BILL ANALYSIS Ó
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair
2015 - 2016 Regular
Bill No: AB 1241 Hearing Date: June 21, 2016
-----------------------------------------------------------------
|Author: |Calderon |
|-----------+-----------------------------------------------------|
|Version: |March 26, 2015 |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Urgency: |No |Fiscal: |No |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Consultant:|JM |
| | |
-----------------------------------------------------------------
Subject: Crimes: Audiovisual Work: Recording
HISTORY
Source: Recording Industry Association of America
Prior Legislation:AB 160 (Dababneh) - Ch. 427, Stats. 2015
AB 2122 (Bocanegra) - Ch. 857, Stats. 2014
SB 1479 (Pavley) - Ch. 873, Stats. 2012
SB 550 (Padilla) - Ch. 421, Stats. 2011
SB 830 (Wright) - Ch. 480, Stats. 2010
AB 2750 (Krekorian) - Ch. 468, Stats. 2008
AB 64 (Cohn) - Ch. 9, Stats, 2006
SB 1506 (Murray) - Ch. 617, Stats. 2004
Support: Unknown
Opposition:None known
Assembly Floor Vote: 78 - 0
PURPOSE
The purpose of this bill is to require a sentencing court to
impose a mandatory minimum fine of at least $1,000 for a second
or subsequent conviction of audio or video piracy.
AB 1241 (Calderon ) Page
2 of ?
Existing law provides that a person is guilty of the failure to
disclose the origin of a recording or audiovisual work (piracy)
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. (Pen. Code, § 653w, subd. (a)(1).)
Existing law provides that if the offense involves at least 100
articles of audio recordings or audiovisual works, or the
commercial equivalent thereof, then the punishment is
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).)
Existing law punishes any other first-time violation of the
crime by imprisonment in a county jail not to exceed one year,
by a fine of not more than $50,000, or by both that fine and
imprisonment. (Pen. Code § 653w, subd. (b)(2).)
Existing law punishes a second or subsequent conviction by
imprisonment in a county jail not to exceed one year, or by
imprisonment 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).)
Existing law 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).)
Existing law defines "audiovisual works" as the "physical
embodiment of works that consist of related images that are
AB 1241 (Calderon ) Page
3 of ?
intrinsically intended to be shown using machines or devices,
such as 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).)
Existing law requires, in addition to any other penalty or fine,
the court to order a person who has been convicted of a music or
video piracy 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).)
Existing law requires the restitution order be based on the
aggregate wholesale value of lawfully manufactured and
authorized devices or articles, and to also include reasonable
costs incurred as a result of the investigation undertaken by
the owner, lawful producer, or trade association acting on
behalf of the owner. (Pen. Code § 1202.4, subd. (r)(1).
This bill imposes a mandatory minimum fine of not less than
$1,000 for a second or subsequent conviction for the crime of
music or video piracy, as prosecuted under the California law
that requires a person to disclose the true name and address of
the manufacturer of a musical or audio
work.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the past several years this Committee has scrutinized
legislation referred to its jurisdiction for any potential
impact on prison overcrowding. Mindful of the United States
Supreme Court ruling and federal court orders relating to the
state's ability to provide a constitutional level of health care
to its inmate population and the related issue of prison
overcrowding, this Committee has applied its "ROCA" policy as a
content-neutral, provisional measure necessary to ensure that
the Legislature does not erode progress in reducing prison
overcrowding.
On February 10, 2014, the federal court ordered California to
AB 1241 (Calderon ) Page
4 of ?
reduce its in-state adult institution population to 137.5% of
design capacity by February 28, 2016, as follows:
143% of design bed capacity by June 30, 2014;
141.5% of design bed capacity by February 28, 2015; and,
137.5% of design bed capacity by February 28, 2016.
In December of 2015 the administration reported that as "of
December 9, 2015, 112,510 inmates were housed in the State's 34
adult institutions, which amounts to 136.0% of design bed
capacity, and 5,264 inmates were housed in out-of-state
facilities. The current population is 1,212 inmates below the
final court-ordered population benchmark of 137.5% of design bed
capacity, and has been under that benchmark since February
2015." (Defendants' December 2015 Status Report in Response to
February 10, 2014 Order, 2:90-cv-00520 KJM DAD PC, 3-Judge
Court, Coleman v. Brown, Plata v. Brown (fn. omitted).) One
year ago, 115,826 inmates were housed in the State's 34 adult
institutions, which amounted to 140.0% of design bed capacity,
and 8,864 inmates were housed in out-of-state facilities.
