to $10,000, or by both fine and
imprisonment.
4. Makes a person who knowingly removes, covers, or alters
the identification mark guilty of a misdemeanor
punishable by a jail term of up to one year and a
maximum fine of $10,000.
5. Specifies that a person "manufactures an optical disc
for commercial purposes" if that person manufactures at
least 10 of the same or different optical discs in a
180-day period for purposes of resale.
This bill:
1. Prohibits anyone who manufactures optical discs for
commercial purposes from owning or operating an optical
disc mold unless it is equipped to apply the required
identification mark.
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2. Defines, for the purposes of the chapter:
A. "Commercial purposes" as the manufacture of at
least 10 of the same or different optical discs in a
180-day period by storing information on the disc for
the purposes of resale by that person or others.
B. "Manufacturer" as a person who replicates the
physical optical disc or produces the master used in
any optical disc replication process. It does not
include a person who manufactures optical discs for
internal use, testing, or review, or a person who
manufactures blank optical discs.
C. "Manufacturing Equipment" as any machine,
equipment, or device, including mastering equipment,
used for the manufacture of optical discs or
production parts in accordance with this chapter.
D. "Mastering Equipment" as any machine, equipment,
or device used for the mastering of optical discs or
production parts consisting of a signal processor and
laser beam recorder or any other recorder, used to
record data onto the glass or polymer master disc
from which production parts are produced, or to
record data directly onto a production part.
E. "Optical Disc" as a disc capable of being read by
a laser or other light source on which data is stored
in digital form. It includes, but is not limited to,
discs known as CDs, DVDs, or related mastering source
materials. It does not include blank optical discs.
F. "Production Part" as the item usually referred to
as a stamper that embodies data in a digital form and
is capable of being used to mold optical discs, and
includes any other item, usually referred to as a
master, father or mother, embodying data from which a
stamper may be produced by means of an electroplating
process.
G. "Professional organization" as an organization
whose membership consists wholly or substantially of
intellectual property rights owners, and which is
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mandated by those members to enforce their rights
against counterfeiting and piracy.
3. Increases the fine for failing to properly mark an
optical disc manufactured for commercial purposes to a
range of $2500 - $25,000 for a first offense and a
maximum of $250,000 for a subsequent offense.
4. Increases the fine for knowingly buying, selling, or
renting a disc without the proper mark to a range of
$1,000 - $10,000.
5. Increases the fine for knowingly removing, covering, or
altering the required mark to a range of $1,000 -
$10,000.
6. Requires that a person who manufactures optical discs
for commercial purposes keep full and accurate records
and inventory of its manufacturing equipment and make
these records available to law enforcement for
inspections.
7. Requires that a person who manufactures optical discs
keep each of a following for at least five years from
the date of production:
A. A sample of each optical disc title manufactured.
B. A retrievable copy of the content of each master.
C. The name and physical address of the customer who
originated the order.
8. Allows law enforcement officers to perform inspections
at commercial optical disc manufacturing facilities to
ensure compliance, and requires an inspection be
conducted by officers whose primary responsibilities
include investigation of high-technology or intellectual
property piracy.
9. Specifies that a search of a manufacturing facility by
law enforcement must take place during regular business
hours and be limited to inspection of physical items and
collection of information necessary to verify
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compliance.
10.Provides that officers may perform inspections without
giving prior notice or obtaining a warrant.
11.Authorizes law enforcement officials to do all of the
following when performing an inspection:
A. Take an inventory of all manufacturing equipment,
including the identification mark or code that any
piece of equipment has been modified to apply.
B. Review any optical disc or equipment involved in
manufacturing the disk.
C. Review any physical or digital records or
documents relating to the business concerned.
D. Inspect, remove, or detain specified equipment,
records, or documents for purposes of examination for
as long as reasonably necessary.
E. Seize any optical disc or production part in
violation of this chapter.
F. Obtain and remove up to four samples each of the
optical discs molded by each mold that has been used
or could be used to manufacture optical discs.
12.Prohibits any person from evading, obstructing, or
refusing any inspection requested or being carried out
by a law enforcement officer to determine compliance
with this chapter.
13.Requires that the manufacturer and the manufacturer's
employees or agents:
A. Provide and explain any record book required to be
maintained pursuant to this act.
B. Point out and provide access to all optical discs,
manufacturing equipment, etc. and demonstrating to
the satisfaction of the officer that they include or
have been adapted to apply the required
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identification mark or unique identifying code.
Background
The passage of AB 2633 (Murray), Chapter 712, Statutes of
1998, made California the first state to require optical
disc manufacturers to permanently mark their discs with
identifying information. The effort was intended to
prevent the loss of revenue due to pirated material by
curtailing illegal activity associated with the production,
distribution, sale and possession of counterfeit optical
disks. AB 2633 required disk manufacturers to permanently
mark each disc with the name of the manufacturer and the
state that the disc was manufactured in.
Supporters of the bill included software, motion picture,
video, and recording industry associations who collectively
argued that the billions of dollars lost by their companies
justified the approach taken in the bill. They noted that
the ability to copy the digital information on optical
discs without any degradation in quality made optical discs
different from other technologies often pirated. The
supporters asserted that the bill would increase the
ability of industries using optical disc technology to
identify those individuals who counterfeit copyrighted
information, and that California's dominance in these
industries necessitated early state action.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/23/11)
Recording Industry Association of America (Sponsor)
City of Los Angeles
Hollywood Chamber of Commerce
Los Angeles Area Chamber of Commerce
Sony Music Entertainment
Valley Industry and Commerce Association
ARGUMENTS IN SUPPORT : According to this bill's sponsor,
the Recording Industry Association of America (RIAA),
California has a serious problem with the crime of music
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piracy. RIAA claims that street vendors and retail
locations offer illicit sound recordings openly throughout
the state, many of which are supplied by large scale
manufacturing and distribution operations. The group
believes that music piracy is a devastating economic crime
that deprives artists and record labels of hard earned
profits, resulting in losses of jobs in California and
across the nation. Further, legitimate music retailers
throughout the state are forced to compete with music
pirates that undercut their businesses by failing to pay
for music, and failing to pay local, state, and federal
taxes.
RIAA believes that current law needs to be updated in
recognition of the evolution of the problem faced and new
provisions are "absolutely necessary to further the disc
identification regulations imposed by existing law," and to
advance the state's interest in creating a level playing
field for law-abiding optical disc manufacturers and
protecting the vibrant entertainment industry of this
state.
JJA:kc 5/23/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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