Law of Sex
Stealing Website Terms & Policies – Not the Best Idea
The Internet has become a notorious breeding ground for poaching others’ intellectual property. While all forms of IP infringement are discouraged, one in particular can create a massive headache for Internet businesses: misappropriation of another website’s Terms, Conditions, Policies & Disclaimers; and/or more broadly, legal web documents. While many may be enticed to simply swipe another’s Terms to avoid the legal costs of having an attorney draft brand new web documents, it’s simply not worth the risk.
Initially, there is the very obvious problem that another website’s Terms likely will not apply to your business. At the broadest level, different websites operate different business models and each set of Terms is ideally drafted for only one website running a specific business model. Similarly, even if the website operations are similar, there is always the possibility that Terms lifted from another website are outdated or flawed. The site that posted the stolen terms may, itself, have lifted them from another inapplicable site, or may be relying on Terms that were drafted before important legal development occurred. A few years is like an eon for Internet Law, and much happens in a short period of time. Cases decided in the last year have had profound impacts on how Terms directed at consumers should be drafted and implemented.
Even if parts of the lifted Terms are up to date and relevant to your business model, certain very specific clauses could be inapplicable, causing problems in relationships with your users. For example, billing provisions, dispute resolution options, and choice of law clauses are all areas which require specific and careful review before posting within legal web documents. Using another state’s (or nation’s) laws, or consenting to be sued in another remote jurisdiction, can have disastrous consequences for your business in the event of a dispute. Even claims brought by non-users can be impacted by these venue and choice of law provisions.
There is also a danger with broadly copying and pasting another website’s legal policies when it includes the name and contact information of the original company. Often this information is buried in the “fine print” or in a copyright disclosure, and easy to miss. Aside from being a clear indication of a copyright violation, this type of wholesale copying can invalidate the entire agreement because it is formed with a completely different entity than the actual website operator. Court’s will not overlook this type of plagiarizing.
A specific issue that our firm routinely sees with legal policy theft is inadvertent copying of a DMCA notice & takedown policy, identifying someone else’s designated DMCA agent. Posting someone else’s DMCA policy can result in a complete loss of DMCA safe harbor, and the fraudulent suggestion that someone is acting as your DMCA agent, when they are not. This is a large problem for “while label” programs, wherein the “white labels” erroneously presume they have permission to utilize the sponsor’s Terms or web documents, but usually, that’s not the case. More importantly, even in situations where the sponsor explicitly gives permission for the use of their Terms, use of the DMCA agent listed in the sponsor’s Terms is typically not part of the deal. Absent a specific agreement by the designated DMCA agent to act on your behalf, it is not likely that DMCA notices directed to your site will be processed in accordance with federal law. DMCA agents must file a designation with the U.S. Copyright Office listing all sites subject to the designation. Your posting of a copied DMCA policy will not suffice to trigger safe harbor protections, or give any notice to the DMCA agent that your site should be included in a designation. This form of copyright theft has severe consequences to any online service provider, even if the copyright holder never discovers the infringement.
As noted above, being sued for copyright infringement is a significant risk of stealing another website’s Terms. Merely changing a few words here and there will not prevent the stolen Terms from being considered a derivative work, and thus still owned by the original author. Statutory damages in a copyright infringement action can be anywhere from $750 to $30,000 per work, and up to $150,000 per work for willful infringement. Each stolen document would likely be considered a separate work. Attorneys fees will often be awarded in addition to damages. Risk of litigation isn’t the only consideration, however: the public perception that comes with using a competitor’s legal work can negatively and significantly impact credibility, both with consumers and in the industry, generally.
Developing your own set of website Terms and other legal web documents is important beyond the reasons listed above. A well-drafted set of web documents creates clearly established policies for both users of the site and third parties; the latter through documents outlining Subpoena Compliance and the site’s DMCA Notice and Takedown Policy. Legal protections like Section 230 protection, DMCA safe harbor, and sometimes Section 2257 exemptions, will be impacted by proper legal terms. Quality web documents can help outline potentially unlawful uses of the site, protect intellectual property, allocate liability, and provide important disclaimers. Finally, as noted, paying careful attention to important provisions such as choice of law, dispute resolution, and any applicable arbitration and/or mediation requirements is critical for protecting your online operation.
