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State Labeling Law Not Preempted by Federal Copyright Act

Federal preemption refers to when a state law is considered invalid because it attempts to regulate something a federal law exclusively controls. State governments have concurrent jurisdiction over many criminal matters with the federal government. But where state law conflicts with federal law on a subject within the power of Congress to regulate, the state law may be preempted by the federal law. Copyright, trademark, and patent law is an area where Congress has chosen to exclusively regulate in order to provide uniform rules and procedures protecting intellectual property rights. But a state law may still be valid if it requires an extra element beyond those required for violation of the federal statutes protecting intellectual property rights. In the recent Tennessee case of State v. Pierson, W2012-02565-CCA-R3-CD (Tenn.Crim.App. 1-23-2014), the Court of Criminal Appeals concluded a state statute imposing criminal liability for non-compliance with certain labeling requirements is not preempted by the federal Copyright Act.

In the Pierson case, the Defendant was convicted of possessing (at a Memphis area flea market) one hundred or more recordings for commercial distribution which did not properly disclose the name and address of the manufacturer (T.C.A. 34-14-139). The Defendant argued the Tennessee statute was essentially a statute addressing copyright violation and that, by preemption from the federal Copyright Act, the state lacked subject matter jurisdiction to regulate copyright infringement. The Defendant argued that if there was any party aggrieved by the Defendant's activities, it would be the copyright holder, who is free to pursue remedies under federal law.

The state argued the Tennessee statute is a labeling statute rather than a copyright statute, and that rather than protect the rights of a copyright holder, it is intended to protect the rights of Tennessee consumers by requiring that products sold or distributed to consumers for gain in the state be accurately and properly labeled (so consumers would not be misled into believing they were purchasing authorized reproductions if they were not).

The Court, noting state court rulings regarding labeling laws in other states, agreed with the state and concluded that the labeling requirement is an additional element which renders the statute qualitatively different from a copyright infringement claim. The Court also found the consumer protection argument persuasive.

Of course, despite the state's claims that the statute primarily protects consumers, it does specifically have a provision encouraging court orders of restitution to the copyright holder, including for investigative costs.

For more information on federal preemption, contact Hindman & Associates.

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