Adult Industry Update July 2001

Posted by admin on July 1, 2001

ADULT INDUSTRY UPDATE

July – August, 2001

By: Lawrence G. Walters

www.FreeSpeechLaw.com

Last month it was Ashcroft, this month it’s George W, himself! The President has kicked off his “Values Campaign,” which will include a critique of what he considers the degradation of American culture through excessively violent and sexually explicit movies and television shows that mock traditional values.[1] Where have we heard that nonsense before? From Sen. Joe Lieberman, D-Conn., who has solicited Bush’s help with his censorship legislation seeking to hold media producers responsible for marketing mature content to minors.[2] The Media Marketing Accountability Act of 2001 would increase the powers of the Federal Trade Commission in connection with enforcement of deceptive advertising practices against entertainment companies.[3] No response from the Bush camp, yet.

As the conservative politicians are banning together, so are the Adult Industry groups: Recently, the Free Speech Coalition, www.FreeSpeechCoalition.com, announced that it would merge with the Global Internet Alliance (GIA), an organization of leading adult webmasters, in an effort to combine forces in order to achieve greater lobbying strength.[4] “I think it strengthens both of our organizations to come together like this,” said Bill Lyon, the FSC Executive Director.[5] The GIA originally formed to combat problems that webmasters were having with the credit card companies. Now, they realize that the problems facing the Adult Industry, webmasters included, are much larger than originally anticipated. This is particularly true given “the hassles the Republicans are going to try and generate for the Internet.”[6] This merger is further evidence of the conversion occurring between various facets of the adult entertainment industry, which formerly maintained separate identities.

No matter how bad it gets here, just be glad you don’t live in Iran. Twenty Iranians were recently flogged in the public square in Tehran for selling “obscene” compact discs and videotapes, according to the official news agency.[7] Virtually any adult material is considered “obscene” in Iran, where women must cover most of their bodies.[8] Despite the flogging, other dealers continued to sell similar material not far from where the punishment occurred.[9] Whether any of the allegedly “obscene” discs or tapes included flogging was not disclosed.

It is no secret that Internet filtering software is not perfect, and can be avoided by most teenagers, even those with minimal computer skills. A search for non-sexual terms will generate a healthy dose of erotic websites.[10] However, a fledgling Internet security firm called MessageLabs recently unveiled software that actually distinguishes between “artistic” nudes and adult material.[11] The firm boasts 95% accuracy and claims that the software even includes “posture recognition” to help weed out offensive images. This brings new meaning to “Girls Lean Back Everywhere.”

Adult webmasters are closely following an obscenity case against Michael A. Jones, from Greenwood Illinois. Jones has been charged with 9 misdemeanor counts of obscenity and 5 counts of child pornography following a search of his home and computers.[12] Jones’ website sells CD-ROMs, with digital images and video clips, to other websites; he is essentially a “content distributor.” McHenry County Sheriffs raided Jones’ house and business in October and searched for about 5 hours before seizing computers and thousands of CD’s.[13] Police conceded that most of the thousands of images and videos were legal, but determined that images of suspected minors and “extreme sadomasochistic” images of women crossed the line.[14] Since this is one of the first cases to test the obscenity laws relating to content distributed online, it will be followed with great interest by the adult webmaster community.

Utah’s newly-appointed porn czar, Paula Houston, recently asked the United States Attorneys Office to consider bringing federal obscenity charges in connection with ten unsolicited emails that contained links to websites with sexual content or attached sexual images, according to Yahoo! News. “There are some that are very sexually graphic,” Houston said. Is this the first time she’s seen these things that clog our in boxes on a daily basis? A spokesperson for the United States Attorneys office in Utah confirmed that the cases are being actively investigated.

Another case of interest involves the First Amendment right to anonymous speech on the Internet. The New Jersey Superior Court recently upheld an earlier ruling that a corporation cannot obtain the identity of an anonymous user of an Internet message board since it did not demonstrate that it suffered “harm” from the user’s posts.[15] The Court’s decision also asked future courts faced with these types of requests to come up with a series of guidelines to govern when anonymous users’ identities may be divulged.[16] This case will potentially set a precedent for the recurring issue of the level of protection to be afforded anonymous speech on the Internet.

The Adobe Systems Corporation is in some hot water over its cooperation with the FBI in an effort to arrest a Russian software developer accused of finding a way to circumvent the security features in Adobe’s Acrobat eBook Reader.[17] The Electronic Frontier Foundation (EFF), a technological civil liberties group, announced that it would call for a rally against Adobe to protest its cooperation with the Government. The EFF called the arrest “disgraceful.”[18]

Beware the lure of offshore transfers! Recently, the U.S. Second Circuit Court of Appeals upheld the conviction of Jack Cohen, for illegal offshore gambling activities, stemming from his relationship with offshore casino web sites. Cohen argued that all of the gambling occurred offshore, in countries where gambling was legal. The Appeals Court rejected the argument, and upheld his conviction. U.S v. Cohen, 2001 WL 863590 (2d Cir. July 31, 2001). For more information on the dangers of “offshore” relationships for webmasters, read the author’s recent article on the subject found at: http://www.lawrencewalters.com/offshore.php3

While the Adult Internet Industry continues to grow, as evidenced by the growing attendance at the recent Internext Convention in Las Vegas, traditional adult print media is struggling. It was recently reported that Penthouse Publisher Bob Guccione has been forced to sell two plots of land in Atlantic City to pay off a reported $28 million in debts.[19] Apparently, General Media’s $56 million in liabilities exceed its assets by more than two to one.[20] Even its Web site is struggling. “There are sites on the Internet much more explicit than anything he can do,” says an insider.[21] One magazine analyst, Martin Walker, notes: “Young kids don’t need the same erotica any more. The changes in sexual mores in this country mean they have access to the real thing.” Oh, to be young again.

Lawrence G. Walters, Esquire is a partner with the law firm of Weston, Garrou & DeWitt, based in Los Angeles. Mr. Walters runs the firm’s Florida office, and represents clients involved in all aspects of adult media. Weston, Garrou & DeWitt 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 or www.FreeSpeechLaw.com

[1] K. Walsh, “A Brand New Front in The Culture Wars,” U.S. News and World Report (July 23, 2001.)

[2] “Lieberman Wants Bush Help on Media Bill,” AVN News (June 22, 2001).

[3] Id.

[4] T. Hymes, “GIA Merges with FSC,” AVN Online (July 17, 2001).

[5] Id.

[6] Id.

[7] “Don’t Peddle Porn in Iran,” Reuters (July 12, 2001).

[8]Id.

[9] Id.

[10] P. Festa, “Porn Outsmarts Search Filters,” ZDNet News (July 2, 2001).

[11] “Anti-Porn Software Adds ‘Posture Recognition’ To Flesh Detection,” Silicon.com (July 5, 2001)

[12] D. Stockman, “Jones Arraigned On 5 Obscenity Charges,” Northwest Herald Online (July 6, 2001).

