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The Entertainment Merchant Association |
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Position Statements (for Positions on Piracy, click here.) |
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click here for a print-formatted pdf The Entertainment Merchants Association (EMA) is committed to maintaining and protecting the first sale doctrine of copyright law. The first sale doctrine gives retailers the right to rent and sell prerecorded videos and video games without the authorization of the copyright holder, thereby guaranteeing that consumers will benefit from the most vigorous retail competition. The U.S. Constitution vests in Congress the authority to enact copyright laws for the purpose of promoting the progress of science and the useful arts "by securing for Limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Copyright law strikes a balance between protecting the ability of copyright holders to obtain compensation for their work and making those works available to the public to enjoy and benefit from. In exchange for the federal government protecting copyright holders from unauthorized publication or performance of their works, copyright law requires copyright holders to give up their ability to control distribution of those works once they have put them into the stream of commerce (except in certain carefully delineated instances). This principle, commonly referred to as the "first sale doctrine," is codified in Section 109 of the Copyright Act. Section 109(a) provides that, notwithstanding a copyright holder's distribution right, the owner of a particular copy or phonorecord lawfully made under U.S. copyright law "is entitled, without the authority of the copyright owner, to sell or otherwise dispose of that copy or phonorecord." The freedom to rent and resell videos and video games without interference from the copyright holder guaranteed by the first sale doctrine has provided consumers with access to affordable, quality entertainment that they can enjoy in their homes, generated substantial revenues for the motion picture studios and video game manufacturers, and created the highly competitive video rental industry, a thriving sector of primarily community-based businesses. Retailers have a strong interest in ensuring that new technologies respect the rights provided to them by the first sale doctrine. The history and language of the Copyright Act demonstrate that the first sale doctrine applies to all fixed copies, including those in digital media. EMA is opposed to efforts by copyright holders to use technological measures and unilateral, non-negotiable contracts to circumvent the operation of the first sale doctrine. EMA believes that a copyright holder impermissibly extends the protections provided by the Copyright Act when access control technologies and end user license agreements are used to control or prevent the lawful use and re-distribution of lawfully made videos and video games by the lawful owner. In such cases, these technologies and agreements are not being used to protect intellectual property rights, and may undermine retail competition and consumer choice.
click here for a print-formatted pdf The Entertainment Merchants Association (EMA) is proud of its 20-year record of commitment to parental empowerment programs. Our efforts in this area began in October 1987, when one of EMA's predecessor organizations endorsed the Motion Picture Association of America (MPAA) rating system for motion pictures and encouraged its members to enforce the ratings. Our current parental empowerment programs include:
Current public education components include media outreach, a ratings awareness public service announcement that runs on the in-store monitors of more than 10,000 retail establishments, and a web site that contains the public service announcement, guidelines for parents, a PowerPoint presentation about the ratings and labeling systems, and other ratings and labeling information.
Regulation of Violent Video Games click here for a print-formatted pdf Since 2000, seven states and two local governments have enacted laws that attempted to restrict minors from playing, purchasing, or renting video games containing fictitious violent imagery. In all nine cases, federal courts – applying established First Amendment law – have enjoined the laws. On behalf of the retailers it represents, the Entertainment Merchants Association (EMA) has been a plaintiff in eight of the nine lawsuits, and it submitted an amicus brief to the Court of Appeals for the Seventh Circuit in the ninth case. EMA, which was known as the Video Software Dealers Association at the time, also was a plaintiff in an earlier, seminal constitutional challenge to a Missouri regulation of depictions of violence in entertainment, Video Software Dealers Ass'n v. Webster, 968 F.2d 684 (8th Cir. 1992). EMA opposes the enactment of laws restricting minors' access to motion pictures and video games based on the depictions of violence in them because we are committed to protecting the First Amendment rights of retailers and their customers. The Association's advocacy is propelled by the recognition that video games and other forms of entertainment can educate, amuse, inspire, challenge, and bring people together and that society is invigorated if individuals and families can decide for themselves, without the interference of government, what they shall see, read, hear, and play. EMA also has operational concerns about the proposals, as most lack meaningful standards that would allow retailers and their clerks to determine which materials are covered. It does not believe that retail clerks should be placed at risk of criminal sanctions if they unwittingly cross an unknowable line, as would result from some of the proposals. Finally, while EMA must oppose legal restrictions, the home entertainment industry understands it has an important role to play in helping ensure that children do not gain access to videos and video games their parents deem inappropriate for them. EMA and its members are committed to actively assisting parents in this regard. They assist parents through voluntary ratings enforcement programs, in-store signage about the video game rating system, and public education campaigns. According to the Federal Trade Commission, video game retailers have steadily and significantly improved the level of ratings enforcement since 2000. In its most recent survey, the FTC found that children it sent into retail establishments to purchase Mature-rated games were turned down 58% of the time. The turn-down rate is even higher, 62%, for the national retail chains where the vast majority of video games are purchased.
