ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

www.FirstAmendment.com

WAR ON PORNOGRAPHY BEGINS

Justice Department officials promise to “send ‘ripples’ through an industry that has proliferated on the Internet and grown into an estimated $10 billion-a-year colossus profiting Fortune 500 corporations such as Comcast, which offers hard-core movies on a pay-per-view channel.”1 For the first time in ten years, the government is spending millions of dollars bringing anti-obscenity cases. With 32 prosecutors, a team of FBI agents and many investigators combing the Internet for pornography, many cases are expected to be filed in the near future. The government has warned that no material is off limits, including soft-core television programs like HBO’s show Real Sex or adult movies offered in hotel rooms,2 notwithstanding its wide acceptance.

The Bush administration boasts about its perfect record in prosecuting the 25 adult obscenity cases filed so far. The cases it has brought in mainly conservative communities have ended in two guilty verdicts and 23 guilty pleas.3 Bruce Taylor, the new head of the anti- obscenity effort at the Justice Department, recently stated, “Just about everything on the Internet and almost everything in the video stores and everything in the adult bookstores is still prosecutable illegal obscenity.”4 The Justice Department’s apparent strategy is to target not only the most egregious hard-core pornography, but also more conventional material in order to most effectively hit those found most responsible for the proliferation of pornography on the Internet. The new trend by federal prosecutors is to initiate cases in communities to which the materials are distributed, as opposed to where they are made or from where they are sent.5 The latest information indicates that new prosecutions are being filed across the country – one in Pittsburgh, three in Kentucky, five in Southern West Virginia, six in Utah and eight in Eastern Virginia.6 A federal prosecutor recently acknowledged that investigators are focusing on the most egregious and widely available materials, in selecting cases for prosecution.7 Interestingly, the United States Attorney involved in a recent Internet obscenity case arising from Bluefield, West Virginia, admitted he does not “pretend to know where community standards are and where to draw the line.”8 Well now, if the prosecutors can’t know community standards, how are the webmasters supposed to divine that very same concept . . . under the penalty of criminal prosecution? With the number of adult-oriented Web sites surging over the last four years to approximately 1.6 million from 88,000 in 2000,9 and President Bush’s 2005 budget proposal containing a $4 million devotion to targeting obscenity, the industry is certainly in for some trying times.10 The time has never been better to focus on legal compliance.

OBSCENITY PROSECUTIONS

Twenty-nine adult novelty items purchased at the Lion’s Den Adult Superstore in Dickinson County, Kansas, were deemed obscene by a grand jury. Kansas is one of six states with a law prohibiting the sale of dildos and other items designed or marked primarily for the stimulation of human genitals. After receiving a complaint from the Citizens for Strengthening Community Virtues, that gathered enough voter signatures to force a prosecution, the Dickinson County Sheriff’s Office purchased 36 novelty items including “artificial devices, vaginas, dildos” from the Lion’s Den.11 All of the 29 counts in the indictment allege that between October 28, 2003, and the present time, the Lion’s Den “knowingly, recklessly and unlawfully is engaged in promoting obscenity . . . ”12 Under Kansas law, selling and promoting obscene adult novelties is a misdemeanor for the first offense, which may be punished by up to one year in jail and/or a $2,500 fine.13 Dickinson County Attorney Kristie Hildebrand stated, “The grand jury’s indictment here may lead to other obscenity cases being filed across the state.”14 Additionally, Hildebrand has contacted Bruce Taylor, who has agreed to provide assistance for prosecuting this case through “drafting responses to Motions typically filed in such cases.”15 Meanwhile, the United States Court of Appeals for the Eleventh Circuit is wrestling with an appeal from a District Court that has twice struck down an identical Alabama law.16

In another case, Gary A. Robinson pleaded guilty to transportation of obscene materials in what United States Attorney Bill Mercer believed constituted the first federal obscenity prosecution in Montana.17 Robinson’s videotapes entitled “Ride’um Cowgirl” and “Dogs and Horses and Pigs and Chickens” among others, contained bestiality as well as excretory functions. The videotapes were sent through the United States Postal Service. Robinson has been released until sentencing.

In the second obscenity case brought within the same week in Montana, two men, Thomas Lambert and Sanford Wasserman, were charged with transportation of obscene materials and face numerous other federal charges. The allegedly obscene videotapes include such titles as “Rape and Sodomize” and “Physically Raped.”18 The two men could face a maximum prison sentence of 20 years and a $500,000 fine for money laundering, and may face a prison sentence of five years and a $250,000 fine for transportation of obscene material and conspiracy.19

LEGISLATIVE UPDATE

The House of Representatives Judiciary Committee voted to approve the Video Voyeurism Prevention Act, S. 1301, an Act that would outlaw many forms of voyeurism occurring with miniaturized technology such as cameras on cell phones.20 Passed by the Senate in September, the Act would prohibit picture taking in bedrooms, locker rooms, among other locations where there is a reasonable expectation of privacy.21 The Act would punish violators with a maximum one year prison sentence and fines.22 The Act now moves to the full House for consideration.

Texas Governor Rick Perry wants to implement a tax on adult clubs to help pay for public school education, but the State Comptroller Carol Keeton Strayhorn wants to pass a law depriving adult clubs of liquor licenses, which may put them out of business.23 Perry’s strategy is to lower taxes on property and increase what he calls “sin taxes” through the creation of a $5 tax to enter adult businesses, and a $1 tax on cigarettes.24 The Governor’s plan would minimize the tax burden on home owners while at the same time maintaining school funding. However, Strayhorn disagrees with this plan stating, “I don’t want my five granddaughters growing up in a state where the governor says partnering with sexually oriented nightclubs is an acceptable way to finance their education.”25

On the spam front, Maryland is considering a bill containing some of the toughest punishments for sending spam proposed in all 50 states.26 The bill, which contains provisions for jail sentences of up to ten years for fraudulent and deceptive email practices by Internet marketers and up to five years in prison for misleading headers on spam, is expected to be signed into law by Maryland Governor Robert Ehrlich.27 State Senator Robert Garagiola “analogize[s] it to putting more anti-spam cops on the beat. There are finite resources to fight crime. As you see more people being gone after and more spammers captured and prosecuted, you’re going to see less spam as a result.”28 The state of Virginia has passed a similar law, which provides for up to a five year jail sentence for individuals who send fraudulent emails.29 Although most state spam laws have been pre-empted by CAN-SPAM, that Act allows states to regulate spam in limited ways, particularly in the area of fraudulent practices.

Notwithstanding objections about the limitation on free speech rights, Missouri is in the process of approving a bill prohibiting new adult-oriented billboards and requiring existing adult- oriented billboards to be removed within three years after the bill’s passage.30 The bill has passed the House and the Senate and is now in Missouri Governor Bob Holden’s hands. The bill would also ban signs on adult entertainment businesses within a one-mile radius of a highway, and would only allow those establishments to post two signs: one sign displaying the business name and hours of operation and the other sign stating that minors are not allowed in the establishment.31 Commenting on the billboard legislation, Republican Representative Bob Johnson stated, “What we’re talking about here is probably a violation of the United States Constitution. This singles out certain businesses and their ability to conduct their business.”32 See, there are some legislators who read the Constitution.