[13] Id.

[14] Id.

[15] M. Bartlett, “New Jersey Court Upholds Anonymity of Net Bulletin Board,” Newsbytes (July 11, 2001).

[16] Id.

[17] D. McGuire, “Civil Liberties Group Blasts Adobe for Aiding FBI in Arrest,” Newsbytes (July 19, 2001).

[18] Id.

[19] “Macho Life Gets Tough For Head Of ‘Penthouse’,” Taipei Times (July 2, 2001).

[20] Id.

[21] Id.

July 2001 Update

Posted by admin on July 1, 2001

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

www.FreeSpeechLaw.com

Last month it was Ashcroft, this month it’s George W, himself! The President has kicked off his “Values Campaign,” which will include a critique of what he considers the degradation of American culture through excessively violent and sexually explicit movies and television shows that mock traditional values.1 Where have we heard that nonsense before? From Sen. Joe Lieberman, D-Conn., who has solicited Bush’s help with his censorship legislation seeking to hold media producers responsible for marketing mature content to minors.2 The Media Marketing Accountability Act of 2001 would increase the powers of the Federal Trade Commission in connection with enforcement of deceptive advertising practices against entertainment companies.3 No response from the Bush camp, yet.

As the conservative politicians are banning together, so are the Adult Industry groups: Recently, the Free Speech Coalition, www.FreeSpeechCoalition.com, announced that it would merge with the Global Internet Alliance (GIA), an organization of leading adult webmasters, in an effort to combine forces in order to achieve greater lobbying strength.4 “I think it strengthens both of our organizations to come together like this,” said Bill Lyon, the FSC Executive Director.5 The GIA originally formed to combat problems that webmasters were having with the credit card companies. Now, they realize that the problems facing the Adult Industry, webmasters included, are much larger than originally anticipated. This is particularly true given “the hassles the Republicans are going to try and generate for the Internet.”6 This merger is further evidence of the conversion occurring between various facets of the adult entertainment industry, which formerly maintained separate identities.

No matter how bad it gets here, just be glad you don’t live in Iran. Twenty Iranians were recently flogged in the public square in Tehran for selling “obscene” compact discs and videotapes, according to the official news agency.7 Virtually any adult material is considered “obscene” in Iran, where women must cover most of their bodies.8 Despite the flogging, other dealers continued to sell similar material not far from where the punishment occurred.9 Whether any of the allegedly “obscene” discs or tapes included flogging was not disclosed.

It is no secret that Internet filtering software is not perfect, and can be avoided by most teenagers, even those with minimal computer skills. A search for non-sexual terms will generate a healthy dose of erotic websites.10 However, a fledgling Internet security firm called MessageLabs recently unveiled software that actually distinguishes between “artistic” nudes and adult material.11 The firm boasts 95% accuracy and claims that the software even includes “posture recognition” to help weed out offensive images. This brings new meaning to “Girls Lean Back Everywhere.”

Adult webmasters are closely following an obscenity case against Michael A. Jones, from Greenwood Illinois. Jones has been charged with 9 misdemeanor counts of obscenity and 5 counts of child pornography following a search of his home and computers.12 Jones’ website sells CD-ROMs, with digital images and video clips, to other websites; he is essentially a “content distributor.” McHenry County Sheriffs raided Jones’ house and business in October and searched for about 5 hours before seizing computers and thousands of CD’s.13 Police conceded that most of the thousands of images and videos were legal, but determined that images of suspected minors and “extreme sadomasochistic” images of women crossed the line.14 Since this is one of the first cases to test the obscenity laws relating to content distributed online, it will be followed with great interest by the adult webmaster community.

Another case of interest involves the First Amendment right to anonymous speech on the Internet. The New Jersey Superior Court recently upheld an earlier ruling that a corporation cannot obtain the identity of an anonymous user of an Internet message board since it did not demonstrate that it suffered “harm” from the user’s posts.15 The Court’s decision also asked future courts faced with these types of requests to come up with a series of guidelines to govern when anonymous users’ identities may be divulged.16 This case will potentially set a precedent for the recurring issue of the level of protection to be afforded anonymous speech on the Internet.

The Adobe Systems Corporation is in some hot water over its cooperation with the FBI in an effort to arrest a Russian software developer accused of finding a way to circumvent the security features in Adobe’s Acrobat eBook Reader.17 The Electronic Frontier Foundation (EFF), a technological civil liberties group, announced that it would call for a rally against Adobe to protest its cooperation with the Government. The EFF called the arrest “disgraceful.”18

Beware the lure of offshore transfers! Recently, the U.S. Second Circuit Court of Appeals upheld the conviction of Jack Cohen, for illegal offshore gambling activities, stemming from his relationship with offshore casino web sites. Cohen argued that all of the gambling occurred offshore, in countries where gambling was legal. The Appeals Court rejected the argument, and upheld his conviction. U.S v. Cohen, 2001 WL 863590 (2d Cir. July 31, 2001). For more information on the dangers of “offshore” relationships for webmasters, read the author’s recent article on the subject found at: http://www.lawrencewalters.com/offshore.php3

While the Adult Internet Industry continues to grow, as evidenced by the growing attendance at the recent Internext Convention in Las Vegas, traditional adult print media is struggling. It was recently reported that Penthouse Publisher Bob Guccione has been forced to sell two plots of land in Atlantic City to pay off a reported $28 million in debts.19 Apparently, General Media’s $56 million in liabilities exceed its assets by more than two to one.20 Even its Web site is struggling. “There are sites on the Internet much more explicit than anything he can do,” says an insider.21 One magazine analyst, Martin Walker, notes: “Young kids don’t need the same erotica any more. The changes in sexual mores in this country mean they have access to the real thing.” Oh, to be young again.

June 2001 Update

Posted by admin on June 1, 2001

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

www.FreeSpeechLaw.com

In one month: (1) Attorney General John Ashcroft promises to prosecute Internet obscenity; (2) Morality in Media proposes an amendment to the United Nations Treaty to Combat Internet and Satellite Pornography; and (3) the United States Supreme Court threatens to reverse the strongest Circuit Court opinion protecting online adult materials. These can be difficult times to operate an adult Website given the downturn in the economy and the unfavorable legal climate, but this cloud may have a silver lining.

The first order of business is the United States Supreme Court: Initially, it agreed to review the Third Circuit Court of Appeals opinion Ashcroft v. ACLU, striking down the Child Online Protection Act (“COPA” or “CDA II”), finding that the concept of “community standards” could not be constitutionally applied to the Internet. Many legal experts felt that this opinion would render obscenity prosecutions difficult if not impossible to pursue against Internet content since essentially the same community standards test is used for obscenity laws. Although no one can predict the outcome of this case, which should be decided this spring, the result likely will impact First Amendment jurisprudence well beyond COPA.

