ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

Visa Clamps Down

The most shocking news this month came from the private sector in the form of dramatic new regulations for those webmasters using third party payment processors, such as iBill, CC Bill and Epoch. Each Webmaster will now be required to pay an initial registration fee of $750 and thereafter an annual fee of $375 to become a “sponsored merchant.”¹ Moreover, the processors must now maintain records, by IP address, of each sponsored merchant’s chargeback ratios. This information can be reviewed by Visa, and used to terminate the sponsored merchant’s account, at Visa’s discretion. Most significant for the foreign Webmasters, is the new requirement that each company using a third party processor (now called an IPSP) must have a “presence” in the country where the processor is doing business. According to one source, a “presence” means the existence of staff employees in the host country. Given the large number of foreign webmasters processing memberships through United States billing companies, such as those listed above, this new “presence” requirement will likely cause a significant shake-out in the industry, with the smaller players seeking refuge under new business arrangements with domestic webmasters. Other webmasters will establish United States offices or corporations in attempted compliance. Speculation abounds as to the underlying rationale for these sudden policy changes. Rumors ranged the gamut from clandestine cooperation between Visa and the government to simple gouging of a presumptively profitable industry. Regardless of the actual reason for these changes, the small amateur market will be particularly hard hit by the annual fees and individual charge back analysis. More discussions and clarifications concerning this issue are inevitable in the coming weeks.

Election Time

As election time nears, the adult industry braces for its regular political onslaught, given its unenviable position as a favorite target of social conservatives. A video store in Oxford, Alabama may be one of the first victims in this election season’s political witch-hunt. Deputies seized over 5,000 VHS tapes and more than 900 DVD movies from Perfect Touch & Lingerie early this month.² Nobody was arrested in the raid, and the merchandise was seized based on the District Attorney’s “opinion” that it was obscene.³ Perhaps the store owner’s mistake was that he placed a political sign in his front yard supporting the challenger in the local Sheriff’s race. The store was raided by the current Sheriff eight days later.⁴ The store had been in operation for over 2 ½ years, and is the largest adult store in Alabama.⁵ Investigators claimed that material crossed the line into obscene pornography since it showed actual sexual intercourse. Using that standard, just about every adult video could qualify as obscene in Oxford, Alabama.

Another video store owner accuses the Metropolitan Bureau of Investigation in Orlando, Florida, of waging a dirty political war against his operation.⁶ Undercover law enforcement agents have been sent into the store to purchase various adult video titles from Video Exposé, and have made a total of ten arrests at the store, charging clerks and managers with selling adult material without a license. While law enforcement officials claim that he simply needs to get a license, the owner says that the City will not issue one to him. Every time he attempts to comply with City ordinances, they change the laws on him, the owner said in a recent interview.⁷ The store’s attorney believes that the arrests are in retaliation for a legal challenge made to the County’s Adult Bookstore Ordinance, which was settled under terms allowing him to remain open with several changes to the store.⁸ The harassment has forced the owner to consider selling his store.⁹

More Problems For WorldCom

The Pennsylvania Attorney General, not to be outdone by the Michigan Attorney General, obtained a court order from a Pennsylvania judge instructing WorldCom to block access to five Websites containing purported child pornography.¹⁰ One of the sites was hosted by Spain’s largest Internet portal, and a divisions of Terra Lycos.¹¹ The judge relied on a recently enacted Pennsylvania law that requires ISPs to block any Website containing child pornography within five business days after being notified by the Attorney General.¹² Criminal sanctions are available against ISPs who fail to comply.¹³ For its part, WorldCom expressed concern over the breadth of the decision.¹⁴ Not coincidentally, both the Michigan and Pennsylvania Attorney Generals are running for Governor.

Web Escort Service Update

In another politically charged prosecution, Central Florida law enforcement officials are turning up the heat on Websites advertising escort services. The Metropolitan Bureau of Investigation, (MBI), in a desperate attempt to justify their existence (and budget) have initiated prosecutions against several Florida-based escort Websites – some even outside their Orlando-area jurisdiction. Shortly after the raid and arrest of the Website’s operators, a judge ordered the Website closed.¹⁵ The operators refused to shut down however, and are challenging the order in court.¹⁶ “They’ve just thumbed their nose at it [the court order], commented an assistant to the Florida Attorney General.” The operators have argued that mere discussion and information regarding escort services on a Website constitutes protected speech. Therefore, any court order forcing a shutdown of the Website constitutes a prior restraint in violation of the First Amendment.¹⁷ Should the Florida Attorney General be successful in this case, the decision would set a disturbing precedent potentially authorizing the forced closure of any Website operated by an individual who happens to be involved in criminal activity. Further updates on this one will be sure to follow.

Politically Motivated?

These recent actions by various Attorney Generals have even caused the mainstream press to question whether state politicians are going public with their campaigns against online erotica, to coincide perfectly with election time.¹⁸ Similar actions were seen four years ago when, exactly one week before election day, the New York State Attorney General’s Office raided an ISP in Buffalo, New York, confiscating its news server.¹⁹ The ISP, BuffNet, was charged with providing access to newsgroups where child pornography could be found. Unfortunately for that Attorney General, the ploy didn’t work and he lost to a Democratic challenger by a razor-thin margin.²⁰

Obscenity Report

Two more obscenity cases bit the dust this month: John Cornetta, owner of the Love Shack in Gwinnett County, Georgia, took the “godfather deal” in the obscenity case against Shane’s World 20. Charges were dropped against all employees, and the corporation plead guilty of distribution of obscene material.²¹ “The First Amendment got a little bruised, but it’s alive and well,” said Cornetta about the plea deal.²²

The other case is the closely watched trial against Max Hardcore involving Max Extreme 4: Extreme Team, Vols. 18, 19, 21 and 24 ended in a hung jury and a mistrial.²³ Hardcore could be retried, unless prosecutors decide to drop the case. Significantly, even Extreme Associates, who had been called upon for assistance in demonstrating acceptability of the material in California, stonewalled the defense, refusing to cooperate by producing business records relating to sales statistics of similar erotic material.²⁴ The defense served the company with a Subpoena Duces Tecum to produce a compilation of statistics or sales figures in California relating to the sale of comparable material to the tapes at issue. In response to the Subpoena, a representative submitted an Affidavit stating that the company had no such records.²⁵ “That’s bullshit,” said a former Extreme employee who saw the Affidavit.²⁶ This goes to show that one quickly learns who one’s friends are when faced with defending an obscenity prosecution. To its credit, Legend Video fully cooperated in the case. Of course, nobody wants to get involved with helping the current target of government persecution for fear of being next on the hit list. Fortunately for Hardcore, and the industry, this case ended in a mistrial and not a conviction.²⁷

Bumfights Busted

Last month also saw the beginning of the end of the “Bumfights” odyssey. This disturbing content, featuring actual street fight scenes, was promoted on several adult Websites. This short-lived craze died a sudden death after the arrest of the producers of the video by the La Mesa, California, Police Department. Police say that the producers convinced homeless people to fight for the camera in exchange for cash.²⁸ Police also alleged that one person broke his leg during a taping session, and that producers threatened witnesses. The producers were charged with conspiracy, solicitation of a felony crime and illegally paying people to engage in fighting.²⁹ Shortly after the bust, one of the major distributors of Bumfights pulled the content from the Net.³⁰

Hotel Campaign Goes National

As a follow up to their recent successes in eliminating adult movies from various Cincinnati-area hotels, the Citizens for Community Values met recently in Washington D.C. to urge Attorney General John Ashcroft and the Justice Department to conduct a nationwide crackdown on hotel erotica.³¹ In response, the Justice Department claimed that it is “committed to enforcing federal obscenity laws.”³² Apparently, the craze has caught on: The American Family Association of Michigan, another pro-censorship group, is attempting to convince prosecutors in that state to prosecute local hotels offering similar fare.³³

Prisoners & Privates

What do prisoners and military personnel have in common? Neither one can enjoy adult material under a court decision and new law; both effective in September, 2002. The Ninth Circuit Court of Appeals rendered its decision upholding the Military Honor and Decency Act on September 13, 2002. The court found that the Act did not violate the First Amendment and was a reasonable regulation of speech.³⁴ Just three days earlier, the California Corrections Department imposed a ban on adult materials in prisons, because of complaints from female guards that the material prompted inappropriate behavior.³⁵ This is one way to keep our military men on edge – but do we really want that for our prisoners?

Child Modeling Update

The federal child modeling prohibition is currently winding its way through the House Judiciary Committee. United States Representative Mark Foley (R-Fla.) called teen modeling Websites a “fix for pedophiles” and noted that the number of images are growing “at an unabated pace.”³⁶ The National Coalition Against Censorship (NCAC) claims that the legislation is “doomed from the start” as an unconstitutional infringement of Free Expression.³⁷ The bill would impose prison terms of up to ten years for exploitative child modeling, defined as “marketing the child himself or herself in lascivious positions and acts, rather than actually marketing products.”³⁸ Apparently those sites that also sell panties are in the clear.

Online Gaming Faces Another Battle

The online gambling industry is battling yet another demon; this time in the form of a proposed bill known as the “Internet Gambling Funding Prohibition Act,” introduced by Rep. James Leach (R-Iowa). The House of Representatives passed the bill on October 2, 2002, shortly after the General Accounting Office issued a report accusing the Internet gambling industry of involvement in money laundering.

Geo-Targeting

Geographic location equipment is soon to become a reality for Webmasters. The Online Gaming Systems company has created a product known as “Geopoint” which claims to achieve a level of data aggregation and accuracy that is unrivaled in the industry, according to its spokesperson, Lawrence Tombari.³⁹ The legal and business implications of such geo-locator products for the adult Internet industry are both significant and obvious. Webmasters may soon be able to accurately block certain communities from accessing particularly explicit or unconventional content. The widespread availability of such technology may also be a detriment to the industry, which may be called upon to implement such technology if it is available and accurate.

