Alex Padilla
An anti-piracy billl by state Sen. Alex Padilla (D-Pacoima) is raising questions among U.S. constitutional law scholars as it quietly moves through the California Legislature. (April 18, 2008)
Reporting from Sacramento—
Frustrated for years by rampant piracy, the recording industry is pushing California's lawmakers to approve legislation that would allow warrantless searches of companies that press copies of compact discs and DVDs.

The Recording Industry Assn. of America, in effect, wants to give law enforcement officials the power to enter manufacturing plants without notice or court orders to check that discs are legitimate and carry legally required identification marks.
The proposal by state Sen. Alex Padilla (D-Pacoima) is raising questions among U.S. constitutional law scholars as it quietly moves through the Legislature.

"I can understand why this makes people nervous," said Laurie Levenson, a law professor at Loyola Law School of Los Angeles. "We have the 4th Amendment that generally requires probable cause [for a search]. This is a huge exception."

But the RIAA, which went on a well-publicized campaign eight years ago to sue individuals who shared music illegally online, argued that piracy has devastated the industry and nothing else has worked to stem the illegal activity.

Net sales of CDs fell 82% in the last decade, while the number of copies shipped dropped 76%, according to the RIAA. Sales and rentals of movie discs last year declined 19% from a peak of $20.2 billion in 2006, according to the Digital Entertainment Group, an industry-funded advocacy group.

To be sure, other factors have caused sales to fall. In recent years, for instance, music downloads and video streaming have taken the biggest bite out of disc sales. But piracy continues to cause financial losses.

"Last year in California, we seized about 820,000 pirated music discs," said Marcus Cohen, the RIAA's director of anti-piracy investigations for the West Coast. "Nine out of 10 of them come from replicator plants … and the replication capital of the country is California."

He estimated that about 70 sophisticated replicator plants in the state — more than a third of them in the Los Angeles area — use state-of-the-art optical reading equipment to produce up to 85% of the counterfeit CDs nationwide.

The plants typically have contracts to copy discs with educational, religious and promotional content, as well as CDs and DVDs for the industry, but many also make counterfeit music discs on the side, Cohen said.

Illegal, high-quality copies account for as much as three-quarters of Latino music CDs sold, according to a recent analysis by the state Senate Public Safety Committee, citing RIAA data. And in 2005 alone, the industry lost nearly $3.6 billion to music and movie disc piracy, according to a study by the Los Angeles Economic Development Corp.

"Fraudulent CDs and DVDs undermine our economy and California's role as a global leader in music and film," Padilla said. "They steal revenue from artists, retailers and our entertainment sector.

The legislation, SB 550, would give police the power to make sure that replicators comply with existing laws and would hit scofflaws with steep fines of up to $250,000 for a repeat offense.

To date, the measure has sailed through two state Senate committees, one unanimously and one by a 5-2 vote. Sen. Ron Calderon (D-Montebello) said he voted no because of "constitutional concerns." The bill goes to a final committee hearing Monday, then to the Senate floor. If it passes, it goes to the Assembly.

Key support comes from the industry, business groups and the city of Los Angeles.

The American Civil Liberties Union questioned the constitutionality of the bill but so far has not opposed the measure because it said the bill appeared to be narrowly drawn.

The RIAA argued that courts had carved out 4th Amendment exceptions already. So far, it said, warrantless searches have been allowed at such businesses as automobile junkyards and repair shops, mines, gun and liquor stores, nursing homes, massage parlors, pawn shops and wholesale fish dealers.

The common trait, the trade group contended, was that the businesses were in "closely regulated" industries in which "the pervasiveness and regularity of the government's regulation reduces the owner's expectation of privacy in his business records."

CD and DVD manufacturing plants by their nature qualify as closely regulated and should be subject to limited, warrantless searches, Cohen said.

"We're literally talking about walking into a plant, walking up to the line and ensuring that, indeed, the discs are in compliance," he said. "I don't think the scope of the search is something a regulator needs to be worried about."

But the focus in allowing warrantless searches of businesses generally is to protect the health and safety of workers, consumers or the public, Stanford Law School professor Robert Weisberg said.

"It strikes me as very unusual, and it may be unconstitutional … when the harm is an economic problem and faced by a single industry," he said.

Courts are wary of giving such unbridled power to law enforcement, Loyola's Levenson said.

"The recording industry really wants this and may be able to persuade legislators to have some sort of inspection scheme," she said. "But the Legislature has to be careful that it puts together one that won't be subject to constitutional challenge."

A key legal element missing in the Padilla legislation is a standard for suspecting that counterfeiting is occurring, said Robert Fellmeth, a former prosecutor who now is executive director of the Center for Public Interest Law at the University of San Diego.

"If I were in the Legislature, I would say I want some kind of reasonable suspicion," Fellmeth said. "I would not want simply to leave an open door for the police."

Some executives at companies that legally replicate CDs and DVDs also don't like the idea of police suddenly swooping into their businesses even though they comply with state law by stamping each disc with a special identification marker that allows the tracking of copyright violations.

California already has enough laws to crack down on CD and DVD pirates without resorting to "unlawful search and seizure," said Dave Michelsen, general manager of CD Video Manufacturing Inc. in Santa Ana.

In recent years, the Legislature and three governors have approved half a dozen laws increasing criminal and civil penalties for counterfeiting and making it easier to prosecute piracy cases.

"They are welcome to come to our facility any time, 24 hours a day, if they ever thought we were doing anything illegal," Michelsen said. "We're pretty open with [the RIAA]. But I don't want to have a law that says our premises could be invaded any time without a warrant."

marc.lifsher@latimes.com