Some in the adult industry have actually hoped that the Supreme Court reverses the Third Circuit’s decision based on the misguided belief that such a decision would eliminate free adult content on the Internet, and boost sales for subscription sites. While reversal might result in some incidental benefit to pay sites by decreasing the amount of free adult materials available on the Web, a substantial amount of free content will remain available from offshore, as well on the Usenet and newsgroups. The individuals who post images in these venues will be undeterred, and potentially unaffected, by the implementation of the COPA law because they have the capability of remaining anonymous and are not posting for profit or for any commercial purpose. Many of the free sites would be forced to either shut down, or begin requiring an AVS or credit card to continue offering access to images. This will of course benefit the age check services and the pay sites. However, the negative impacts resulting from a reversal of the COPA decision will not be worth any of the incidental benefits to the pay sites under a cost benefit analysis.

Depending on the precise language of the Supreme Court’s forthcoming opinion on COPA, prosecutors may well become emboldened, should the Court strongly reject the Third Circuit’s community-standards analysis, and begin instituting obscenity prosecutions across the country with reckless abandon. The pendency of the Ashcroft v. ACLU appeal has likely dissuaded many prosecutors from initiating obscenity charges, given the viable defense relating to community standards outlined by the Third Circuit’s decision. Should this defense be eliminated by the Supreme Court, those pay site operators who claimed that they would benefit by the shake out may live to regret the day they advocated for a reversal in this case.

The Supreme Court also announced that it would review a decision from the Seventh Circuit Court of Appeals regarding the procedural safeguards are required by the First Amendment when analyzing a permit scheme which imposes a prior restraint on Free Speech. What all that legal mumbo-jumbo means is that the Supreme Court could take away significant protections that many in the adult industry have relied upon in obtaining licenses or permits to operate adult bookstores, video stores, or gentlemen’s clubs across the country.

In 1990, the Supreme Court announced, in a case entitled FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 110 S.Ct. 596 (1990), that any local ordinance imposing licensing requirements on adult businesses must guarantee that the business receives a decision on its application for a license within a specified, brief time period, and that the ordinance provide a means to have a court “review” its decision in a “prompt” manner. These protections were provided to prevent cities and counties from “dragging their heels” by simply not acting on a permit application, and thereby keeping the adult business from opening indefinitely, and keeping the courts from reviewing their decision, lack of it. Scores of ordinances across the country have been invalidated in lawsuits brought by adult businesses for failing to contain these procedural safeguards, most of which were allowed to open after pointing out the deficiency. Now that the Supreme Court has announced its intention to review this issue, First Amendment lawyers have become concerned that the current makeup of the Supreme Court could change the rules of the game on this issue.

Now that the morality groups have had their say in Washington during last month’s round of meetings, Attorney General John Ashcroft has announced that his Justice Department would help state law enforcement officials imprison adult site operators who feature obscene images. “I am concerned about obscenity and I’m concerned about obscenity as it relates to our children,” Ashcroft said in his first appearance before the House Judiciary Committee.

These statements come after Ashcroft’s meeting with Republican Congressman Steve Largent (R-OK) and numerous anti-pornography groups such as Morality in Media, Focus of the Family, the National Law Center, and the American Family Association, among others.

Apparently, Ashcroft’s Justice Department has not been deterred by the recent acquittal in Cincinnati, Ohio, involving Elyse Passion, an adult video store in Butler County, Ohio. The County has now hired Steve Tolbert, the loosing attorney in that case, to act as the “Anti-Obscenity Prosecutor” for Butler County. Of the recent acquittal on obscenity charges, Mr. Tolbert stated, “I’m not willing to concede that one case sets community standards for obscenity. It’s a fight that will be fought.”

All of this bad news has galvanized the National Obscenity Law Center (a subgroup of Morality in Media, Inc.) to call for an amendment to the United Nations’ Treaty on obscenity to combat Internet and satellite porn. In its recent Obscenity Law Bulletin, the group claimed that entrepreneurs around the world have abused the Internet by making available depictions of “masturbation, copulation, pedophilia, sadomasochism, falatio, bestiality, necrophilia, oralism and cunnalingus, as well as advertisements for the same.” The group claims that current domestic laws of various nations are inadequate to control the trans-border, transnational transmission of obscenity because of extraterritorial origin.⁷ It is also noted that the same “evils” can be viewed via satellite transmission.

The mindset of this group can be summed up by its comment claiming, “trans-national obscenity is one of the most culture destroying phenomena of our time.” The National Obscenity Law Center uses all of its perennial arguments to justify international regulation of digital erotica such as harm to morality, harm to marriage, harm or violence toward and the degradation of women, harm to children, harm caused by rapists fueled by pornography and the harm of nude performances. Perhaps such an effort could succeed in a country without Free Speech protections, however it is appalling that a group based in the United States would even endorse a document called the “Agreement for the Suppression of the Circulation of Obscene Publication.”

there may be a silver lining associated with all of this, at least for the companies willing to fight. The current posturing by the Justice Department, and local authorities, along with fears generated by potential adverse Supreme Court decisions, have convinced many to flee the adult industry. Demand for erotica, however will not decline-it never does. Forbes Magazine claims that the American adult industry now generates 11 billion dollars in sales annually! For those companies willing to stand and fight, the financial rewards may be significant. Money aside, we may even be able to preserve important First Amendment freedoms along the way.

May 2001 Update

Posted by admin on May 1, 2001

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

www.FreeSpeechLaw.com

Happy “Victims of Pornography” Month! Each May, a coalition of anti-pornography groups celebrates its efforts to draw attention to the “horrors” of erotic materials. This year, they’re hoping that their efforts will result in more obscenity prosecutions against the adult industry.

For the last eight years or so, Washington officials would barely acknowledge the effort with a nod and a wink, and just usher these groups out the door with promises of more child pornography prosecutions. This year is different, however: The festivities began May 2, with an event attended by several groups and a couple of elected officials. Representative Steve Largent (R-OK) took the opportunity to blast former President Bill Clinton for not enforcing obscenity laws. “It’s a disease that has to be stopped,” Largent said, “and we have the cure.” Bruce Taylor, President of the National Law Center for Children and Families stated, “the Attorney General has made both public and private statements that he intends to enforce all the laws, including the obscenity laws.” Typical, because of his Religious-Right affiliation, our Attorney General recently stated that he: “might be willing to trade First Amendment rights to improve the culture.” Thomas Jefferson must be twirling in his grave!

The week of May 7 brought more fun and games. Representatives of nearly a dozen anti-pornography organizations were set to meet with General Ashcroft this week, in the hopes to persuade the government to start prosecuting obscenity cases. In testimony to the House Appropriations Committee on May 4, 2001, Ashcroft called pornography “a matter of great concern to me and to this Administration.” Numerous anti-pornography groups have meetings scheduled with Ashcroft including the Concerned Women for America, the Family Research Council, Morality in Media, Citizens for Community Values, the American Center for Law and Justice, Focus on the Family and the Center for Reclaiming America. Conspicuously absent from the meeting agenda are any groups advocating civil liberties or Free Speech.

