BILL ANALYSIS Ó
AB 2122
Page 1
Date of Hearing: April 1, 2014
Counsel: Shaun Naidu
ASSEMBLY COMMITTEE ON PUBLIC SAFETY
Tom Ammiano, Chair
AB 2122 (Bocanegra) - As Introduced: February 20, 2014
SUMMARY : Expands the offense of failing to disclose the origin
of a recording or audiovisual work when utilizing the material
for financial gain, and when at least 100 articles of audio
recordings or audiovisual work are involved, to include "the
commercial equivalent thereof."
EXISTING LAW :
1)States 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 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 outside 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. This provision does not require
the original manufacturer or authorized licensees of software
producers to disclose the contributing authors or programmers.
(Pen. Code, § 653w, subd. (a)(1).)
2)Defines "recording" as any tangible medium upon which
information or sounds are recorded or otherwise stored,
including, but not limited to, any phonograph record, disc,
tape, audio cassette, wire, film, memory card, flash drive,
hard drive, data storage device, or other medium on which
information or sounds are recorded or otherwise stored, but
does not include sounds accompanying a motion picture or other
audiovisual work. (Pen. Code, § 653w, subd. (a)(2).)
3)Defines "audiovisual works" as the physical embodiment of
works that consist of related images that are intrinsically
intended to be shown using machines or devices, such as
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projectors, viewers, or electronic equipment, together with
accompanying sounds, if any, regardless of the nature of the
material objects, such as films, tapes, discs, memory cards,
flash drives, data storage devices, or other devices, on which
the works are embodied. (Pen. Code, § 653w, subd. (a)(3).)
4)Punishes any person convicted of the provision above (#1), if
the offense 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, as specified, by imprisonment
in a county jail not to exceed one year, by imprisonment
pursuant to criminal justice realignment for two, three, or
five years, by a fine not to exceed $500,000, or by both that
fine and imprisonment. (Pen. Code, § 653w, subd. (b)(1).)
a) Punishes any other violation of the provision above
(#1), for the first offense, by imprisonment in a county
jail not more than one year, by a fine not more than
$50,000, or by both that fine and imprisonment; and (Pen.
Code, § 653w, subd. (b)(2).)
b) Punishes a second or subsequent conviction by
imprisonment in a county jail not more than one year or
pursuant to criminal justice realignment, by a fine not
more than $200,000, or by both that fine and imprisonment.
(Pen. Code, § 653w, subd. (b)(3).)
5)Requires, in addition to any other penalty or fine, the court
to order a person who has been convicted of a violation of the
provision above (#1) to make restitution to an owner or lawful
producer, or trade association acting on behalf of the owner
or lawful producer, of a phonograph record, disc, wire, tape,
film, or other device or article from which sounds or visual
images are derived that suffered economic loss resulting from
the violation. (Pen. Code, § 1202.4, subd. (r)(1).)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement : According to the author, "AB 2122
continues the message that media piracy is a serious crime
that deprives businesses and artists of their earned profits,
thereby resulting in lost jobs and tax revenue in California.
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"The State Legislature has already recognized, through the
passage of previous anti-piracy measures, the destructive
effect of piracy on California businesses and the value of
maintaining the competitiveness and profitability of the
California recording industry.
"However, problems continue to arise as the practices of
'pirates' continue to evolve with the development of new
technology. Therefore, it is necessary for the State to
update its anti-piracy laws to reflect the increasing
sophistication of this underground criminal market.
"Many pirates now use digital tools with vast storage
capacity, such as memory sticks and computer hard drives, to
create fraudulent music or other audiovisual products that can
contain hundreds to thousands of unauthorized recordings. Some
are loaded with movies or music at the point-of-sale and sold
for next to nothing. The unauthorized sale of these items
displaces legitimate sales, thereby hurting the businesses of
legal media distributors, retailers, record labels, artists
and writers.
"Though California has a statute designed to protect the
entertainment industry and the general public against the
crime of media piracy, it needs to be clarified to recognize
the illicit sale of single digital storage devices that, while
only one item, may contain the 'commercial equivalent' of
multiple musical recordings or movies.
