BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1241


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          Date of Hearing:  April 28, 2015
          Counsel:               Sandra Uribe

                         ASSEMBLY COMMITTEE ON PUBLIC SAFETY


                                  Bill Quirk, Chair





          AB  
                      1241 (Calderon) - As Amended  March 26, 2015





          SUMMARY:  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.

          EXISTING LAW: 

          1)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).)

          2)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  








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            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).)

          3)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).)

          4)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).)

          5)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).)

          6)Defines "audiovisual works" as the "physical embodiment of  
            works that consist of related images that are 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).)

          7)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).)









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          8)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).)

          FISCAL EFFECT:  Unknown

          COMMENTS:  

          1)Author's Statement:  According to the author, "AB 1241  
            continues the practice of fine-tuning state laws to address  
            the impact of piracy upon very important industry sections to  
            California.  This just clarifies that a minimum fine will be  
            established for those committing a second offense in this  
            criminal area."

          2)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.
          
          3)Practical Considerations:  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  








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            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 a minimum fine of $1,000 for a second or subsequent  
            conviction may not be unreasonable, the sentencing judge  
            already has the discretion to impose this amount, and much  
            more.  There is no evidence that this amount is not already  
            being imposed in these types of cases.  

          4)Existing Penalty Assessments:  There are penalty assessments  
            and fees 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 



            Penal Code 1464 state penalty on fines:                         
                                                      1,000  ($10 for  
            every $10)


            Penal Code 1465.7 state surcharge:                              
                                                            200  (20%  
            surcharge)
            Penal Code 1465.8 court operation assessment:                   
                         40  ($40 fee per offense)
            Government Code 70372 court construction penalty:               
                   500  ($5 for every $10)
            Government Code 70373 assessment:                               
                                                              30  ($30 for  
            felony or misdemeanor)
            Government Code 76000 penalty:                                  








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                       700  ($7 for every $10)
            Government Code 76000.5 EMS penalty:                            
              200  ($2 for every $10) 
            Government Code 76104.6 DNA fund penalty:                       
                    100  ($1 for every $10)
            Government Code 76104.7 addt'l DNA fund penalty:                
                 400  ($4 for every $10)
            Total Fine with Assessments:                                    
                 $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.


          5)Prioritization of Court-Ordered Debt:  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.

          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  








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            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.)   

          6)Related Legislation:  AB 160 (Dababneh) would expand the list  
            of crimes that allow for forfeiture of assets and prosecution  
            of criminal profiteering to include, among other crimes,  
            illegal piracy of recordings or audiovisual works.  AB 160 is  
            pending in the Assembly Committee on Revenue and Taxation.

          7)Prior Legislation:  

             a)   AB 2122 (Bocanegra), Chapter 857, Statutes of 2014,  
               provides that the "true name and address" audio recording  
               and audiovisual works piracy alternate felony-misdemeanor  
               shall apply where the defendant's conduct involved the  
               "commercial equivalent" of at least 100 articles of sound  
               recordings or audiovisual recordings.

             b)   SB 1479 (Pavley), Chapter 873, Statutes of 2012,  
               provides that in music or video piracy cases, restitution  
               shall include the value of pirated works that were seized  
               from the defendant, but not actually sold.

             c)   SB 830 (Wright), Chapter 480, Statutes of 2010, expanded  
               the definition of a "recording" for the purposes of  
               prosecution for failing to disclose the origin of a  
               recording when utilizing the recording for financial gain  
               to include memory cards, flash drives, hard-drives, or data  
               storage devices.

             d)   AB 819 (Calderon), Chapter 351, Statutes of 2010,  
               increased the fines for intellectual property piracy.

             e)   AB 2750 (Krekorian), Chapter 468, Statutes of 2008,  
               required a court to order persons convicted of specified  
               crimes relating to music piracy to pay restitution to not  
               only the owner or lawful producer, but also to a trade  








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               association acting on behalf of the owner or lawful  
               producer.

             f)   AB 64 (Cohn), Chapter 9, Statutes of 2006, made the  
               possession or sale of at least 100, rather than 1,000,  
               audio recordings punishable as an alternate  
               felony/misdemeanor.

          REGISTERED SUPPORT / OPPOSITION:
          
          Support

          None

          Opposition
          
          None

          Analysis Prepared  
          by:              Sandy Uribe / PUB. S. / (916) 319-3744