Patrick Truman, the American Family Association’s Government Affairs Director, believes that even some Cable TV programs can be prosecuted under obscenity statutes.⁵ It was Truman who ran the Justice Department’s Child Exploitation and Obscenity Section during the Ronald Regan and George Bush administrations. Truman also believes that there is ample material available for prosecution on the Internet, which allows for the same kind of interstate sting operations he used during his Justice Department days.

Although many in the adult industry are concerned about what Attorney General Ashcroft will do, another nominee to watch is Robert Flores, recently nominated to be the Administrator of the Office of Juvenile Justice and Delinquency Prevention. Mr. Flores is currently the Vice President and Senior Counsel for the Nation Law Center for Children and Families. The goal of that organization is the “protection of children and families from the harmful effects of illegal pornography by assisting in law enforcement and law improvement.” He is one of the leading proponents of launching prosecutions against Adult Websites; he previously worked for the Justice Department as an obscenity prosecutor from 1989-1997.

All of this law enforcement rumbling is enough to make some adult entrepreneurs get out of the business altogether. In fact, that may have played a part in Yahoo!’s decision to abandon its brief foray into the adult merchandise distribution business. However, some adventuresome company will always be there to pick up the slack. While the censors might be in power now, there will always be a freedom fighter willing to take the heat to test the limits of Free Speech. In the past, it has been Hugh Hefner, Bob Guccione, Larry Flynt and many others. The next four years will surely have more pioneers of compatible stamina.

Even some mainstream Websites are turning to sex to make up for lost advertising revenue. Salon.com, for example, has added new content including what it calls “erotic art and photography” for a $30.00 annual fee. As mainstream Internet and Cable TV companies turn to sex to spice up their bottom line in these slow economic times, these companies will certainly gain the attention of the morality groups impose their sense of morality on everyone else. Big companies generate big headlines. Dave McClure, President of the United States Internet Industry Association believes that people like Truman, and his American Family Association, are interested in going after big names like Yahoo! or AOL.

While many adult industry insiders believed that erotic entertainment would be the first victim of censorship legislation during the new Administration, as it turns out the video game industry may be targeted first. On April 25, 2001, Senator Joseph Lieberman, (D-Conn.), joined by Hillary Clinton of New York, and Herb Kohl of Wisconsin, filed proposed legislation to punish media companies who market products to children that are intended for adults. The legislation will primarily affect the interactive game industry and the music industry. The bill has been labeled an attack on Free Speech by the Motion Picture Association of America. Senator Lieberman responds by claiming, “that’s not censorship, that’s common sense.”

While Washington is looking to crack down on graphic video games, a federal appeals court recently found that these games are entitled to full First Amendment protection. The Seventh Circuit Court of Appeals struck down, on Free Speech grounds, a City of Indianapolis, Indiana Ordinance limiting access of minors to video games that depict violence or sex. The Ordinance prohibits any operator of five or more video game machines in one place to allow an unaccompanied minor to use an amusement machine that is harmful to minors. The term “harmful to minors” has been used in legislation protecting minors from sexually oriented material for decades, but had not been extended to violent content until this bizarre law. The Ordinance was challenged by several Free Speech organizations before it even went into effect. The trial court temporarily upheld the Ordinance by refusing to enter preliminary injunction, but the Seventh Circuit Court of Appeals later reversed and enjoined the Ordinance. It concluded that the graphic video games at issued were not obscene, but were fully protected by the First Amendment. It rejected the notion that two allegedly empirical studies claiming a link between violence and video games established a compelling interest to justify the restriction on First Amendment rights. The court compared the actions of the City in prohibiting access to violent video games to forbidding children from reading The Divine Comedy, War and Peace or Dracula. “Violence has always been and remains a central interest of humankind and a recurrent, even obsessive theme of culture both high and low,” the court noted. This ruling sets the stage for a big battle between the censors, who are up in arms regarding recent school shootings, and the $20 billion dollar a year video game industry, dead set on protecting First Amendment rights.

Recently, even the Wall Street Journal stepped up to defend the adult Internet industry. I guess politics makes for strange bedfellows. Even though the Journal has a reputation in some quarters for staunch conservativism, it defended the adult Web industry as a significant part of online commerce. It further decried the pressure placed on companies not to do business with adult Internet providers as a threat to Web industry freedom. The Journal editorial noted that the online adult industry has been essentially unaffected by the pressure from mainstream advertisers, since adult sites seem to be one of the more hardy online business.

Despite that perception, the economic downturn has even affected adult Internet sites. Operators of both large and small adult Websites report that the days of easy customer acquisition and steady revenue growth are over. The revenue slow down is blamed on a massive saturation of free adult content, and stricter rules on credit card processing. Many users are canceling their memberships because they have lost their jobs or are being crushed by credit card debt. Adult industry insiders observe that there are now too many adult sites, and that average users have become overwhelmed by the never-ending banners and pop up windows typically associated with erotic Websites. “This may be the year Webmasters will make the decision whether they’ll stay in the business or not,” said Lee Noga, an executive with Cybererotica.

As predicted in last month’s Update, City Officials in Tarpon Springs ordered a nude voyeur Website operating within the City limits to close, or face $800.00 a day in fines. The City’s Code Enforcement Board told www.youcanwatch.com to shut down on April 12, 2001. The Website’s attorney argued that his client’s business is located in Cyberspace, not in Tarpon Springs. The Board members voted 7-0 against the company. Big surprise! Their attorney says that they will appeal. Can we watch?

Lawrence G. Walters, Esquire recently became a partner with the law firm of Weston, Garrou & DeWitt, based in Los Angeles. Mr. Walters continues to practice in Central Florida, and represents clients involved in all aspects of adult media. Weston, Garrou & DeWitt 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 or www.FreeSpeechLaw.com

April 2001 Adult Industry Update

Posted by admin on April 1, 2001

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

FreeSpeechLaw.com

First Amendment attorneys may be watching a bunch of adult films in the upcoming months. Several of the larger adult video companies are hoping to make sure that their products are defensible against obscenity prosecutions by having their lawyers review all movies before distribution. “We do our own editing. Then we send them to our First Amendment attorneys,” says the president of Vivid Entertainment Group, according to AVN Online. “The legal time alone is expensive as you can imagine” he added. This may be money well spent, however, given the dramatic change in the political climate surrounding the adult entertainment industry. Attorney General John Ashcroft is certainly no friend of adult media, and already has blamed recent school shootings on violence in the media.

Gone are the days when adult videos were sold out of the back of a van, wrapped in brown paper packages. Now even Yahoo! has gotten into the act. Yahoo! is the first Internet giant to jump into the online erotica market. This decision illustrates the desperation facing many mainstream Internet companies seeking new sources of advertising dollars in the slowing economy. While many online ventures have gone bust, including recently Kazoo.com, adult Websites have continued to flourish. Some analysts believe that entering into this market will hurt Yahoo’s business reputation; long term. But there is no denying the old adage: Sex sells.

