BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1479|
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THIRD READING
Bill No: SB 1479
Author: Pavley (D)
Amended: 3/29/12
Vote: 21
SENATE PUBLIC SAFETY COMMITTEE : 7-0, 4/17/12
AYES: Hancock, Anderson, Calderon, Harman, Liu, Price,
Steinberg
SUBJECT : Music And Video Piracy: restitution based on
pirated works seized from the offender
SOURCE : Recording Industry Association of America
DIGEST : This bill provides that in music or video piracy
restitution shall include the value of pirated works -
works not obtained at wholesale from the copyright holder
or licensee - that were seized from the defendant and
destroyed.
ANALYSIS : Existing law (Penal Code Section 653w)
provides that a person is guilty of a crime when he or she
knowingly attempts to sell, rent or manufacture, or possess
for these purposes, an illicit audio recording or
audiovisual work. The essence of this crime is that the
defendant failed to disclose the true name and address of
the manufacturer and the name of the artist.
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A violation involving at least 100 copies of an audio
recording or an audiovisual work is an alternative
felony-misdemeanor, punishable by imprisonment for up to
one year in the county jail, or in state prison for two,
three, or five years, or a fine of up to $500,000, or
both.
A first violation involving less than 100 copies is a
misdemeanor, punishable by up to one year in county jail,
or a fine not exceeding $50,000, or both.
A subsequent violation involving less than 100 copies is
an alternative felony-misdemeanor, punishable by up to
one year in county jail, 16 months, two years, or three
years in state prison, or a fine not exceeding $200,000,
or both. (Penal Code Section 653w.)
Existing law includes a number of crimes concerning music
piracy, other than Section 653w, which appears to be the
most commonly prosecuted of these crimes. These related
sections - 653h, 653s and 653u are complex and confusing.
Section 653h, subdivision (a), prohibits transferring any
recording for purposes of sale or commercial public
performance and transporting such recordings for
financial gain. An offense involving at least 1000 units
is an alternate felony-misdemeanor, with prison triad of
two, three or five years and $500,000 fine. An offense
involving less than 1000 units is a misdemeanor. A
second conviction for fewer than 1000 units is a straight
felony, with a maximum fine of $200,000.
Section 653h, subdivision (d), prohibits selling or
offering for sale, etc. illegally transferred recordings.
A first offense involving at least 100 units is a
misdemeanor, with maximum one-year jail term and maximum
$20,000 fine. A second conviction is an alternate
felony- misdemeanor, with maximum $50,000 fine. A first
offense involving less than 100 units is a misdemeanor,
with maximum six-months jail term and a maximum fine of
$10,000. A second offense involving less than 100 units
is a misdemeanor, with maximum one-year jail term and
maximum $20,000 fine. A third offense involving less
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than 100 units is an alternate felony-misdemeanor, with
maximum $25,000 fine.
Penal Code Sections 653s and 653u concern unlawful
recording and sale of live performances. The elements of
the crimes and the fines are equivalent to those in Penal
Code Section 653h.
Existing provisions in the California Constitution state
that all persons who suffer losses as a result of criminal
activity shall have the right to restitution from the
perpetrators of these crimes. Restitution shall be ordered
in every case unless compelling and extraordinary reasons
exist to the contrary. The Legislature shall adopt
provisions to implement this section during the calendar
year following adoption of this section. (Cal. Const. Art.
1 Section 28(b).)
Existing law states legislative intent that a victim of
crime who incurs any economic loss as a result of the
commission of a crime shall receive restitution directly
from any defendant convicted of that crime. (Penal Code
Section 1202.4, subd. (a)(1).)
Existing law directs the court to order a defendant to make
restitution to the victim or victims of the defendant's
crime. The court shall order full restitution for the
losses caused by the defendant's crime unless the court
finds and states compelling and extraordinary reasons for
not doing so. (Penal Code Section 1202.4, subd. (f).)
Existing decisional law provides that restitution must be
determined from the losses actually caused by the
defendant's crime. ( People v. Lyon (1996) 49 Cal.App.4th
1521.) With the exception of lewd conduct cases,
compensable losses are limited to economic losses. ( People
v. Giordano (2007) 42 Cal.4th 644.