While an experienced Internet attorney will require compensation for drafting important legal terms, often the process of discussing these documents will lead to important modifications in internal operating procedures, as the legal consequences are evaluated.
Sex, Lies, & Sex Tapes
Sex, drugs & rock ‘n roll. That used to be the unofficial motto of Hollywood. And it worked. For years, the so-called scandals of celebrities in public were enough to keep tabloid headlines fresh, interesting and attractive to readers. Now though, it’s 2014: we’ve seen it all and it is no longer enough to simply report on what celebrities are doing in the public eye. A new unofficial motto has taken hold of those that fancy themselves the gatekeepers of celebrity information: sex, more sex, and leaked private media.
In recent times, not only have there been a rash of leaked photos from consumer-driven websites like 4chan, we’ve also lately seen stories of big name production labels, such as Vivid, considering the release of celebrity sex tapes. Rapper Iggy Azalea is at the center of the most recent controversy, with reports that a former boyfriend is shopping around a sex tape involving the entertainer to various media outlets including Vivid Entertainment.
Images or videos released to the public which were not originally meant for public consumption bring with them a wide variety of legal issues and pitfalls. That being said, there are four main issues in this realm which should be noted for anyone considering publishing this increasingly popular category of material.
Copyright: Initially, the person who created the media presumptively owns the copyright in the media. Sounds simple enough, right? Not exactly. This clear principle can quickly be made muddy, given the way we all create copyrightable “original works of authorship” these days. For example, consider the famous case of the Ellen DeGeneres Oscar Selfie. DeGeneres licensed use of the now widely known photograph to the Associated Press. But did she own the rights to license? It is unclear. DeGeneres is the one who got all the famous stars together, posed them, and set the scene for the photo. However, she was not the one to click the shutter button on the phone: Bradley Cooper was. The traditional presumption is that the photographer – meaning, very literally, the one who clicked the shutter button – owns the copyright and can distribute it. Additional confusion arises when the photographer is acting at the specific request of another – particularly without a ‘work for hire’ agreement. Within the rash of leaked celebrity photos on 4chan, this principle would mean that the copyright in each of the selfies was owned by the celebrity who took the picture, providing that individual with a strong intellectual property case to go after anyone who published the images. Conversely, however, in the case of Iggy Azalea, if her former boyfriend shot the video, he would have a good argument as to ownership of the copyright in that case. That’s not the only consideration for leaked media, however…
Publicity/Privacy/Commercial Exploitation: Even if Azalea’s former boyfriend properly owns the copyright, Azalea, as the subject of the video, also maintains rights to control the publication of her personal depiction in the video. A model or subject depicted in media has a right to profit from the display of their ‘image and likeness.’ This is usually called the right of publicity; or sometimes, the right to commercial exploitation, and is separate from the copyright. If the recording was done in secret, there may be privacy rights at play as well. All of these rights would typically need to be waived by execution of a model release. If not, then the individual depicted in the video retains the rights, and can sue for violation of those rights. Naturally, with celebrity sex tapes, there typically is no model release signed before the ‘performance.’
Section 2257 Records: The elephant in the room regarding celebrity sex tapes is compliance with 18 U.S.C. § 2257. As virtually all producers of erotic material know, Section 2257 imposes an obligation to review and compile certain performer identity and age documents prior to filming and/or publication. If those records were not created beforehand (which rarely, if ever, happens with a private sex tape or leaked content), the content is presumptively illegal to publish in the absence of accompanying records. The original producer must keep the original records, and all secondary producers (including webmaster) must keep copies of the records, along with generating their own records, such as the URL’s associated with the person depicted in the video. A notice of where the records are kept must be associated with the video, in the manner required by the statute and regulations.