FTC Gears Up Against Fraud

The Federal Trade Commission has again turned its attentions to e-commerce and online fraud; this time with a global twist. The FTC recently announced an international effort to combat online fraud through initiatives with international law enforcement agencies designed to root out cross border fraud in e-commerce transactions.⁴⁰ Foreign Webmasters beware: Have your promotional material, Terms & Conditions and overall business practices reviewed American attorneys.

Conclusion

Perhaps once the political season dies down, both the industry and politicians can get back to business as usual. In these times, even that may be a scary concept.

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 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.FreeSpeechLaw.com or AOL Screen Name: “Webattorney.”

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

Michigan Throws The First Punch

The Michigan Attorney General, Jennifer M. Granholm, has appointed herself as the official “locomotive” for the slow motion train wreck predicted in last month’s Update. As most readers already know, the Attorney General issued notice letters to the industry’s largest third party billing processors, instructing these companies to immediately disable services to numerous sites that “may” contain child pornography, and further disable all “similar” Websites.¹ The billing companies reacted in a variety of ways, including immediate termination of services to the named sites, requests for further information, or no response at all.² While some Webmasters in the industry reacted with indifference or support for the Attorney General’s actions, given the universal disdain for child pornography, others realized the dangerous precedent that will be set if her actions are successful.

When this author first learned of the warning letters, he was hearkened back to the earlier days of his practice, in the 1980’s, when the State Attorney in Daytona Beach, Florida, delivered similar warning letters to the Mom & Pop video stores, demanding that various “unsuitable,” “immoral” and possibly obscene videotapes immediately be removed from the shelves; unless the owners wanted to be the target of a Grand Jury investigation. One of the tapes identified was Pink Floyd’s The Wall.

There is nothing new about this procedure: Some of the elder (and past) partners in the author’s firm have been through this battle, in various incarnations, even dating back to the Nixon Administration. It happened again in the Regan years, starring the infamous Attorney General Edwin Meese.

Throughout history, censors have been acutely aware of the efficiency of the so-called “chilling effect.”³ When protected speech is involved, the threat of prosecution can have a devastating effect on other individuals, who are not targets of the investigation. Such threats encourage self-censorship out of fear of potential prosecution in the future. Thus, government has learned that it need only threaten a small number of individuals to realize substantial, immediate results from the chilling effect. That is precisely what is going on with the Michigan Attorney General’s Office. It becomes irrelevant whether a particular billing company actually complies with the AG’s demands, since many Webmasters have already run for cover, and the third party processors likely will be much more conservative in their policies and criteria concerning client Website content. Yes, Virginia, censorship works.

However, not all targets have consistently buckled under the threat of government censorship. Over the years, many adult media freedom fighters have challenged this unconstitutional form of censorship, which threatens prosecution in the absence of any judicial determination of the legality of the content. Those challenges have not been in vain. The courts have generally taken a dim view of this type of governmental action, and have often concluded that threats of prosecution that are designed to result in self-censorship constitute an illegal prior restraint on protected speech.⁴ So, it will be interesting to see what the adult Internet industry does about the fact that the first punch has been thrown by the Michigan Attorney Genera. Will it wait to see if the next one is worse, or if more Webmasters are affected next time? Perhaps the industry will erroneously conclude that this is an isolated incident, and that none of the other 49 Attorney Generals across the country are watching and waiting in the wings.

Now is the time when the adult Internet industry must ban together and assist those unfortunate souls who happen to be in the government’s cross hairs this week. Solidarity is critical at this juncture, particularly given the fact that the Michigan Attorney General has played the child porn card, attempting the smear the targets with a despicable label, in the hopes that the industry will step aside and clear the way for unhampered intimidation.

Virtually everyone in the legitimate adult Internet industry will agree that processing memberships for sites involved in actual child pornography is unacceptable, and should be terminated. However, what should concern this industry more is the perceived ability for a state government to allege that certain Web site content is illegal, without any specific proof or judicial determination that it is, and demand that access to the material cease. In this country, speech is presumed to be protected unless and until a judicial determination to the contrary has been made. This author recommends that each and every concerned webmaster express his or her concern with the actions of the Michigan Attorney General by sending an email to her office, which can be found here: miag@michigan.gov, Further, these actions illustrate the need to join organizations such as the Internet Freedom Association the Free Speech Coalition. If a small percentage of Webmasters joined or took an active role in these organizations, the membership numbers, resources, and negotiating strength of this industry could be overwhelming.

Good News From Ohio

Although overshadowed by the news from Michigan, other events of interest to adult webmasters occurred throughout the world this month. Yet another victory was realized for First Amendment principles through a decision by District Judge Walter Herbert Rice, in Dayton, Ohio, who permanently prohibited the state government from enforcing its new Internet pornography law, designed to prohibit distribution of harmful materials to juveniles.⁵ The law prohibited communications portraying or describing sex acts, repeated use of foul language, lurid details of violence, and the glorifying of criminal activity, over the Internet and elsewhere.⁶ Like similar laws that have been struck down on First Amendment and Commerce Clause grounds, the Ohio law was broad enough to criminalize Websites that answered sexual health questions or which depicted images of indigenous women naked from the waist up, such as are commonly found in National Geographic.⁷ The Judge noted that the law’s prohibitions on extreme violence could even prohibit teaching about the Holocaust.⁸

Online Gambling Losses

The online gambling industry also took some hits this month, with the withdrawal of major payment processors such as Pay Pal, Citibank and Bank of America, along with a written opinion from the Department of Justice concluding that online gambling violates the Wire Act if United States betters are involved.⁹ Financial analysts, who once predicted that Internet gambling would become a 6.2 billion dollar annual enterprise by next year, have now reduced their prediction to 4.2 billion.¹⁰ That is less than half of what the Nevada casinos take in.¹¹

Cleaning Up Brothel Websites

Webmasters in the United States will no doubt find it amusing that houses of prostitution in Victoria, Australia, can no longer include nudity on the businesses’ Websites under regulations that took effect on September 2, 2002.¹² Oddly, such a restriction on Website content would likely be illegal in the United States, although regulations completely banning prostitution are universally upheld. Conversely, it appears that the folks down under will tolerate censorship of the Internet, but allow prostitution services to operate openly.

WalMart Erotica

This month also saw the censors crawl out of the woodwork and into the WalMart, which bore the brunt of a national campaign by The Timothy Plan, the nation’s leading mutual fund group offering funds based on moral responsibility.¹³ The Group accused WalMart of “anti-family promotion of pornography.” All of this was over WalMart’s refusal to either remove or partially cover the covers of Cosmopolitan Magazine, which the plan’s president describes as one of the most “blatantly aggressive soft core pornographic magazines in America.”¹⁴ That probably answers your question if you’re wondering whether any erotic Website would ever be acceptable to the “family values groups.”

Obscene Performance

Even comedy performances were on the censorship chopping block this month, with Steve-o (star of MTV’s Jackass), being charged with felony obscenity for misusing a staple gun on himself in ways too graphic to describe here.¹⁵ Steve-o is facing obscenity charges in the notably progressive part of the country known as Terrebonne Parish, Louisiana. His original bond was $1.12 million, until his attorney successfully convinced the court that the Comedian was not a flight risk, resulting in bond reduction to $35,000.¹⁶ Interestingly, a Terrebonne Parish Corrections Officer was disciplined for “participating” in the performance.¹⁷ Apparently the masochist fetish has not yet taken hold in Terrebonne Parish.

Mobile Erotica

Count High Point, North Carolina, out on the voyeurism fetish as well: Four men were charged with obscenity violations after a local police officer observed them watching an adult film in a large SUV.¹⁸ One of the men argued that the charges were inappropriate because the film was being shown in the privacy of their personal car and was just “a bit of getting it on.”¹⁹ They face up to six months in prison if convicted. There’s nothing like getting your erotica fix on the run.

Ashcroft On Our Side?

Webmasters who wish that Attorney General John Ashcroft would turn his attention away from adult materials and to protecting Web sites from copyright theft might be in good company.²⁰ Some 19 lawmakers from both sides of the isle asked Ashcroft to begin prosecuting “peer to peer” networks like Kaaza and Morpheus and their users, who swap digital songs, video clips and other files without permission from artists or their record labels.²¹ One can only wonder whether Ashcroft will maintain a sufficient level of commitment to the project once somebody lets the cat out of the bag that the majority of these file swaps involve erotic images or movies.

Video Games Not To Blame

One voice of reason has stood out this month amongst the clamor of censorship: The Sixth Circuit Court of Appeals issued a decision which upheld the dismissal of the $33 million lawsuit which sought to blame video game makers, a pornographic Website and a movie studio, for a deadly 1997 school shooting massacre at Heath High School.²² Judge Danny Boggs, writing for the three judge panel, summed it up in the court’s written decision: “We find that it is simply too far a leap from shooting characters on a video screen (an activity undertaken by millions) to shooting people in a classroom (an activity undertaken by a handful, at most).”²³ The suit was one of several filed against the lucrative video game industry seeking to hold interactive software developers responsible for the actions of consumers. All such suits have been uniformly rejected by the courts.

“Send Me Your SPAM”

California Attorney General, Bill Lockyer, surprised many in the online community this month by asking for SPAM email.²⁴ The request was actually a part of an investigation by the California AG’s Office into the legality of unsolicited emails. California law imposes stringent requirements upon unsolicited emails directed at California residents. For example, the subject line of each message must include the letters “ADV.” SPAM advertising for adult materials must also include the designation “ADLT.”²⁵ The adult industry is carefully watching the California AG’s actions because of the level of marketing it does using unsolicited email. Some industry leaders are concerned that California will go after the adult industry first, even though other industries such as the online gambling industry, make more frequent use of SPAM.²⁶ Currently, only sixteen states have anti-SPAM legislation. At the federal level, Congress has been toying with anti-SPAM legislation for some time now, but with no results.

