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2257 Danger Without Obama

2257 Danger Without Obama

June 16, 2011
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" It is important to point out that if President Obama is not re-elected, it is likely that inspections under the 2257 regulations will begin anew. "

Recently a client provided me with an excerpt from an online blog discussing the question of whether a webmaster using explicit sexual materials provided by an affiliate marketing program had any federal recordkeeping or labeling obligations regarding the use of the materials. The laws at issue were, of course, the infamous complex set of regulations set forth at 18 U.S.C. §2257, 18 U.S.C. §2257A and 28 CFR 75, known throughout the adult entertainment industry as the “2257 regulations.”

As I read the thread, I realized that the participants unfortunately simply did not understand the obligations that affiliates and marketing programs have with respect to the use of marketing materials containing depictions subject to the 2257 regulations.

The jist of the blog’s commentary was that it was permissible for an affiliate to use explicit advertising materials provided by a marketing company on the affiliate’s website or elsewhere online without the need to keep records pertaining to the content in compliance with the 2257 regulations.

This was supposedly allowable because affiliate marketing companies often refuse to provide affiliates with copies of the records that they maintain pursuant to the 2257 regulations stating that they are obligated to withhold the records to “protect the privacy of the performers.”

Well the thread contributors got it about as wrong as it could get. Affiliates using explicit advertising materials subject to the 2257 regulations will almost certainly have to comply with all of the numerous record-keeping and labeling obligations set forth in the 2257 regulations.

If the affiliate uploads the content to a server or manages the content of the website on which it appears, the affiliate will be a “secondary producer” of the content under the 2257 regulations. As such, the affiliate must comply with all of the 2257 regulations pertaining to that content and the affiliate’s use of it.

And as for a marketing program company that provides explicit content subject to the 2257 regulations to affiliates expressly for their use to provide traffic to the program in exchange for payment, while at the same time knowingly refusing to provide the affiliates with the records required to make such use of the content lawful, well, it doesn’t take a lawyer to realize that such knowing inducement to engage in criminal behavior for the program’s financial benefit is itself unlawful. Moreover, the Department of Justice has made it clear on numerous occasions, including most recently in its commentary accompanying the last revision of the 2257 regulations, that compliance with the 2257 regulations is required even if it results in the potential loss of performers’ privacy or it increases the possibility of identity theft.

2257 complacency. The experience of reading the aforementioned threat prompted me to do a bit of informal research in which I reviewed a number of other recent blogs and posts discussing various 2257 matters. While my survey was limited and admittedly unscientific, what I saw convinced me that despite innumerable articles, panel appearances and client discussions regarding the 2257 regulations by the industry’s attorneys over the last ten years, there is still a large number of owners of adult entertainment businesses who apparently do not understand their obligations under the 2257 regulations or the serious risks associated with that lack of knowledge. Even worse perhaps, there also seems to be a fairly large number of adult entertainment entrepreneurs that apparently have a good understanding of the regulations but mistakenly believe that there is not any risk of enforcement of the laws against them.

In sum, my little research project confirmed for me a suspicion that I have had for some time. Specifically, that a significant part of adult entertainment industry, particularly its online segment, has become somewhat complacent about the 2257 regulations. It is not hard to see why.

First, there have been no 2257 inspections or prosecutions under the Obama Administration. This has led many to believe, albeit erroneously, that this means that there will not ever be 2257 inspections again. Further distracting industry attention from 2257 compliance matters, is the fact that many bottom line legal issues like copyright infringement and proposed mandatory condom use regulations in California currently present serious, if not potentially business destroying, challenges to many adult entertainment companies. And to the extent adult entertainment entrepreneurs have any legal bandwidth left after these issues, it has been increasingly consumed by the blow-by-blow reporting of the industry’s civil war between FSC and the ICM Registry over ICANN’s consideration and approval of the .XXX top level domain.

But what if Obama is not re-elected? While it is very unlikely that the current administration will recommence 2257 inspections any time soon, it is important to point out that if President Obama is not re-elected, it is likely that inspections under the 2257 regulations will begin anew. Even worse, under a conservative republican president, enforcement of the 2257 regulations is looking increasingly likely unless the law is definitively struck down in court before then. Unfortunately, the Free Speech Coalition’s challenge to the 2257 regulations in federal court was recently dismissed. As a result, conclusive invalidation of the 2257 regulations (which would require an action by the Supreme Court), if it will ever come, is very unlikely before next Inauguration Day in 2013. And that now has put many adult entertainment companies and their principals in potential jeopardy for prosecution of current 2257 regulations violations.

The reason why Obama’s reelection poll numbers are correlated with an adult entertainment entrepreneur’s risk of 2257 prosecution for today’s violations is rooted in the fact that the government has up to five-years from the date of a 2257 regulations violation to commence criminal prosecution of the violator. This means that any current noncompliance with the 2257 regulations could be prosecuted by the next republican administration if President Obama is not re-elected. And with unemployment projected to remain high throughout the coming election year, it is by no means certain that the Obama Administration will have a second term.

So if Obama loses in 2012, what can the industry expect under the next republican president? The answer, of course, depends on which republican becomes president. A cultural conservative republican such as Mitt Romney (the current front-runner), Mike Huckabee or Sarah Palin (heaven help us), could be expected to unleash the DOJ upon the adult entertainment business with great fanfare and furry. Given that each is a staunchly anti-porn “cultural conservative,” it is not out of the question that any one of these candidates might actually try to put the porn genie back in the bottle by initiating widespread prosecutions of adult entertainment businesses emulating the tactics used during the administrations of Ronald Reagan and the first George Bush (41).

