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When it Rains, it Pours: 2

When it Rains, it Pours: 2

June 1, 2007
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" This activity seems to be building to a crescendo as we approach what may be the most important presidential election in nearly 50 years. "

In part one, we looked at ICANN's rejection of .XXX and COPA being declared unconstitutional. In this conclusion, we'll look at Utah's Child Protection Registry, FSC's Challenge to 2257 and private lawsuits against adult industry companies.

A Federal Judge in Utah Denies FSC's Motion to Enjoin the Utah Child Protection Registry
What happened: In 2005, the State of Utah enacted a law called the Child Protection Registry Act (CPR), that allows parents and others to register email addresses to which minors have "access," and then prohibits emails from being sent from anywhere in the world to those addresses that advertise sexual materials that comprise "harmful matter" for minors or any other products or services that minors cannot purchase. Violation of the law can result in both civil and criminal penalties for the email sender.

For example, administrative enforcement of the CPR against a violator can subject the email sender to fines of up to $2,500 per message, without any maximum amount. If the violation is intentional the fine is $5,000 per message. Interestingly, however, the law also provides that emailers can obtain insulation from prosecution for violations if they pay a private company, Unspam Registry Services Inc. (Unspam), to "scrub" their lists at a cost of $.005 per email address, every 30 days.

The regulatory regime that the Utah legislature has created through the CPR and its officially empowered private scrubbing firm looks a lot like a legal version of what organized crime prosecutors call a "protection racket."

Essentially the racket works like this: a thug or a gang creates the threat of harm and then charge the victim for "protection" from the threatened harm. In association with the enforcement power of the State of Utah, Unspam could potentially soak the industry for what might amount to millions of dollars in the guise of "child protection." But I do give Utah and Unspam high marks for having invented a clever business model that might well be the world's first legal "child protection racket."

Soon after the enactment of the CPR, the FSC filed suit on behalf of its members in federal court in Utah, to invalidate the CPR on the grounds that it (1) violates the 1st Amendment and other parts of the U.S. Constitution, (2) violates the free speech provisions of the Utah Constitution, and (3) the law is preempted by the federal CAN-SPAM Act. Additionally, the FSC requested that the Court enjoin enforcement of the CPR while the parties litigate the law's validity.

On March 26, U.S. District Court Judge Dale Kimball denied FSC's motion to enjoin the enforcement of the CPR until the end of the litigation. This means that Utah is empowered to enforce the CPR against anyone who sends an email message to any email address in the registry, if the message contains an advertisement for membership in an adult website, or any other product or service that cannot be sold to minors. Consequently, if you use email as a means of advertising any adult product or service, you should immediately contact competent counsel to review your situation in light of Kimball's ruling.

Kimball ruled in favor of FSC by denying Utah's motion to dismiss the action seeking to invalidate the CPR. Attorneys for Utah unsuccessfully tried to persuade the Judge that FSC lacked standing to challenge the law on behalf of the adult entertainment industry. As a result, we are able to continue our efforts on behalf of the industry to strike down this invidious law.

What's next: The Utah CPR decision comes on the heels of the announcement that COPA had been struck down as unconstitutional. Nothing in Kimball's opinion addresses or even acknowledges the COPA ruling. This is important because both COPA and the CPR address the issue of minor access to "harmful matter" over the Internet.

Because of the very favorable COPA decision, and the well-reasoned opinion by the federal judge in that case, a number of options are available to FSC to contest Kimball's decision. Among them are a request for reconsideration of the decision based on the COPA decision, an appeal of the injunction decision, and finally, a trial to determine the constitutionality of the law itself.

Suggested industry action: If you use email to market adult products, you are strongly advised to consult with a competent attorney familiar with the CPR and other similar "do not email" laws, such as the Michigan Children's Protection Registry Act.

Whether you use email marketing or not, it is critically important to support the Free Speech Coalition's efforts to combat this new wave of pernicious anti-adult industry laws.

Federal District Court in Colorado Grants the Government's Summary Judgment Motion in FSC's Challenge to the 2257 Regulations
What happened: On March 30, U.S. District Court Judge Walker D. Miller granted the government's motion to dismiss many of the FSC's claims in its constitutional challenge to the federal record-keeping and labeling laws, aka the "2257 Regulations" (18 U.S.C. Sect. 2257 and 28 CFR 75 et seq.).

What it means: "Secondary Producers" who are members of FSC may lose their immunity from 2257 inspections. The court, on its own, noted that The Adam Walsh Child Protection And Safety Act Of 2006 effectively overruled the Sundance case at the heart of FSC's challenge, by amending 18 U.S.C. Sect. 2257. As you may already know, FSC was successful in obtaining an injunction that currently prohibits 2257 inspection of companies, that are FSC members, and that have not actually engaged in the hiring of the performers depicted in the content they distribute. These companies, which are often called "secondary producers" (a term that is obsolete since the passage of the Walsh Act), are now in danger of losing the protection of the injunction we obtained last year, because the now-overruled Sundance case provided the legal precedent which Judge Miller was obliged to follow in granting the injunction. Now that the controlling precedent has been overruled, the protection afforded to FSC members could disappear as early as May 1, 2007. Consequently, if you are an FSC member who depends on the protection of the aforementioned 2257 injunction, you should contact your attorney or hire competent counsel to discuss the matter as soon as possible.

Acceptable I.D. for 2257, for content created outside the U.S. The judge accepted the government's interpretation of the type of identification to be used when a U.S. company is shooting abroad. In sum, when shooting outside of the U.S., any government- issued picture identification that includes the person's photograph, legal name and date of birth will comply with the regulations

Performer privacy and redacted performer IDs. The court accepted the government's claim that regulations allow original producers to redact performers' addresses, Social Security numbers and month and date birth data, from the 2257 records. But note that the performer's year of birth and all other data on the copy of the identification document, including a clear, recognizable and recent photograph, is still required to be visible.