Clean Up Your (Hotel) Room

Hotels buckled under pressure from family values groups by removing adult film viewing options from their entertainment packages. The Citizens for Community Values (“CCV”) helped convince Warren County, Cincinnati prosecutors pressure Cincinnati hotel chains to stop offering pay-per-view adult movies to guests.²⁷ The Marriott chain was the first to remove the option, with Comfort Inn and others quickly following suit. The decision was made after Warren County prosecutors threatened that obscenity charges could be brought against the hotel chains.²⁸ “I’m very pleased with the Marriott and their response,” said Bill Burress, the president of the CCV. “We’re ecstatic,” he added.²⁹ The ACLU of Ohio, on the other hand, referred to the group as “fundamentalist wackos,” calling the actions a “pressure tactic and anti-First Amendment.”³⁰ The CCV promises to expand its efforts, despite the criticism.³¹

Feds: Dirty Laundry Violates Federal Law

The bizarre story this moth comes from Anderson, South Carolina, where a woman has been charged with “mailing indecent and filthy substances” for selling her dirty panties to customers over the Internet.³² The common practice for amateur adult Websites can result in penalties ranging up to five years in prison and/or a $250,000 fine, according to federal law.³³ South Carolina U.S. Attorney Srom Thurman, Jr., filed the charges against the women under the rarely used federal statute. What’s next? Panty raids by the Department of Justice?

First Amendment Second To Security

Even the general public may not be as supportive of the First Amendment as they were before 9-11. A recent poll indicates that half of us think that the First Amendment goes too far and protects too much speech.³⁴ That is up from only 39% at this time last year.³⁵ This is particularly discouraging when you consider that these same people will ultimately decide the fate of any Webmaster prosecuted based on content appearing on the Website. Polls like these highlight the critical importance of educating the general public about the policies underlying First Amendment protections. While many Americans support the government’s right to fight the war on terrorism using covert information kept from the press, those same individuals react poorly when told what they can or can’t read, write or view.³⁶

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 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.FreeSpeechLaw.com or AOL Screen Name: “Webattorney.”

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

Train Wreck

As the reports begin to surface about the training session conducted for United States Attorneys, to teach them how to prosecute adult Webmasters for obscenity violations, one is reminded of the metaphoric train wreck in slow motion. We know it’s coming, but there’s nothing we can do to stop it. Well – almost nothing.

The federal obscenity law is currently the subject of a debatable, but certainly well intentioned legal challenge pending in the Southern District of New York.¹ Webmasters have finally organized a trade group, the Internet Freedom Association (“IFA”) to advocate for their interests in the political and legal processes. Also, many Webmasters have finally taken the hint and eliminated explicit material from their free tours, while having their hardcore content reviewed by First Amendment counsel. But none of these efforts are likely to derail the Department of Justice from initiating an all-out assault on the adult Website industry in the United States. Attorney General John Ashcroft has even motivated his soldiers by making outlandish claims about adult Webmasters’ ties to organized crime.²

Times like these separate the men from the boys (and the women from the girls). There is more to being an adult industry participant than generating revenue, one would hope. The adult entertainment industry has produced a long line of freedom fighters, dedicated to preserving the right to Free Expression and beating back government aggression at every turn. The free ride enjoyed by many during the last ten years has produced much complacency, but the tough times ahead will produce many heroes. If the First Amendment could speak, it would reassure those many heroes about to be born, and let them know that she will offer solace and support during times of uncertainty and persecution. Many in the adult Webmaster community will cash in their chips and seek to avoid any risk. Others will publicly challenge the government, offering to take the first hit. But most will continue their day-to-day operations, hoping to fly under radar and watch someone else go down first. It is this latter group that is at greatest risk. Change is inevitable, and the change in the political winds must result in some retooling in the adult Internet industry. Legal compliance simply must become the number one concern – even more important than the bottom line. Business debts can be paid off, written off or discharged in bankruptcy. However criminal punishment must be avoided in the first instance.

Final Warning

Take a moment to review a few practical tips for surviving in the Ashcroft era:

1. Clean up your free tours. Providing hardcore images to children in this political climate means you have a death wish.

2. Pay an attorney to review your site. Even if you retained counsel several years ago and have not made substantial changes since, the enforcement policy has changed and so has the law. Legal advice in this industry can quickly go stale. Ask your lawyer to take a second look at your content for compliance with current law.

3. Tighten up your § 2257 compliance. Remember, over ninety percent of adult Websites do not fully comply with the Records Keeping and Labeling law requirements. In fact, full compliance is extremely difficult for a Website, particularly one that purchases the rights to display images from various different content producers. Gone are the days when one can feel safe by simply listing a name or an email address of a records custodian to contact for more information about the required records. Each image must be tied separately to a records custodian, and a physical address (not a post office box) must be provided. If you act as your own records custodian, you must consult with an attorney regarding the proper manner of maintaining and cross-referencing the records you compile.

4. Treat your customers and employees right. Experience teaches that oftentimes it is not the content that catches the attention of law enforcement; it is the complaint by an unhappy customer or a disgruntled employee who feels cheated. Running a clean ship and acting with business integrity is not only the right thing to do; it’s in your best interests. If you are paying individuals to perform services, you might need an employment law checkup.

5. Pick the right spot. An adult Website can be operated from virtually anywhere in the world. Why take chances in a particularly conservative or puritanical location when you can set up shop in a more tolerant area? Check the laws of your local jurisdiction or have your attorney do so. Get a feel for the politics of your region and its history of hostility or tolerance for adult businesses. Research the court records to determine if any obscenity prosecutions have occurred within the last ten to fifteen years. And, perhaps most importantly, keep abreast of the local news. Often, an upcoming assault on the adult industry will be telegraphed in speeches, workshops, public meetings, or threats by law enforcement and local fundamentalists.

In The News

With those caveats in mind, it is time to turn to the recent happenings in the industry. Add Vermont to the list of states that have passed legislation seeking to restrict minors’ access to the Internet, only to have the law declared unconstitutional by a federal court.³ In that case, various Free Speech groups challenged a Vermont statute criminalizing the transfer of sexually explicit materials to minors. The court held that just like numerous other similar statutes, this law violated the First Amendment rights of Internet Website operators displaying or offering links to sites displaying materials that might be regulated by the statute. The government argued that it had an interest in deterring the “grooming” of minors to become participants in sexual activities later in life. While the court accepts that such may be a valid governmental interest, it held that the statute was not narrowly tailored to meet this goal. In addition, the statute had a chilling effect on the dissemination of indecent but constitutional speech to adults due to the inability to ascertain the age of Internet users.⁴

While online erotica featuring adults seems to be catching a break in the courts, the same cannot be said for operators of “teen” model sites. Law enforcement is turning up the heat against several Internet sites featuring preteen and teen models. At the same time, a Bill is pending at the federal level which would make it a criminal offense to operate such a site.⁵ At least three cases have been brought across the country against such sites: The first involves a “mom and pop” site run by an Arkansas couple that featured their twelve-year-old daughter. They have been charged with the state law felony of “engaging children in sexually explicit conduct for use in visual or print medium,” and face a maximum of ten years in prison or a $10,000 fine. Their children have been placed in protective custody pending the outcome of the trial.⁶ Earlier this year, a federal grand jury in Missouri indicted one if its residents on federal child pornography charges, based on allegations that he operated at least one preteen “model” site and enticed a minor to engage in sexually explicit conduct.⁷ The third case involves the highly publicized charges against the owner of trueteenbabes.com.⁸ The accused entered a not-guilty plea to 886 felony counts involving a state statute against sexual exploitation of children and remains in jail on a half million-dollar bond.⁹ He could face life in prison if convicted at trial which is set to begin on October 3, 2002. All of those cases involve the volatile issue of “erotic nudity,” in the absence of sexual activity. While the legal landscape surrounding this issue is unclear at best, there can be no doubt that operators of any underage model sites are at risk of prosecution under currently-existing or soon-to-be-enacted legislation. At least one case has held that erotic photography, even of fully clothed children, violated federal child pornography laws.¹⁰

On the copyright front, the Electronic Frontier Foundation, (“EFF”), recently announced that it would not seek United States Supreme Court review of the case involving 2600 magazine, wherein it argued that a prohibition on the dissemination of information about a DVD copying program violated the First Amendment.¹¹ In December 1999, eight major motion picture studios sued 2600 magazine for publishing an article containing the DeCss Computer Software allowing the DVD copying. 2600 magazine lost at both the District Court and the Second Circuit Court of Appeals which both held that the program could be used to infringe on the copyrights of major motion picture studios. Interestingly, an appellate court in California came to the opposite conclusion and held that an injunction prohibiting the dissemination of this information violated First Amendment rights. That case is currently on appeal at the California Supreme Court level. Those copyright cases raise a fascinating legal issue regarding the relationship between the court process and the First Amendment. Ordinarily, actions by private parties do not implicate First Amendment rights, since the constitution only prohibits the government from abridging Free Speech or expression. However, when a private party uses the court process to restrict otherwise protected communications, the courts are grappling with the question of whether the First Amendment is implicated or potentially violated. These cases may have significant precedential value concerning any attempt to restrict the free flow of information online. Some of these issues may be resolved in yet another suit challenging the constitutionality of the Digital Millennium Copyright Act (DMCA), filed on July 25, 2002 by the ACLU.¹² The Plaintiff in the case is Ben Edelman, who claims that the DMCA prevents him from evaluating Web filtering software. Edelman was one of the experts who testified at the court hearings in the case challenging the Child Internet Protection Act (CIPA) the federal law recently struck down that required libraries to install internet filtering devices or risk loss of federal funding.¹³ The ACLU remains hopeful that this case will produce better results than previous challenges to the DMCA.¹⁴

Adult search engines beware: The FTC has issued a warning to search engines about “paid placement ads,” where companies pay a fee determined by the search engine to have their product or name displayed at the top of the search result list. Such business model has become commonplace on the Web, but consumer groups have become fed up with the increasing use of such “paid inclusion” ads.¹⁵ The FTC sent letters to AltaVista, AOL Time Warner, Direct Hit Technologies, iWon, LookSmart, Microsoft and Terra Lycos, warning that the intermingling of non-paid Websites with paid inclusion Websites in the search database may cause consumer confusion and mislead consumers.¹⁶ Given the prevalence of such paid inclusion ads in the adult Internet industry, operators should take heed of this warning and consult with their counsel if any concern is identified.