At the same time, the FCC recently issued new “indecency guidelines” attempting to tighten up the rules on what will be tolerated over the airwaves by the new Administration. “Understandably, the public is outraged by the increasingly coarse content aired on radio and television at all hours of the day, including times when children are most likely to be listening or watching,” said FCC Commissioner Suzan Ness, who further referred to today’s media as “an onslaught of on-air smut.” The new factors that the FCC will consider when processing indecency complaints is the explicitness and graphic nature of the broadcast, the extent to which sexual innuendo is repeated and the extent to which the broadcast panders, titillates or possesses intentional shock value. Whether these new guidelines are constitutional, or not, is another matter.

One thing is clear: the government does not want the execution of Tim McVeigh broadcast over the World Wide Web. The Feds will broadcast the death over closed circuit television to a select audience of victims. Recently however, Entertainment Network, Inc., which operates VoyeurDorm.com and DudeDorm.com, filed suit in the U.S. District Court, for the Southern District of Indiana, trying to obtain permission to show the execution live over the Internet. The company argued that it had a constitutional right to place a Web cam in the execution chamber in the federal pen, which is located in Indiana. Perhaps Justice officials believe that the execution would be “indecent.”

Elsewhere, government officials empanelled by Congress, will be taking a tour of the country to receive open testimony regarding Internet porn. The National Research Counsel will be holding public hearings in Austin, Kansas City, Salt Lake City, Miami and San Diego to discuss approaches to protecting children from pornography and other “inappropriate” Internet content. The Committee will make recommendations to Congress regarding anti-porn legislation. This is your chance to be heard.

In the latest ruling on the “linking” issue, a court in India ordered a number of business leaders from www.Rediff.com to stand trial for “giving access to pornographic material.” This is the latest in a growing number of cases worldwide where Websites are being held responsible for content found on linked sites. Rediff.com is a portal that allows users to conduct essentially free-form searches. Although this portal does not create directory listings of adult materials, users can locate such content using its search engine. Rulings such as this- and others in both the United States and elsewhere- are resulting in increasing concern amongst Adult Webmasters. It’s one thing to be held responsible for content on a Website; but it’s quite another to be prosecuted for content found on only one of many links.

Local governments cannot turn a blind eye to the fact that adult entertainment does not cause increases in crime and decreases in property values. At least that’s what a federal court of appeals held in the recent case, Flanigan’s Enterprises, Inc. of Georgia v. Fulton County, Georgia, 2001 WL 166375 (11^th Cir. 2001). For many years, First Amendment lawyers have battled the so-called “Secondary Effects Doctrine,” by virtue of which cities and counties regulate topless bars and adult bookstores They presume that such establishments cause sufficient problems to justify their intense regulation, pretending that adult entertainment is essentially the root of all evil in the community, but without any real empirical proof. Many courts even allowed local governments to ignore contrary evidence showing that property values increased in areas surrounding adult entertainment, or that patrons were better behaved in topless bars than in the local corner pub. This problem came to an end with the Flanigan’s decision, where the court ruled that Fulton County must consider the results of its own study of adult entertainment when enacting such restrictive laws.

Looming over all of this is another case, Alameda Books v. City of Los Angeles, that stands to decide just how much proof is needed to support adoption of regulations affecting expressive adult businesses. In that case, which will be argued by our firm’s senior partner, John Weston, the United States Supreme Court will address the fate of the Secondary Effects Doctrine. The Justices may clarify this issue, once and for all, for First Amendment practitioners. Arguments before the High Court are expected to occur in October or November, 2001.

On a lighter note, Las Vegas police recently told lawmakers that they could not prosecute a stagehand who secretly videotaped showgirls in various states of undress in a casino dressing room. In Las Vegas, there is no law against secretly photographing people for sexual gratification. Apparently, the stagehand had videotaped showgirls through a camera he had placed in a box in their dressing room. States and locales across America have been busily enacting anti-voyeurism laws which, for the first time, criminalize acts of videotaping individuals against their will. Could it be that Las Vegas is behind the times?

Local government has set its sights on another “Voyeur House.” The City of Tarpon Springs, near St. Petersburg, Florida, has scheduled a hearing to determine whether the voyeur house depicted at www.ucanwatch.com violates the City’s prohibitions on adult use businesses. Adult Webmasters are closely watching this case, as it may strongly impact the fate of thousands of such voyeur houses across the country that typically do not obtain adult use permits prior to going live on the World Wide Web. If my instincts are right, the site may soon be called: ucan’twatch.com.

Lawrence G. Walters, Esquire, formerly of Wasserman & Walters, is a partner with the law firm of Weston, Garrou & DeWitt, based in Los Angeles. Mr. Walters continues to practice in Central Florida, and represents clients involved in all aspects of adult media. Weston, Garrou & DeWitt 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 or www.FreeSpeechLaw.com

April 2001 Update

Posted by admin on April 1, 2001

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

FreeSpeechLaw.com

First Amendment attorneys may be watching a bunch of adult films in the upcoming months. Several of the larger adult video companies are hoping to make sure that their products are defensible against obscenity prosecutions by having their lawyers review all movies before distribution. “We do our own editing. Then we send them to our First Amendment attorneys,” says the president of Vivid Entertainment Group, according to AVN Online. “The legal time alone is expensive as you can imagine” he added. This may be money well spent, however, given the dramatic change in the political climate surrounding the adult entertainment industry. Attorney General John Ashcroft is certainly no friend of adult media, and already has blamed recent school shootings on violence in the media.

Local governments cannot turn a blind eye to the fact that adult entertainment does not cause increases in crime and decreases in property values. At least that’s what a federal court of appeals held in the recent case, Flanigan’s Enterprises, Inc. of Georgia v. Fulton County, Georgia, 2001 WL 166375 (11th Cir. 2001). For many years, First Amendment lawyers have battled the so-called “Secondary Effects Doctrine,” by virtue of which cities and counties regulate topless bars and adult bookstores They presume that such establishments cause sufficient problems to justify their intense regulation, pretending that adult entertainment is essentially the root of all evil in the community, but without any real empirical proof. Many courts even allowed local governments to ignore contrary evidence showing that property values increased in areas surrounding adult entertainment, or that patrons were better behaved in topless bars than in the local corner pub. This problem came to an end with the Flanigan’s decision, where the court ruled that Fulton County must consider the results of its own study of adult entertainment when enacting such restrictive laws.

Looming over all of this is another case, Alameda Books v. City of Los Angeles, that stands to decide just how much proof is needed to support adoption of regulations affecting expressive adult businesses. In that case, which will be argued by our firm’s senior partner, John Weston, the United States Supreme Court will address the fate of the Secondary Effects Doctrine. The Justices may clarify this issue, once and for all, for First Amendment practitioners. Arguments before the High Court are expected to occur in October or November, 2001.

