BILL ANALYSIS Ó SB 550 Page 1 Date of Hearing: August 17, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 550 (Padilla) - As Amended: August 15, 2011 Policy Committee: Business and Professions Vote: 8 - 0 Public Safety 7 - 0 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill authorizes law enforcement officers to search the premises of commercial optical disc manufacturers to verify compliance with optical disc identification law without providing prior notice of the inspection or obtaining a warrant. Specifically, this bill: 1)Authorizes law enforcement officers to search the premises of optical disc manufacturers without first obtaining a warrant. 2)Defines optical disc as a disc capable of being read by a laser or other light source on which data is stored in digital form, including, but not limited to CDs, DVDs, or related mastering source materials. This definition does not include blank optical discs. 3)Prohibits a person who manufactures optical discs for commercial purposes from possessing, owning, controlling, or operating manufacturing equipment or any optical disc mold unless it has been adapted to apply the appropriate identification mark or unique identifying code. 4)Prohibits a person who manufactures optical discs for commercial purposes from making, possessing, or adapting any optical disc mold for the purpose of applying a forged, false, or deceptive identification mark or identifying code. 5)States that any manufacturing equipment, optical disc mold, or production part found on the premises of a commercial manufacturer shall for the purposes of this chapter, be deemed SB 550 Page 2 to be in the possession of the manufacturer. 6)States that any manufacturer of optical discs found to be in violation of this section is guilty of a misdemeanor and shall be subject to a fine of not less than $500 and not more than $25,000 for a first offense, and shall be subject to a fine of not less than $5,000 and not more than $250,000 for a second or subsequent offense. FISCAL EFFECT Potential minor nonreimbursable costs to counties for prosecution and incarceration related to violations of the bill's provisions, offset to some extent by fine revenues. COMMENTS 1)Purpose . The intent of this legislation is to increase the fines and penalties associated with pirating music and movies. According to the author, "The crime of illegal mass reproduction of music and movies is a serious problem in California. Last year alone, more than 820,000 illegal discs were seized by law enforcement authorities in California. In a 2007 report, The Los Angeles Economic Development Corporation estimated the economic losses in Los Angeles County to all industries exceed $5 billion annually. Music and movie losses make up more than half of that number. The result of pirating is a loss of nearly half a billion tax dollars a year to state and local governments." 2)Constitutional Concerns re Warrantless Searches . It is unclear whether this bill, which allows law enforcement to search private property without a warrant, would stand up to a constitutional challenge. The Fourth Amendment of the United States Constitution protects against unreasonable searches and seizures. Generally, a warrant is required before government agents, including law enforcement can enter into private property. The Assembly Public Safety Committee analysis includes a discussion of this concern, essentially concluding that myriad rulings involving exigent circumstances, closely regulated industries, high risk of illegal conduct or of serious danger to the public, reasonableness, substantial governmental interest, furtherance of a regulatory scheme, and scope of SB 550 Page 3 search, are interrelated and inconclusive. 3)Opposition . The American Civil Liberties Union notes, "SB 550 would allow the warrantless searches of businesses that create CDs, DVDs, or other optical disks that contain music, films, computer programs, and other expressive content, activity which is protected by the First Amendment. In general, the First Amendment looks with suspicion on laws like this one that single-out publishers and impose burdens on them that are not equally imposed on other businesses. "In addition, this bill authorizes law enforcement officials to seize any disks that they believe were manufactured in violation of the statute. This violates the fundamental First Amendment principle that the government cannot confiscate more than a single exemplar of expressive materials without a final judgment that the materials are unprotected by the First Amendment." 4)Related Legislation . AB 819 (Calderon), Statutes of 2010, increases the fines for intellectual property piracy. AB 568 (Lieu), Statutes of 2009, allows law enforcement to declare any non-residential property unlawfully used for the manufacture, sale, or possession of counterfeit goods, a nuisance. AB 2750 (Krekorian), Statutes of 2008, requires 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. AB 64 (Cohn), Statutes of 2006, makes the possession or sale of at least 100, rather than 1,000, audio recordings punishable as an alternate felony/misdemeanor. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081