Maybe Ashcroft is turning the heat up on adult Websites in the attempt to deflect criticism from his traditional backers over his power grab fueled by the War on Terrorism. Many religious conservatives who were instrumental in impressing President Bush to appoint Ashcroft as Attorney General, now are rumored to have become deeply dissatisfied by his actions.¹⁷ “His religious base is now quite troubled by what he’s done,” says Grover Norquist, President of the Americans for Tax Reform.¹⁸ Specifically, the groups have been complaining that Ashcroft has been overstating the evidence of terrorist threats and using such threats to extend the federal government’s power, which conservatives instinctively oppose.¹⁹ Even some city governments have refused to cooperate with Ashcroft, quietly staging revolts against the USA Patriot Act.²⁰ Over the last several months, Cambridge, North Hampton, Amherst and Leveret, Massachusetts, have all passed resolutions that called the USA Patriot Act a threat to civil rights of the residents of their communities.²¹ Those cities joined Berkley, California and Ann Arbor, Michigan in rejecting the way the Bush Administration has decided to address the War on Terror within the homeland. Portland, Oregon broke ranks with the Justice Department even before the USA Patriot Act was passed, refusing to cooperate with FBI investigations of Middle Eastern students within the city. Boulder, Colorado is considering similar resolution to those passed in Massachusetts, and Denver has already passed a resolution expressing concerns about the threat to civil liberties. Councilwoman Kathleen Mackenzie of Denver said: “We were concerned about the abridgement of Free Speech because of national security concerns.”²² “Giving up the right to dissent was to high a price to pay,” she added.²³

Perhaps adult Websites will prove to be an easier target than Muslim extremists. Then again, if history repeats itself, perhaps not.

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 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.FreeSpeechLaw.com or AOL Screen Name: “Webattorney”.

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

As reports begin to surface about the training session conducted for United States Attorneys to teach them how to prosecute adult Webmasters for obscenity violations, one is reminded of the metaphoric train wreck in slow motion. We know its coming, and there’s nothing we can do to stop it. Well – almost nothing. The federal obscenity law is the subject of an incomplete, but well-intentioned legal challenge pending in the Southern District of New York. Webmasters have finally organized a trade group, the Internet Freedom Association (“IFA”) to advocate for their interests in the political and legal processes. And many Webmasters have finally taken the hint and eliminated explicit material from their free tours while having their hardcore content reviewed by competent counsel. But none of these efforts are likely to stop the Department of Justice from initiating an all-out assault on the adult Website industry int eh United States. Attorney General John Ashcroft has motivated his soldiers by making outlandish claims about adult Webmasters’ ties to organized crime.¹

Times like these separate the men from the boys (and the women from the girls). There’s more to being an adult industry participant than generating revenue, one would hope. The adult industry has produced a long line of freedom fighters dedicated to preserving the right to Free Expression and beating back government aggression at every turn. The easy times of the last ten years have produced much complacency, however the tough times ahead will produce many heroes. If the First Amendment could speak, it would reassure those many heroes about to be born, and let them know that she will offer solace and support during times of uncertainty and repression. Many in the adult Webmaster community will cash in their chips and seek to avoid any risk. Others will publicly challenge the government, offering to take the first hit. But most will continue their day-to-day operations, hoping to fly under radar and watch someone else take the heat. It is this latter group that is at greatest risk. Change is inevitable, and the change in the political lens must result in some retooling in the adult Internet industry. Legal compliance simply must become the number one concern – even more important than the bottom line. Business debts can be paid off, written off or discharged in bankruptcy. However criminal punishment must be avoided in the first instance. Take a moment to review a few practical tips for surviving in the Ashcroft era:

1. Clean up your free tours. Providing hardcore images to children in this political climate means you have a death wish.

2. Pay an attorney to review your site. Even if you retained counsel several years ago and have not made substantial changes since, the enforcement policy has changed and so has the law. Legal advice in this industry can quickly go stale. Ask your lawyer to take a second look at your content for compliance with applicable law.

3. Tighten up your §2257 compliance.

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 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.FreeSpeechLaw.com or AOL Screen Name: “Webattorney”.

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

The House Judiciary Committee sprang into action this month by approving a bill designed to address the Supreme Court’s recent decision striking down the virtual child pornography law, Ashcroft v. Free Speech Coalition.¹ The Committee approved a bill that would outlaw computer images that were indistinguishable from actual photographs or movies.² The bill would also ban any images of prepubescent children engaged in sexual activity, whether virtual or not.³ The bill shifts the burden of proof to the defendant to show that the images in question were entirely computer-generated and not an actual depiction of actual events.⁴ Some lawmakers disagreed with the newest attempt to regulate virtual child pornography: “I think this bill is the newest in a series of attempts to do what the Supreme Court has said we repeatedly cannot do,” said New York Democrat Jerry Nadler.⁵ A similar bill was recently introduced in the Senate by Sen. Jean Carnahan, D – MO.⁶

The House Judiciary Committee also took up the controversial issue of online gambling this month. The bill, introduced by Rep. Bob Goodlatte (R-VA), is entitled the “Combating Illegal Gambling Reform and Modernization Act.” After various stalled attempts by Congress to outlaw Internet gambling by United States citizens using offshore casino Websites, it now appears that Congress is ready to act on the issue through Rep. Goodlatte’s bill. The House Judiciary Committee approved several amendments to the bill, which would expand the prohibitions to include bingo, games of chance and selling lottery tickets online. The amendments even went so far as to eliminate exceptions for charitable organizations. The bill now goes to the full House for further action. Adult Webmasters who utilize online casino affiliate programs should closely follow this legislation since it may empower the government to prohibit certain promotions such as banner ads for offshore casinos.

Score another one for the good guys! Based on First Amendment grounds, a United States District Court panel of three judges in Philadelphia struck down the Children’s Internet Protection Act (“CIPA”).⁷ This law represents the third attempt by Congress to control online erotica, all of which have suffered defeats in the courts. CIPA would have prevented public libraries from receiving federal funds for technology unless the libraries installed filtering devices to prevent access to adult materials. Filtering technology has been roundly criticized as ineffective by Free Speech advocates. The judicial panel found that significant portions of the CIPA law were “facially invalid under the First Amendment to the United States Constitution.⁸ On June 20, 2002, the Government appealed to the United States Supreme Court for review of the decision. How many defeats will it take before the government gives up on its attempts to censor the Internet?

In a throwback to the McCarthy Era, the FBI will now be allowed to investigate and conduct surveillance on innocent civilians, including their online activities. The Bureau has canned the so-called “Levy guidelines,” which were drafted in the 60s and generally prevented the FBI from spying on political and religious groups in the absence of reasonable suspicion of criminal activity. Using the War on Terrorism as a justification, however, Attorney General John Ashcroft announced that FBI Agents will now be encouraged to visit public places and conduct online surveillance of individuals and groups without any evidence of criminal activity as a “preventative measure.” Internet privacy advocates have become alarmed by the new broad surveillance powers seized by the FBI, and are concerned that cyberspying will explode to new levels.⁹ Of great concern is the so-called “Magic Lantern,” believed to be the FBI’s latest and most guarded program designed to let agents track Web browsing activity, including email and password access, without detection.¹⁰ “It allows them to bug a computer in ways that in the past they were not able to do,” said David Sobel, an analyst for the Electronic Privacy Information Center.¹¹ For the record, the FBI refuses to confirm or deny whether Magic Lantern exists.¹² However, according to Sobel: “It’s not someone’s paranoid fantasy, there is the existence of such a thing.”¹³

Escort Websites have been the target of some recent prosecutions in Florida. Officials with the Metropolitan Bureau of Investigation arrested Charles S. Kelly, of Tampa, and Steve E. Lipson, of Boca Raton on various counts of racketeering, deriving support from prostitution, and promotion prostitution. Law enforcement officials set up a fake Website to be included within the Defendants’ promotional portal. As soon as the fake site was included, it received thousands of hits, according to the Hillsborough County Sheriff’s Office.¹⁴ “The wave of the future is really to do prostitution this way,” said Assistant Statewide Prosecutor Christopher Brown. The site had over fifty thousand users, and advertised dates with porn stars for as much as $17,000 a night.¹⁵ The owner of another Central Florida-based website, www.bestadultclub.com, was also arrested on racketeering and prostitution charges earlier this month. The website advertised a long-standing gentlemen’s club in Cocoa, Florida. Based in part on information contained on the site, law enforcement officials arrested the owner along with numerous employees, and froze all the club’s assets. The owner has retained the author’s firm to assist in defending the charges and to investigate potential civil rights abuses committed during the investigation and arrest. Given the recent proliferation of escort sites, Webmasters should closely consult with their counsel regarding the legality and method of operation of any such Website.

