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
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            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 








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            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