LAWSUITS INITIATED UNDER THE CAN-SPAM ACT

Four individuals in Detroit were charged with violating the CAN-SPAM Act by fraudulently promoting weight loss products.33 The four are charged with hiding their identities in hundreds of thousands of emails, and using relay computers to deliver their messages.34 According to a professor at the Mayo Medical School consulted by federal investigators, the ingredients in the product promoted did not work.35 The case is still pending, and no judgments have been obtained under the CAN-SPAM Act as of yet. Jeffrey G. Collins, United States Attorney for the Eastern District of Michigan, stated, “The cyber scam artists who exploit the Internet for commercial gain should take notice. Federal law now makes it a felony to use falsehood and deception to hide the origin of the spam messages hawking your fraudulent wares.”36 Moreover, as of May 19, 2004, all adult-oriented emails must contain the term “Sexually-Explicit,” as the first 19 characters of the subject line and in the text, as very specifically set forth in the regulations.

H.I.V. ADULT INDUSTRY SCARE

The H.I.V. outbreak is the first involving performers in the San Fernando Valley adult- video industry since 1999. It forced a voluntary moratorium on filming adult-oriented productions,37 which was lifted on May 12, 2004.38 Darren James is the actor believed to have brought the virus into the industry after he did a film in Brazil.39 Five actors have since tested positive for the virus.40 In response to the outbreak, Los Angeles County and state officials attempted to force actors in adult entertainment productions to use condoms in scenes involving sexual activities.41 The idea was struck down by the adult industry in California, which produces approximately 4,000 videos per year (probably tens of thousands of sex scenes), with the majority of producers calling mandatory condom use, “an attack on their business and the quality of films.”42 Some production studios located in San Fernando stated that they would move their production business from California if mandatory condom use was required.43 The National Institute for Occupational Safety and Health is currently investigating the H.I.V. outbreak in the adult industry, and will offer advice to the Los Angeles Health Department concerning potential workplace safety and health solutions for adult production sets.44 The backlash from this looms large for content producers.

ANTI-SMUT DVD UNIT

The first DVD unit, which skips over swearing, nudity, violence, explicit drug use, and other allegedly offensive content, is now available at Wal-Mart.45 The DVD player sells for $79, and allows users to fast-forward and filter original movies depending on how the user has preprogrammed the machine.46 However, the DVD player is involved in a legal battle with Steven Spielberg, Martin Scorsese, Steven Soderbergh as well as other members of the Directors Guild of America.47 They argue that the DVD units allow users to violate copyright law when users “mute and skip the playback of movies on DVDs that they have lawfully bought or rented.”48 Issues relating to the creation of unauthorized “derivative works” are also implicated by the device. The lawsuit is still pending.

SEX NEWS

Keira, a freshman at Indiana University, operates and poses nude on her Web site www.teenkeira.com that she produces from her seventh floor dorm room.49 Richard McKaig, Dean of Students, stated that since the freshman uses the school’s space, and probably its name, without the school’s authorization, it is up to the campus judicial system if Keira broke the school’s ethics rules.50 If so, punishment would range from a reprimand to expulsion.51

In other news, “toothing” is the latest sex craze to hit the United Kingdom.52 Toothing is when wireless technology devices and pre-specified language is used to help two strangers meet for anonymous sexual encounters.53 Toothing boards, blogs, and Web sites are available on the Internet, where devoted toothers can meet and share ideas.54 As a toothing Web site states, “Toothing is a form of anonymous sex with strangers – usually on some form of transport or enclosed areas such as a conference or training seminar. Toothers meet by first connecting suitable equipment – such as a modem, phone or palmtop computer. Users discover other computers or phones in the vicinity and then send a speculative message.”55

SAY NO TO CRACK

The Louisiana House Criminal Justice Committee just approved House Bill 1626, the “Baggy Pants Bill,” which states: “It shall be unlawful for any person to appear in public wearing his pants below his waist and therefore exposing skin or intimate clothing.”56 The Baggy Pants Bill would punish violators with 3 eight-hour days of community service and a maximum fine of $175.57 State Representative Derrick Shepherd, when asked about the Bill, stated, “Hopefully, if we pull up their pants, we can lift their minds while we’re at it.”58 However, Joe Cook, Executive Director of the A.C.L.U. Louisiana Chapter, believes the Bill “infringes on young people’s freedom of expression and their privacy rights.”59

Lawrence G. Walters, Esquire is a partner with the law firm of Weston, Garrou & DeWitt, with offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all aspects of adult media. The firm handles First Amendment cases nationwide, and has been involved in much of the significant Free Speech litigation before the United States Supreme Court over the last 40 years. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, www.FirstAmendment.com or AOL Screen Name: “Webattorney.”

1 L. Sullivan, “Administration Wages War on Pornography,” Baltimore Sun (April 6, 2004), at http://www.baltimoresun.com/news/bal-te.obscenity06apr06,0,3004361.story?coll=bal-home-headlines.

2 Id.

3 S. McCaffrey, “Justice Dept. Cracks Down on Adult Porn,” The Charlotte Observer (April 3, 2004), at http://www.charlotte.com/mld/observer/news/8345436.html.

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

www.FirstAmendment.com

BRUCE TAYLOR REHIRED BY DOJ

Bruce Taylor, a Department of Justice (“DOJ”) Special Attorney from 1989 to 1994, was recently rehired as part of a renewed effort by the government to prosecute obscenity cases against the adult industry. Taylor was an attorney for the DOJ during the heyday of its Regan- Bush Sr. anti-porn effort, which reinforces the current commitment to escalate its war against adult erotica. As DOJ spokesman Bryan Sierra stated, “Bruce has vast experience, both at the federal and state level, prosecuting those kinds of cases. It is all part of our overall effort to kick- start obscenity prosecutions after a long absence.”1 The DOJ has also assigned an elite FBI team to focus exclusively on the DOJ’s newly invigorated assault on adult erotica. Additionally, President Bush is seeking an increased budget to fight adult entertainment companies using obscenity laws, as evidenced by his fiscal 2005 budget proposal released in February. 2 Given the groundswell of support from Congress for the concept of obscenity prosecutions, this effort should receive all the funding requested by Bush and Ashcroft. Now that the training sessions have been completed, the funds set aside, a leader picked and the gumshoes in place, all signs point to a significant effort coming down the pipe against the adult industry. The time for legal evaluation and compliance is now. ‘Nuff said.

SUPREME COURT REVISITS COPA

On March 2, 2004, the United States Supreme Court heard oral arguments in Ashcroft v. ACLU, which was the government’s third attempt to have the Child Online Protection Act (“COPA”)declaredconstitutional. TheCourtmustdecidewhetherCOPAprotectschildrenfrom adult online content without stifling adults’ free speech rights. The Third Circuit Court of Appeal struck down COPA because it allowed the Internet to be judged by “contemporary community standards” which is difficult to enforce due to the Internet’s breadth, and the Philadelphia-based federal appeals court struck down COPA on broader free speech grounds. The ACLU argued that “COPA’s bludgeon suppresses an enormous amount of speech protected for adults and is unnecessary and ill-tailored to address the government’s interest in protecting children from sexually explicit images.”3 COPA, which has been on hold pending the Court’s decision, may impose $50,000 fines and six-months of jail time for first-time offenders, with increased fines for repeat COPA offenders. The Court is expected to render a decision within this term, which closes this summer.

The pending decision in that case reinforces the need for some form of age verification protecting the free areas of adult websites, or free sites themselves. Various options are available, and the author’s firm allows its clients to use the method described on www.BirthDateVerifier.com. Regardless of the method chosen, age verification is becoming a critical issue both in terms of compliance with COPA (if upheld) and to prevent the government from accusing webmasters of providing erotica to children during the expected wave of obscenity prosecutions on the horizon. Despite the possibility that COPA may be struck down, compliance is universally recommended by Industry attorneys.

