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A New Legal Reality

A New Legal Reality

March 14, 2008
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" Can we now simply conclude that the adult entertainment industry has won its culture war with the religious right? "

If you would have told me on George W. Bush's inauguration day in 2001 that we would reach the last year of a two-term Bush presidency with merely a handful of federal prosecutions of adult entertainment entrepreneurs, I would have politely provided you with a litany of lawyerly reasons why you were, well, delusional. Yet, with less than a year left in Bush's presidency, that is exactly what has transpired.

Despite repeated promises of numerous and broadly based obscenity prosecutions by evangelical Attorney General John Ashcroft and his successor Roberto Gonzales, we have yet to see the porn apocalypse hoped for by the religious right (and some criminal defense lawyers). Despite two onerously expansive revisions to the 2257 regulations, as well as passage of the CAN-SPAM Act and a new criminal deceptive domain law ("The PROTECT Act"), instead of prosecutorial pornagheddon, what the industry got instead was a glut of content and whole lot more competition as the numbers of adult businesses grew almost as fast under the Bush administration as did our national debt.

So, as we enter the final year of the Bush administration with the industry larger than ever, many are wondering if the days of governmental harassment and politically motivated prosecutions of the industry are finally over.

Some reasonably ask: "Can we now simply conclude that the adult entertainment industry has won its culture war with the religious right?"

The answer, unfortunately, is not quite yet. I do not think the adult industry should emulate Bush's mistake of prematurely declaring victory. But clearly, to quote Bob Dylan, "The times they are a-changin'."

Once George Bush leaves office, assuming the likely result that a Democrat or a moderate Republican wins this year's presidential election, there are good reasons to believe that the criminal prosecution of the producers and distributors of adult materials may not be a high priority of the federal government for some time thereafter.

Consider the fact that by 2009, large numbers of Generation Y, the kids of the baby boomers, will join their baby boomer parents and Generation X-ers to make up the vast majority of American voters. All these groups were raised in a cultural environment that was a lot more sexually permissive than the generations preceding the baby boomers.

For most adults today, erotic and sexually explicit forms of entertainment have been a part of their culture their whole lives. Consequently, given the serious problems facing 21st century America, like Islamic extremism, global warming, a collapsing health care system, foreign competition from China and other serious economic challenges, for most members of the post-World War II generations, diversion of government resources to prosecute pornographers makes less and less sense unless its for the enforcement of child pornography laws.

Thus, despite what we can expect to be a continued clamoring by the morality police of the religious right that government must "protect children" by prosecuting mainstream adult erotica, to borrow a phrase often used by Bill Clinton, "That dog just won't hunt no more."

But along with the diminished threat of prosecution that accompanies the greater cultural acceptance of erotica that will likely typify the post-Bush era, will come new legal challenges to the adult entertainment industry.

Ironically, after Bush departs, the more likely source of legal problems for a typical adult entertainment company will not be parties seeking to destroy the market for adult content, but will instead be parties seeking to capitalize on the enormous market for erotica.

For example, demand for adult content is at the core of a huge and growing piracy problem that will pose a much greater threat to the viability of adult businesses than government obscenity prosecutions.

The government is also likely to switch to a more economically self-serving strategy in the types of cases it brings against the adult industry.

For example, in the post-Bush era, it will probably be less likely that the government will initiate prosecutions of adult entertainment companies for violating the obscenity laws or the 2257 regulations than it will be for the government to initiate tax collection and tax evasion cases against adult enterprises.

As our firm saw during Clinton administration, we are also more likely to see cases filed by the Federal Trade Commission against large mainstream adult entertainment companies seeking massive monetary forfeitures than we are likely to see new criminal actions filed by the Justice Department against such adult enterprises.

The view that adult entertainment companies will probably face a diminished threat of criminal prosecution in the next administration does not mean that adult entrepreneurs should stop complying with all the laws that apply to them.

After all, there will always be some parties who elect to distribute extremely offensive materials that will likely face an increased risk of criminal prosecution because of the nature of the material they distribute or because they have engaged in some other activity that has made them an attractive prosecutorial target.

Also, it is clearly possible that the government may want to pad a criminal tax evasion case brought against an adult entertainment businessperson with additional criminal charges such as alleged violations of the obscenity laws which would, in turn, entitle the government to bring even more serious charges such as money laundering and racketeering.

But while the risk of serious criminal prosecution will always remain a part of doing business in the adult industry to some extent, there is a new set of legal realities that will confront adult entertainment businesspersons after George Bush leaves office.

Successful adult entertainment companies in the next era are likely to be those that quickly grasp this fact and effectively exploit the new emerging legal landscape.

This means, for example, that for an adult entertainment company to be competitive in the years to come, it must be able to effectively develop, protect, exploit and enforce its copyrights, trademarks and other intellectual property rights.

It also means that adult companies will have to learn how to minimize their risk of tax enforcement actions and prophylactically protect themselves from vexatious and unnecessary litigation from competitors, consumers, employees and others. Meanwhile, shrewd and effective deal-making and contract negotiation will become more important than ever.

To help our readers obtain a better working knowledge of the legal issues they are likely to confront in the post- Bush era, in the coming months, in addition to reporting and commenting on events of legal importance to the industry, this column will focus on a number of adult business law issues that I believe will be of critical importance for adult entertainment companies in the years to come.

In association with XBIZ, I will discuss many cutting edge business law issues and provide helpful tips and techniques that our firm has used for many years to assist our clients in their development, exploitation and enforcement of their intellectual property rights and their negotiation of some of the industry's biggest deals. Stay tuned.

The future is bright: it's bye-bye Bush.

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


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