February 2001 Update

Posted by admin on February 1, 2001

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

FreeSpeechLaw.com

The first anti-pornography crusaders are crawling out of their caves, now that it’s become safe for censorship under the Bush Administration. General Ashcroft sailed through his confirmation hearings without a single question about the adult entertainment industry, or his position on pornography and obscenity prosecutions. Inside sources say that the Justice Department is “cleaning its guns” in preparation for an attack on the industry.

Utah has appointed its first full time anti-porn warrior; Paula Houston. Her official title is the “Obscenity and Pornography Complaints Ombudsman.” During her introduction, Utah Attorney General Mark Shurtlerff said: “There’s absolutely no redeeming value to pornography…and I, for one, will not allow pornographers to hide behind the First Amendment.” Her first task will be to draft a comprehensive state “Moral Nuisance Law” designed to discourage obscenity and pornography.

In fact, it looks like the first round of arrests has already occurred. On March 3, 2001, the owner of a Salt Lake City magazine shop was charged with 51 felonies for selling pornographic videos to an undercover officer. Undercover officers went into the store, Bob’s Magazine and Video, and purchased over a hundred videos that were seized when the police executed a search warrant at the store on February 18. Prosecutors are looking for over two million dollars in fines against the owner.

For the first time, an Internet Service Provider has been found guilty of a child pornography offense. A Buffalo area ISP, named BuffNet, plead guilty, before the State Supreme Court in New York, of providing access to child pornography. It faces a five thousand ($5000.00) dollar fine at sentencing. An investigation determined that BuffNet failed to take any action after it was notified that one of its newsgroups was distributing child pornography. This case sets an interesting precedent when it comes to ISP liability for content found on its servers. Under the Communications Decency Act of 1996, ISPs have immunity from prosecution for many types of communications, but not for child pornography or obscenity. If ISPs are to be charged with the responsibility of making sure no illegal images exist on their servers, many ISPs will simply get out of the business. Given the sheer volume of communications that pass through a typical ISP, it would be nearly impossible to police content on a daily basis. So far, we have received no reports of an ISP being held liable for obscene materials, but time will tell.

“Sex” still remains the number one Internet search term despite the government’s attempt to impose a new morality. In a study involving some 9.1 million users, “sex” was the most popular search word, it being submitted one out of every three hundred terms. “Porn” along with “pornography” was the fourth most popular term, with “nude” “xxx” and “playboy,” also in the top ten.

Recently, the Federal Trade Commission stepped up their crusade against “dialers;” adult Internet sites providing access to their content using telephone bills instead of credit cards. Since the initiation of their campaign in October, 2000, most dialers have been chased off the Internet. For now: no credit card; no porn.

Yet another Internet censorship law has drawn the attention of the ACLU, who recently sued Vermont over its Internet child porn restrictions. The ACLU joined with the American Booksellers Association, and others, in filing suit in the United States District Court on February 7, 2001. According to the ACLU, the challenged legislation is a “broad censorship law that imposes severe content-based restrictions based on the availability, display and dissemination of constitutionally-protected speech.” Essentially, the law gives the State of Vermont jurisdiction in fifty states to prosecute people anywhere that material has been accessed which is offensive to minors. The Senate Judiciary Committee originally removed the child pornography ban because of concerns over constitutional free speech, however the House lawmakers ultimately reinstated the ban in the version of the law that passed. We will keep you posted on developments in this litigation.

In another Internet porn case, The First District Court of Appeal in California recently held that libraries can not be held liable for minors who get access to obscene images posted on the Net by third parties. The case of Kathleen R. v. City of Livermore, stemmed from a 12 year old boy’s use of his local library’s computer to download hardcore pornography to a disk. When his relatives later discovered the material, his family sued the library. Ultimately the Court concluded that simply providing minors access to the Internet does not affirmatively place them in danger, and therefore dismissed the suit.

Another large-scale obscenity prosecution has come down; this time in South Bend, Indiana. Several retail video stores were hit with incitements from the Grand Jury in early February, 2001. One of the stores, Pleasureland, faces four felony counts of racketeering, money laundering, conspiracy, and fifteen misdemeanor counts of pandering obscenity. Similar charges were brought against Little Denmark, and its owner Robert Henderson. All charges stem from sale or rental of adult videotapes. The Grand Jury returned indictments, but of course only heard the prosecutor’s version of the arguments. Recently, at least one First Amendment lawyer has sprung into action and is representing one of the video stores charged. This case promises to turn into a Free Speech versus morality debate that may set the tone for obscenity prosecutions in the new millennium. In the words of one of the Defendants, Ed Ballanow: “You’re not guilty until you go to court.”

One final note; it looks like the U.S. Supreme Court is about to tackle the issue of adult entertainment once again. On March 5, 2001, the Court announced that it would review the Ninth Circuit Court of Appeals’ decision in Alameda Books, Inc. v. City of Los Angeles, which invalidated an adult use ordinance which prohibited business that both sold adult products and contained facilities for viewing of adult movies or videos. Randy Garrou, Esq., of our firm represented the Plaintiffs in that case, and is now preparing to brief these issues in the United States Supreme Court. John Weston, Esq., will argue the case before the Justices, his Seventh argument before the U.S. Supreme Court on issues of censorship of erotica. We will keep you posted on the status of this important litigation.

Lawrence G. Walters, Esquire, formerly of Wasserman & Walters, is now a partner with Weston, Garrou & DeWitt, based in Los Angeles. Mr. Walters continues to practice in Central Florida, and represents clients involved in all aspects of adult media. Weston, Garrou & DeWitt 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 or www.FreeSpeechLaw.com

December 2000: Legal Beat

Posted by admin on December 1, 2000

LEGAL BEAT

By: Lawrence G. Walters

www.firstamendment.com

Vulgar website names are not protected by the First Amendment. At least that’s what U.S. District Court Judge Steven McAuliffe ruled in an adult website case recently. The case questioned whether Network Solutions could legally refuse to register names which it deemed “profane” or “vulgar.” The court ruled that domain names are more akin to signposts, and have little or no communicative value to justify First Amendment protections. This is a dangerous precedent for the Internet, which depends on Free Speech protections for its survival. This ruling may also prove problematic for companies attempting to protect intellectual property associated with their domain names like trademarks or tradenames.

Meanwhile, the battle raged over who has rights to the sex.com domain name. In the lawsuit filed in federal court, Gary Kremen alleges that his cyberspace nemesis, Steph Cohen, unlawfully deprived him of the legal rights to the valuable URL by committing fraud. The Web portal tied to the name generates tens of millions of dollars by directing online users to adult material, and has become somewhat of a “Yellow Pages” for the adult industry. Kremen’s lawyers are attempting to freeze $25 million in sex.com related assets to make sure Cohen doesn’t hide his money in offshore accounts in the event judgment is entered against him. This case also raises thorny legal issues regarding how intellectual property laws are to be applied to domain names like sex.com. Earlier, the judge assigned to the case dismissed Network Solutions as a defendant, ruling that traditional property rights do not apply to a domain name since it is not considered tangible property. This case could have far-reaching implications to any owner of a domain name.

