AN ACT Relating to fair competition in motion pictures; amending RCW 19.58.010, 19.58.020, 19.58.030, 19.58.040, and 19.58.050; adding new sections to chapter 19.58 RCW; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 1, chapter 29, Laws of 1979 ex. sess. and RCW 19.58.010 are each amended to read as follows:

The purpose of this chapter is to promote the public interest in a diverse, competitive motion picture exhibition industry; to establish fair and open procedures for bidding and negotiation for the right to exhibit first run motion pictures in the state in order to prevent unfair and deceptive acts or practices and unreasonable restraints of trade in the business of motion picture distribution and exhibition within the state; to ((~~promote fair and effective competition in that business~~)) prevent the award of motion picture licenses on other than an individual, picture-by-picture, theater-by-theater basis; to promote the survival of small, independent exhibitors; to afford exhibitors a fair opportunity to bid for motion pictures released in this state; and to insure that exhibitors have the opportunity to view a motion picture and know its contents before committing themselves to exhibiting the motion picture in their communities.

Sec. 2. Section 2, chapter 29, Laws of 1979 ex. sess. and RCW 19.58.020 are each amended to read as follows:

The definitions contained in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Bid" means a written or oral offer or proposal ((~~to buy~~)) made by an exhibitor to a distributor ((~~in response to an invitation to bid~~)) of terms for the license for or right to exhibit a motion picture, ((~~the license stating the terms under which the exhibitor agrees to exhibit the motion picture~~)) the terms including the theater, length of run, rent or rental formula, and guarantee of minimal rent, if any, the exhibitor is offering.

(2) "Blind bidding" means the exhibitor's bidding or negotiating for, or the exhibitor's offering or agreeing to, terms for the license or right to exhibit a feature motion picture at any time either before the feature motion picture has been trade screened within the state or before the feature motion picture has been otherwise made available for viewing within the state by all exhibitors.

(3) "Blind selling" means the practice whereby a distributor licenses a feature motion picture before the exhibitor is afforded an opportunity to view the feature motion picture by trade screening.

(4) "Buying" or "selling" of the right to exhibit a feature motion picture means the licensing of a theater to show the feature motion picture for a certain number of days for a certain price.

(5) "Distributor" means a person engaged in the business of distributing or supplying more than one feature motion picture per year to exhibitors by rental, sale, licensing, or other agreement.

(6) "Exhibit" or "exhibition" means playing or showing a feature motion picture to the public for an admission charge.

(7) "Exhibitor" means a person in the business of operating one or more theaters in which motion pictures are exhibited to the public.

(8) "Feature motion picture" means a motion picture exceeding sixty minutes in duration.

(9) ((~~"Invitation to bid" means a written or oral solicitation or invitation by a distributor to one or more exhibitors to bid or negotiate for the license or right to exhibit a feature motion picture.~~

~~(10)~~)) "Independent distributor" means a distributor whose total film rental earned in the preceding calendar year was less than twenty-five million dollars.

(10) "Licensing agreement" means a contract, agreement, understanding, or condition between a distributor and an exhibitor relating to the licensing or exhibition of a feature motion picture by the exhibitor.

(11) "Person" means one or more individuals, firms, partnerships, associations, societies, trusts, organizations, or corporations.

(12) "Run" means the continuous exhibition of a feature motion picture in a defined geographic area for a specified period of time. A "first run" is the first exhibition of the feature motion picture in the defined area; a "second run" is the second exhibition; and "subsequent runs" are subsequent exhibitions after the second run. "Exclusive run" is a run limited to a single theater in a defined geographic area and a "nonexclusive run" is a run in more than one theater in a defined geographic area.

(13) "Single screen exhibitor" means an exhibitor that operates only one theater with one screen and is not in whole or in part owned or operated by or affiliated with any other exhibitor, or any other person that in whole or in part owns, operates, or is affiliated with another theater.

(14) "Theater" means an establishment in which feature motion pictures are regularly exhibited to the public for an admission charge.

((~~(14)~~)) (15) "Trade screening" means the exhibition of a feature motion picture, prior to its release for public exhibition by a distributor, in the largest city within the state((~~, which is open to all exhibitors from whom the distributor intends to solicit bids or with whom the distributor intends to negotiate for the license or right to exhibit the feature motion picture~~)).

(16) "Highest bid" means that bid for the right to play a film at a particular theater at a particular time that would generate greater revenue for the distributor than any competing bid for the same specific license. In determining the highest bid, the distributor may consider the location, quality, seating capacity and grossing record of the theater offered, the financial responsibility of the exhibitor, the proposed length of run, rental terms, guarantee and any other factor relevant to maximizing film revenue.

(17) "Unacceptable bid." In determining an unacceptable bid the distributor may consider the location, quality, seating capacity and grossing record of the theatre offered, the financial responsibility of the exhibitor, the proposed length of run, rental terms, guarantee, and any other factor relevant to film revenue.

Sec. 3. Section 3, chapter 29, Laws of 1979 ex. sess. and RCW 19.58.030 are each amended to read as follows:

(1) The buying or selling of the right to exhibit a feature motion picture by blind bidding or blind selling is prohibited within the state.

(2) No bids may be returnable, no negotiations for the exhibition or licensing of a motion picture may take place, and no license agreement or any of its terms may be agreed upon, for the exhibition of a feature motion picture within the state before the feature motion picture has ((~~either~~)) been trade screened ((~~or otherwise made available for viewing by all exhibitors within the state~~)).

