BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2013-2014 Regular Session
SB 1356 (Lieu)
As Amended April 10, 2014
Hearing Date: April 22, 2014
Fiscal: Yes
Urgency: No
RD
SUBJECT
Counterfeit goods: abatement: nonresidential premises
DESCRIPTION
Existing law makes the use of a nonresidential building or place
for the purpose of willfully manufacturing, intentionally
selling, or knowingly possessing for sale any counterfeit mark,
as specified, a nuisance which may be enjoined, abated, and
prevented, and for which damages may be recovered, as specified.
Existing law requires reports to be provided to the Senate and
Assembly Judiciary Committees by October 1, 2013 from any
district and city attorneys, county counsels, and city
prosecutors who maintain an action to enjoin, abate, or prevent
a nuisance pursuant to these provisions. Existing law sunsets
on January 1, 2015.
This bill would extend the above reporting requirement deadline
to February 1, 2015 and extend the sunset to January 1, 2016.
BACKGROUND
Under existing law, a nuisance is defined to mean anything which
is injurious to health or is indecent or offensive to the
senses, or an obstruction to the free use of property, so as to
interfere with the comfortable enjoyment of life or property.
Current law deems certain uses of buildings or places to be a
nuisance and authorizes a district attorney, city attorney, or
any citizen to bring an action to abate and prevent the
nuisance. Such uses include buildings or places used for the
purposes of illegal gambling or prostitution, unlawfully
selling, serving, storing, keeping, manufacturing, or giving
(more)
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away any controlled substance, and unlawfully selling, serving,
or giving away alcoholic liquor.
In 2009, AB 568 (Lieu, Ch. 453, Stats. 2009) was enacted to
provide that if a person is convicted for willfully
manufacturing, intentionally selling, or knowingly possessing
for sale any counterfeit mark, as specified, then a
nonresidential building or place used by that person for that
purpose shall be deemed a nuisance which may be enjoined,
abated, and prevented, and for which damages may be recovered,
whether it is a public or private nuisance. The bill also
required a 30 days' notice to be sent to the owner prior to the
filing of any such action. Additionally, the bill required that
any district and city attorneys, county counsels, and city
prosecutors who maintain an action to enjoin, abate, or prevent
a nuisance pursuant to these provisions provide specified
reports to the Senate and Assembly Judiciary Committees by
October 1, 2013. The provisions added by AB 568 will sunset on
January 1, 2015.
This bill would extend the deadline for these reports to
February 1, 2015 and extend the sunset to January 1, 2016.
CHANGES TO EXISTING LAW
Existing law defines a nuisance as anything which is injurious
to health, including but not limited to, the illegal sale of
controlled substances, or is indecent or offensive to the
senses, or an obstruction to the free use of property, so as to
interfere with the comfortable enjoyment of life or property, or
unlawfully obstructs the free passage or use, in the customary
manner, of any navigable lake, river, bay, stream, canal, or
basin, or any public park, square, street, or highway. (Civ.
Code Sec. 3479.)
Existing law makes it a crime for any person to willfully
manufacture, intentionally sell, or knowingly possess for sale
any counterfeit mark registered with the Secretary of State or
patented by the United States Patent and Trademark Office.
Existing law provides for certain criminal fines, imprisonment,
or both, where the offense involves 1,000 or more of
counterfeited goods, or has a total retail or fair market value
equal to or greater than that required for grand theft as
defined. (Pen. Code Sec. 350(a)(2).)
Existing law makes it a crime for any person to fail to disclose
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the origin of a recording or audiovisual work if, for commercial
advantage or financial gain, he or she knowingly advertises or
offers for sale or resale, or sells or resells, or causes the
rental, sale, or resale of, 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
thereof, except as specified. Existing law prescribes the
punishment for any convictions under this section based upon the
volume of articles involved. (Pen. Code Sec. 653w.)
Existing law , until January 1, 2015, provides that if there is a
conviction by any person for a violation of the specified Penal
Code provisions above, then a nonresidential building or place
used by that person for the purpose of willfully manufacturing,
intentionally selling, or knowingly possessing for sale any
counterfeit goods shall be deemed a nuisance which may be
enjoined, abated, and prevented, and for which damages may be
recovered, whether it is a public or private nuisance. Existing
law, among other things, specifies the remedies and procedures
that may be applied by the court, and requires that an owner be
provided with 30 days' notice prior to the filing of an action
to abate a nuisance under the provisions of this section. (Bus.
& Prof. Code Sec. 17800.)
