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July 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.
Schwarzenegger v. EMA
The state of California submitted its opening brief with the U.S. Supreme Court in the Schwarzenegger v. EMA case. The central argument in the state's brief is that the State may regulate the dissemination of depictions of violence to minors in order to aid parental authority, since minors have limited First Amendment rights and scientific research and common sense indicate that depictions of violence can be harmful to children. Four "friend of the court" briefs were submitted in support of the state of California's position, including one by a group of 11 state attorneys general.
EMA and the Entertainment Software Association will file our response brief by September 10. Approximately 20 "friend of the court" briefs in support of our position are being prepared.
Interchange Fees
The President signed into law the financial reform bill, which includes provisions to address "interchange fees" (the fees credit card companies levy on retailers to process credit and debit card transactions). Under the law, the Federal Reserve is charged with issuing new regulations on whether debit card interchange rates are "reasonable and proportional to the cost incurred by the issuer with respect to the transaction." The Federal Reserve is to consider the functional similarity between debit transactions and checks, which clear at par, and the incremental cost incurred by the issuer in the authorization, clearance, or settlement of transactions. The law also authorizes retailers to set minimum and maximum transaction levels for credit and debit cards and steer customers towards cheaper forms of payment.
EMA was part of a broad coalition of trade associations that supported the provision.
Greenfield WI Secondhand Goods Ordinance
EMA wrote to the city of Greenfield WI outlining our objections to a pending secondhand goods ordinance. The ordinance would require background checks of all employees in a business that purchases secondhand goods, photographs of all secondhand goods purchased and the sellers of those goods, a 30-day hold, transaction fees, and labeling of secondhand goods and would impose a number of other burdensome requirements. The letter identified 12 issues that make the ordinance unworkable or unduly burdensome on retailers.
The city held a meeting on the ordinance on July 19, which a variety of retailers attended. They city has promised to work with the retail community to revise the ordinance.
Omega v. Costco
EMA and the National Association of Recording Merchandisers (NARM) submitted an amicus brief with the U.S. Supreme Court in the Omega S.A. v. Costco Wholesale Corp. case. The brief supports the position of Costco.
The case involves watches that had been manufactured abroad by Omega, were subsequently imported into the U.S. by a third party without authorization from Omega, and eventually sold by Costco in the U.S. Because the watches have a small copyrighted mark on them, they are "copies" of copyrighted works, and Omega sued Costco for copyright infringement as a result of the unauthorized distribution. The U.S. Court of Appeals for the Ninth Circuit held for Omega. Relying in part on a much-debated passage in a 1998 U.S. Supreme Court opinion, the Ninth Circuit held that the requirement in the First Sale provision that a copy must be "lawfully made under this title" in order to be covered by the First Sale provision means "lawfully made in the United States" and, therefore, the First Sale provision does not apply to copies manufactured outside the U.S.
EMA and NARM argued in the brief that the Ninth Circuit's ruling threatens retailers' right to distribute copyrighted works without a license and could eliminate the rental and secondhand goods markets for copyrighted works.
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