OBSCENITY PROSECUTIONS

In one of the first federal obscenity cases in almost a decade, Garry Ragsdale was sentenced to serve 33 months and his wife, Tamara, was sentenced to serve 30 months for conspiracy to mail obscene material, transporting obscene material, and aiding and abetting.4 The material at issue included videos entitled “Brutally Raped.” The two are currently out on bail, pending appeal. Others are also facing federal obscenity charges, including Jon Coil, Rob Black, and Extreme Video.

A federal grand jury indicted Harold Foote Hoffman II on March 10, 2004, for transporting allegedly obscene videos depicting bestiality via Federal Express to an address in Alabama. If convicted, the indictment orders Hoffman to forfeit all money and property gained from transporting the material. United States Attorney Kasey Warner said, “Our strategy is to focus on cases involving the online distribution of obscenity for commercial gain and obscenity involving children.”5 This is the first time that this author has seen an indictment where a private commercial courier, Federal Express, as opposed to the United States Mail, was used in a case involving the transportation of obscene materials , although such prosecutions have been statutorily authorized for decades.

In Canada, Steve Sweet, the head of Sweet Entertainment Group, is currently being tried for allegedly making and distributing obscene material. The materials at issue include videos depicting urination, bondage, and sadomasochism. Sweet will offer evidence regarding consensual acts displayed in the videos, the popularity of bondage, the unlikelihood of harm from the videos, and the widespread nature of bondage sites on the Internet. This case will raise issues regarding “contemporary Canadian community standards.”6 This case is also important as a glimpse into what the future may hold for webmasters indicted for obscenity offenses here in the United States. This trial may last as long as six weeks. Until then, Sweet Entertainment is continuing to provide adult entertainment via its site, www.sweetentertainment.com.

FEDERAL CRACKDOWN ON INDECENCY

Culminating with the now infamous Janet Jackson exposure, the federal government has decided that it has had enough of Americans deciding what they want to watch and listen to and is set to come down with new regulations aimed at accomplishing just that goal. Never mind the fact that the event at the Super Bowl has been the most-searched in the history of the Internet, receiving more than three times the number of hits than the 2000 election received on the day after voting and five times as many searches as the day the Space Shuttle Columbia exploded.7 Parent groups and the moral majority are pushing Congress and the Federal Communications Commission (“FCC”) to come down on broadcasters over indecency law violations and the revocation of licenses.8 The House of Representatives overwhelmingly voted, 391 to 22, to increase penalties to $500,000 for the holders of broadcast licenses and performers who violate federal standards at times when children may be listening, between 6 a.m. and 10 p.m., and also supported the revocation of licenses of repeat offenders. The Senate version of the bill proposes to increase fines to $275,000, with a maximum fine of $3 million for a 24-hour period for corporations and a maximum fine of $500,000 for a 24-hour period for individuals.9 The passage of the House bill, H.R. 3717, which encompasses only content broadcast over public airwaves and not cable or satellite programs, bars the transmission of obscene, indecent, and profane material. The measure was strongly supported by the White House, which said in a statement, “This legislation will make broadcast television and radio more suitable for family viewing.”10 This measure may make television safer for children, but what about those adults who use their brains and want the right to choose what they watch or listen to? Howard Stern fans across the country did not have a choice when their favorite disk-jockey was pulled from Clear Channel Communications’ programming recently over allegedly “indecent conduct” aired during the broadcast. A campaign designed to oppose this new decency push by the FCC is circulating, and can be found here: StopFCC.Com – The campaign for free speech. Free speech is an essential liberty provided to Americans, yet it is one that we must fight the most to preserve, as evidenced here.

HILTON CO-OWNER OF SEX TAPE?

A February court hearing suggested that Paris Hilton not only debuted in her first adult film with ex-boyfriend, Rick Solomon, but she also directed and shot the film. In response to a $10 million copyright infringement lawsuit filed by Solomon, Seattle-based Marvad Corp., which is owned by Solomon’s ex-roommate, argued that Hilton played a big role in the production and shooting of the film, she is the co-owner of the film’s copyright, and that Solomon’s failure to acknowledge her on the copyright registration renders the registration invalid. Solomon’s attorney stated, “When an actor appears in a motion picture and may help direct scenes…that doesn’t change ownership.”11 The Court has yet to decide this issue.

SPAM

In an unusual joint effort, some of the United States’ largest Internet Service Providers are teaming up to file lawsuits against hundreds of people who have been accused of violating the CAN-SPAM Act for sending millions of unwanted emails known as “spam.” Much like what the Recording Industry Association of America did to combat song swapping, Microsoft, America Online, Earthlink and Yahoo! targeted mostly “John Doe” defendants in the suit and plan on working together for future lawsuits.12

Since its commencement in January of this year, the Act has yet to meaningfully reduce the amount of spam being sent to users’ inboxes. According to Brightmail, a spam filtering company, the volume of spam has grown continuously since the Act took effect, with spam taking up as much as 60 percent of emails in January up from the 58 percent in December.13 Consequently, the Federal Trade Commission (“FTC”) has decided to post a Web forum at www.regulations.gov to gather public thoughts and input about the “war on spam.” The FTC is soliciting comments on modifications of the Act, its application and whether the public feels like more regulations are necessary. The FTC also seeks public input on what other questionable online practices should be added to listings of “aggravated violations,” like e-mail harvesting and dictionary attacks.14

SEX NEWS

Acacia has done it again. Disney Enterprises, Inc., which owns ESPN, Disney, and ABC News, entered into a license agreement with Acacia Technologies Group for the Digital Media Transmission technology. Acacia has licensed more than 116 companies for its technology in all industries, including online music, adult entertainment, movies, and news industries. 1 5 Resolution of the Acacia digital media transfer technology issue is still pending in the courts. However, until the courts resolve the validity of the claims, Acacia will continue compelling users to license its technology.

In other news, Playboy Enterprises, Inc., entered into a multimedia venture with France- based men’s lifestyle publisher 1633SA to start an adult Web site featuring young men called Playboy.fr, which will be launched in March of this year. The venture also includes a deal for Playboy to supply content to cellular phones, which would allow users to download such things as wallpaper images and streaming video. Playboy currently operates many other international Web sites in Germany, Taiwan, Brazil and the Netherlands.16

Also, Harvard’s Committee on College Life approved a plan to distribute and publish its first edition of an adult-oriented student run magazine, which will be called the “H Bomb.” This magazine will be an official Harvard publication and distributed during its May commencement ceremonies. Although the magazine was approved by Harvard, it will not necessarily be funded by the college. The magazine will feature articles concerning sexual issues as well as naked pictures of Harvard undergraduates, with the stipulation that no naked pictures may be taken inside Harvard buildings. Now that is what you call a Harvard education.

ARRESTED FOR WHAT?

Elizabeth Book, 42, of Ormond Beach, Florida, planned a nationally publicized political protest for “decriminalizing the female breast” for the last day of Bike Week in Daytona Beach. She filed a federal lawsuit seeking an emergency restraining order against the City of Daytona to allow the protest to occur without arrests or harassment, but the federal court denied the request because it did not have enough time to hear from the City. The protest went on as planned, but Book was arrested during the protest when she bore her breasts, which violates Daytona’s public nudity ordinance that states a “full and opaque covering” of the nipple and areola is required, along with half of the outside surface of the breast below the areola.17 She will take her ordinance violation case to court, with the assistance of the author as defense counsel. Book faces a fine of $253 and the possibility of one year in jail.18 Book will fight for her First Amendment right to protest and said, “Do you think for one minute I would pay them? Never!”19
Also, a driver in New York was arrested for breaking New York state law prohibiting

watching television while driving, as well as another law barring the display of sexually explicit material in a public place.20 The driver was arrested after cruising by police playing a DVD entitled “Chocolate Foam,” which was visible from his passenger-side sun visor and on screens located in the car’s headrests. Depending on a motorists’ location, he or she could face fines and even jail time for the display of X-rated images. Regarding the penalties involved, supporters of the state law believe, “Those restrictions would apply if the content is located in a vehicle. You have effectively moved beyond the privacy of your own home,” stated Jeff Matsuura, Director of the Law and Technology Program at the University of Dayton.