The U.S. Supreme Court, in the middle of sorting out the election mess, took time to hear arguments on a landmark Free Speech case involving an adult bookstore in Wisconsin. The City News And Novelty, Inc. v. City of Waukesha case will decide whether adult businesses are entitled to the protection of “procedural safeguards” when applying for licenses to operate from local governments. At issue is whether the City of Waukesha was required to allow the bookstore to remain in business while the courts considered legal challenges to the license renewal procedure. These procedural safeguards have been the subject of significant litigation by First Amendment lawyers on behalf of the adult entertainment industry. In 1990, the U.S. Supreme Court decided, in the case of FW/PBS v. City of Dallas, that local governments must issue a decision on license applications by adult businesses within a specified, brief time period, and must provide for prompt judicial review of a license denial. Without these safeguards, cities and counties could tie up a decision in the administrative review process indefinitely, and keep the business closed while the courts considered the challenge to the process. Most businesses would give up the fight if prohibited from opening during this process. This produced censorship by delay. First Amendment lawyers are watching the City News case very closely to see if the current Court reaffirms or takes away these important Free Speech protections.

The couple who provided links to websites containing child pornography has been found guilty of promoting child porn in federal court. After deliberating for 6 1/2 hours, the federal jury convicted Thomas Reedy on 89 counts of distributing child porn and sexual exploitation of minors. His wife, Janice Reedy, was only convicted on 87 counts. While not directly providing any images themselves, the Reedys were accused of giving subscribers access and passwords to other Internet sites displaying child pornography. Those sites were maintained by foreign webmasters. The prosecutors hope to put other similar Internet companies on notice. “I hope this verdict might scare other companies into stopping what they’re doing,” said Assistant U.S. Attorney Terri Moore. The Reedys’ lawyer defended on the grounds that his clients should not be responsible for material provided by other webmasters. Now he’ll have to make that argument on appeal, and his clients are looking at a long prison term. This case may provide precedent in cases where the government tries to hold webmasters accountable for information found on linked websites. As our firm has warned from the beginning: Watch your links!

Two brief updates on the obscenity front: The Ohio obscenity statute was held constitutional by the Twelfth District Court of Appeals, in a challenge by Millville Video, Inc. The case involved two videos, declared obscene, even though neither video depicted sexual intercourse, fellatio or cunnilingus. The court concluded that “sadomasochism, sexual bondage and sexual discipline” fell under the Miller test’s definition of “sexual contact.” Relatedly, the owner of another Ohio video store, the Video Barn in Union Township, pled guilty to a misdemeanor count of attempted pandering of obscenity. As a term of the plea, the store can no longer advertise the words “adult” and “X-Rated.” Ohio still appears to be a hotbed of obscenity prosecutions. However, with the Bush team getting ready to take the helm, we predict widespread use of the obscenity laws on a federal level, as a crack down on the explosive growth of the adult industry under the Clinton administration.

Good news from Malaysia: That government will not censor the Internet. “The freedom of the net is assured,” said Deputy Energy, Communications and Multimedia Minister Datuk Tan Chai Ho. Sex sites topped the list of favorites among Malaysian surfers, according to a report from www.catcha.com. Now, if only the freest nation in the world would follow suit.

Lawrence G. Walters, Esquire, is a partner in the law firm of Wasserman & Walters in Winter Park, Florida. His practice concentrates in First Amendment and Internet law. He represents clients involved in all aspects of adult media. All statements made in the above article are expressions of opinion only, and should not be considered specific legal advice. You should always consult your own lawyer regarding any legal issue. You can access the firm’s web site at: www.firstamendment.com

November 2000 Update

Posted by admin on November 1, 2000

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

www.FirstAmendment.com

By this time, I would have predicted that the adult entertainment industry would either be rejoicing in a Gore victory, or cringing in fear in anticipation of a Bush administration. Instead, the industry, along with the rest of the country, is on pins and needles awaiting the outcome of several recounts and lawsuits challenging the electoral process. Time will tell whether the new millennium will be ushered in under a reign of censorship or freedom.

In the meantime, there is big news out of the State of Florida: The renowned Voyeur Dorm has been ordered to shut down by a federal Judge in Tampa. The Voyeur Dorm Website offered 24 hour viewing of five unrelated women “in the most intimate acts of youthful indiscretion.” The Judge determined that the house in which the women lived was an “adult use” within the meaning of Tampa’s Adult Entertainment Code. The Court also found that this Code was constitutional as applied to the Internet. The Court rejected arguments made by Voyeur Dorm that these local Adult Entertainment Codes should be looked at differently when applied to businesses that are available only on the World Wide Web. The Voyeur Dorm house created no parking problems, traffic problems, prostitution, drugs, or other so-called “adverse secondary effects” typically associated with adult businesses. The Court rejected all of Voyeur Dorm’s arguments in their totality, and upheld Tampa’s adult entertainment ordinance as applied to Voyeur Dorm. Voyeur Dorm was also ordered to shut down its adult entertainment operations. This case will likely have significant impact on other “voyeur houses” scattered throughout the United States and elsewhere. If these houses can be required to become licensed and zoned as adult businesses, simply by virtue of the fact that Websites provide 24-hour observation of the residents, very few of these houses will continue to exist. By definition, most houses are located in a residential zone. Adult entertainment licenses are not issued for businesses within residential zones. Local governments will now probably attempt to model their legislation after the City of Tampa’s which has now been upheld. It is likely that this case will be appealed to the 11^th Circuit Court of Appeals in Atlanta, where the Voyeur Dorm will ask for a reversal of the judgment based on the constitutional issues raised. I will continue to keep you posted on this groundbreaking case.

The 4^th Circuit Court of Appeal recently upheld the Child Pornography Prevention Act of 1996, which had been declared unconstitutional by the 9^th Circuit Court of Appeal, but which had been upheld by other Circuits. This law punishes, as child pornography, computer images that do not involve the use of real children in their production or dissemination. It also punishes images of individuals who “appear to be” under the age of 18, even if the model is an adult. It is likely that these cases will be appealed to the United States Supreme Court to resolve a conflict in the various circuits.

On the obscenity front, we can strike up one win and one loss for the First Amendment. In Nebraska, John Halton, owner of Dr. John’s Novelty and Boutique was found guilty of selling obscene videos. He was sentenced to nine months in jail and required to pay a $1,000.00 fine. The prosecutor also petitioned to close down his adult video store on the basis that it constituted a nuisance. However, in St. Charles County, the owner of Family Video was prosecuted for selling obscene videotapes, but was acquitted. His defense counsel argued that removing the videotapes from the shelves would limit the choice and freedom of normal people wanting to “add spice” to their relationship. The defense expert said that the movies help people who may feel intimidated in the bedroom. The prosecutor argued that residents were entitled to decide what they want in their neighborhood, and that this material attracts the “wrong” kind of people. Apparently, the jury disagreed.