Jerry Falwell just can’t seem to catch a break in the legal system. After the highly publicized loss to Larry Flynt and Hustler magazine in the United States Supreme Court, you would think that Falwell would have given up on the courts. However, Falwell decided to file a claim against a Website that pokes fun at him and uses his name without consent. Falwell filed the complaint with the World Intellectual Property Organization, (“WIPO”), seeking a transfer of the subject Website, www.JerryFalwell.com, based on alleged trademark and other intellectual property violations.¹⁶ The three-member panel of WIPO ruled that protections should be limited to personal names that have been commercially exploited. No such commercial exploitation of Falwell’s name occurred, and the panel rejected Falwell’s claim that he has a common law trademark on his name. For his part, Falwell plans to appeal to federal court.¹⁷

On the lighter side, it seems that adult Websites are the home page of choice for public officials in Chile. Government officials have admitted that a civil servant’s addiction to online erotica has caused all of the government’s computers to crash.¹⁸ The computer failure lasted for two days and essentially ground government operations to a halt.¹⁹ The Chilean government has now installed filtering software and the responsible government official was sacked.²⁰

Finally, it appears that another photographer has been arrested for taking pictures of young girls. Kenneth O’Brien, from Oklahoma City, a graphic designer for fourteen years, allegedly took illicit photographs of a fourteen-year-old girl.²¹ Instead of child pornography, O’Brien has been accused of distributing obscene material. And so it begins…

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 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.FreeSpeechLaw.com or AOL Screen Name: “Webattorney”.

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

So many legal developments have occurred this month, it is difficult to know where to start. No sooner did the ink dry on the Supreme Court’s decision invalidating the virtual child pornography law, than did Attorney General John Ashcroft, along with Crime Sub-committee Chairman Lamar Smith (R-Texas) propose a new bill entitled the “Child Obscenity and Pornography Prevention Act of 2002,” (COPPA) designed to close the legal “loopholes” identified by the Court’s recent decision. Justice Department officials claim that the new law is completely constitutional.

Under the new, supposedly improved bill, digitally generated images of prepubescent children would be completely banned. However, images depicting older minors still would be outlawed, although the bill creates a legal safe-harbor for photographers who can demonstrate that real children were not used to create the images. Time will tell what the Supreme Court thinks of this sequel to the CPPA. Some lawmakers have their doubts: “The Supreme Court went to great lengths to say ‘unless it’s a real minor, it’s not illegal,’” according to Representative Robert Scott (D-Virginia).¹

General Ashcroft also responded to the virtual child pornography decision by easing rules relating to initiation of federal child pornography charges. Previously, investigators and assistant prosecutors were required to obtain the approval of the local U.S. Attorney to pursue such criminal charges.² Mr. Ashcroft and the Justice Department also ordered prosecutors to examine any currently pending cases to determine whether the defendants could now be charged under obscenity statutes instead of the law struck down by the Court.³

This month also saw a 1-2-punch from the United States Supreme Court, which rendered rulings on the COPA⁴ law and decided a constitutional challenge against a local adult entertainment law in City of Los Angeles v. Alameda Books.⁵ Both cases resulted in “plurality” decisions, since a majority of the Justices could not agree on any one basis for the result. Interestingly, both cases also reversed the Appellate Courts’ decisions, and sent the cases back down to the lower courts for additional proceedings. In the COPA case, the Third Circuit Court of Appeal will now consider whether some of the other constitutional deficiencies alleged by the parties are sufficient to invalidate the law, even if application of community standards to the Internet, alone, did not justify declaring the law unconstitutional.

In the Alameda Books case, handled by the author’s firm, the High Court reversed the Ninth Circuit Court of Appeals’ ruling that an ordinance preventing multiple classifications of adult entertainment businesses from operating in the same structure was unconstitutional, since it was unsupported by sufficient evidence of “adverse secondary effects” allegedly caused by adult businesses. Although some industry leaders feared that the Supreme Court would simply uphold the ordinance, many were pleasantly surprised when the Court essentially determined that a final decision on the issue was premature, and that additional evidence relating to adverse secondary effects was necessary before any constitutional decision could be rendered. While the Court again rendered a split decision, it appears that litigants challenging local adult entertainment ordinances will have more ammunition. They now will be allowed to present their own evidence relating to the lack of negative impacts by adult businesses, and that the courts will be required to consider both that evidence, any evidence adduced by the local governments in support of their ordinances, and evidence of the extent to which the ordinance stifles speech. This is a positive development for brick-and-mortar adult businesses. This interesting decision opens up a whole new round of challenges by adult entertainment facilities against local ordinances which may not be adequately supported by competent evidence of adverse secondary effects.

Things have gone from bad to worse for James Steven Grady, whose bail has been increased from $1 million to $1.5 million after prosecutors filed additional charges of second degree sexual assault, attempted first degree sexual assault and contributing to the delinquency of a minor.⁶ Grady was initially arrested in connection with his teen modeling Web site, www.trueteenbabes.com. The new charges resulted from a new alleged victim coming forward who claimed that Grady tried to force her to perform sex acts, touched her inappropriately and provided her with alcohol.⁷ Authorities are investigating whether as many as 50 other girls were allegedly victimized by Grady as well.⁸

Cases such as Grady’s likely prompted another new Bill in Congress, called the “Child Modeling Exploitation Prevention Act,” (“CMEPA”), sponsored by Representative Mark Foley (R-Florida). The Bill seeks to ban all Web sites featuring controversial images of preteen children. “These Web sites are nothing more than a fix for pedophiles,” according to Foley.⁹ Some experts have concluded that the law would prohibit all commercial photography of children since the Bill does not verify how to distinguish between legitimate modeling and “exploitative modeling.”¹⁰

More action inside the Beltway: The House Commerce Committee was busy approving a bill that will substantially impact the adult Internet industry. The bill, entitled the “Family Privacy Protection Act of 2002,” would require Web sites containing adult material, hate speech or other material deemed “harmful to minors” to give up their .com Web addresses, and reregister in a new Cyber-Red-Light District using an adults-only Internet domain such as “.prn.” The Bill would also impose prohibitions on email or sexually oriented advertisements directed at minors without certain identifying marks and notices.¹¹ Finally, the Bill would criminalize the act of filming individuals for a “lewd and lascivious purpose” without that person’s consent. Essentially, the Bill seeks to prohibit actual voyeuristic images and content. Currently, videotaping, unlike audio surveillance, is only illegal in a small number of states.¹²

All of these new bills floating around in Congress have renewed calls for the creation of an adult webmaster trade organization to conduct, amongst other things, lobbying efforts in connection with these proposed new laws. This onslaught of new legislation may prove to be a sufficient motivator for the industry to finally organize, but time will tell. The rumblings in the industry indicate that leaders may be serious this time.

MasterCard gave the adult industry a scare when it proposed to stop third party billing transactions.¹³ The move would have potentially eliminated transactions by popular third party billing programs such as CCBill, iBill and PayPal. The change was aimed primarily at the adult and gaming industries, which have a higher occurrence of credit card fraud and identity theft.¹⁴ MasterCard later backed off on the proposed change to the collective relief of pay sites everywhere.

Celebrity Web sites were dealt a serious blow by United States Federal Court Judge Lourdes Baird, who sent shockwaves through the industry by ruling that billing companies, such as Adult Check, could be held liable for illegal content found on sites which they service.¹⁵ Judge Baird found in the recent ruling that Adult Check may have an actual partnership relationship with the sites in its program rendering them jointly liable for illegal celebrity content or copyright violations. This author has counseled Webmasters for years against the use of the term “partnership program” to describe affiliate relationships. The recent Adult Check ruling further reinforced that advice.

Poor Al Goldstein: In one month, he announced that his print newspaper was basically dead, and was later sentenced to jail for a period of sixty days as a result of his aggravated harassment conviction involving his former secretary.¹⁶ “Porn in print is finished, there is just too much product out there on video and the Internet,” Goldstein said.¹⁷ Penthouse circulation has plunged from five million copies per edition in the 1970s to just around 650,000 copies currently.¹⁸ Xavier Hollander sums it up this way: “Goldstein, Guccione and Hefner, they had fun, they made money, they caused the world to change. I think they’ve earned a rest.”¹⁹ Goldstein won’t be able to rest quite yet; he plans to appeal his sentence.

On a positive note, another adult video company has been cleared of obscenity charges. Jeff Steward, owner of JM Productions, pled “no contest” to a nothing charge of “creating a public nuisance.”²⁰ In exchange for the plea, all obscenity charges against Steward and his company were dropped, and all property seized by the government was returned. The tapes charged in this case were Liquid Gold 5 and American Bukkake 11. For his part, Steward described the City prosecutors as the “American Taliban” and claimed the police put him through “a year of hell.”²¹ One obscenity case remains pending in Los Angeles County  the charge against Max Hardcore. It does appear, however, that City prosecutors have reevaluated their position on prosecution of adult videotapes.²² The City’s enforcement policy is over 20 years old, and they have finally recognized that much has changed.

The video game industry was dealt a significant blow by District Judge J. Limbaugh, who ruled that violent video games such as Doom^TM, Mortal Kombat^TM, and Fear Effect^TM do not constitute protected speech within the meaning of the First Amendment.²³ The Judge cited previous Supreme Court precedent and held it is “possible to find some kernel of expression in almost every activity . . . but such a kernel is not sufficient to bring the activity within the protection of the First Amendment.”²⁴ Previous cases have held that video games do constitute speech for purposes of First Amendment analysis.²⁵ Judge Limbaugh’s decision involved a St. Louis County ordinance which required that minors be prohibited from playing violent video games without a parent or guardian’s consent. The law was challenged by the industry’s trade group, the Interactive Digital Software Association, who claimed that the ordinance violated the First Amendment. In a devastating decision for the video game industry, Judge Limbaugh found that the games were not sufficiently expressive to constitute speech, and that even if they were, the County had a sufficient compelling interest in regulating the content of the expression in the manner chosen. Hopefully the District Court’s decision will be appealed.