Lawrence G. Walters, Esquire is a partner with the law firm of Weston, Garrou & DeWitt, with offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all aspects of adult media. The firm handles First Amendment cases nationwide, and has been involved in much of the significant Free Speech litigation before the United States Supreme Court over the last 40 years. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, www.FirstAmendment.com or AOL Screen Name: “Webattorney.”

1 Richard Schmitt, Yes Plans to Escalate Porn Fight, Los Angeles Times, (Feb. 14, 2004) at http://www.latimes.com/la/na/porn14feb14,1,7713213.story .

2 Id.

3 AP, Supreme Court weighs porn, free speech, CNN.com, (Mar. 2, 2004), at http://www.cnn.com/2004/LAW/03/02/scotus.online.porn.ap/index.html.

4 Scott Ross, Ragsdales Sentenced to Federal Prison, AVN, (Mar. 8, 2004), at http://www.avn.com/index.php?Primary_Navigation=Articles&Action=View_Article&Content_ID=76443.

5 Chris Wetterich, Nitro Man Indicted on Obscene-Video Charges, The Charleston Gazette, (Mar. 11, 2004) at http://wvgazette.com/section/News/Today/2004031027.

6 Angus Fitzpatrick, Steve Sweet Goes to Trial, Xbiz, Feb. 18, 2004, at http://xbiz.com/articles/print.php?article_idp=1108.

7 A. Schatz, The Lycos 50 Daily Report, Lycos (Feb. 4, 2004) at http://50.lycos.com/020404.asp. 8 J. Pelofsky, House Panel Pushed TV, Radio to Clean Up Shows, Reuters (Jan. 28, 2004) at www.reuters.com/printerfrinedlypopup.jhtml?type=domesticNews&storyID=4231052 .

9 Scott Ross, Broadcast Decency Enforcement Act of 2004 Passed in Landslide Vote, AVN, (Mar. 11, 2004), at http://www.avn.com/index.php?Primary_Navigation=Articles&Action=View_Article&Content_ID=76895.

10 C. Hulse, House Votes 391-22, To Raise Broadcasters’ Fines For Indecency, New York Times (March 12, 2004) at www.nytimes.com/2004/03/12/politics/12INDE.html.

11 Cory Kincaid, Hilton Called the Shots, Xbiz, Feb. 24, 2004, at http://xbiz.com/articles/index.php?article_idp=1136 .

12 C. Cobbs, Microsoft, AOL Earthlink and Yahoo! Sued At Least 165 Suspected Spammers, Orlando Sentinel (March 11, 2004) at www.orlandosentinel.com.

13 C. Farrar, “Fraction” Of Spam Complies With CAN-SPAM: Report, AVN.com (Feb. 11, 2004), at http://www.avn.com/index.php?Primary_Navigation=Articles&Action=Print_Article&Con.

14 C. Farrar, FTC Seeking Commment on Spam Reg, Definitions, AVN.com (March 11, 2004), http://www.avn.com/index.php?Primary_Navigation=Articles&Action=Print_Article&Content_ID=76889.

15 Brandon Shalton, Disney Gets Goofy, Fightthepatent.com, Feb. 26, 2004, at http://www.fightthepatent.com/v2/ Disney.html.

16 Cory Kincaid, Playboy Unveils Wireless Plan, Xbiz, (Feb. 20, 2004), at http://xbiz.com/articles/print.php?article_idp =1116.

17 Mike Schneider, Women Sue to March Topless During Daytona Beach Protest, Orlando Sentinel, Mar. 5, 2004, at http://www.sun-sentinel.com/news/local/florida/sfl-0305topless,0,6372207.story?coll=sfla-news-florida.

18 Henry Frederick, Experts Disagree About Topless Protest’s Effect, Daytona Beach Journal, Mar. 10, 2004, at http://www.news-journalonline.com/newsjournalonline/news/headlines/03newshead03031004.htm.

19 Id.

20 CNN, XXX-DVDs A New Hazard For Drivers, CNN.com (March 10, 2004) at http://www.cnn.com/2004/US/03/10/drive.by.porn.ap/index.html.

ADULT INDUSTRY UPDATE

First Amendment Protections for Employees

Involved in the Adult Industry – The Marcie Betts Case

By: Lawrence G. Walters

www.FirstAmendment.com

Imagine showing up for your day job one Friday afternoon and being summoned by your boss for a “chat.” When you arrive at his or her office, you are handed a stack of pictures of you downloaded from the adult Website that nobody was supposed to know about. Your employer then hands you a pink slip, and tells you to immediately clean out your desk. Welcome to the world of workplace discrimination – but this kind of discrimination is usually not against the law.

This scenario is becoming more and more common these days; and most employees are out of luck because of the “Employment at Will” doctrine. That legal principle essentially allows employers to terminate workers for any reason, or no reason whatsoever. However, one fired employee, by the name of Marcie Betts, stood up and fought back, and recently won the right to job reinstatement; on First Amendment grounds. This is her story:

Marcie Betts was a prison guard, or “corrections officer” as they now prefer to be called. She worked at Roxbury Correctional Institution in Hagerstown, Maryland, and was an exemplary probationary employee. Before she was hired, she sold some nude pictures of herself to an adult Website called BurningAngel.com. During the interview process with the Division of Corrections, she was never asked whether she had been involved in adult entertainment or nude modeling, although an extensive background investigation was conducted and plenty of

opportunity existed for such inquiry. She was hired in November, 2003, and after some training time, reported for work the middle of January, 2003. She immediately received positive feedback from her superiors and co-workers about her job performance. However, it was not long before rumors of her involvement with the adult Website began to surface, to her surprise and dismay. After initially attempting to shrug off the rumors, the Warden ultimately confronted her with evidence of her participation in the Website. An investigation was launched, during which it was uncovered that an inmate almost obtained a magazine containing an image of Ms. Betts. As it turns out, this inmate had a subscription to a magazine entitled Tabu Tattoo, wherein a single image of Marcie Betts appeared. Inmates at Roxbury Correctional Institute are allowed to receive sexually explicit materials; however, this magazine was intercepted before the inmate ever received it, because it contained a picture of a corrections officer, which made it contraband. Importantly, inmates there are not permitted to access the Internet at this particular institution. Therefore, there was no indication that any inmate ever actually accessed or viewed any erotic image of Marcie Betts — either online or in any other medium.

Nonetheless, Ms. Betts was terminated on January 29, 2003, as a result of her pre- employment nude modeling and involvement with the Website. Although she was not represented by counsel at that point, the firing certainly seemed unfair, and possibly unconstitutional, at least to her. In upholding the firing during the initial administrative review process, a hearing officer determined that “some” of the images justifying the termination were not protected by the First Amendment. Parenthetically, none of the subject images were ever declared to be obscene by any court or jury, and therefore this finding defied logic. At that point, Ms. Betts retained the author as lead counsel, and Jon Katz, Esq., as local counsel, to defend her interests and seek reinstatement as a corrections officer with the Division of Corrections. She

also set up a legal defense fund website, www.FightForOurRights.com, to inform the public about this significant battle. Importantly, as a public employee, she enjoyed a Fifth Amendment property right in her employment, unlike most private sector employees. Also, given the reasons asserted for the termination, substantial Free Speech interests were at stake as well.