Publication Risks: What happens if you publish a sex tape without 2257 records? The answer may depend on your role in the publication process. The original producer of the material, and the person responsible for initially uploading or publishing the material on a website, are clearly responsible for any non-compliance, which can include a multi-year prison sentence. So how are all these images being published on the Internet, presumably without 2257 records or model releases? Often, the content is uploaded by an anonymous customer of a ‘user generated content site’ such as a tube site, or posting forum like 4chan. The operator of the site will assert a Section 2257 exemption, designed to protect hosts and social networking sites from liability, and excuse their compliance with 2257 records maintenance obligations. The validity of the exemption depends on whether the site operator was actually involved with soliciting the sex tape upload; or in some cases, actually posting the content. If that activity can be uncovered, the site would almost certainly fail in asserting any attempted 2257 exemption. If the posting was done through a legitimate, unsolicited third party user upload, the site may be off the hook for 2257 compliance. Once the content appears online – somewhere – as user generated content, other ‘indexing sites’ link to it, categorize it and reproduce it, on a multitude of other sites; which ultimately display and drive traffic to the user-uploaded file. Section 230 immunity and DMCA safe harbor typically protect the tube sites and indexing sites from monetary liability for violation of publicity rights, privacy rights and copyrights, with respect to legitimate user uploaded or indexed content. All of this anticipates that the individuals depicted in the videos were over 18 years old when the content was created. If not, none of the exemptions, immunities or safe harbor protections will help the publishers with regard to child pornography allegations. Failure to report such content, once being made aware as website operator, is also a violation of federal law; Section 2258A.
Publishing sex tapes and leaked celebrity content is risky business, particularly in the absence of Section 2257 records or model releases. Celebrities have money and power…and lawyers. They can afford to enforce their rights, and may have enough influence to get law enforcement interested in pursuing criminal investigations. While some online service providers may be able to rely on federal law to skirt liability for the publications, any involvement in soliciting, posting or producing this category of erotic content generates significant legal risks.
Viewing Rights - The Constitutional Right to View Erotic Material
What are your constitutional rights when it comes to viewing pornographic, violent or controversial material in your own home? This is a question we frequently address as First Amendment attorneys, and on which there is still some confusion in the minds of consumers. Is there a right to view or possess pornography? What about obscenity? The answer to both of these questions, under the First Amendment to the United States Constitution and the Right of Privacy, is indisputably yes.
Stanley v. Georgia was a U.S. Supreme Court case in which the home of Robert Stanley, a Georgia resident, was searched by police. Stanley was previously convicted of bookmaking, and was suspected of conducting such nefarious activities again. Police had a warrant to search his home for bookmaking paraphernalia, and instead, found pornographic material in a drawer. Under Georgia law, it was a crime to possess obscene materials. Stanley was charged and convicted, and the conviction was upheld by the Supreme Court of Georgia.
That was not the end of the Stanley’s story, however. The U.S. Supreme Court overturned the conviction, and in the process made clear that all state laws criminalizing the mere possession of obscenity were invalid. In doing so, the Supreme Court noted that there is also a fundamental “right to be free, except in very limited circumstances, from unwanted governmental intrusions into one’s privacy.” Regarding the notion that the State of Georgia could control the contents of an individual’s personal home library, the Court said this was “wholly inconsistent with the philosophy of the First Amendment.”
Out of Stanley comes the legal principle that individuals are free to possess and view pornography, even if that material is considered obscene, in their own homes. Stanley placed no specific restrictions on the content or subject matter of the materials. Individuals are free to possess extreme erotic material in their own homes, and may additionally view whatever fetish or subject area they wish.
This right is not absolute, however. The right to view pornography comes with one important limitation: the prohibition against even mere possession of underage material. In Osborne v. Ohio, the U.S. Supreme Court held that states’ prohibitions on the mere possession of child pornography are not inconsistent with the First Amendment and therefore, even private possession of child pornography is illegal. What constitutes possession, however, varies by state. Some states have court rulings or statutes saying that viewing without downloading constitutes possession, while other states require active downloading onto the hard drive to meet the possession threshold. Under federal law, “receipt” of child pornography via the internet or other interstate transmission is prohibited as well, thus triggering potential federal penalties for these acts.
Importantly for advertisers and operators of adult websites, the U.S. Supreme Court has held that it is also illegal to promote something as containing underage materials even if it actually includes only adult performers, pursuant to federal “pandering” laws. Importantly for viewers, anything that is suggested to be underage material may actually contain such material, so it would therefore be best not to access such materials at all. Additionally, “morphed” or “photoshopped” images, containing the bodies of adults but the heads or faces of minors, have been the subject of recent and conflicting court decisions. Nonetheless, consumers are warned to avoid this content as well, given the potential risks.
