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Strategic Alliances

Strategic Alliances

November 22, 2007
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" 18 U.S.C. § 2257 imposes two distinct requirements: record keeping and labeling "

The government recently unveiled its proposed amendments to Chapter 75 of the Code of Federal Regulations dealing with record maintenance and labeling requirements for depictions of sexually explicit materials. While a full discussion of the proposed changes to the Code is beyond the purview of this article, one modification will cause significant headaches for adult Internet companies and might finally bring mainstream retailers into the fold, given its potentially devastating impact on retail sales of adult films.

By way of refresher, Title 18 U.S.C. § 2257 imposes two distinct requirements: record keeping and labeling. Most adult webmasters are intimately familiar with both requirements, but only the labeling obligations apply to distributors such as retail DVD outlets. Few retailers pay much attention to this requirement because there is rarely any issue: Professionally produced erotica in the U.S. (and elsewhere) almost always contains a proper 2257 label. That may not be the case if the Justice Department gets its way with the currently pending 2257 regulations.

Presently, the ubiquitous 2257 label generally contains the following pieces of information: 1) the legal name of the records custodian; 2) the physical address where the records will be made available to inspectors; 3) the title of the work and 4) the "date."

The last requirement has resulted in much confusion and some disagreement regarding proper compliance obligations, because the regulations allow the producer to choose from one of several different (and potentially applicable) dates to insert in the disclosure, i.e., the date of "production, manufacture, publication, duplication, reproduction, or re-issuance of the matter."

The industry practice has been to select a date that best fits the particular matter at issue, and use that date in the disclosure statement. Since a website often consists of depictions created on a multitude of different dates, many webmasters take the position that the content on their site is "reproduced" or "reissued" every day it appears on the web, and would therefore insert a rolling date code in their disclosure statement.

That option would not comply in the event the proposed regulations pass as presented by the Justice Department, and webmasters suddenly will be faced with identifying the original dates of production for each image or video clip on their website(s). The reason for this is the proposed revision to §75.6(b)(2), calling for every web page to contain a disclosure statement identifying the "date of original production of the matter." As a result, each image on each web page will need to be tied to its own specific date of production in the disclosure statement. The financial and practical burden of retrofitting hundreds of thousands of web pages will be staggering for the adult Internet industry.

However, retailers and distributors dealing in any sort of explicit material will now also need to pay attention to the accuracy of the label affixed to adult material, since selling any such product without a label, or without a complete label, can result in a five-year federal felony, with up to 10 years incarceration for repeat offenders.

While adult webmasters will have their own difficulties with the new labeling requirements, the new 'original date of production' requirement transcends the Internet industry. DVD producers will now suddenly need to go back and try to identify the original date of production for all material, if they used any other date previously available for compliance with the labeling requirement. The same difficulty facing adult webmasters in identifying multiple dates of production for web content also impacts the producers of so-called "compilation" films, which generally include clips or small portions of many other adult film titles in one product. Attempting to retrofit the dates of production onto 2257 disclosures that once displayed the date of reproduction, for example, will be challenging to be sure. Moreover, the new proposed regulatory requirements purport to relate back to any content produced after the effective date of the Adam Walsh Child Protection Act. Given the independent obligation imposed on distributors and retailers to ensure that a proper disclosure statement appears on every product sold, this has now become everybody's problem.

All this has the potential for new strategic alliances to be formed between the various segments of the adult industry and mainstream retailers as well. Suddenly, distributors and retail outlets have a significant stake in the outcome of the proposed regulations. Some large DVD outlets that sell films involving explicit nudity, to which 2257 obligations now purportedly apply; may consider joining the fight against these burdensome and censorial laws. When the Justice Department realizes just how widespread the impact of these new regulatory obligations will be, it may be influenced to temper them with some reason and logic. One can always hope, anyway.

It should be noted that distributors and retailers will not be immediately liable for sale of a product with a faulty 2257 label. Initially, in order to prove a violation, the government must establish that the seller acted "knowingly." Also, the statute makes clear that sellers of explicit materials have "no duty to determine the accuracy of the contents of the statement." But, what if the statement is incomplete or contains information that is obviously not in compliance with the law? The courts have not decided those issues yet, and neither the regulations nor the statute specifically addresses those concerns. What is known, however, is that the Justice Department has finally latched on to the notion that including the date of production is required for the entire statutory scheme to make any sense. Otherwise how will the government (or the producer for that matter) ever know how old the performers were when the work was created? This glaring omission has been quietly addressed by including the new requirement in the proposed regulations, without any comment or discussion whatsoever. Now the industry must gather its allies and mobilize.

This next battle may be fought more by the lobbyists than by the lawyers, as many of the legal arguments against 2257 were rejected in the Free Speech Coalition vs. Gonzales case. While that action was dismissed before a final ruling on the merits was issued — thus allowing another crack at some of the legal and constitutional challenges — an effort must be made to band together with those other parties now affected by the proposed regulations directed at the adult industry. If done properly, the Justice Department may realize that they have gone too far with these overly broad proposals.

Lawrence G. Walters is a partner with the law firm of Weston, Garrou, DeWitt & Walters, with offices in Orlando, Los Angeles and San Diego. 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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