(Defendants' December 2014 Status Report in Response to February
10, 2014 Order, 2:90-cv-00520 KJM DAD PC, 3-Judge Court, Coleman
v. Brown, Plata v. Brown (fn. omitted).)
While significant gains have been made in reducing the prison
population, the state must stabilize these advances and
demonstrate to the federal court that California has in place
the "durable solution" to prison overcrowding "consistently
demanded" by the court. (Opinion Re: Order Granting in Part and
Denying in Part Defendants' Request For Extension of December
31, 2013 Deadline, NO. 2:90-cv-0520 LKK DAD (PC), 3-Judge Court,
Coleman v. Brown, Plata v. Brown (2-10-14). The Committee's
consideration of bills that may impact the prison population
therefore will be informed by the following questions:
Whether a proposal erodes a measure which has contributed
to reducing the prison population;
Whether a proposal addresses a major area of public safety
or criminal activity for which there is no other
reasonable, appropriate remedy;
Whether a proposal addresses a crime which is directly
dangerous to the physical safety of others for which there
is no other reasonably appropriate sanction;
Whether a proposal corrects a constitutional problem or
AB 1241 (Calderon ) Page
5 of ?
legislative drafting error; and
Whether a proposal proposes penalties which are
proportionate, and cannot be achieved through any other
reasonably appropriate remedy.
COMMENTS
1.Need for This Bill
According to the author:
Crimes related to piracy are often viewed as
victimless. As such, they are often treated lightly
by the courts. While there are opportunities for the
courts to establish fines, there is no mandatory fine
in cases involving piracy of copyright, intellectual
property, despite the unquestioned impact upon the
entertainment and other industries affected by these
illegitimate activities. AB 1241 would create a
minimum fine of $1,000 on a second offense.
2.Special Restitution in Music and Video Piracy is Equivalent to
a Fine; this Bill requires Imposition of a Standard Criminal
Fine
In audio and audio-visual piracy, restitution is defined to
include the value of unsold items seized from the defendant. As
the items did not actually replace a legitimate sale, the value
of these items is not truly restitution for a loss. (People v.
Garcia (2011) 194 Cal.App.4th 612, 614-622.) The restitution is
essentially a fine paid to the victim in an amount measured by
the value of the illegitimate sales the defendant would have
made if he or she had actually sold the items. This form of
restitution is a penalty based the defendant's criminal intent,
not actual losses suffered by the victim and appears to be
similar to punitive damages ordered in a civil suit.
This bill requires payment of a traditional fine. A criminal
fine is paid to the government, not the victim. Criminal fines
are generally imposed based on the culpability of the defendant.
The fact that a defendant would have made additional illicit
AB 1241 (Calderon ) Page
6 of ?
sales had he or she not been caught is such a consideration. A
fine can also reflect the harm the defendant's conduct more
generally caused society.
3.Federal Law Controls Copyright - State Law Generally Involves
Other Defined Offenses that may Indirectly Advance Copyright
Interests
Federal law preempts state law in the area of copyright. State
laws related to copyright interests are generally called "true
name and address" laws, which 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 United
States 9th Circuit Court of Appeals upheld the California true
name and address law. The defendant's claim that the true name
and address law (Pen, Code § 653w) is preempted by federal
copyright law was rejected by the 9th Circuit. The court in
Anderson explained its holding:
The state's interest in enacting Penal Code section
653w is the desire to protect the public in general,
and the many employees of the vast entertainment
industry in particular, from the hundreds of millions
of dollars in losses suffered as a result of the
"piracy and bootlegging" of the industry's products.
However, the statute also has the purpose of
protecting the public from being victimized by false
and deceptive commercial practices. ? [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 serve this purpose of
protecting consumers. They are designed to protect the
property rights of copyright owners.
Further, the California statute criminalizes selling
recordings whose labels fail to disclose the
manufacturer or author; it does not criminalize
unauthorized duplication or "bootlegging" of
AB 1241 (Calderon ) Page
7 of ?
copyrighted works. An act criminalized by § 653w thus
does not "in and of itself . . . infringe one of the
exclusive rights" listed in the copyright laws. (Id.,
at pp. 102-103.)
4.Underground Economy
The "underground economy" refers to those individuals and
businesses that deal in cash and/or use other schemes to conceal
their activities, identities, and true tax liabilities from
government licensing, regulatory, and taxing agencies. The
activities that occur in the underground economy include the
sale or transfer of illegal goods, such as pirated music or
movies, counterfeit pharmaceutical drugs, vitamins, wine,
clothing, accessories, weapons, tax evasion or fraud, and
untaxed tobacco products or alcohol. The underground economy
hurts legitimate businesses, creates an enormous tax gap and
hurts all California due to the loss of revenue. The Board of
Equalization estimates that the State of California losses about
$8.5 billion dollars annually in tax revenue due to the
underground economy.