Aside from the possession of underage materials, what is legal to view in your own home is a large category and includes exceedingly controversial content; such as images of violence, animal cruelty, and even “virtual” underage images, videos, cartoons or drawings. For violent images, there is interestingly no limit to the amount of simulated or real violence that can be viewed, as obscenity laws only apply to sexually-oriented materials. Although extremely controversial or violent materials may be legal to view, one must make his or her own personal decision whether to support or endorse content depicting self-harm or individuals being exploited. Another important point for viewers to note is that downloading a video depicting a real crime of violence may place you in the position of possessing relevant evidence, and subsequently destroying such evidence may, itself, be a crime.
Excepting the possession of underage materials, as noted above, individuals are free to view and possess a wide variety of violent and erotic content in their own homes, without fear of criminal prosecution. The First Amendment needs sufficient “breathing room” to survive, and part of that is tolerating the private possession of material that might be illegal in other contexts, like obscenity. However, with the widespread use of smart phones to create a diverse amount of both erotic and violent material, substantial questions remain regarding the legality of “producing” images that might be perfectly legal to possess.
Censored by Google: What’s Next?
Google, a name most associated with the popular, gargantuan search engine, has been making its way into the headlines for a different and much more egregious reason: censorship across its platform of products. The company recently made waves for prohibiting adult material on its advertising network, AdWords. Now, it seems, Google has expanded its censorial policies and many are wondering just where the company will stop.
Xbiz.com founder and editor, Alec Helmy, called out the search giant for its hypocritical behavior; echoing the concerns of many in the adult industry. In an open letter, Helmy wrote, “Your decision has left countless businesses in dismay, bewildered about why an ultra-progressive company that is so committed to ‘Freedom of Express’ would make such a decision. These same companies also remain concerned about what the future may hold – specifically, whether you will also decide to place adult oriented websites at a decided disadvantage in organic search results.”
Through a spokesperson, Google claims its restrictive policies on adult advertisements are not new. However, many familiar with Google and the adult industry do not agree. Theo Sapoutzis, chairman and CEO of AVN Media Network, said he was surprised by the move: “I was one of the very first advertisers for AdWords back in 2002. It’s something that’s been [untouched] for 12 years, so you don’t expect change is going to start happening.”
Tom Hymes, senior editor at AVN, agrees, noting that many in the adult industry have been abiding by Google’s rules for years and are now being abandoned by the search giant: “There are many people who say the biggest losers are the ones who play by the rules. The winners are the huge properties with a lot of free content and frequent updates – the type of actions the Google algorithms really like.” BaDoink CEO, Todd Gilder, added to the chorus with a scathing open letter to Google, noting: “When an organization as visionary, powerful and dominant as Google starts kowtowing to shrewd, faith-based special interest groups with federal lobbyists like Patrick A. Trueman at the helm, it’s a sad day for freedom and a sad day for IT.”
Now, Google is taking its censorship on advertisements a step further and directing business users to cover up “sexually explicit content” in the form of album covers. The search giant has instructed music website Drowned in Sound (DiS) to pixelate, thereby censoring explicit cover art. Sean Adams, founder of DiS said that “it seems crazy that they feel they can police our editorial.” He also wondered just far Google would go with its censorship policies in the future. Just recently, Google surprised many users when it removed several thousand links in an effort to comply with the EU’s “right to be forgotten” law.
Adams is certainly not alone in questioning the lengths and depths of the company’s censorship. Many people, both in and out of the adult industry, are uncomfortable with Google’s recent decisions and wonder what will come next. Attorney Michael Fattorosi stated, “This is another example of a mainstream company turning its back on the industry that has supported it. The question now becomes: Will they block adult content from their search results?”
Google has also previously attempted to keep adult content out of other major products: developers are not permitted to share Google Glass apps with sexually explicit content and sexually explicit materials are banned from Chromecast.
Many are speculating that pressure from conservative groups caused Google’s policy changes regarding adult content. Morality in Media, an ultra-conservative media activist group, claimed through a press release that Google’s policy changes came after a “productive meeting” between the two. Google has refused to confirm the connection. If accurate, this kowtowing to a family values group is a first for the search engine giant, which previously prided itself on commitment to free expression principles.
David Holmes, writing for Pando Daily, explains the greater problem of Google’s censorship and its impact beyond the adult industry. Holmes writes:
You may despise pornography, but the specter of “family values” has often been used to attack anything that threatens traditional Christian morality, from homosexuality to books about wizards. I doubt Google will ban Out Magazine or Harry Pottery anytime soon, but what about links to, say, a provocative work of art like Piss Christ? Or ads for birth control?