A number of employees have once again lost their jobs for activities associated with the adult Internet. For some reason, this trend continues to be generated out of the State of Arizona, where several employees have lost their jobs due to associations with adult Web sites. A Maricopa County Medical Examiner’s Office employee, April Marshall, was terminated less than a day after her government employer found out about her involvement with an adult Web site. Ms. Marshall appeared as a model on www.SweetJordan.com. County officials learned of her involvement through an anonymous tip, and took swift action by terminating Ms. Marshall shortly thereafter.²⁶ The County disputes that the adult Web site had anything to do with their sudden firing decision, but blamed the decision on the fact that Ms. Marshall failed to answer the phone quickly enough.²⁷ A number of federal government employees were also terminated for sending sexually explicit messages and other “unacceptable” content using the state email system. The Washington State Department of Labor and Industries fired six employees, and disciplined two others.²⁸

Since it is always appropriate to keep things in perspective, United States Webmasters should once again be thankful they live in a country with a First Amendment. It was recently announced that the country of Kuwait had shut down fifty Internet cafes for offering access to adult Web sites.²⁹ Adult images are strictly forbidden in Kuwait.³⁰ The government is expected to unleash a new set of regulations applicable to Internet cafes soon. Didn’t we free that country just a few years ago?

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 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.

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

The big news this month was the U.S. Supreme Court’s ruling which struck down the Virtual Child Pornography law (“CPPA”) as unconstitutionally overbroad. This is a victory for the Free Speech Coalition and for the First Amendment. The Court ruled that the law is inconsistent with the requirements of Miller v. California, which requires that materials involving adults must appeal to the prurient interest before they can be criminalized. Moreover, the CPPA provided for severe punishment if just a single scene of a movie contained a graphic depiction of prohibited sexual activity. This is inconsistent with the First Amendment, which requires that a work’s artistic merit be evaluated as a whole, and not dependent on the presence of a single scene. The Court noted that CPPA is not supported by the traditional reasons for outlawing child pornography. The CPPA prohibits speech that records no crime and creates no victim by its production. The alleged harm, future criminal acts by pedophiles, does not necessarily flow from the speech. Thus, the court held that where speech is neither obscene nor the product of sexual abuse, it has First Amendment protection. The impact of this decision will be debated for many years to come, but it clearly represents a resounding victory for First Amendment principles.

The adult Internet community was reeling as details were made available regarding the arrest of James Steven Grady on child pornography charges. Investigators claim that Grady lured underage girls to pose for sexually exploitive photo shoots, and posted the images on the Internet.¹ Grady was well-known in the adult Webmaster community, and distributed content for numerous Websites. Webmasters across the nation frantically scoured their servers for potentially illegal images as law enforcement announced that the investigation expanded from Colorado into Texas, Florida and Nevada, where Grady also allegedly maintained operations. Law enforcement claimed that the case likely involved the largest child pornography operation in state history. Investigations even popped up in this author’s hometown of Seminole County, where a female model was interviewed regarding her contacts with Grady. Some of the models stepped up and defended Grady, claiming that they were not pressured to strike sexually suggestive poses, and that all modeling was consensual.²

This law enforcement action serves as a stark reminder to the adult Internet community: “Know your content producer.” Many adult Webmasters purchase content from less than reputable producers, and simply rely on the representations of the producer that all models are over the age of 18, and that sufficient §2257 records have been compiled for all photo shoots. While lawyers commonly advise “secondary producers,” such as Webmasters, that they need not act as records custodians or physically maintain copies of executed Model Releases, failing to do so can come with a price. Without the records, Website operators can never be sure that the models depicted on their site are over legal age, and have produced valid identification. If the content producer is alleged to have created illegal images, the Webmaster has no defense other than ignorance. You may not get very far in court with the defense of: “but I thought she was 18.” Sexy photos of minors are contraband, just like illegal drugs. And, depending upon what the Supreme Court says, the same may be true for anything that appears to be child pornography, even if it is not!

The proliferation of Lolita sites and “youth erotica” on the Internet may have serious consequences for the adult Webmaster community. Child pornography has gone from a dirty, underground secret to a booming commercial business in recent times. Cases such as Grady’s do not help the adult Webmaster community’s efforts draw a distinction between constitutionally protected adult erotica, and illegal child pornography. The adult Webmaster community simply cannot afford to associate itself with youth erotica in any way, shape or form. To the extent that this industry is viewed as linked with, or participating with underage content, it will be providing fodder for the censors who attempt to equate adult entertainment with child pornography at every turn.

Signs of a waning economy can be found all over the Web these days. A recent study showed that half as many Internet surfers were looking for sexually oriented Websites in May, 2001, as compared with a similar study done four years earlier.³ Some researchers associate the decline with a changing demographic of the average Web surfer.⁴ In 1997, surfers were made up primarily of academics and young guys who knew something about computers, but now you have more average people who may not be as interested in sex and erotica.⁵ Other researchers disagree, and believe that the change may be more attributable to the fact that people looking for sexually explicit material today are more likely to go to newsgroups where material can be obtained for free, rather than use a search engine.⁶ Another possibility is that the new has simply become an integral part of mainstream commerce. One thing is for sure, online erotica has put a hurtin’ on the traditional, softcore magazine such as Penthouse and Playboy. This fact has resulted in Penthouse’s circulation falling from a peak of five million copies a month to a new low of just about 650,000. Penthouse’s publisher, General Media, is 36 million dollars in debt and may not be able to meet interest repayments of nearly 9 million dollars this year.⁷ The decline in traditional adult print sales thrills the anti-porn activists: “I’m delighted that Mr. Guccione may be going out of business,” says censorship crusader Andrea Dworkin.⁸ Activists like Dworkin should be careful what they ask for since: “The problem is that he is being replaced, quite possibly, by something that is much worse,” Dworkin added.⁹

Online financial woes have caused many Websites to litter their online presence with annoying “Pop up” ads, hawking everything from “psychic phone readings” to tiny digital cameras. Although virtually unheard of a year ago, they now appear on one third of the largest Websites.¹⁰ Adult sites have included these, along with other annoying (and possibly deceptive) advertising gimmicks for years, however. The end result of all of this is to make the World Wide Web appear something closer to a carnival midway, with barkers shouting out from behind every circus tent. Most states and the federal government have enacted deceptive and unfair trade practices legislation, that may well make many of these promotional schemes illegal. Webmasters who pay close attention to their content issues, often gloss over or ignore the legality of their advertising. In these times where more Webmasters are competing for fewer and fewer consumer dollars, legal issues relating to questionable promotional tactics should not be overlooked.

Last month we reported a stunning 5 million dollar judgment rendered against Arco Media Group, Inc. in connection with a lawsuit brought by a Southwest Texas State University student for invasion of privacy and emotional distress after her image was used to promote the “Wild Party Girls” video without her permission.¹¹ However, what the courts giveth, the courts can taketh away. This month, Judge Charles Ramsay set aside the default judgment since the Plaintiff failed to properly name the Defendant in the case, which actually goes by the name “The AccroMedia Group, Inc.”¹² As they say, easy come, easy go.

The Federal Communications Commission recently dismissed complaints registered against the Victoria’s Secret lingerie show, which aired in November, 2001.¹³ The show featured scantily-clad models wearing Victoria’s Secret lingerie during primetime, and generated complaints to the FCC. However, the Commission stated, in dismissing the complaints: “Based on the information you and other complainants have provided to us, you have not demonstrated that the sexual aspects of the material was, in context, so graphic or explicit as to be patently offensive.”¹⁴ Game Recap: Victoria’s Secret models: 1; Prudes: 0.

An important First Amendment case is winding itself through the court system in Philadelphia. It involves the United States government’s third attempt to control online erotica, which is labeled “The Children’s Internet Protection Act,” (“CIPA”). With this legislation, the government attempted to limit the public’s access to online erotica by denying funding to any public library that refused to install sufficient filtering devices designed to block access to online erotica. “Our perspective is that for all of us to govern ourselves effectively, we need access to information and it’s not up to the government to say what that information is,” said Judith Krug, Director of the Office for Intellectual Freedom at the American Library Association.¹⁵ Opponents of the law argue that enormous amounts of innocuous information is blocked by existing filtering software, and that explicit photographs can still be accessed unless accompanied by suggestive or objectionable text.¹⁶ The case is currently being considered by the Third Circuit Court of Appeals, and that decision may be handed to the United States Supreme Court.

One final case worth mentioning is a decision from the Colorado Supreme Court which recognized the right to anonymously purchase reading material, free from governmental interference.¹⁷ In this case, a search warrant was served on the Tattered Cover Bookstore demanding records of all individuals who purchased two books on drug manufacturing from the store. The trial court ordered the store to turn over the records, but the Colorado Supreme Court reversed, holding that the First Amendment and the Colorado Constitution protects the fundamental right to purchase books anonymously.¹⁸ These arguments may have significant implications for adult Webmasters who face governmental requests or court orders for subscriber or membership information.

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

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

Online voyeur houses top the legal news this month; first with the United States Supreme Court refusing to disturb the very favorable legal ruling for the Voyeur Dorm. The Voyeur Dorm solidified its legal victory by convincing the United States Supreme Court to leave its appellate court victory intact, despite desperate pleas by the City of Tampa, Florida, which pressed the High Court to take the case.¹ Last year, the Atlanta-based Eleventh Circuit Court of Appeals ruled that Tampa’s zoning laws do not apply to “virtual space” on the Internet, despite the City’s attempt to require the Voyeur Dorm to comply with the City’s adult entertainment regulations.² While the appeals court avoided the sticky constitutional issues potentially raised by the case, the ruling may cause some local governments to reconsider any attempts to regulate the Internet through imposition of local zoning restrictions.