Terminated employees are entitled to a full-blown adversarial hearing on the legality of their termination, under Maryland administrative law. Such a hearing was immediately requested, and in response, on September 22 through 23, 2003, an Administrative Hearing was conducted before Administrative Law Judge D. Harrison Pratt to determine whether involvement in an adult Website constituted legal justification for terminating a public employee. The Division of Corrections pulled out all the stops in its attempt to justify this termination, even going so far as to hire a surprise expert witness, the former Director of the Virginia Department of Corrections, which generally is not cheap. Although this expert was not disclosed until a few days before the hearing, he was allowed to testify as to all the “parade of horribles” that would occur if Ms. Betts were allowed to function as a Corrections Officer after having appeared nude on an adult Website. The essence of the Department’s position was that once a female appeared in erotic photography, and the inmate population learned about it, that female was forever transformed into nothing more than a sex object who would thereafter be subject to immediate sexual abuse by the inmate, who could not control themselves upon learning of such information. Such concerns were dismissed as “speculative” by the Judge, who on November 12, 2003, determined that the termination violated Marcie Betts’ First Amendment rights to freedom of speech, and that those rights outweighed any safety concerns identified by the Division. The Judge also did not overlook the fact that even though these images had been in global circulation for several months before she was fired, no inmate had ever come into possession of a single

image of Marcie Betts. She is therefore now entitled to reinstatement with full pay and benefits, along with compensation for attorney’s fees incurred in seeking her job back. An online copy of the decision can be found here.

Those employees working for private employers may not be so lucky if their involvement in the adult entertainment field is uncovered and used as a basis for termination. The First Amendment’s guarantee of freedom of speech only prohibits governmental censorship and retaliation, and is not applicable to private employers. While other legal theories might be used to challenge a discharge based on involvement in adult media in the private sector, such as breach of contract, gender discrimination or retaliatory discharge, these claims are much more difficult to pursue, particularly in the absence of a written employment contract. Only a couple of states and cities have enacted legislation protecting employees from adverse employment action based on leisure time or off duty conduct. However, as the role of the employer becomes more and more controlling in the average citizen’s daily life, such legislation is likely to catch on. Large employers have become something akin to quasi-governments given their power over our daily lives and ability to control our behavior. The role of the employer is often much more influential than the role of the government, in one’s daily routine. Accordingly, federal legislation is necessary to protect the privacy interests of workers nationwide, to prevent the employer from taking the place of Big Brother in 2004. For now, at least one adult Internet model’s First Amendment rights have been vindicated; something all too rare in modern times.

Lawrence G. Walters, Esq., is a partner in the national law firm of Weston Garrou & DeWitt, with offices in Orlando, Los Angeles, and San Diego. Mr. Walters represents clients involved in all aspects of adult media. Nothing in this article constitutes legal advice. Please contact your personal attorney with specific legal questions. Mr. Walters can be reached at Larry@LawrenceWalters.com, through his website: www.FirstAmendment.com or via AOL Screen Name: “Webattorney.”

THE ACACIA ISSUE:

A LOOK AT THE OPTIONS

BY: LAWRENCE G. WALTERS WESTON, GARROU & DEWITT

WWW.FIRSTAMENDMENT.COM

Introduction

Recently, Acacia Media Technologies Corporation, (“Acacia”), sent a round of letters directed to those in the adult Internet industry who have provided “access” to Websites allegedly violating their patent claims by streaming video. Most of these new targets fall into the category of affiliates or link lists, and do not actually stream any video from their sites. Acacia’s theory of liability in this case will be contributory or vicarious patent infringement. Initial reactions have ranged from shock and dismay, to depression and resignation to exit the adult industry completely. Once the initial effect wears off, it will be time to take a level-headed look at the various options available to webmasters prior to the stated deadline of November 30, 2003.

The following information must be prefaced by a disclaimer: This author is not a registered patent attorney, and thus does not intend to provide any commentary or advice on the enforceability of Acacia’s patents, or the merits of its claims. However, the Acacia issue has affected many of the author’s clients, thus resulting in a certain level of education and analysis, under the guidance of outside patent counsel. This article will not recommend any particular option over any other, but will attempt to set forth the various choices, and logical consequences thereof.

Any webmaster who has received the recent Acacia Media demand has the following basic options:

Option 1 – Accept the License Agreement

Acacia has provided a “grace period” until November 30, 2003, to accept the terms of its Webmaster License Agreement and/or Content Provider License Agreement for its DMT Technology. The terms of its Agreement can be found on www.AcaciaResearch.com. Several of the large adult media corporations have accepted the License Agreement, including Vivid Entertainment Group, Wicked Pictures, Platinum Bucks and LFP, Inc. (Hustler). Essentially, the License Agreement requires webmasters to pay Acacia a royalty fee amounting to a percentage of gross receipts realized from the Website containing the streaming content. This option essentially puts you into business with Acacia, with whom you will be sharing revenues. An accounting of revenues may be requested to confirm that Acacia is getting its “fair share.” This option will reduce the webmasters’ bottom line, but in a known percentage. For those webmasters who do not like to gamble, this option will eliminate all risk on a go-forward basis, and quantify any exposure to liability for past patent infringement.

Option 2 – Join the Defense Group

A number of adult media companies have joined a coalition of industry players who have chosen to stand and fight against the validity of Acacia’s patent claims. Some members of the group have already been sued, and are actively in litigation. The defense group has hired the renowned patent firm of Fish & Richardson, www.FR.com, to represent its interests in the Acacia litigation. Those who have not been sued can request an opinion letter from defense counsel, regarding the validity of Acacia’s patent claims in regard to the actual technology being used by any particular Website for streaming video. An Association has been formed to back the defense group called the Internet Media Protective Association, www.IMPAI.org. More information can be found on that site about joining the Association and/or the defense group. Acacia, however, has claimed that some members of this group are conspiring to interfere with Acacia’s attempts to negotiate License Agreements with defendants who choose to settle.1

Option 3 – Hire Individual Patent Counsel

Webmasters affected by the Acacia issue always have the option of hiring their own personal patent attorney. Webmasters searching for such representation should make sure that any candidate for legal counsel is a “registered patent attorney.” The field of patent law is extremely specialized. Attorneys should not dabble in a field like patent litigation. Webmasters should only consider patent attorneys who have had years of experience litigating patent claims in federal court. It is most advisable to seek a referral to such a legal specialist from your own general counsel or Internet attorney. Retaining private patent counsel is the best, and of course the most expensive, option. Any webmaster’s unique situation can only be thoroughly evaluated by an experienced patent attorney who is focused solely on that client’s particular circumstance. However, it should be noted that independently evaluating each of Acacia’s patent “claims,” and comparing those claims with the specific technology used for streaming video on any given Website, can be a time consuming and costly process that also requires the involvement of a computer engineer. There can be no question about the fact that Acacia realizes the time and expense required to property evaluate its complex claims, which consequently makes acceptance of the License Agreement more attractive. However, it may be that after proper evaluation, it is determined that your method of video streaming does not infringe on Acacia’s patents. If such is the ultimate conclusion, the cost of the analysis would be money well spent.