"This measure will strengthen businesses' protections against
media piracy by clarifying that the sale of digital storage
devices containing the commercial equivalent of 100 or more
records or movies constitutes a felony violation under state
law, thus aligning the criminal penalties with the true degree
of harm caused by the sale of these pirated goods in
California."
2)Copyright Law & Federal Control : Federal law preempts state
law in the area of copyright. (17 U.S.C. § 301, subd. (a).)
Federal law, however, does not annul or limit any state law
with respect to "activities violating legal or equitable
rights that are not equivalent to any of the exclusive rights
within the general scope of copyright" specified in federal
statute. (14 U.S.C. § 301, subd. (b)(3); see also Oddo v.
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Ries (9th Cir. 1984) 742 F.2d 630, 635 [finding that there is
no preemption if the state law is "predicated upon an act
incorporating elements beyond mere reproduction or the
like"].) Generally, state laws relating to copyright that
fall into this category are called "true name and address"
laws and are intended to protect consumers and prohibit
specified forms of unfair competition. Penal Code section
653w is a form of true name and address law.
In Anderson v. Nidorf (9th Cir. 1994) 26 F.3d 100, the U.S.
Court of Appeals for the Ninth Circuit upheld the
constitutionality of section 653w, California's true name and
address law. In that case, Cletus Anderson was convicted
under Penal Code section 653w for failing to disclose the
origin of a sound recording. Anderson appealed the
conviction, arguing, in part, that section 653w was preempted
by federal copyright law, because it was intended to protect
the rights of copyright owners through the prevention of
pirating. The court, in rejecting Anderson's assertion,
explained that the California law, in protecting interests
beyond and apart from federal copyright law, was not
preempted:
[As the district court pointed out,] "[Anderson's]
argument ignores the other purpose the legislative
materials ? show Section 653w was designed to serve:
'assisting consumers in this state by mandating that
manufacturers market products for which consumers can
go back to the source if there are any problems or
complaints.' Preemption would frustrate the State's
objective of consumer protection through disclosure."
[] Federal copyright laws do not . . . protect
consumers. They are designed to protect the property
rights of copyright owners.
?
Because § 653w does not prohibit the reproduction of
copyrighted works, but rather prohibits selling
recordings without disclosing the manufacturer and
author of the recording (regardless of its copyright
status), the federal copyright laws do not preempt the
state statute.
(Id. at p. 102 [internal citations omitted, bold type
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added].)
The decision in Anderson did not consider whether the
California true name and address statute would be preempted by
federal law if the sole intent of the law were to prevent
piracy. However, such an argument can be made from the
decision in Anderson, which focused on the consumer protection
aspect of the California law.
Penal Code section 653w very broadly describes the devices and
media that can be used in a violation of that statute. The
section refers to "any tangible medium" upon which audio works
are stored or recorded and states that the statute applies to
audiovisual works without regard to the nature of the medium
or device on which the works are embodied. Existing law
punishes a person who, while knowingly advertises, sells or
resells, manufactures, etc. a recording or audiovisual work
for private financial gain, fails to disclose the origin of
the recording or audiovisual work. If the offense involves at
least 100 articles of audio recordings or audiovisual work,
the violation is increased to an alternate misdemeanor/felony.
This bill seeks to expand the alternate misdemeanor/felony
violation of section 653w to include "the commercial
equivalent" of at least 100 articles of audio recordings or
audiovisual works. As stated by the author in the background
material, the aim of this bill is to clarify existing law "to
recognize the illicit sale of single digital storage devices
that, while only one item, may contain the 'commercial
equivalent' of multiple musical recordings or movies." It
could be argued that large-capacity storage devices, such as
memory sticks and hard drives, would be used to commit
substantial violations of federal copyright law. It would
appear harder to argue, however, that such devices would be
used in the legal sale of music or movies to unsuspecting
individual consumers.
