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August 2010 Update
The following summarizes key government affairs activities of the Entertainment Merchants Association during the past month. Please email Sean Bersell if you have any questions or need further information.
Organized Retail Crime
EMA wrote to leaders of the U.S. House Committee on the Judiciary to express support for the Organized Retail Theft Investigation and Prosecution Act of 2010 (H.R. 5932).
The bill would establish an Organized Retail Theft Investigation and Prosecution Unit (ORTIP Unit) in the Department of Justice that would be staffed with investigators, prosecutors and others. The ORTIP Unit would be responsible for investigating and prosecuting instances of organized retail theft over which the Department of Justice has jurisdiction, assisting State and local law enforcement agencies in investigating and prosecuting organized retail theft, and consulting with and advising victims of organized retail theft. The bill would define "organized retail theft" as obtaining retail merchandise by illegal means for the purpose of reselling or otherwise placing such merchandise back into the stream of commerce, aiding or abetting the commission of such acts, or conspiring to commit such acts. H.R. 5932 would also require the Attorney General to submit a report containing recommendations on how retailers, online businesses, and law enforcement agencies can help prevent and combat organized retail theft. Finally, it authorizes $5 million per year for fiscal years 2011 through 2015 to fund the ORTIP Unit.
H.R. 5932 passed the House on September 29, and may be taken up by the Senate after the November elections.
"Children's Product" Under the Consumer Product Safety Improvement Act
The Consumer Products Safety Commission (CPSC) has finalized its "interpretive rule" on determining whether an item is a "children's product" for the purposes of the federal Consumer Products Safety Improvement Act of 2008 (CPSIA). The interpretive rule specifically addresses the coverage of DVDs and video games under the term "children's product," declaring that most are not, but that some children's movies and video games may be classified as "children's products." Unlike the interpretive rule as originally proposed, there is no blanket exemption for movies and video games aimed at children under age four. The final interpretive rule is available online at http://www.cpsc.gov/about/cpsia/frchildprod.pdf.
The CPSIA, in part, limits the lead content in "children's products" and requires tracking labels for "children's products." The definition of "children's product" in the CPSIA covers any "consumer product designed or intended primarily for children twelve years of age or younger." According to the CPSC, "[t]he scope of this provision is quite broad in that it applies to all children's products … not just toys and other regulated products." In determining whether an item is a "children's product," the CPSIA requires the CPSC to consider:
1.A statement by a manufacturer about the intended use of such product, including a label on such product if such statement is reasonable;
2.Whether the product is represented in its packaging, display, promotion, or advertising as appropriate for use by children 12 years of age or younger;
3.Whether the product is commonly recognized by consumers as being intended for use by a child 12 years of age or younger; and
4.The CPSC's Age Determination Guidelines.
The Age Determination Guidelines state that, when determining the age appropriateness of audiovisual content (other than computer and video games), an evaluator should "place primary emphasis or importance" on sensory elements, length of video or audio track, level of realism and detail, and level of complexity. For computer and video games, the "primary emphasis or importance" should be on sensory elements, cause and effect attributes, licensed characters depicted, motor skills required, and educational characteristics.
The interpretive rule is designed to provide guidance on how the CPSC staff and manufacturers can evaluate consumer products to determine whether such products are "children's products." The interpretive rule expands on the first three statutory factors listed above by, for example, stating that a product's size, color, safety features, and decorative motifs may be considered when determining whether it is a "children's product."
Regarding DVDs and video games, the final rule states that most DVDs and video games would be considered "general use products" and not "children's products" - that is, they not be deemed to be designed or intended primarily for children twelve years of age or younger. It goes on to state, however, that "CDs and DVDs with encoded content that is intended for and marketed to children, such as children's movies, games, or educational software may be determined to be children's products." (While the rule and associated explanation uses varying terms, for example sometimes specifically referencing video games, other times not, it is clear that the rule addresses packaged media containing video content, video games, and/or music.) The rule notes that the CPSC may look at voluntary industry ratings for guidance in determining whether something is a "children's product."
Likewise, DVD players, video game consoles, and associated accessories would generally be found to be "general use products," but a device may be declared to be a "children's product" if it is "embellished or decorated with childish themes that are intended to attract children" or is "marketed to appeal primarily to children."
Notably, the CPSC dropped its proposed interpretation that DVDs and video games designed or intended primarily for children under age four would never be a "children's product." It had previously suggested that very young children lack the motor skills to personally use the products and the physical products themselves (as opposed to the content they contain) have no appeal to children. The CPSC decided that such a bright line exemption would "only further complicate[] the age determination."
The final interpretive rule will be published in the Federal Register in the near future. The interpretation will go into effect when the final rule is published.
Schwarzenegger v. EMA
Twenty-seven amicus ("friend of the court") briefs were submitted to the U.S. Supreme Court in support of the challenge of EMA and the Entertainment Software Association (ESA) to the 2005 California video game restriction law. According to ESA, 182 organizations and individuals were represented by the briefs. Groups submitting amicus briefs in the Schwarzenegger v. EMA case included state attorneys general, retail associations, entertainment, media, and technology companies and associations, social scientists, and First Amendment scholars.
The Supreme Court has scheduled oral arguments in the case for Tuesday, November 2.
U.S. v. ASCAP
In a significant victory for the suppliers and retailers of digitally delivered entertainment, a federal appeals court ruled late last month that a digital download of a musical work - and by extension, a digital download of an audio-visual works that contains music - by itself, is not a "public performance" for copyright purposes. EMA had urged the court to adopt this position.
In a straightforward decision, the court in U.S. v. American Society of Composers, Authors and Publishers simply relied on the plain meaning of the term "public performance." It found that "performance" requires that the transmission of a work be "contemporaneously perceptible" and that a download is not.
A contrary ruling - that a digital download is a public performance - would have triggered an additional, public performance royalty for digital music downloads, in addition to any royalty for reproduction. EMA submitted a "friend of the court" brief supporting the position that a digital download is not a public performance because of our concern that a double royalty requirement could be extended to digital downloads of motion pictures or video games that contain musical works.
While the holding necessarily means that a download of a movie is not a public performance of a movie either, the question has generally not been an issue because, in the film industry, the same entity (the motion picture studio) typically administers both rights. In music, however, rights of a single copyright holder are generally administered by different rights collectives, such as ASCAP for public performances and the Harry Fox Agency for reproductions. Even so, the ruling certainly bodes well for freeing movie download services from the potential of similar claims being made on behalf of the holders of copyrights in the musical works contained in them.
EMA had filed a friend of the court brief in the case, arguing that the court should rule that a digital download is not a public performance.
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