Option 4 – Negotiate with Acacia Independently

Any webmaster can pick up the phone and call Acacia, or send the company an email. Acacia has no obligation to negotiate on the terms of its License Agreement; however nothing prevents that from happening. Acacia can settle on different terms with different individual defendants. However, negotiating the resolution of a patent claim without legal counsel is dangerous business for several reasons. Initially, anything you say to a representative of Acacia could be considered an “admission” or “statement against interest” under the Federal Rules of Evidence, and therefore admissible in subsequent legal proceedings against you. There may be various settlement privileges that come into play, preventing the admissibility of such statements, however a webmaster treads on dangerous ground if he or she decides to get into a substantive discussion with a representative of Acacia regarding the issues of video streaming, or any other relevant legal fact. Attorneys can negotiate such issues without the fear of making binding admissions, or giving away sensitive information that could bear on potential defenses. It is therefore always advisable to utilize the services of an attorney when embarking on such negotiations. Another concern is the disadvantage that a webmaster is at, compared to a member of Acacia’s legal staff. Acacia holds all the cards in the negotiation, and discussing patent claims with its representatives will be similar to negotiating with someone who speaks another language. It may be difficult for the webmaster to know if any particular terms being proposed are fair or reasonable.

Option 5 – Wait and See Approach

Acacia has provided a grace period until November 30, 2003, within which to evaluate one’s options, and make a decision. Therefore, nothing must be done today, and a webmaster can take advantage of the grace period to learn as much as possible about the issue before making any decisions. There are many sides to this story, and numerous complex legal, factual and technological issues are involved. Discussion boards are alive with debate surrounding this topic, and much can be learned by your fellow industry participants. A new Website has been created for the purpose of fighting “patent abuse” entitled: www.FightThePatent.com. Several industry leaders are calling for an organized opposition to Acacia’s claims, and such resistance is growing. On the other hand, a number of larger companies have accepted the License Agreement, which itself provides valuable information, by implication. Educating yourself regarding the details of this complex problem is essential in order to make a proper decision. Option 6 – Do Nothing

Unfortunately, many affected webmasters will choose to bury their heads in the sand and take no action in response to Acacia letter. Many simply believe that this is “wrong” and so they should not have to spend any time or money in response to these claims. However, even the most frivolous legal claim must be taken seriously, since failure to act may result in the loss of rights or opportunities. For example, Acacia may withdraw its offer to accept the current License Agreement, and seek to hold many webmasters responsible for past infringement, spanning a period of several years. Damages in patent infringement case can be astronomical, depending on the specific situation. Some webmasters are hoping that the “court case” involving Acacia will be resolved soon, and that its patent claims will be invalidated. Such is an unrealistic expectation, however, since the litigation against the existing defendants is in its early stages. No substantive rulings have occurred to date regarding the enforceability of Acacia’s patents. It could be years before a final decision is handed down, once a trial has occurred and all appeals have been exhausted. Therefore, each webmaster must act in his or her own best interests now, without regard to how other defendants will fare in court.

Conclusion

In an era where financial success in the adult industry is becoming more and more elusive, the time and effort necessary to deal with these patent claims can result in tremendous resentment and despair. However, nothing has been able to significantly impact the viability of the adult Internet industry, despite attacks from within and without. The industry will continue to survive, and it is in Acacia’s best interests that it does, if this company intends to base its future profits on royalties received from successful players. So, in a way, everybody is in this together. Webmasters should therefore take some time to carefully evaluate their options and make appropriate decisions, in their own best interests.

Lawrence G. Walters, Esq., is a partner with the law firm of Weston, Garrou & DeWitt, which maintains offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all aspects of adult media. The firm handles First Amendment cases nationwide, and has been involved in significant Free Speech litigation before the United States Supreme Court. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, www.FirstAmendment.com or AOL Screen Name: “Webattorney.”

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FirstAmendment.com

GUILT BY EXTREME ASSOCIATION

This month’s Update will not be the usual collection of interesting news stories and legal tidbits. The current prosecution of Extreme Associates and the industry’s response thereto is and must be the single most important issue for adult webmasters to consider presently. That issue therefore will be the focus of this month’s Update.

Marybeth Buchanan, the Assistant United States Attorney heading up the prosecution against Extreme Associates, claims that even Playboy may be obscene in parts of the country.1 Yes, ladies and gentlemen, this is the United States in year 2003. The Department of Justice refuses to inform the public where it will draw the line regarding what it believes to be obscene, but it promises that at least 49 other federal obscenity prosecutions are in the works.2 If history is to be any guide as to what to expect in the future, it is likely that the feds will start prosecuting extreme, fringe, fetish material, and slowly work their way towards more acceptable forms of alternative erotica, like BDSM, interracial, facial, or even gay material. The nation’s Obscenity Czar, Andrew Osterbaan, recently pointed out that even producers of “mainstream” erotica are not immune, and that cases currently in the works include one of the largest producers of adult videos in the world.3 There is no list of what content is or is not legal that webmasters can use as a guide in producing erotica. All adult materials are presumed to be protected by the United States Constitution unless and until declared obscene by a judge or jury.

The single most significant fact to be gleaned from the Extreme Associates prosecution is the government’s contention that individual video clips appearing on ExtremeAssociates.com can be independently alleged to be obscene without taking into consideration any other materials appearing on the site; ignoring the requirement that material be considered as a whole. Should that view prevail, Internet obscenity cases will immediately become significantly more difficult to defend. Currently, many webmasters rely on significant amounts of artistic or literary material appearing on their sites as a means to satisfy the Miller Test for obscenity, which provides a defense against charges that a work is obscene, if, taken as a whole, the work either lacks prurient appeal or contains serious literary, artistic, scientific or political value.4 If the courts will now allow the government to single out individual video clips, or potentially specific images, for prosecution under federal obscenity laws, that would be tantamount to ripping out pages of a book and asking a judge or jury to declare each of those specific pages obscene, without considering the whole book. While the practice of charging individual video clips as independently obscene will certainly be challenged in the Extreme Associates case, it evidences the government’s creative, yet sinister, approach to federal obscenity prosecutions.

Equally diabolical is the Department of Justice’s decision to bring this case in the Western District of Pennsylvania on the basis that: 1) Video tapes were allegedly sent to that location from Extreme Associates in California, and 2) The video clips were downloaded in Pennsylvania. Mixing the online delivery of Website content across state borders with the physical delivery of tangible media to that same location confuses the community standards issue for the courts and the jury, and muddies the waters on the arguments relating to the difficulties in applying the concept of local community standards to online communications. The argument goes something like this:

Defense counsel: Your Honor, you can’t apply the community standards of Western Pennsylvania to online content originating from California.

The Government: But Your Honor, the Defendant sent video tapes into this community, and was certainly aware that their content would be received in that location.

The Court: How is this different from any other case where a national distributor sends video tapes to various locations across the country?

Defense Counsel: Well, Your Honor, my client did not know that its Website content would be downloaded in Pennsylvania even though it sent similar content through the mail to that location.

The Court: Are you asking this Court to instruct the jury to apply a different set of community standards to the online content as opposed to the video tapes?

Defense Counsel: Possibly, or maybe there should be a national standard applied to the Website content, and a local standard applied to the video tapes.

The Court: Well, it seems like the jury will get awfully confused on what standard they must use to evaluate the legality of these materials, don’t you think, counselor?

The Government: Your Honor, If Extreme knew that it may be subject to the community standards of Pittsburgh, Pennsylvania when sending video tapes there, the Court should apply local community standards for our purposes when evaluating Extreme’s Website content.

