EMA Government Affairs Quarterly Update -- Q1 2012

Oklahoma Video Game Tax (H.B. 2696)

EMA provided an analysis to Oklahoma state legislators considering a video game tax (House Bill 2696). The bill would have imposed additional 1% sales and use taxes on sales of “violent video games” (defined as those rated “Teen” and above) in the state to fund outdoor education and anti-bullying programs for children.

EMA’s analysis noted that singling out certain video games for disparate taxation based on their content is likely unconstitutional. It also informed the legislators that the “Teen,” “Mature,” and “Adults Only” ratings do not necessarily mean that a game contains depictions of violence and that a state cannot give the voluntary ratings the force of law. Finally, the analysis indicated that the implications in the bill that video games lead to obesity and bullying are not supported by scientific consensus. 
The bill was rejected in committee.

Video Game Warning Labels

U.S. Representative Joe Baca (CA) has reintroduced his video game warning label bill. The measure, H.R. 4204, would require every video game rated E or higher to carry a label stating “`WARNING: Exposure to violent video games has been linked to aggressive behavior.” EMA responded to the introduction by noting to the media that: last year’s Brown v. EMA case established video games are protected speech and the government cannot regulate video games simply because it disfavors the content; the proposed warning is inaccurate; and the bill would misuse the ESRB ratings and would encompass many games they have no violent content at all.

The measure is not expected to be taken up in this Congress.

U.S. v. Alvarez

The U.S. Supreme Court heard oral arguments in the case of U.S. v. Alvarez, which is a challenge to the federal Stolen Valor Act. The Stolen Valor Act makes it a federal offense to claim to have received a military decoration that one did not actually earn. EMA signed on to a “friend of the court” brief to the high court, which argued that the Stolen Valor Act violates the First Amendment’s guarantee of freedom of expression by criminalizing non-fraudulent false statements. The brief posits that, if the government’s position that non-fraudulent false statements are not protected by the First Amendment and may be restricted were to be adopted, it would allow governments “to restrict any false factual speech in which the government can plausibly claim a ‘strong interest.’” This could conceivably allow governments to punish retailers and distributors for selling movies and other entertainment containing false statements that the government finds objectionable.

A ruling in the case is expected by the end of June.

Video Privacy Protection Act Amendment (H.R. 2471)

 EMA provided the Senate staff handling the consideration of the Video Privacy Protection Act Amendment (H.R. 2471) with the letter EMA wrote to House Judiciary Committee Chairman Lamar Smith taking issue with statements about the home video industry contained in the House report accompanying the bill. The staff were provided the letter in advance of a Senate hearing on H.R. 2471.

 The House report stated that video stores are obsolete and that they have been replaced by cable and internet video-on-demand. EMA’s letter noted that industry statistics show that traditional video stores captured 26% of the rental market in 2010, belying the assertion that they are obsolete, and that packaged home video accounted for 42% of the consumer motion picture and video spending in 2010, which far outpaced the cable and internet video-on-demand markets.

Video Privacy Protection Act Ruling

In a case interpreting the Video Privacy Protection Act (VPPA), the U.S. Court of Appeals for the Seventh Circuit found that an individual cannot obtain monetary damages from a video retailer for the retailer’s alleged failure to destroy the individual’s video rental and/or sales records in a timely manner. (The VPPA requires that video retailers destroy “personally identifiable information” – meaning specific video rental and sales records of an individual – no later than one year after the information is no longer needed for the purpose for which it was collected.) The court found that the structure of the VPPA leads to the conclusion that Congress did not intend for monetary damages to be awarded for the mere retention of rental and sales records beyond one year (as opposed to the unauthorized disclosure of the records, which are subject to damages). The case is Sterk v. Redbox Automated Retail.

Brown v. EMA

In the final installment of the successful challenge to the 2005 California video game restriction law, the state of California agreed to pay the Entertainment Software Association (ESA) $950,000 to reimburse ESA for the costs and fees it incurred in challenging the  law before the Supreme Court. When reimbursements for lower court costs and fees are considered, the total state reimbursement to ESA was more than $1.3 million. ESA will use a portion of the reimbursement to fund after-school educational programs for underserved communities in two California cities.

Louisiana Secondhand Goods Law

The Louisiana legislature is considering an am

endment to the state’s secondhand goods law that would modify the most-onerous provisions of a revision to the law that was enacted last year. House Bill 751 (now House Bill 1187) would eliminate in most instances the law’s requirements to photograph the sellers of secondhand goods and the goods themselves and would limit the prohibition on paying for secondhand goods with cash or store gift cards so that it would only apply to secondhand metals.

First Sale Provision and Foreign-Made Copies

EMA produced a white paper on legal cases addressing whether the first sale provision of the Copyright Act applies to copies of works copyrighted in the U.S. but manufactured abroad and subsequently brought into the U.S. The white paper was developed in anticipation of the U.S. Supreme Court’s expected decision in April whether it will hear appeals of two of these cases: Kirtsaeng v. John Wiley & Sons, Inc. and Pearson Education, Inc. v. Liu.

Copyright 2012, Entertainment Merchants Association
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