Existing decisional law provides in broadest terms that the
restitution "ensures that amends . . . be made to society
for the breach of the law, enables people who suffer loss
as a result of criminal activity �to] be compensated for
those losses, and acts as a deterrent to future criminality
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. . . and to rehabilitate the criminal." ( People v. Crow
(1993) 6 Cal.4th 952, 958, internal quotation marks
omitted.) Restitution orders in probation cases can be
somewhat broader than in cases where probation is denied.
( People v. Giordano , supra, 2007) 42 Cal.4th 644, 653;
Penal Code Section 1203.1.)
Existing law provides that if the amount of restitution
cannot be determined at the time of sentencing, the
restitution order shall state that the amount will be
determined at the direction of the court. (Penal Code
Section 1202.4, subd. (f).)
Existing law grants the defendant the right to a hearing to
dispute the amount of restitution. (Penal Code Section
1202.4, subd. (f)(1).)
Existing law states upon a person being convicted of any
crime in the State of California, the court shall order the
defendant to pay a fine in the form of a penalty
assessment. Penalty assessments are calculated at
approximately 280 percent of the base fine, which is added
to the base fine to determine that actual amount paid by
the defendant. (Penal. Code Section 1202.4, subd. (a)(2).)
Existing law provides in every case where a person is
convicted of a crime, the court shall impose a separate and
additional restitution fine unless the court finds
compelling and extraordinary reasons for not doing so and
states those reasons on the record. (Penal Code Section
1202.4, subd. (b).)
This bill provides that in a music or video piracy case,
restitution shall include the value of pirated works -
described as "displaced legitimate wholesale purchases" -
that were seized from a defendant and destroyed.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/19/12)
Recording Industry Association of America (source)
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Valley Industry and Commerce Association
ARGUMENTS IN SUPPORT : According to the author:
SB 1479 provides clarity as to the amount of
restitution that victims may claim under Penal Code
1202.4. When AB 2750 was passed in 2008, the author
clearly intended that record companies and their
designees (such as RIAA) are entitled to restitution
for economic loss arising from the sale, or possession
for sale, of �pirated] copies of copyright-protected
sound recordings and motion pictures. Restitution
should be set at the average wholesale price of the
items that were illegally possessed by the defendant
with the intent to sell. The rationale behind this
calculation is that the only way for a party to obtain
such copies legally would be to purchase them from an
authorized source---in this case, a wholesaler. Thus,
by possessing the copies, the pirate displaced the
wholesale purchase.
The "wholesale" argument used by RIAA has been
advanced successfully in many restitution cases.
However, a 2011 decision in the case of People vs.
Garcia �(2011) 194 Cal.App.4th 612] dramatically
changed the landscape. In Garcia, the appellate court
threw out the wholesale basis for restitution and
provided restitution only for past sales of unlawful
sound recordings documented in �the defendant's]
"pay-owe" sheet and the costs of investigations and
assistance to the prosecutor. The court failed to
recognize that piracy causes economic harm on the
retail and wholesale levels. When a pirate possesses
illicit goods for sale, he deprives the owners of the
media (record labels, film studios, etc.) of the
wholesale transaction that would have occurred had he
purchased the product from its legitimate source. If
and when a pirate sells his goods to a consumer, he
deprives retailers of sales. Thus, the court in
Garcia failed to recognize that 1202.4(r) focuses on
the actual economic harm to producers of media based
on displaced wholesale purchases, and not potentially
displaced retail sales. Garcia reduces incentives for
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prosecutors to pursue piracy cases, since the typical
case produces little or no jail time, small fines,
and, now, little restitution to the victims. SB 1479
will provide clear direction to the courts on how to
properly calculate a restitution order and settle,
once and for all, the basis that should be used by the
courts in determining these values.
Piracy causes substantial damage to affected
industries. In its 2007 report entitled, "A False
Bargain: The Los Angeles County Economic Consequences
of Counterfeit Products," the L.A. Economic
Development Corporation noted that counterfeiting is
not taken seriously as criminal activity. The report,
however, argued that "consumers lose when companies
�reduce] investment in research and development,
whether developing new drugs or new music acts. More
immediately, piracy causes real losses measurable in
revenues, jobs, wages, and taxes." The report stated
that motion picture production accounted for nearly $3
billion in losses, while music accounted for $851
million in losses. As a result, local and state
government lost substantial tax revenue.
RJG:do 4/23/2012 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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