Defense Counsel: But Your Honor, there’s a difference . . . The Court: Sounds reasonable to me.

The United States government has, without a doubt, thought through many of the legal and constitutional arguments that will be raised in the defense of the Extreme Associates prosecution. The feds often pick specific issues and venues in the attempt to establish precedent in their favor. The Extreme Associates prosecution may be one of those cases. As noted earlier, the government could be starting with the fringe material and working its way to mainstream erotica. According to one Justice Department official, “There is no particular behavior that is off the table.”6 Along the way, this approach could be calculated to establish precedent favorable to the government to assist in prosecution of the more mainstream material. It will take a team of talented and dedicated attorneys, along with some brave federal judges to recognize what the government is trying to accomplish, and put a stop to this blatant censorship campaign. Should the government obtain victories in the earlier, more difficult cases, that precedent will come back to haunt the industry in a big way. An acquittal in the Extreme Associates case, on the other hand, could prove a huge setback for the government.

The Extreme Associates case should serve as a call to arms for the adult Internet industry since rulings in that case will undoubtedly affect the industry as a whole. Our industry did not assist in any way with the first federal obscenity prosecution against adult webmasters in Beckley, West Virginia.7 Consequently, the amateur couple producing videos for sale over a Website, along with their webmasters, have all pled guilty to one count of conspiracy to distribute obscene materials, in exchange for the dismissal of three other counts.8 The industry now has an opportunity to get involved in this current prosecution which specifically involves material downloaded from the Internet. Groups such as the Internet Freedom Association (www.OnlineFreedom.com) and the Free Speech Coalition (www.FreeSpeechCoalition.com) need your support and membership. If the industry turns its back on webmasters producing extreme or fringe content, the feds may soon be coming for you with a long line of victories in their hip pocket to use against you. Keep in mind, the federal government has unlimited financial resources to prosecute these cases, under the recently-passed PROTECT Act. On the other hand, adult webmasters number in the tens of thousands, and command the attention of millions of online web surfers. This industry can fight back financially and politically by pooling its resources to fight these first few cases brought by the government, and by using the great communication tool called “the Internet” to remove the censors from power.

Rumor already has it that Attorney General John Ashcroft may not return to his post if George Bush is elected to a second term.9 Ashcroft is already on the ropes, trying to defend the USA Patriot act, however his attempts to do so have met with a cool reception.10 It has now been established that the Act has been used against common criminals, instead of reserved for the terrorists, as promised.11 If the moderates and political advisors in the current administration get the message that this campaign against erotica will cost them significant votes from the mainstream, merely to pacify the ultra-right wing zealots, this obscenity campaign will be dropped like a hot potato fresh out of the microwave oven.

The adult Internet industry resents and resists organization and cooperation like the plague. On the one hand, it is such individualistic and rebellious attitudes that make adult webmasters such enjoyable clients to represent. However, in the interests of industry survival, the ego attachments and natural distrust of any sort of formal organization held by the adult webmaster community must give way to a collaboration based on the consistency of interests associated with fighting government censorship in the early stages. There is still time.

Lawrence G. Walters, Esquire is a partner with the law firm of Weston, Garrou & DeWitt, with offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all aspects of adult media. The firm handles First Amendment cases nationwide, and has been involved in much of the significant Free Speech litigation before the United States Supreme Court over the last 40 years. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, www.FirstAmendment.com or AOL Screen Name: “Webattorney.”

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FirstAmendment.com

THE RETURN OF THE OBSCENITY SECTION

It appears that the Child Exploitation and Obscenity Section of the Justice Department’s Criminal Division is back in action, after over a decade of relative calm for the adult industry. Recent comments and legal actions indicate that the “Section” is gearing up for an assault on the industry, using beefed-up obscenity laws, now that Congress passed the PROTECT Act. “I have the feeling that something big is going to happen in the near future,” said Patrick Trueman, a former federal obscenity prosecutor and current consultant to the American Family Association – referencing upcoming obscenity prosecutions.1 “I have been assured of that,” he added.2 Andrew Osterbaan, head of the Section, said that new prosecutors and Internet analysts were recently added to target those who sell obscene materials over the Internet and promised, “We hope to alter criminally offensive conduct on the Internet as you see it.”3 Osterbaan is also well aware of the inevitable First Amendment challenges that will be asserted in any such prosecution: “Obviously we’re going to be developing some new case law in that area,” he said.4 Recently, however, Trueman has been complaining about the lack of results by the Justice Department. “This is an issue they haven’t handled well . . . they haven’t made it a priority, and therefore there have been less than a handful of prosecutions and no prosecutions to date of major pornographers who are violating the law,” he said.5 Violating the law in whose opinion, one might wonder.

Possibly in response to this kind of pressure, Alabama Republican Senator, Jeff Sessions and Texas Republican Representative, Lamar Smith, are planning to introduce a resolution urging the Justice Department and all 93 United States Attorneys across the country to be more aggressive in prosecuting obscenity.6 Concerned Women for America (“CWA”), a so-called public policy group that also supports the resolution, accused United States Attorneys across the country of ignoring over 22,000 complaints of obscenity forwarded to them for investigation since June of last year through the “ObscenityCrimes.org.”7 The group is urging citizens to write letters to their United States Attorney, asking: “What are you doing about obscenity enforcement?”8

Disturbingly, eight out of ten Americans believe that federal laws against Internet obscenity should be vigorously enforced, according to a recent poll by the Wirthlin Worldwide research company.9 Another poll, conducted by Morality in Media, a well-known censorship group, concluded that 70% of respondents did not believe that obscenity laws were being vigorously enforced.10 The reliability of these polls is certainly suspect.

Signs of the upcoming obscenity prosecutions are already apparent: The Justice Department has initiated an obscenity prosecution against Mike and Sharon Corbett, alleging that videos sold through the Website, www.girlspooping.com, are obscene. The Justice Department is also looking to renew a 1998 obscenity investigation involving Garry Ragsdale and Clarence Thomas Gartman, in connection with various rape-torture fantasy videos.11 Finally, there was the well-publicized raid against Xtreme Associates, conducted in April, 2003. All of this leads to the inevitable conclusion that obscenity battles are looming on the horizon, and that the adult Internet industry must organize and make their stand.

STREAMING ADULT VIDEO PERFORMANCES NOT PROTECTED BY THE FIRST AMENDMENT

In a disturbing blow to the First Amendment’s protection of erotic speech, a federal judge recently ruled that the First Amendment does not protect “live acts of sexual intercourse, masturbation or oral sex between marital partners captured on ‘streaming’ or real time video tape for dissemination over the Web.”12 The judge issued the ruling in connection with a case brought by a former Sheriff’s Deputy against his former employer, the Palm Beach County Sheriff’s Office, alleging a deprivation of First Amendment rights as a result of his termination for engaging in group sexual activities displayed on the Internet.13 The court dismissed the Plaintiff’s claims, concluding: “[G]roup physical sexual activity staged, and photographed in a hotel room for mass distribution over a pay Website, does not constitute expressive conduct within the meaning of the First Amendment.”14 While the court paid lip service to the well- established precedent protecting the right to distribute or view non-obscene, sexually explicit materials, it denied such protection for those who “engage” in public sexual activity, “either in the middle of the street, or in a hotel room under the eye of a camera with intent to capture and distribute the images over the Web to a mass audience.15 This ruling strikes at the heart of the constitutional protections afforded those who perform in sexually oriented media. Given the financial status of the Plaintiffs, an appeal of this unfortunate decision is unlikely in the absence of significant industry support.