(http://www.boe.ca.gov/info/underground_economy.htm.) This
revenue is needed to fund critical programs such as education,
public safety, infrastructure and social services.
5.Legislative and Judicial Functions as regards Criminal
Sentencing
Setting the penalty, or range of penalties, for a crime is an
inherently legislative function. The Legislature does have the
power to require a minimum term or other specific sentence.
(Keeler v. Superior Court (1970) 2 Cal.3d 619, 631.)
Sentencing, however, is solely a judicial power. (People v.
Tenorio (1970) 3 Cal.3d 89, 90-93; People v. Superior Court
(Fellman) (1976) 59 Cal.App.3d 270, 275.) California law
effectively directs judges to impose an individualized sentence
that fits the crime and the defendant's background, attitude,
and record. (Cal. Rules of Court, rules 4.401-4.425.) This
bill limits judicial discretion and requires a minimum fine of
$1,000 to be imposed in each case in which a defendant has
already suffered a prior conviction for piracy, regardless of
the facts.
Although requiring a minimum fine of $1,000 for a second or
AB 1241 (Calderon ) Page
8 of ?
subsequent conviction is within the authority of the Legislature
to set penalties for crimes, the sentencing judge has the
discretion to impose this amount, and much more, under existing
law. The maximum fine under existing law is $200,000 -
approximately $800,000 with penalty assesssments. There is no
evidence that this amount is not already being imposed in these
types of cases.
6.Mandatory Penalty Assessments Effectively Quadruple a Criminal
Fine
Penalty assessments and fees must be assessed on the base fine
for a crime. Assuming a defendant was fined $1,000 as the fine
for a criminal offense, the following penalty assessments would
be imposed pursuant to the Penal Code and the California
Government Code:
Base Fine:
?? $
1,000
Pen. Code § 1464 state penalty on fines:
$1,000 ($10 for
every $10)
Pen. Code § 1465.7 state surcharge:
$ 200 (20%
surcharge)
Pen. Code § 1465.8 court operation assessment:
$40
Gov. Code § 70372 court construction penalty:
$500 ($5 for every
$10)
Gov. Code § 70373 assessment:
$30
Gov. Code § 76000 penalty:
$700 ($7 for every $10)
Gov. § 76000.5 EMS penalty:
?? $200 ($2 for every $10)
Gov. § Code § 76104.6 DNA fund penalty:
$100 ($1 for every $10)
Gov. § Code § 76104.7 addt'l DNA fund penalty:
$400 ($4 for every $10)
Total Fine with Assessments:
AB 1241 (Calderon ) Page
9 of ?
$4,170
It should be noted that this figure does not include victim
restitution, or the restitution fine, and that other fines and
fees, such as the jail booking fee, attorney fees, OR release
fees, probation department fees, may also be applicable.
7.Prioritization of Court-Ordered Debt and the Extent of
Uncollected Fines
Current law under Penal Code section 1203.1d prioritizes the
order in which delinquent court-ordered debt received is to be
satisfied. The priorities are 1) victim restitution, 2) state
surcharge, 3) restitution fines, penalty assessments, and other
fines, with payments made on a proportional basis to the total
amount levied for all of these items, and 4) state/county/city
reimbursements, and special revenue items.
The fine at issue in this bill has a fairly low priority in the
collection order, falling in the third category. Given that
victim restitution in these types of cases is to be on the
aggregate wholesale value of lawfully manufactured and
authorized devices or articles, and to also include reasonable
costs incurred as a result of the investigation undertaken by
the owner, lawful producer, or trade association acting on
behalf of the owner (Pen. Code, § 1202.4, subd. (r)(1)), it
could very well be the case that this fine is unlikely to be
collected, especially if the defendant is ordered to pay special
restitution based on the value of unsold pirated works.
A recent San Francisco Daily Journal article noted, "California
courts and counties collect nearly $2 billion in fines and fees
every year. Nevertheless, the state still has a more than $10.2
billion balance of uncollected debt from prior years, according
to the most recent date from 2012." (See Jones & Sugarman,
State Judges Bemoan Fee Collection Process, San Francisco Daily
Journal, (January 5, 2015).) "The annual growth in delinquent
debt partly reflects a supply of money that doesn't exist to be
collected." (Ibid.) In the same article, the Presiding Judge
of San Bernardino County was quoted as saying "the whole concept
is getting blood out of a turnip." (Ibid.)
AB 1241 (Calderon ) Page
10 of ?
-- END -