On the other hand, a more centrist and intellectual candidate like Newt Gingrich might only pay lip service to the cultural conservative wing of the republican party, recommence 2257 inspections, but only initiate token prosecutions for violation of the obscenity laws and the 2257 regulations.

But if a republican is elected president in 2012, it is almost a certainty that adult entertainment business operators will be facing greater federal scrutiny and a substantially greater risk of prosecution than they do today, regardless of which particular republican it is. Historically, republican administrations have consistently been more aggressive against adult entertainment businesses than their democratic counterparts. And given the wave of cultural conservatism sweeping the country, I see little reason to think that pattern will not be rewoven when a republican next occupies the White House.

For years Morality In Media and other anti-porn organizations have been lobbying the government to prosecute mainstream adult content under the federal obscenity laws. These groups, and many conservative elected officials believe that, contrary to many free-speech attorneys and other constitutional scholars, convictions of mainstream pornographers under the obscenity laws are still a realistic possibility. Moreover, these groups have become desperate to prove that intolerance for obscenity is still a vital part of the American culture.

Fortunately, mainstream adult content has become exceedingly difficult to successfully prosecute almost everywhere in the U.S. This is because mainstream adult content is widely consumed in virtually every community in the country. This fact, coupled with court rulings like the recent 9th Circuit decision our firm obtained requiring the use of a national community standard to evaluate explicit adult content in obscenity cases rather than local communities, makes it clear to government prosecutors that successful mainstream obscenity prosecutions are becoming increasingly difficult and improbable.

But then, there’s this. Regardless of how hard it has become to successfully prosecute mainstream adult content, as long as the 2257 regulations are alive and well, there will still be a potent mainstream obscenity prosecution potential. Here’s why. The government has at its disposal the ability to simultaneously prosecute an adult entrepreneur for both obscenity and 2257 regulation violations in the same case. This can be a potent prosecutorial mix because a very large segment of the adult business is not fully compliant with all the 2257 regulations. This is a big problem given the fact that the DOJ has a longstanding policy that any violation of the 2257 regulations, no matter how small, is nonetheless a fully prosecutable and fully punishable violation. This means, for example, that an adult entertainment business person could go to jail for up to five years if there is just one missing identification document in his or her 2257 record keeping system or if he or she failed to use the exact required words in his or her webpage 2257 link.

Because of this, the government has the option of pairing up a relatively difficult obscenity prosecution with a relatively easy 2257 prosecution. In this way a zealous anti-porn DOJ (as might be the case under a conservative president) may elect to use 2257 violation-paired obscenity prosecutions as a much quicker and more efficient means of forcing a large number of mainstream adult entertainment companies out of the business than via long, difficult, and problematic obscenity prosecutions. In fact, the government could try to use 2257 prosecutions as a means to reestablish the fact that even mainstream content can still be effectively prosecuted under the obscenity laws, a desperately desired goal of cultural conservative groups like Morality in Media. Here’s how.

Essentially the government could simultaneously charge a mainstream adult entertainment defendant with obscenity violations, that the DOJ knows ahead of time would be difficult, if not impossible to prove, and 2257 violations that the government knows would be much easier to prove given the difficulty of full compliance with all of the numerous requirements of the 2257 regulations. Since the 2257 violations, like the obscenity violations, carry potentially multi-year jail terms, a charged defendant that is not in complete compliance with the 2257 regulations will likely be motivated to agree to a plea arrangement that does not involve incarceration if one is offered by the government.

In the past, during previous obscenity prosecution sweeps under Reagan and Bush 41 (which did not involve any 2257 charges), the government often offered plea agreements that required the defendant to admit that the charged materials were obscene, exit the adult entertainment business permanently, and pay a large fine. A future DOJ under a conservative president might do the same through the use of prosecutions that include both obscenity counts and 2257 counts. If so, and assuming that the 2257 regulations are not struck down on constitutional grounds, given the widespread lack of compliance with the 2257 regulations, the government could potentially use the paired obscenity/2257 violation strategy as a veritable prosecutorial weapon of mass destruction against the industry. Given that many companies also lack the resources to effectively mount defenses against such criminal prosecutions, it is not inconceivable that scores if not hundreds of companies could be forced out of the business in a relatively short period of time. A cultural conservative’s wet dream if ever there was one.

More useful 2257 compliance information. Because of the continued vitality of the 2257 regulations, the real possibility that we may see a republican administration in 2013, and what I believe may be a growing industry wide complacency regarding the compliance with 2257 regulations, I will be publishing a number of articles over the coming months addressing 2257 Regulation compliance in the context of current and emerging adult entertainment business models. Topics I plan to address include what the 2257 regulations are and how they apply to specific situations such as domestic and foreign content production, mobile content distribution, amateur sites, link sites, online adult dating sites, tube sites, live content, affiliate programs, virtual worlds and copyright enforcement. Stay tuned.

This article is not intended to be, nor should be considered to be, legal advice. I strongly urge you to seek the counsel of a qualified and experienced adult entertainment attorney familiar with the legal matters discussed in this article.

Gregory A. Piccionelli is an intellectual property and adult entertainment attorney. He can be reached at Piccionelli & Sarno at (818) 201-3955 or greg@piccionellisarno.com.


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