BILLING WOES

Pressure from Visa and MasterCard over administrative and chargeback requirements have caused a major Internet billing company to go under. Websitebilling.com announced its withdrawal from the Industry and cessation of business on May 23, 2003, citing “arbitrary fines” by card associations, foreign banks and their agents.16 Relatedly, a multi-million dollar fraud suit has been initiated by Paycom against MasterCard, accusing the credit card association of fraud and antitrust.17 Paycom is complaining about the “monopolistic” rules and “illegal” fines ranging in the millions of dollars.18

However, it is not only the adult Internet companies that are accusing the credit card companies of fraud. Another fraud suit was filed by three mainstream Internet merchants against Visa, MasterCard, American Express and Discover, claiming that these associations actually profit from Internet fraud and do not seek to stop it.19 The Complaint seeks class action status, claiming that the merchants bear virtually all the costs associated with fraud and theft online. Allegations of monopolistic abuse have also surfaced in this suit.20 “What we’re seeking is not only restitution of excessive penalties but also to cure tomorrow,” said the attorney representing the Plaintiffs in the Raleigh, North Carolina, litigation. The named Plaintiffs are eGeneral, which runs a health Website, New York-based Direct Foreign Exchange, PLC, which runs an online currency exchange, and West Virginia-based Howell Automotive, which sells auto parts online. The damages claimed in this suit could run into the hundreds of millions of dollars. “They are abusing their monopolistic powers because merchants cannot function online without being able to accept these credit cards,” Ishman added.21

This suit comes hot on the heels of a settlement reached by MasterCard and Visa in litigation brought against them by various retailers regarding their debit card practices.22 Visa/MasterCard agreed to pay three billion dollars to settle the class action case, and agreed to lower debit card fees and allow merchants to refuse certain cards.23 Hey, it’s just monopoly money!

The adult Internet Industry is frantically searching for a solution to its credit card and billing problems. With PayPal withdrawing, adult Websites are faced with fewer and fewer options. If the current impasse is not resolved soon, the government may not need to launch an assault on the industry to achieve its desired censorship result.

SPAM UPDATE

Federal lawmakers are continuing to wrestle with the Spam issue. The House is currently debating a bill being called “Reduction and Distribution of Spam Act,” authored by Representative Richard Burr (R–NC), which may have the best chance of being passed by the full House in light of its political support.24 Violators could spend up to two years in prison, and ISPs would be allowed to sue for $10 per each email sent to an opted-out recipient, with a cap of $500,000.25 However, critics are calling the bill “weak,” claiming that it would do more to protect mass email advertising than to combat spam.26 “If I thought that everything that was legal under this bill would end up in my mailbox, I’d jump off the Capitol building,” said one Internet industry participant.27 Lobbyists representing several direct marketing groups attended some of the meetings relating to the proposed legislation, which may have contributed to the weakening of the bill.28 Some state Attorneys General claim that the bill is riddled with loopholes, which may prevent the states from enforcing their own, tougher anti-spam laws. For example, the draft bill would provide any company with a “preexisting relationship” with customers the right to send email for up to three years.29 Anti-spam groups have also criticized the bill. “This is yet another bill . . . attempting to get rid of the porn and the scams, but really clearing the way for legitimate companies to spam,” said Joe Mozena, co-founder of the Coalition Against Unsolicited Commercial Email, or CAUSE.30 It is currently estimated that spam comprises over 40% of all email.31

One spammer felt the wrath of EarthLink’s disdain for the practice this month. Howard Carmack, identified as a ringleader of spammers, was hit with a $16.4 million judgment and a permanent injunction in federal court, in a lawsuit brought by EarthLink.32 A number of similar federal lawsuits are pending against other notorious spammers in an effort to cut down on junk email.33

EYE IN THE SKY

Smile for the camera: Big brother is watching you – without a warrant. High definition satellite imagery is currently available to the government, and anybody else with a credit card. Under existing technology, high resolution images of virtually any coordinates on earth can be obtained through powerful satellite cameras.34 However, the widespread availability of these images is raising significant privacy concerns. “Do we really want the ability to track everybody all the time, without any suspicion, or without probable cause?” asked Attorney Doug Klunder, in a recent interview.35 These issues were recently the subject of a Washington Supreme Court case on whether a warrant should be required to track a person’s movements using satellite devices.36 A previous United States Supreme Court opinion, authored by conservative Justice Antonin Scalia, indicated that a warrant would be required to observe heat signatures emanating from a home, in connection with a marijuana growing investigation.37 In the home “all details are intimate details, because the entire area is held safe from prying government eyes,” Scalia said in the opinion.38 Maybe this will create a new niche for adult Websites: SatelliteVoyeurism.com?

ANTI-PATRIOT ACT

In a brave move, the small town of Arcata, California, made it a crime to comply with the USA Patriot Act.39 The city ordinance would impose a fine of $57 on any City department head who voluntarily complies with investigations or arrests under the Patriot Act.40 Town officials acknowledge that the law is mostly symbolic, since federal law would trump any local ordinance; however the move has put the small town in the limelight. Critics of the Patriot Act claim that it violates civil liberties, however supporters claim that it helps fight terrorism.41 Perhaps Arcata will start a trend. On the other hand, the Commissioners may just end up in a CIA holding cell for all eternity.

GRADY ACQUITTED

The highly publicized case against James Grady ended in an acquittal recently.42 Grady was initially arrested on 886 counts of sexually exploiting children through child modeling sites operated in Arapahoe County, Colorado. However, when the trial started, the number was reduced to 39. The jury acquitted Grady of all 39 counts.43 The charges involved photographs of young girls, some 13 years old, in provocative poses with suggestive clothing, which prosecutors claimed constituted sexual exploitation of a minor. However, Grady had received written permission from the parents of the teens to post the pictures on his Website, trueteenbabes.com. The case is largely seen as precedent-setting for the child modeling industry.

SCORE ONE FOR ACACIA

The adult Internet industry is closely following the patent suit brought by Acacia Media over its claimed right to control the use of common video downloading technology over the Internet. Recently, Acacia won the right to use the term “adult entertainment” in describing the alleged infringers.44 Homegrown Video and New Destiny Media filed a motion asking the judge to remove all references to “adult entertainment,” which the movants sought to strike based on fears of prejudice.45 The judge allowed the descriptions to stand.46 Several adult Internet companies have come together to fight the patent claims. The group contends that the patent cannot be enforced since the technology had already existed and was being used at the time that the patents were awarded to Acacia.

CENSORSHIP BATTLES DOWN UNDER

“Plain silly:” That’s what an adult industry crusader in Australia called Queensland’s pornography laws.47 The statement was made in Brisbane District Court in a case involving the selling of some banned X-rated films and magazines by a company known as “Good Vibrations.”48 The company was found not guilty of selling the items, but the Office of Fair Trading appealed.49 The legal arguments focused on the interpretation of the Australian Constitution, as it applies to adult materials. In describing the prohibition on sale of adult materials in certain parts of Australia, the company’s lawyer claimed, “that’s not just unconstitutional, it’s just plain silly.”50 This case may set precedent for another 100 prosecutions, also pending in Queensland. See, the United States is not the only source of “silly” anti-porn laws.

Lawrence G. Walters, Esquire is a partner with the law firm of Weston, Garrou & DeWitt, with offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all aspects of adult media. The firm handles First Amendment cases nationwide, and has been involved in much of the significant Free Speech litigation before the United States Supreme Court over the last 40 years. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, www.FirstAmendment.com or AOL Screen Name: “Webattorney.”