Voyeur Dorm’s legal victories, however, did not deter a Florida homeowners association from trying to shut down a gay voyeur house in Seminole County, Florida. That dispute is currently raging in the author’s hometown of Altamonte Springs, Florida, and may set a dangerous precedent for voyeur Websites nationwide. The voyeur house at issue operated inconspicuously until a neighborhood child accidentally tossed a baseball through one of the house’s windows, exposing cameras and promotional material for the Website. County law enforcement was unable to identify any crime being committed, or any other enforcement mechanism that could be used to shut the operation down, despite repeated urgings by “concerned” neighbors. Finally, the homeowners association identified some archaic property restrictions, prohibiting the operation of a business in a residence. Using that legal argument, the homeowners association filed suit against the property owner, seeking to shut down the gay Internet voyeur site.³ Of course the homeowners association is unconcerned with the many other businesses almost certainly operating in homes throughout the subdivision. This case illustrates the increasing tension between traditional land use laws and the proliferation of home-based Internet businesses. Online businesses create none of the typical secondary effects of traditional, brick-and-mortar businesses such as traffic congestion, parking problems and urban blight. Important to note is the fact that the City of Tampa did not seize upon the argument that Voyeur Dorm was operating a business without a permit in a residential zone. That argument will now be litigated in the Seminole County case, which is certainly one to watch.

The Government’s “Protect the Children” battle cry received a boost recently, with over 50 arrests announced by the FBI in “Operation Candyman,” an online child pornography sweep involving more than 89 people in 26 states.⁴ Those arrested included two Catholic priests, a school bus driver and at least one law enforcement officer.⁵ The Government also recently announced that the child pornography sting has been widened to ten other countries, where search warrants were executed on people suspected of exchanging illegal images on the Internet.⁶ From the searches, customs agents seized 12 computers, more than 600 CDs, floppy disks and external computer drives, hundreds of videos, a digital camcorder and a book on how to seduce children. Attorney General John Ashcroft, in describing the operation stated: “A new marketplace for child pornography has opened in the dark corners of cyberspace. There will be no free rides on the Internet for those who traffic in child pornography.” The Government’s case may be falling apart, however, since several Defendants are raising the question of how it will prove that any particular individual was behind the keyboard when the illegal images were exchanged.⁷ A few weeks before the arrests, Ashcroft claimed that the mission of the Justice Department was endowed by God: “The guarding of freedom that God grants is the noble charge of the Department of Justice.”⁸ Nothing like doing the Lord’s work!

Efforts to protect children on the Internet has resulted in a Congressional Bill to set up a kid-friendly zone on the Web, free of violence, pornography or other material deemed inappropriate for children.⁹ The Bill would direct the operator of the “.us” Internet domain to set up a “.kids” subdomain for Websites targeted at children under the age of thirteen.¹⁰ The Bill was introduced by Representative Fred Upton, whose Telecommunications Subcommittee unanimously approved the Bill.¹¹ The Energy and Commerce Committee will take up the Bill by the end of March, and it may become law as soon as July, 2002. The government originally put pressure on the Internet Corporation for Assigned Names and Numbers (“ICANN”) to create a .kids top-level domain like .com and .net. However the government backed off of that plan last fall after it was informed that it could be difficult to overrule ICANN, which is not under direct government control.¹² The proposed new .kids subdomain would be overseen by the Commerce Department’s National Telecommunications and Information Administration. The content would be policed by NeuStar, Inc. to make sure that it remained free of inappropriate content.¹³ While many in the adult Internet community agree that a kid-friendly domain might be a good idea, such government-imposed content control of any domain on the Web may draw complaints of censorship.

Internet service providers have also become the focus of state and federal legislation. The State of Pennsylvania recently passed a law requiring Internet service providers to block child pornography.¹⁴ Under the new law, ISPs with customers in Pennsylvania will be legally responsible for blocking access to child pornography, with maximum penalties including prison time for repeat offenders.¹⁵ This law is believed to be the first of its kind. However, the law requires the State Attorney General’s Office to notify ISPs of what content should be blocked.¹⁶ This requirement may result in the law having somewhat limited success in accomplishing its stated goals. It is contemplated that prosecutors would, after obtaining a court order, provide the ISPs with a list of Websites and other items that must be blocked. However, child pornographers have been known to readily move to other Websites once existing sites have been identified by law enforcement.

The law carries penalties of $5,000.00 for a first offense, $20,000.00 for a second and thereafter violators are subject to fines of $30,000.00 and up to seven years imprisonment. ISPs have argued, in response to the law, that they serve only as conduits of information, and do not actually control content. Essentially, the ISPs argue that they are tantamount to the Postal Service which delivers letter without knowing what’s inside of the envelopes.¹⁷

At the same time, the federal government is floating contradictory legislation designed to protect Internet service providers from the criminal actions of third party users. Under current law, ISPs are protected from civil liability for content posted by a third party.¹⁸ Under the new Bill, introduced by Representative Robert Goodlatte, R-Va, ISPs would be protected from criminal charges, and a uniform standard would be set for ISP liability.¹⁹ The Bill is entitled “The Online Liability Standardization Act of 2002,” and was prompted by a criminal charge against a New York-based ISP, BuffNet, in 2001. BuffNet was charged with a misdemeanor for facilitating child pornography because it allowed access to a bulletin board containing images of a child pornographic nature. In February, 2001, the company pled guilty and a judge ordered BuffNet to pay a $5,000.00 fine.²⁰ The proposed Bill contains an exception where a senior employee knew about illegal activity of a third party.

In more news on the voyeur front, the creator of “Wild Party Girls” was ordered to pay five million dollars to a Southwest Texas State University student who appeared in advertisements for the video.²¹ The case arose from the photographing of the student taking off her shirt at a wet T-shirt contest in Mexico on her twenty-first birthday. A few months later, the student saw herself in national ads for a “Wild Party Girls” video on the E! cable network, with a red stripe proclaiming “Too hot for TV” stamped across her naked breasts. The student knew something was wrong when strangers began asking her to take her top off.²² The student sued the Florida-based Arco Media Group, Inc. for invasion of privacy and emotional distress, along with E!. Arco never responded to the complaint, and the judge entered a default judgment in the amount of five (5) million dollars. The student’s lawyer argued that Arco’s representatives conspired with bartenders to get pretty young women to drink alcohol and convince them to enter wet T-shirt contests which would then be filmed. The lawsuit against E! will continue. E!’s lawyers claim that the network simply sold airtime to Arco, and had no duty to censor the advertisements wholly produced by third parties. The student plans to donate part of the funds collected by her judgment to a women’s shelter. This judgment is one of the first of its kind against the makers of videos with nude college women, for invasion of privacy. The legal question involved is whether privacy protections extend to individuals who take their clothes off in public at large events where many people have video cameras. Even if such an expectation of privacy is not found to be reasonable, and additional question is raised whether companies have the legal ability to profit from such images by placing them on the Internet.

The adult video industry was prepared to receive some advice regarding current community standards for obscenity in the case against Adam Glasser, a.k.a. Seymore Butts, but those charges recently resulted in a settlement. On March 20, 2002, Glasser announced that the charges had been resolved through a settlement agreement with City Prosecutors. The case involved one of Glasser’s videotapes, Tampa Tushy Fest, which included a controversial “fisting” scene. The settlement required Glasser’s company to plead No Contest to the charge of creating a public nuisance, and pay $1,000.00 to a victim’s restitution fund.²³ “I feel great,” said Glasser in a recent interview. “I feel like the fight’s been well worth it, although very stressful at times,” he added.²⁴ All obscenity charges against Glasser and his mother were dropped as a result of the settlement agreement, and all materials seized during the investigation will be returned. As part of the deal, Glasser must make a version of Tampa Tushy Fest available that omits the controversial fisting scene.²⁵ The depiction of fisting has long been considered to be taboo in the adult video industry, although the Web is replete with depictions of this sex act.

In closing, it is worth mentioning that three significant United States Supreme Court decisions involving erotic speech issues are right around the corner. Adult Internet industry leaders should watch for these decisions within the next few months since any of these cases could have a significant impact on the industry.

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

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

If the first decision by the United States Supreme Court on First Amendment issues this term is any indication of what the other three will look like, the Commerce Clause my be the best defense against Internet content regulations. The High Court voted unanimously to uphold a Chicago Park District regulation providing virtually unlimited discretion to the government in granting or denying applications to use park district facilities for protests and other gatherings. The Justices rejected the First Amendment claims and essentially allowed the government to pick and choose which groups would be entitled to use federal property to engage in free speech. Fortunately, the Court did not address the issues of most concern to the brick and mortar adult industry, that of “procedural safeguards” in adult use licensing schemes. The Court rendered a mercifully narrow opinion which is basically limited to specific circumstances. More fortunately, the Court left open the possibility of demonstrating First Amendment violations by showing that the licensing scheme was unconstitutional as applied. Of the four First Amendment cases being considered this term, the Thomas case is of least relevance to the adult Internet industry, but the unanimity and tenor of this decision is somewhat disturbing for any individual or business that depends on the First Amendment for protection. Should the First Amendment receive the same short-shrift analysis in the remaining cases, creative lawyers may need to turn to other legal doctrines as an alternative for preserving free speech online. The Commerce Clause has been recognized in several recent decisions as a constitutional protection against inconsistent state regulation of the Internet. Let’s hope the Supreme Court doesn’t take any Commerce Clause cases next term!