In a disappointing decision, the Louisiana Supreme Court upheld its ancient sodomy law prohibiting the “solicitation by a human being of another with the intent to engage in any unnatural carnal copulation…” The Louisiana Court found that the constitution does not prohibit states from enacting laws that prohibit private acts of consensual sodomy between adults. Only in Louisiana!

On the Internet front, the 3^rd Circuit Court of Appeals denied rehearing in the Child Online Protection Act (COPA). In that case, the Appeals Court affirmed a Preliminary Injunction against the enforcement of the Act which prohibited the transmission of material which is considered to be harmful to minors over the Internet. The Court recognized that the concept of local community standards as applied to the Internet is unworkable since Internet sites cannot be blocked from specific geographic locations. The government can now file a petition for review in the Supreme Court or prepare for trial on the merits in the District Court. In a stray decision, the 1^st Appellate District Court of California affirmed convictions for attempting to distribute lewd material to a minor over the Internet. This decision goes against every other reported case holding such laws to be unconstitutional either in violation of the First Amendment, or the Commerce Clause, or both. Finally, the 4^th Circuit Court of Appeals recently upheld Virginia’s prohibition against state employees’ access to sexually explicit material on government computers. The Appeals Court held that the statute only limited the speech of employees in their capacity as State employees, which the Court believed was acceptable.

These cases demonstrate the continued erosion of First Amendment rights whenever the free expression involves the issue of sex. For some time, the courts were hesitant to allow any censorship of speech over the Internet. However, we are starting to see the first wave of decisions upholding laws applicable to the Internet. This may be a dangerous trend, and stifle the greatest marketplace of ideas ever created. These issues will be dealt with by one of two administrations in the next four years. Which administration remains the crucial question.

October 2000 Update

Posted by admin on October 1, 2000

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters

www.FirstAmendment.com

The federal government is ready to take on the porn industry. The storm clouds are gathering on both the regulatory front as well as in the Legislature. Election time has arrived.

It was predictable that online porn would become somewhat of an election issue from the beginning. Even Al Gore, who is generally seen as the better candidate for the adult industry, has pledged to fight pornography on the Internet.

Recently, however, the issue of on-line porn has gotten more attention in light of the creation of the Commission on Child Online Protection, which was established to investigate options in regard to Internet pornography. While the Commission unanimously endorsed a largely hands-off approach to the Internet, it did call for increased enforcement of deceptive or unfair practices laws to punish Webmasters for enticing children to view obscene material, and contended the practices of “mouse trapping” and deceptive meta tagging. D. McCullagh, “Porn Panel: Nix ‘Mouse-trapping’” Wired News, October 6, 2000.

Shortly after the porn panel made its recommendations, the Federal Trade Commission took severe administrative action against Verity International, an online porn company located on the Island of Starke, in the English Channel, for allegedly billing more than 110 thousand United States consumers for hundreds of dollars each in false long distance charges incurred for dialing adult websites. The company offered a seemingly attractive alternative to credit card billing for adult websites by allowing the customer to have the charges placed on their long distance telephone bill. The FTC Complaint claims that Verity lured customers into obtaining their services by telling the users they were being charged $3.99 a minute for a call to an adult entertainment site in Madagascar, when the call actually was routed through London at a higher rate. The FTC estimates roughly 25 million dollars is in question in this case. That figure underscores the tremendous growth and popularity of adult Internet sites in recent times. The FTC Complaint also alleges that a subsidiary of Verity, a company called Crescent Communications, inappropriately billed users’ credit card numbers, which they were asked to provide only for age verification. Those charges allegedly added up to $188 million from 1997 to 1999. We can expect to see more and more aggressive action on behalf of federal agencies against online porn companies as election time draws nearer. Should the Republican administration take over, the morality groups will likely push the newly-appointed Attorney General into significant prosecution of adult webmasters based on the content of their sites.

Already, a Bill has been introduced into the House seeking five million dollars for the prosecution of obscenity cases at the federal level. Another Bill has been introduced by Congressman Duncan Hunter (R-Calif), HR 5045, which would allow a minor who alleges to have been “harmed” from the exposure to legal adult materials, to demand money damages from the producers or distributors of that material. This Bill, introduced in July, was quickly referred to the House Judiciary Committee and sent to the Subcommittee on Courts and Intellectual Property. Apparently, the thinking is: If fear of going to jail won’t force online porn distributors to run for cover, perhaps fear of frivolous lawsuits will. Our firm is closely monitoring the progress of this and other anti-porn bills through the legislative process. Internet porn is an easy political target, and one which candidates can use as a scapegoat to get votes in this extremely close election.

In other developments, the Internet Corporation for Assigned Names and Numbers (ICANN) accepted forty-seven proposals for new top-level domain name suffixes in a bidding process that ended October 2, 2000. It is expected that several new suffixes will soon become available such as .kids, .sex, .xxx, .info, .site, .web and .pro. Internet registration companies paid a non-refundable $50,000.00 application fee to submit their proposed suffix. ICANN is expected to announce the list of new suffixes by November 20, 2000. This would be the first major growth in top-level domain suffixes in more than a decade. Advocates on both sides of the censorship issue have called for clustering or grouping of adult entertainment sites into a cyber-Red Light zone, with a .sex or .xxx domain. Civil libertarians have largely criticized that proposal as the “ghettoizing” of erotic speech online. The Commission on Child Online Protection rejected such a proposal, instead calling for more “public education” and “responsible adult empowerment.”

On the adult nightclub scene, two clubs obtained at least partial victories in the courts this month. The first came out of the State of West Virginia which has a Statewide adult entertainment law, unlike most other states which regulate adult entertainment at the local level. This state law was ruled unconstitutional by the United States District Court. The judge found that the law targeted conduct protected under the First Amendment and was unconstitutionally vague. Of particular concern was the requirement that an applicant for an adult dance club license be of “good moral character.” Nobody really knows what that means, thus allowing state officials to deny adult entertainment licenses on an ad hoc basis. The second case came out of the City of Cumberland, Wisconsin, where City officials obtained substantial help from anti-sex religious groups including the National Family Legal Foundation to assist them in putting adult entertainment out of business in Cumberland. The City largely copied the NFLF’s model ordinance that it circulates throughout the country, and passed a restrictive anti-adult entertainment law even prohibiting “sensual erotic movements” by dancers. Although the Court upheld part of the law, it declared the prohibition on erotic movements unconstitutional, noting: “The dominant theme of nude dance is an emotional one; it is one of eroticism and sensuality…The dancer may use non-sexually explicit elements and semi-nudity to convey a certain degree of sensuality, but putting taste aside, more explicit and erotic content is commonly available on prime time television without being fairly regarded as adult entertainment”

Although these two victories for the First Amendment should be celebrated, such victories these days are few and far between, given the conservative nature of most federal judges in the U.S. However, as the restrictions on adult entertainment become more and more severe the courts will (hopefully) be left with no choice but to declare these laws unconstitutional. Our firm will continue to do its part by monitoring these decisions and providing regular updates. We may even win a few cases for good measure.

Category: Adult Industry Update