click here for a print-formatted pdf The Entertainment Merchants Association (EMA) opposes proposals to single out the sale and/or rental of pre-recorded DVDs and video games for disparate taxation. Some communities see the high volume of DVD and video game sales and rentals as an opportunity to raise revenues for their communities and have proposed special video and video game taxes in addition to normal sales and use taxes. Such proposals punish DVDs and video games for their popularity and reduce the inherent value of these entertainment option. A special tax on DVD and/or video game sales and rentals would fall most heavily on families with children. Home video is the most economical way for most families to view the latest movies, and for many it is the only affordable way. EMA research shows that households with children are much more likely to rent a video at least once a week than are households without children. For an average price of approximately $3.00 the entire family can enjoy a movie. For children's videos and other videos they will watch numerous times, families can purchase DVDs for an average cost of $21.75 – less than it costs to take an average family to the movies just once. Similarly, more than two-thirds of video game consoles are found in households with children. Research has found that more than one-third of American parents play computer and video games, and 80 percent do so with their children. Although the amount of a special DVD and/or video game tax that would levied on each transaction may seem small, it would place "brick and mortar" retailers at a competitive disadvantage. Home video competes with other motion picture delivery systems, including cable and satellite pay-per-view and Internet video on demand. Likewise, physical versions of video games, such as the discs played on video game consoles, compete with other video game delivery systems, including Internet-based video games and downloadable games. A special tax on DVD and/or video game sales and rentals would place an unfair burden on traditional retailers as they compete against other delivery systems that are not subject to the same level of taxation. In addition, the U.S. Supreme Court has regularly found differential taxation of expressive products presumptively unconstitutional because the differential treatment suggests the goal of the tax is not unrelated to suppression of the expression. See, e.g., Minneapolis Star v. Minnesota Commissioner of Revenue, 460 U.S. 575, 585 (1983); Police Department of Chicago v. Moseley, 408 U.S. 92, 95-96 (1972). Thus, any proposal to single out the sale and rental of DVDs and video games for special taxation unrelated to a legitimate regulatory scheme would heavily burden speech and likely would be constitutionally invalid. Such an impairment on speech could be subjected to a federal court challenge.
Regulation of Second-Hand Videos and Video Games click here for a print-formatted pdf Recently, several states and local governments have proposed stringent regulations for the sale, purchase, and/or trade of used videos and video games. The proposed laws seek to reduce residential and commercial theft of videos and video games by making it harder to sell – and easier to track – stolen videos and video games. In order to do so, these laws would subject retailers who buy/sell/trade second-hand videos and video games to regulations similar to those imposed on pawn brokers, including licensing, recordkeeping for secondhand good transactions, automatic reporting to law enforcement, and holding periods. While supporting strong laws to make it difficult to sell stolen goods, the Entertainment Merchants Association has serious concerns about the impact of the proposals on the market for used DVDs and video games obtained from its members' customers. In an era of declining rentals and aggressive price competition among retailers of new videos, purchases and trades of used DVDs and video games from customers are becoming increasingly important ways for video and video game specialty retailers to promote customer loyalty, as well as augment their revenue streams. The opportunity to trade in and purchase used video software offers consumers a unique value proposition. For instance, used video game titles which have an average price of $13 as compared to $34 for new video game titles. The availability of used video game products for sale has enabled a lower-economic demographic, which may not have been able to afford the more expensive new video game products, to participate in the video game industry. Sales of previously viewed DVDs totaled approximately $1 billion nationwide in 2005. In that year, GameStop, the largest used game retailer in the world, generated approximately 26% of its total retail sales and almost 44% of its gross profits from used video game products. A February 2, 2006 article in The New York Times noted that, "For GameStop, the beauty of the used business is that it acquires most of its inventory not by paying cash but by giving gamers credit that they then spend in the stores anyway. GameStop then sells the used disks and cartridges, which usually function just as well as new disks and cartridges, for about 20 percent less than the new versions of the same games sitting an aisle or two away." Applying second-hand goods laws to transactions involving used DVDs and video games could severely impair the ability of video and video game retailers to participate in the used DVD and video game market and is unnecessary, as many video and video game specialty retailers usually will only give store credit or a gift card – not cash – for used videos and games. In addition, EMA believes that a retailer that provided seller information to law enforcement could be accused of violating the federal Video Privacy Protection Act (18 U.S.C. 2710), which severely limits the release of information about a consumer's video and video game transactions.