Attorney General John Ashcroft revealed his true colors recently by ordering that massive draperies be used to conceal semi-nude statutes in the Great Hall of the Justice Department Building. At the end of the hall in this room, on either side of the stage, are two enormous aluminum statutes; one female figure represents the Spirit of Justice, and a male figure to the right is the Majesty of Justice. One breast of the female figure is entirely exposed.  In the past, photographers have writhed on the floor, flat on their backs, in order to shoot a picture of former Attorney General Edwin Meese, on the day he proudly released his Final Report of the Commission on Pornography, with the breast of the statute peeking over his shoulder. When Ashcroft took office, many wondered how he would feel about the figures. He didn’t seem to mind until he was photographed giving a speech about fighting terrorism with the breast of the statute visible over his shoulder. That was the final straw for the strongly religious and conservative man, who insisted that the artwork be appropriately attired with draperies at the cost of just over $8,000.00.

It appears that the FBI will use some of its over $900 million in new funding to bring on over 900 new agents by September 30, 2002.⁷ The focus of the new FBI agent hiring will be on those with computer, science and information technology skills, along with counter-terrorism and foreign language abilities. Between hundreds of millions of dollars in new funding, hundreds of new agents and many excuses to investigate adult websites, the adult Internet industry is bracing for a law enforcement onslaught. Religious groups couldn’t be happier about the new focus on law enforcement against the adult industry. As broadcast on PBS on February 7, 2002, it appears that the new administration intends to make prosecuting pornography a priority. But why stop at erotica? A long list of Christian and conservative organizations is calling on federal regulators to investigate the FOX Network, claiming that it systematically violates the FCC’s indecency rules. The groups include Focus on the Family, Morality in Media, the Christian Coalition, the Citizens for Community Values, the American Family Association, the American Decency Association, and American Values. The groups cited “Boston Public” as one of the primary targets of their disdain. The joint letter from the groups claimed that no child should ever see shows like “Boston Public.” FCC Commissions Rules state that no radio or television station shall broadcast obscene material at any time, or broadcast “indecent” material from 6 a.m. to 10 p.m.

In lighter news, an appeals court has upheld the right of a former Playboy Playmate to use the terms “Playboy” in the metatags of her own Website. The dispute centered around the attempt by Terri Welles to include the terms “Playboy” and “Playmate” in the biographical references in her Website, and in the search engine-friendly metagags at TerriWelles.com. Playboy, which aggressively enforces its trademark rights, sued her in February of 1998, in a California federal District Court. The trial court ruled in her favor, and that ruling was affirmed by the Ninth Circuit Court of Appeals which decided that the references to her former title, as a Playboy Playmate, represented “fair use” of the Playboy name. Attempting to describe her association with the adult entertainment giant without using its name would require her to venture into absurd descriptive phrases, according to the initial trial court ruling. Because the metatags did not repeat themselves extensively, her site would not be at the top of the list of search results for surfers seeking “Playboy” on search engines. The practical lesson learned from this case is that webmasters may be legally entitled to use certain trademarked terms in their metatags without violating trademark rights, in the appropriate circumstance. As always, it is important to consult with competent legal counsel prior to including any trademarked words on your Website.

The odd story this month comes from Yankton, South Dakota. A recent Senate Bill introduced by Democratic State Senator Moore would ban the sale of “Porn Cards” to anyone under the age of 18. The prepaid cards allowing access to adult entertainment sites on the Internet have boomed in popularity throughout the United States and abroad. According to Moore, “I don’t think we can stop people from distributing these things, but we can stop the sale in South Dakota.” Huh? The ACLU counters that Moore’s statement sounds like censorship. Given the number of free adult Websites that proliferate on the Internet, these legislative actions appear to be an exercise in futility. It could be worse: Seoul, South Korea’s answer to the availability of adult images online is to indict 19 Internet adult broadcasting companies, and issue warrants for 13 others. Seoul has also proposed legislation to criminally charge those who send Spam emails. Too bad the First Amendment does not apply in Seoul; change that to the Commerce Clause.

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

ADULT INDUSTRY UPDATE

By: Lawrence G. Walters, Esq.

www.FreeSpeechLaw.com

The first year of the new Millennium ended without any stunning fanfare or any further shocking terrorist attacks. As we sat on the edge of our collective seats during the last quarter of 2001, waiting to see what will happen next, our government began methodical preparations for the long political and military battles ahead. Potentially caught in the crossfire will be the adult industry, which is on the losing end of the confluence of numerous events destined to change the legal climate in which adult webmasters operate.

The U.S. Supreme Court has now heard arguments in four First Amendment cases, all of which could be decided against the Industry. At the same time, the FBI just received an influx of $379 million to be used to beef up its investigative technology.¹ We will now see an army of gumshoes armed with not only the latest laptops and broadband access, but also a host of new investigative powers thanks to the Patriot Act, signed into law recently – not that the feds needed a reason to investigate the adult webmaster community. Moreover, the fact that terrorists were said to have communicated through the posting of sexually explicit images on the Internet did not help things.² To add to this pressure cooker, Red Herring magazine recently revealed the extent to which child pornographers have invaded both adult and mainstream Internet services such as domain registrars, hosting companies and community publication sites such as Geocities.³ Apparently, these services have been used without the knowledge of their owners, to proliferate the despicable child porn industry, and that has drawn the attention of two sworn enemies of the adult industry, Bruce Taylor and Robert Flores.

For anyone who does not know, Bruce Taylor is the President and General Counsel for the National Law Center for Children and Families, and a long-time advocate of censorship. While he is not in a position to initiate any investigations or prosecutions, Robert Flores is. Mr. Flores was recently appointed to the Department of Justice’s Office of Juvenile Justice Delinquency Prevention. That is a high-level position that includes broad investigative authority. That dynamic duo made it clear that blind ignorance to illegal content on the Internet will not serve as a defense, and that it’s just a matter of sitting back and waiting to see who will take the hit first.⁴ Taylor has previously called for obscenity prosecutions against media giants such as AOL and Yahoo! Now he says: “Nobody is immune.”⁵

Even if you steer far clear of child pornography on your servers and links, it may be that a significant amount of teen or youth content will be declared illegal child pornography if the Free Speech Coalition looses its appeal to the United States Supreme Court in the Child Pornography Prevention Act case.⁶ Should the relatively conservative High Court uphold the law, any images that “appear to be” of a minor engaged in sexual activities can be treated the same as child pornography. The federal sentencing guidelines for such offenses are staggering. A recent calculation performed by our firm for a very typical webmaster prosecuted for commercial distribution of child pornography resulted in a recommended sentence of between 180-210 months in a federal prison.

The Justice Department finally got around to appointing a United States Attorney to spearhead its forthcoming obscenity prosecutions. The appointee, Andrew Oosterbaan, has served as Deputy Chief of the Child Exploitation and Obscenity Section (a/k/a the “God Squad”) since January, 2000.⁷ Attorney General John Ashcroft says that Oosterbaan “…will diligently investigate and prosecute child exploitation and obscenity crimes. Andrew’s many years of experience in complex criminal matters should put on notice those who seek to exploit children or violate our nation’s obscenity laws will be punished to the fullest extent of the law.”⁸ Despite these ominous words, Ashcroft’s selection could have been much worse; the Religious Right wanted Bruce Taylor, Robert Flores (both discussed above) or Patrick Trueman, Director of Affairs for the American Family Association.⁹ On the other hand, given the conservative bent of our current Attorney General, it makes little difference who actually directs the prosecution of obscenity cases for they will be brought just the same. The censorship groups are already demanding that Oosterbaan make obscenity prosecutions a priority, “Obscenity has exploded through videos, through satellite, through cable and especially the Internet, so it is extremely important that this be make a high priority by the new chief,” says Jerry Kirk, another censor and co-chairman of the “Religious Alliance Against Pornography.”¹⁰

One interesting case to watch on the obscenity issue is the new challenge to the Communications Decency Act (“CDA”), which was filed on December 11, 2001, by the National Coalition for Sexual Freedom, along with a fetish photographer. The case was filed in the Southern District of New York, and names the federal government and John Ashcroft as defendants.¹¹ In 1997, a unanimous Supreme Court struck down the “indecency” provisions of the CDA on First Amendment grounds, but the obscenity prohibitions were not challenged. Currently the CDA makes it a federal felony to transmit any obscene images over the Internet. Obscenity is based, in part, on community standards. One Appeals Court has held that the concept of community standards cannot be constitutionally applied to a global medium like the Internet. If community standards remain an element of the obscenity test, all online communications would have to be acceptable in every community since it is impossible, under current technology, to block particular communities from accessing any given images. Depending on the outcome of this case and the COPA case before the High Court, the federal government may be left without a law to regulate sexually oriented communications over the Internet. On the other hand, the government could try to replace the CDA with something worse. This is certainly an issue to watch.

The adult industry launched a sneak attack on domain names, as many previously registered domain names expired in December, 2001. Numerous adult websites took over the expired URL’s to the dismay of the previous owners who overlooked re-registration. “We were shocked,” said Carole Martin, Webmaster for the Diocese of Brooklyn, New York whose parish’s domain name was obtained by an adult website.¹² This appears to be a growing trend in the adult industry, and one that probably did not do anything to endear the Religious Right.¹³

It appears that movie-style ratings may soon be coming to Internet Web sites. The Internet Content Rating Association (ICRA) recently announced a voluntary content rating system that would allow users to screen out Web sites that contain violent, sexual or other possibly objectionable content.¹⁴ The addition of such voluntary ratings to adult websites couldn’t hurt the Industry’s image and provide additional ammunition demonstrating that adult webmasters are trying to keep their content away from minors.

This month’s odd story comes from the Federal Communications Commission. After millions tuned in for the Victoria’s Secret racy fashion show in November, FCC Commissioner Michael Copps called for an investigation.¹⁵ The reason for his investigation? His 27 year old daughter thought it would be inappropriate for children to watch.¹⁶ I wonder what his kids watch; Law & Order? Hey Commissioner, have you seen MTV lately?

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