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Adult Mobile and the Law: 2

Adult Mobile and the Law: 2

June 16, 2006
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" The mobile content market is very dynamic and rapidly evolving. "

In part one, we looked at the increasing memory and bandwidth capabilities of mobile devices and their applicability as an adult content distribution platform. In this conclusion, we'll examine the law, the cellular providers and issues to consider when negotiating your agreement.

Know the Law
Many of the laws that pertain to the distribution of adult content via the web also apply to distribution of adult content via mobile phones. That means that hardcore materials distributed via cellphones are subject to obscenity prosecutions. Similarly, the materials must also be compliant with the federal record keeping and labeling laws (18 U.S.C. §2257 et seq. and 28 C.F.R. Part 75 et seq.). Additionally, distribution of sexual materials via telephones is subject to the federal “dial-a-porn” law, 47 U.S.C. § 223(b)(2)(A), which prohibits the use of a telephone for “any indecent communication for commercial purposes which is available to any person under 18 years of age or to any other person without that person’s consent, regardless of whether the maker of such communication placed the call.”

The existence of this law is one of the main reasons why domestic mobile telephone service providers are unwilling to allow their network servers to be used to distribute sexual materials. The federal dial-porn law does contain a “safe harbor” defense if the provider of the content has notified the relevant common carrier in writing that the provider is providing sexual content and the caller is required to provide payment by a credit card before transmission of the content. The mobile content company’s compliance with all laws also is important because their violation of law could potentially subject you to prosecution for aiding and abetting or conspiracy.

Also, you should carefully follow the developments in the Free Speech Coalition’s lawsuit against the state of Utah challenging its recently enacted Child Protection Registry law. The law prohibits the sending of any communication to a mobile telephone number listed in the state's registry that contains harmful (sexual) matter or an advertisement for goods or services that a minor cannot purchase. The law criminally punishes violators and provides private causes of actions against them with fines of $1,000 per message. At the time of this writing we are preparing to file a motion seeking a preliminary injunction to restrain enforcement of the law.

Learn About Providers
Most mobile content companies have been in business for less than five years. Some are barely more than start-ups. Therefore, before you enter into an agreement with any mobile content company it is wise to check it out. Appropriate areas of inquiry include length of time in business, annual revenue, track record with other content providers and the company’s agreements with telephone service providers. If they represent to you that they have great relationships with the major telephone service providers, you should obtain independent confirmation from the providers. Additionally, given your potential exposure to criminal prosecution resulting from the actions of the mobile content company, a background check of the principals may be warranted, particularly if the company is a foreign entity.

In my previous article, I suggested that producers might want to wait and see which mobile content companies would emerge as the industry leaders, to help producers identify the more effective and reliable players. Indeed, a few companies now clearly lead the pack and have shown, in my opinion, both a greater capability to effectively distribute mobile adult content and a greater sensitivity to the legal issues involved.

Here are some additional issues to consider when negotiating your agreement:

Warranties. The contract should contain a number of specific warranties to protect your content, your company and you. For example, the mobile content company should warrant that it will at all times comply with all applicable laws, including the record keeping and labeling laws, laws prohibiting the possession or distribution of child pornography and laws prohibiting the distribution of sexual content to minors. There also should be warranties that your content, your company name and other trademarks will not be used in any manner other than what you have agreed to.

Non-exclusive and/or short-term agreements. The mobile content market is very dynamic and rapidly evolving. You may want to limit the duration of your content license to a year or even six months, and you may want to avoid exclusivity agreements. These suggestions also were included in my last article, and for which I have since received much thanks from many producers. Many companies, unfortunately, now regret that they have signed long-term and/or exclusive distribution agreements for their mobile content distribution, in some cases binding the company for up to five years.

Also, you should be aware that what is currently technologically complex is likely to become less so over time. For example, at present, to reach the largest possible mobile market requires content and distribution protocol adjustments for a dizzying number of phone types and networks. This is an expensive expertise that is currently cost-effectively provided only by certain mobile content companies and telephone service providers. However, greater standardization and ease of web-to-phone distribution is anticipated in the near future. Consequently, what is technologically difficult, complex and costly today may not be so in a year or two.

For example, the “white label” ringtone distribution engine vended by Skin Muzik enabling websites to provide their own ringtones is a good example of how more and more mobile telephone technology relating to content distribution will progressively become available to virtually all webmasters and content producers.

Performance criteria. You may want your agreement to require the mobile content company to meet specific performance criteria to maintain your content license. For example, you might require that as a condition for renewing your agreement at the end of the first year, the mobile content company must have generated and paid to you a specified threshold amount of licensing fees.

Don’t over-license. Grant limited licenses, don’t over license. You should only grant rights that the mobile content company has the ability or the capacity to actually exploit. For example, if your library contains both explicit and non-explicit content, and the mobile content company lacks the legal means of distributing explicit content in the U.S., there is no need to grant to the company exclusive worldwide rights to your entire library. You also may want to preserve your future options to better exploit your content by granting only non-exclusive licenses to mobile content companies.

Application of local laws and convenient dispute resolution. When dealing with a foreign mobile content company, it is advisable to require that the agreement be governed by and enforced under the laws of your state and not the laws of a foreign country. Moreover, the agreement should also specify a convenient domestic location, such as your city or town, for the resolution of disputes. Additionally, the foreign mobile content company should be able to warrant that all the distribution of your content will be in compliance with all the foreign country’s laws and that the company will indemnify you from any damages resulting from their breach of this warranty.

Attorney’s fees. An attorney’s fees provision can also serve as a deterrent to copyright infringement if the licensed party knows that they might be required to pay for your attorney’s fees in a dispute regarding their use of your content outside the scope of the rights you granted to them.

Finally, as all the information provided in this article is for educational purposes only and should not be relied upon as legal advice, before entering into any mobile content distribution agreement you should consult with a competent attorney experienced in the fields of adult entertainment, intellectual property and mobile content exploitation.

Gregory A. Piccionelli is a senior member of Piccionelli & Sarno, one of the world's most experienced law firms specializing in Internet, intellectual property and adult entertainment matters. He can be reached at (310) 553-3375.


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