Existing law requires a district attorney, county counsel, city
attorney, or city prosecutor that maintains an action or actions
to enjoin, abate, or prevent a counterfeiting nuisance report to
the Senate and Assembly Committees on Judiciary, by October 1,
2013, on their use of the provisions of this chapter and their
effectiveness. The report shall include, but not be limited to,
all of the following:
the frequency of use of the nuisance abatement provisions as
well as statistics on whether the use of the abatement
provisions correlates with a decrease in the use of criminal
penalties; and
any statistics or information concerning the impact of the use
of these provisions on counterfeiting overall, both in the
relevant county or city and overall. (Bus. & Prof. Code Sec.
17801.)
This bill would extend the sunset on the counterfeiting
abatement provisions above to January 1, 2016 and would extend
the deadline for the mandated reports to February 1, 2015.
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COMMENT
1. Stated need for the bill
According to the author:
Los Angeles and New York City hold the dubious distinction of
being the nation's leading centers for trafficking in pirated
and counterfeited goods.
Counterfeit goods are a danger to consumers, undermine
legitimate businesses, and deprive tax-payers of revenues
needed for public services.
Counterfeit goods sellers play a major role in the underground
economy and rarely pay taxes or contribute to workers
compensation funds. In a time of critical shortages in public
budgets, these massive losses in tax revenues translate into
reductions in vital services that we can ill afford.
According to the Los Angeles County Economic Development
Corporation (LAEDC), counterfeiting and piracy have cost Los
Angeles County at least 70,000 manufacturing jobs and 36,000
retail jobs, resulting in the loss of $482 million in tax
revenues for the city of Los Angeles and county of Los
Angeles.
In January of 2014, the United Nations Office on Drugs and
Crime (UNODC) reported that counterfeit goods are a minimum of
a $250 billion problem worldwide. Some estimates put the total
far higher. For example, the International Chamber of
Commerce estimates counterfeit goods are a $650 billion dollar
problem worldwide, and will be a $1.7 billion dollar problem
in 2015.
[ . . . ] This bill would help eliminate the growing problem
of piracy and counterfeiting plaguing California communities."
2. April 10, 2014 amendments
As noted in the Background, in 2009, AB 568 (Lieu, Ch. 453,
Stats. 2009) was enacted to make the use of a nonresidential
building for the purpose of manufacturing, selling, possessing
for sale any counterfeit mark, as specified, a nuisance that
could be enjoined, abated, or prevented, and for which damages
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may be recovered, if certain requirements are met. Those
provisions are currently set to sunset on January 1, 2015.
When AB 568 was heard in this Committee, several amendments were
taken by the author to address concerns. Among other things,
these amendments: (1) required that a person first be convicted
of certain crimes involving large volumes of counterfeit goods
to ensure against the possibility that a nuisance abatement
action could be brought for a single counterfeit item; (2)
required that owners be provided 30 days' notice before an
action to abate such a nuisance is filed; and (3) mandated
specified reports so as to enable this Committee to assess the
usefulness and/or any unintended or undesirable impacts or
consequences of the statute, at the very time in which the
proponents would presumably seek a sunset extension or deletion.
(See Sen. Judiciary Com., analysis of AB 568 (2009-2010 Reg.
Session, July 14, 2009, pp. 5, 9.)
As introduced, this bill would have removed each of the above
required amendments, deleted the mandated reports which were due
to the Senate and Assembly Judiciary committees on October 1,
2013, and extended the statute indefinitely. While the October
1, 2013 deadline for submitting the reports has passed, staff
notes no such reports detailing either the effectiveness or the
unintended impacts of AB 568 have been provided to the
Committee.
Recognizing the importance of allowing this Committee to review
the required reports on the effectiveness (or ineffectiveness)
of the statute before changing or removing language that this
Committee required in approving the original legislation, the
April 10, 2014 amendments substantially narrowed the bill.
Accordingly, as amended, this bill would leave the existing
statute intact, merely extend the sunset by one year to January
1, 2016, and re-set the deadline for the reports to February 1,
2015. This modest approach would preserve the existing statute
long enough to allow the proponents of the bill additional time
to provide this Committee with the necessary information before
any determinations are made as to the appropriateness of
altering the existing requirements or extending the sunset date.
3. Removal of opposition based on recent amendments
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The California Swap Meet Owners' Association (CSMA) opposed the
introduced version of this bill out of concerns that the bill
would remove important due process protections (specifically,
the elimination of the conviction requirement, the requirement
that owners be provided with 30 days' notice prior to the filing
of an action to abate such a nuisance, and the removal of the
discretion of the courts in awarding certain remedies and
procedures). The CSMA has removed its opposition in light of
the April 10, 2014 amendments would, instead, simply extend the
sunset by one year to allow for the required reports to be
submitted by February 1, 2015.
Support : None Known
Opposition : None Known
HISTORY
Source : Los Angeles City Attorney
Related Pending Legislation : None Known
Prior Legislation : AB 568 (Lieu, Ch. 453, Stats. 2009) See
Background.
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