A copy of each depiction must be included in the records. A producer may comply with the 2257 Regulations' requirement that the records must include a "copy" of the depiction (28 CFR 75.75.2(a)(1)(i)) by simply including a single identifiable copy of a subject depiction in the company's 2257 record keeping system. Presumably, this would even mean that a company could place a digitized copy of the company's entire web site in their 2257 record-keeping system.

The compliance statement "date" requirement. The compliance statement "date" requirement (28 CFR 75.6(b)(2)) can be satisfied by the producer's inclusion of any of the following: the date of production, publication, duplication, manufacture, reproduction or re-issuance.

What's next: The effect of the Walsh Act amendments to the 2257 regulations were not all bad. In fact, certain provisions of the Walsh Act provide us with the best chance ever to invalidate the 2257 regulations, "root and branch" or to at least substantially restrict the number and complexity of 2257 regulations. Judge Miller's ruling, while disappointing, does not fundamentally alter our conviction that, eventually, we will prevail, and that the 2257 regulations can be dramatically restricted in both scope and complexity, if not stricken entirely.

Suggested industry action: It is simply critical that every adult industry participant become an FSC member and that FSC be robustly supported in its efforts battling the 2257 Regulations and other threats to the industry, such as the Utah CPR.

Additionally, the patent unfairness of the 2257 regulations are not widely known by persons outside the industry. Because of this, I strongly suggest that the industry use its great communication resources that reach tens of millions of Americans each day to let our fellow citizens know that instead of effectively fighting terrorists, our government would rather harass adult entertainment companies (for additional "show and tell" materials along these lines please visit DoomsDayCurve.org).

A Private Lawsuit Filed Against Sexsearch.com, Playboy, Jenna Jameson and Other Adult Industry Companies
What happened: In early March a lawsuit seeking unspecified damages was filed against a number of adult entertainment companies. One of the lawsuit's claims seeks damages resulting from an alleged breach of a dating website's alleged duty to perform age verification on the users of its online dating service.

The plaintiff filing the action was arrested and is currently facing felony charges for allegedly having sex with an underage girl who he allegedly met through his use of the website SexSearch.com. The girl, if actually a minor, could only have become a member of SexSearch.com if she lied about her age at the time she joined the adults-only service. With a straight face, the plaintiff claims in his lawsuit that damages associated with his alleged sex with the minor are in fact attributable to the website.

What it means: The lawsuit is an even more patently absurd attempt to inappropriately shift personal responsibility and infringe an adult entrepreneur's rights, than that soundly rejected by Judge Lowell in the COPA ruling. Unfortunately, unlike the COPA case however, here the defendants are being forced to spend serious amounts of money defending themselves in an action that should never have been filed.

In my opinion, the case is an example of a new kind of legal threat I have often predicted the adult business will be forced to face as it evolves into a mature industry. Simply put, as the industry gains acceptability and as its monetary success becomes more widely recognized, the adult entertainment business becomes a more and more tantalizing target for predatory trial attorneys seeking to cash in on that success. Indeed, it is very telling that the attorney who filed the case told XBIZ earlier this month that he will attempt to bring the case into a class action; that, "Adult FriendFinder — they are next," and that "the whole industry is going to be rocked."

More seriously, however, is the reported comment by the same attorney: "We plan on notifying attorney generals in several states regarding the case." If true, in my opinion, this statement coupled with his previous statements should be viewed as a serious threat, not only to the defendants in the present case, but also to industry entrepreneurs at every level.

What's next: Unfortunately the defendants in the case are going to be forced to expend substantial resources to appropriately respond to this shameful use of our overburdened court system. Nevertheless, I believe that the plaintiff will lose his ill-advised action against our clients, and lose big in his criminal case.

Suggested industry action: Playboy, SexSearch.com, Jenna and others named in the suit are respected, if not beloved, industry icons that have been unfairly targeted by the action filed against them. I suggest that the industry do all it can to rally around them in support. The best way to prevent this kind of vexatious litigation is to make clear to this plaintiff and other would-be plaintiffs and their predatory attorneys that the industry simply will not tolerate this kind of abuse.

Time and time again the industry has surprised and confounded its enemies with the ferocity of its defense when attacked. From the industry's successful battle to enjoin secondary producer requirements imposed by the Department of Justice, to its "fight the patent" frustration of Acacia patent lawsuits, to its most recent victory, a resounding defeat of ICM Registry's attempt to gain ICANN approval of a ".XXX" top level domain, the adult entertainment business has demonstrated that if wrongfully attacked, the industry and its attorneys will fight back — HARD.

In my opinion, the industry should once again be on guard and ready to fight back if the attorney who has filed the present case expands the case or if he or other attorneys file other similarly vexatious actions.

This activity seems to be building to a crescendo as we approach what may be the most important presidential election in nearly 50 years. Consequently, in light of all that has recently transpired, and because of the likelihood that the industry will remain a political punching bag until there is a new occupant of the house at 1600 Pennsylvania Avenue, I strongly recommend that you retain competent counsel to help you weather whatever may transpire in the next 20 months.

If you prepare properly, and with proper legal assistance, there is every reason to believe that you will see a dramatically larger, more mature, and more mainstream adult industry in the years to come. But if you don't, well, quoting Shakespeare, "Beware the Ides of March."

Gregory A. Piccionelli, Esq. is one of the world's most experienced Internet and adult entertainment attorneys. He can be reached at Piccionelli & Sarno at (310) 553-3375 or at greg@piccionellisarno.com.


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