Secondary Effects (Time, Manner, and Place) Restrictions click here for a print-formatted pdf The U.S. Supreme Court has permitted states and localities to address the alleged "negative secondary effects" of sexually oriented businesses, such as adult bookstores, cabarets, and movie theaters, through "time, manner, and place" restrictions. The alleged negative secondary effects of sexually oriented businesses include crime, unsanitary conditions, traffic congestion, and decreased property values. Permissible restrictions generally establish where sexually oriented businesses can be located, hours of operation, standards of behavior for employees and patrons, and licensing requirements. The Supreme Court has stated that, in order to impose a secondary effects restriction on a category of businesses, a state or local government must have some evidence that can be reasonably relied on to support the assertion that the category of businesses generates negative secondary effects and, therefore, should be regulated. The court has also clarified that a local government cannot rely on "shoddy data or reasoning" and the evidence "must fairly support the municipality's rationale for its ordinance." City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002). The Entertainment Merchants Association (EMA) strongly opposes efforts to regulate mainstream video stores that carry some adult product as sexually oriented businesses. Given U.S. Supreme Court rulings on secondary effects regulations, it is impermissible for states and localities to attempt to apply them to video stores that primarily sell or rent material that is not sexually oriented and that do not allow on-premises viewing of adult movies. There is no evidence that such video stores generate negative secondary effects. Such regulations would unduly burden protected speech and, as a result, violate the First Amendment.
Regulation of Retail Use of RFID Tagging click here for a print-formatted pdf The Entertainment Merchants Association (EMA) opposes efforts to limit the use of radio frequency identification (RFID) tagging in the retail environment or require special procedures to be implemented if RFID tagging is utilized in retail establishments. Such mandates would create disincentives for widespread adoption of RFID tagging, which has the potential to improve supply chain management, reduce shrink, and improve customer service. The "Electronic Product Code" RFID tags utilized in the retail supply chain are like electronic barcodes. Unlike RFID tags used for tolls and mass transit, the tags have no internal power supply and are not constantly activated; rather, a reader is used to send a signal to an antenna embedded in the tag, which provides a burst of energy to the tag and allows it to respond. These tags can be read at distances ranging from a few inches to several yards, depending on the frequency used and the size of the antenna. RFID tags are used at the case- and item-level in retail supply chain management to provide an accurate report on inventory and its location. They can track products as they move from the manufacturing facility, through distribution centers, to retail establishments, and ultimately into the hands of the consumer. RFID tags improve the ability of product suppliers and retailers to know how much inventory is on hand and where an item is in the supply chain, improving on-shelf product availability. The tags can reduce shrink (product loss) by eliminating the potential for discrepancy between inventory records and physical inventory and preventing the unauthorized removal of products from warehouses and retail establishments. By providing retailers with real-time information on each unique item in their inventory and its location, RFID tags will improve customer service. Retailers will be able to inform customers whether they have the particular item the costumer is seeking and where it is in their store, even if the item is mishelved. The improved item tracking offered by RFID can be used to alert retailers when product supplies are running low and when it is time for replenishment, thus reducing the potential for customer frustration due to product shortages. Legislative proposals to require RFID tags to be removed or deactivated at the time of purchase or to restrict post-sale communication with RFID tags are both impractical and unnecessary, as, much like barcodes, RFID tags are part of product packaging. In addition, because of the passive nature and limited range of Electronic Product Code RFID tags, the tags are not designed for communication outside of the supply chain. EMA supports accepted industry guidelines for retailers to provide notice regarding the presence of RFID tags in their establishments. However, since the industry has already agreed to provide such notice, EMA believes legislation is unnecessary.
Statement on Benefit Denial Technology click here for a print-formatted pdf EMA encourages the development and testing of benefit denial technology on optical discs in order to reduce shrink, both in the back room and on the sales floor, and to improve sales. (a) Sales lifts by permitting the open merchandising of DVDs and games, and by reducing out-of-stocks due to shrink. |
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