(3) A distributor shall provide reasonable and uniform written notice ((of the trade screening of feature motion pictures to those exhibitors within the state from whom bids will be solicited or with whom negotiations will be conducted for the license or right to exhibit the feature motion picture)) to all exhibitors within the state of any trade screening, and reasonable notice shall in no case be less than seventy-two hours prior to the event.

((~~(4) A purported waiver of the prohibition in this chapter against blind bidding or blind selling is void and unenforceable.~~))

Sec. 4. Section 4, chapter 29, Laws of 1979 ex. sess. and RCW 19.58.040 are each amended to read as follows:

((~~If bids are solicited from exhibitors for the licensing of a feature motion picture within the state, then:~~

~~(1) The invitation to bid shall specify: (a) Whether the run for which the bid is being solicited is a first, second, or subsequent run;~~)) (1) If an exhibitor notifies a distributor that it wishes to bid for feature motion pictures to be released by the distributor in this state, then the distributor shall solicit bids from the exhibitor and competing exhibitors for the first runs of all motion pictures to be released by the distributor in each city, town, other community, or competitive area in which the exhibitor operates a theater.

(2) When a distributor is required under this chapter, or otherwise elects, to solicit bids from exhibitors, it shall require bids to be sealed and in writing, shall not solicit oral bids and shall comply with the following requirements and procedures:

(a) The distributor shall notify each exhibitor solicited of the following information: (i) Whether the run is an exclusive or nonexclusive run; and, the geographic area for the run; ((~~(b)~~)) (ii) the names of all exhibitors who are being solicited; ((~~(c)~~)) (iii) the date and hour the invitation to bid expires; and ((~~(d)~~)) (iv) the time, date, and location, including the address, where the bids will be opened, which shall be in the largest city within the state.

((~~(2) All bids shall be submitted in writing and~~)) (b) The distributor shall ((~~be opened~~)) open the bids submitted at the same time and in the presence of those exhibitors, or their agents, who submitted bids and who attend the bid opening.

((~~(3)~~)) (c) Immediately upon being opened, the bids shall be subject to examination by the exhibitors, or their agents, who submitted bids, and who are present at the opening. Within ten business days after the bids are opened, the distributor shall notify each exhibitor who submitted a bid either the name of the winning bidder or the fact that ((~~none of the bids were acceptable~~)) each bid submitted was an unacceptable bid.

((~~(4)~~)) (d) Once bids are solicited, the distributor shall ((~~license~~)) award the feature motion picture only by bidding and may solicit rebids if ((~~none~~)), but only if, each of the submitted bids ((~~are acceptable~~)) is an unacceptable bid: PROVIDED, That if no bids are received in response to a bid or rebid solicitation, the distributor may thereafter award the feature motion picture by a method other than bidding.

(e) Unless the distributor lawfully rejects all bids, the license or right to play a feature motion picture for which bids are solicited shall be awarded to the exhibitor submitting the highest bid for that license or right.

(f) When a distributor awards a feature motion picture by bidding, it shall not enter into a license agreement or any modification of such an agreement that permits the winning exhibitor to depart materially from the terms of its bid: PROVIDED, That if there occurs an act of God or other extraordinary event over which the distributor and the winning exhibitor have no control and that event makes it impossible to perform according to the terms of the winning bid, there may be such departure from the terms of that bid as the event reasonably makes necessary: PROVIDED FURTHER, That if at any time the picture licensed does not generate revenues sufficient to cover the winning exhibitor's costs of operation and overhead, the distributor and exhibitor may then renegotiate the terms of their agreement.

(g) If a single screen exhibitor request an independent distributor to award a license for a specific film by a method other than bidding, the independent distributor may award the license in question by any method.

(h) The distributor's judgment as to whether a bid is an "unacceptable bid" or is the "highest bid" shall be conclusive unless a reasonably prudent person would not have made that judgment.

Sec. 5. Section 5, chapter 29, Laws of 1979 ex. sess. and RCW 19.58.050 are each amended to read as follows:

Any person aggrieved by a violation of this chapter may bring a civil action in superior court to enjoin any continuing or further violation((s)) or to recover ((~~the actual~~)) damages ((~~sustained~~)), or both, together with the ((~~costs of~~)) actual reasonable expenses incurred in bringing the suit. In any such action, the court shall award reasonable attorneys' fees to the prevailing party.

NEW SECTION. Sec. 6. If an exhibitor establishes that a violation of this chapter deprived it of a feature motion picture license which it should otherwise have secured, the exhibitor shall be entitled to either the actual damages it suffered because it did not obtain the license or liquidated damages equivalent to twenty percent of the gross box office receipts generated by the feature motion picture at the theatre to which it was awarded, whichever the exhibitor elects.

NEW SECTION. Sec. 7. In addition to any other damages that may have been incurred on account of a violation of this chapter, and even if no actual damages have been incurred, if the violation is found to be intentional, the distributor shall be liable for a civil penalty, provided that the penalty shall not exceed the film rent earned from the license or licenses marketed, awarded, or modified in violation of this chapter.

NEW SECTION. Sec. 8. This chapter does not apply to the licensing or other provision of motion pictures to an exhibitor for the purpose of sneak previews, film festivals or other occasional, isolated, nonconsecutive exhibitions.

NEW SECTION. Sec. 9. A purported waiver of the rights created by this chapter is void and unenforceable and the language of this chapter shall be construed liberally to achieve its purposes.

NEW SECTION. Sec. 10. Sections 6 through 9 of this act are each added to chapter 19.58 RCW.

NEW SECTION. Sec. 11. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.