3)Practical Consideration : SB 830 (Wright), Chapter 480,
Statutes of 2010, amended the meaning of "recording" in
section 653w to include memory cards, flash drives, hard
drives, or data storage devices in the list of tangible medium
upon which information or sounds are recorded or otherwise
stored. The same mediums are included with respect to
capturing audiovisual works. As stated by Senator Wright, SB
830 was intended to plug a loophole in the law and keep state
law in pace with the latest downloading technologies. SB 830
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and this bill appear to have very similar, if not the same,
effect. Consequently, this committee may wish to explore what
practical difference this bill will make to existing law in
light of SB 830.
4)Argument in Support : The Recording Industry Association of
America argues "Physical music piracy has historically
involved the unauthorized manufacture and sale of single
records on traditional media such as vinyl records, tapes, and
compact discs (CD's). However, many music pirates now make
use of digital media with far greater storage capacity, such
as memory sticks and computer hard-drives, to create a new
breed of fraudulent music product containing hundreds if not
thousands of unauthorized sound recordings that are sold to
the public for remarkably low prices. For example, flea
market vendors have recently been discovered in California
selling memory chips and thumb drives stocked with 1,200 songs
or more (the equivalent of 100 legitimate records) for as low
as $30 each. The unauthorized sale of such items displaces
multiple legitimate sales, thereby damaging the businesses of
the many artists, song writers, record labels, retailers, and
legal music distributors that call California home.
"Though California has a state statute designed to protect the
entertainment industry and the general public against the
crime of music piracy, it should be amended to clarify that
the sale of digital storage devices containing the equivalent
of 100 or more records or movies constitutes a felony
violation under state law. Currently, law enforcement
officers are refusing to take action against the growing
number of vendors dealing in digital storage devices stocked
with infringing music and movies because such vendors
generally possess small quantities when dealing that would
subject them to mere misdemeanor violations. Accordingly, AB
2122 addresses this by amending the piracy statutes to reflect
criminal penalties more closely aligned with the true degree
of harm caused by the sale of these fraudulent goods in
California."
5)Prior Legislation :
a) AB 819 (Calderon), Chapter 351, Statutes of 2010,
doubled the fines relating to intellectual property piracy.
b) SB 830 (Wright), Chapter 480, Statutes of 2010, expanded
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the definition of a "recording" for the purposes of
prosecution for failing to disclose the origin of a
recording when utilizing the recording for financial gain,
as specified. Specified that "recordings" include memory
cards, flash drives, hard-drives, or data storage devices.
c) AB 2750 (Krekorian), Chapter 468, Statutes of 2008,
required a court to order persons convicted of specified
crimes relating to music piracy to pay restitution to
persons who have suffered economic loss as a result of the
illegal activity, as specified.
d) AB 64 (Cohn), Chapter 9, Statutes of 2006, made the
possession or sale of at least 100, rather than 1,000,
articles of audio recordings punishable as an alternate
felony/misdemeanor.
e) AB 6 (Cohn), of the 2003-04 Legislative Session, would
have made the possession or sale of at least 100, rather
than 1,000, articles of audio recordings punishable as an
alternative felony/misdemeanor. AB 6 was amended into an
unrelated subject area.
f) AB 2735 (McCarthy), of the 2003-04 Legislative Session,
would have provided that it is a crime, punishable by a
fine and/or imprisonment, for a person who is not the
copyright owner to knowingly electronically disseminate a
commercial recording or audiovisual work without disclosing
his or her true name and address, and the title of the
recording or audiovisual work. AB 2735 was never heard in
the Assembly Committee on Arts, Entertainment, Sports,
Tourism, and Internet Media.
g) SB 1506 (Murray), Chapter 617, Statutes of 2004,
required that electronic disseminations of specified
recordings and audiovisual works include an e-mail address.
h) AB 1005 (Committee on Arts, Entertainment, Sports,
Tourism, and Internet Media), of the 2001-02 Legislative
Session, would have lowered the threshold to make the
possession or sale of at least 25, rather than 1,000, audio
recordings punishable as an alternative felony/misdemeanor.
AB 1005 failed passage in the Senate Committee on Public
Safety.
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REGISTERED SUPPORT / OPPOSITION :
Support
Recording Industry Association of America
Opposition
None
Analysis Prepared by : Shaun Naidu / PUB. S. / (916) 319-3744