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Website Legal Reviews: 1

Website Legal Reviews: 1

March 22, 2005
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" Certain business models may implicate additional, specialized legal concerns... "

A substantial percentage of adult webmasters are still operating without having had their website reviewed by an attorney. Various reasons are offered for this, including: "I know the law," "I stick to soft-core content," "My friend told me what his lawyer said," or, "What is a website review?" None of those excuses justify the unacceptable risk of publishing online content that has not passed legal clearance; however, this article will attempt to address the last excuse which focuses on the webmaster's fundamental lack of familiarity with the legal review process.

Mainstream publishers have utilized attorneys for pre-publication content review for decades, and publishers of erotic print and film media are typically diligent about legal clearance; however the culture of the adult Internet community often bypasses this most basic industry standard.

Scope of Review
Many webmasters believe that a website review consists largely of an attorney getting paid to look at a bunch of erotic content for compliance with obscenity standards, only to render an opinion that the laws are too vague for any kind of concrete advice, and that the content might be found obscene by somebody, somewhere in the country, at some time. While obscenity laws are by far the most difficult and complex issue that is considered in connection with a website review, the scope of such a review involves substantially broader issues.

Typically, our firm breaks down a website evaluation into the following general categories:

  • Corporate Formation/Structuring;
  • Online Agreements;
  • Intellectual Property Concerns;
  • Infringement on the Rights of Others;
  • Age Verification/2257 Issues;
  • Obscenity/Content Issues.

Certain business models may implicate additional, specialized legal concerns, such as public filming, unique fetish issues, intoxication, spam/marketing concerns, or sweepstakes matters, however the above-referenced categories will apply to the vast majority of adult websites published on the Web.

Corporate Formation/Structuring
One of the first, most basic issues to be addressed is the form of corporate entity being used to operate the website, if any. Many webmasters still operate as sole proprietors, despite the many benefits and "cheap insurance" a corporation provides, particularly as an asset protection device. A website review should include an inquiry as to the current status of the operator's corporation, and a confirmation that all applicable corporate documents have been prepared, including notices, waivers, minutes, bylaws, and stock certificates, necessary to comply with the formalities of incorporation. Some clients have come to our firm after having filed articles of incorporation for their corporate entity several years ago, and never having paid any more attention to the corporation since that time.

Typically, a corporation must conduct annual corporate meetings, generate organizational minutes, Bylaws and written actions, in order to legally maintain itself as a valid corporate entity. The specific formalities differ from state to state, but failure to observe these technical requirements could result in a creditor "piercing the corporate veil" and holding the shareholders of the corporation liable for corporate debts.

Therefore, it is essential to confirm that the corporate house is in order, and all relevant documents are contained in the Corporate Book.

A more complex issue that should be addressed in the corporate review is the potential for foreign incorporation and operation of the website from an offshore location. Websites can be run from virtually any location, given Internet technology, and this opens up a world of possibilities, in terms of offshore incorporation. The benefits can be substantial in terms of tax savings and asset protection, and thus all options should be considered in the course of the corporate review.

Online Agreements
Many adult websites are severely lacking in the area of online agreements. Given the E-SIGN legislation, electronically signed into law by President Clinton in 2000, webmasters can often form binding electronic contracts with their users, affiliates, or content providers, by posting the agreements to the website in the proper manner. At the very least, a typical adult website should incorporate the following online documents:

1. Warning Page/Disclaimer, including Age Verification;
2. User Terms & Conditions;
3. A Privacy Policy;
4. An Affiliate Agreement
5. A Spam Policy; and,
6. A DMCA Designation.

Each of these agreements provides different legal protections, and should be incorporated to assist in reducing the webmaster's exposure to liability. Many issues can be addressed by proper online agreements, such as the procedure for dispute resolution, venue, choice of law, arbitration, attorney's fees, digital rights transfer, risk of loss, indemnification, payment terms, etc. In the absence of these terms, a court may impose a variety of "reasonable" terms that the webmaster may not like, or worse yet, may determine that no contract exists.

Certain information, like DMCA Designation, is required in order to take advantage of certain 'safe harbors' under federal law. Online agreements are a fairly easy and inexpensive way to significantly reduce potential liability from a variety of sources, including users, affiliates, and the government.

Intellectual Property Concerns
Websites can be copyrighted, ideas can be patented, and brand names can be trademarked. Webmasters, overall, do a poor job of protecting their own intellectual property and securing the bundle of available IP rights associated with their site. Software coding can ordinarily receive copyright protection, as can graphics, images, video, and the overall "look and feel" of a website.

If a webmaster has come up with a unique business model or online invention, he or she can obtain patent protection to prevent others from copying that idea or invention. Many online patents have been issued, and while some are controversial, the industry is only in the beginning stages of patent right protection. While patent lawyers are a specialized breed, and are specially licensed to practice before the United States Patent & Trademark Office, ("USPTO"), your adult website attorney should be able to identify ideas, concepts, or business models that may qualify for patent protection, and refer you to an appropriate specialist to prosecute patent registration, if desired.

As the online industry matures, the focus is moving away from domain names in favor of online brand names. Online branding is certainly the wave of the future, and the best way to protect infringement on, or dilution of, your unique brand is to register a trademark or service mark with the USPTO. The process is not terribly complex or costly, while the end result, i.e. a registered trademark, is a valuable business asset that should be seen as a welcome addition to your company's portfolio. A webmaster's leverage in dealing with competitors using the same or similar trade names is greatly enhanced if the webmaster owns a registered trademark. Much has been written on the benefits of copyright protection, but it is important to remember that copyrights cannot be enforced without a valid copyright registration. The availability of all these means of IP protection should be carefully evaluated and considered, in the course of a website review.

In Part 2, we'll examine issues surrounding the infringement on the rights of others, age verification and 2257, plus obscenity and content issues. Stay tuned!

Lawrence G. Walters, Esquire, is a partner with the law firm of Weston, Garrou, DeWitt & Walters, 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 much of the significant Free Speech litigation before the United States Supreme Court over the last 40 years. 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.FirstAmendment.com or AOL Screen Name: "Webattorney."


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