As Holmes notes, the importance of tracking Google’s policy changes is not only for their impact on industries currently hurt by the new rules, but also their potential to censor information Google doesn’t agree with in the future. Holmes colleague, Mark Ames, makes an important point: “Never in history has one corporation and one source had so much power over what we know and don’t know.”
Google’s power to filter the information received by the public is vast, and its ability censor disfavored speech, dangerous. Most importantly, this is everyone’s issue, not the select few whom Google has decided to target today.
DMCA Evolution: Forum Solicits Input on Possible Changes to Notice and Takedown Procedures
The Digital Millennium Copyright Act’s (DMCA) “notice and takedown” procedure and the attendant “safe harbor” protections afforded to service providers often spark controversy and debate. Originally designed as a way to balance the interests of copyright holders and online service providers, the DMCA’s 14 year history has demonstrated that well-intended laws can quickly become outdated and misused. Often DMCA notices are sent by, or on behalf of, competitors seeking to damage another party’s business, or by those who do not understand basic “fair use” concepts. On the other hand, DMCA safe harbor can be manipulated and invoked by parties that Congress never intended to protect from copyright infringement liability.
Change is in the air, however, at least for traditional DMCA notice and takedown procedures. Recently, the United States Patent and Trademark Office opened a public forum in pursuit of ideas for improving the notice and takedown process explicated by the DMCA. The forum was to be the first of a series of such, all geared towards the ultimate goal of increased efficiency, as well as continued protection for copyright holders, under the DMCA. The public discussion came after a green paper released in July 2013 by the Department of Commerce’s Internet Policy Task Force examined problems with the current notice and takedown process.
The purpose of the forum, according to Patrick Ross, a USPTO spokesman, was to solicit input to answer the questions raised by rights holders, service providers and the public at large, as addressed in the green paper.
The speakers were from a diverse cross-section of those affected by the DMCA: The Software Alliance, the Computer and Communications Industry Association, the Artists Rights Society, Google and many others.
One of the most common complaints from rights holders, according to the forum, is the inability of small and medium-sized artists or enterprises (SME’s) to keep up with infringement of their work. A proposed solution to this was the encouragement of collective representation for infringement research.
Additionally, one of the main and pressing topics examined at the forum was whether standardization of forms for the notice and takedown procedure would be helpful, both to rights holders and service providers. Overall, many of the participants believed that standard forms for notices seemed a good beginning, but certainly not a good end. The feeling at the forum was that there remained much work to be done. Several of the speakers, both service providers and rights holders, stressed the need to maintain balance in any solution designed to bring more efficiency to the DMCA, so that both sides would find value in the notice and takedown procedures.
Another possible solution discussed was creating “Trusted Submitter” programs, something Google has done, to more efficiently process DMCA notices. More diverse solutions were offered as well, such as the potential creation of a certification mark or badge for Internet search results, to alert consumers which pages were authorized or licensed sites for the particular intellectual property being searched for.
Given the large volume of notices received by most service providers, which often makes responding in a timely fashion difficult and costly, this is a great moment in time to examine better and more efficient methods of protecting copyrights online. The DMCA has been an important tool, for both rights holders and service providers alike, and may need to be updated to continue as such.
As discussed at the forum, it is important to keep in mind the balancing of interests that goes into any intellectual property issues on the Internet. Rights holders must be given a fair and easy way to prevent and police infringement, while online service providers must have an opportunity to efficiently and easily handle incoming notices. Those who abuse the notice and takedown process must also be held accountable.
Byte-Sexual: Recognizing the Evolving Relationships with Our Electronic Devices
Does the virtual assistant on your smartphone just “get you”? For many smart phone users, interacting with a natural speech-recognizing, intelligent, digital assistant - ever-present on their devices - has become a way of life. It was impossible to imagine just a few years ago that we would become a society dependent on our bots, for everything from driving to a place we’ve never been to seeking out the latest movie reviews. Perhaps predictably, some individuals prefer interacting with artificial intelligence over human beings. Others have even developed ‘feelings’ for their digital devices. Yes, there is even a name for such a fetish: mechanophilia.
For the past several years, the popular online dating website Match.com has been defending a lawsuit alleging that the company utilizes fake user profiles in order to encourage real members to renew their subscriptions. The suit also claims that Match does not adequately vet their profiles, and that the site may be filled with hundreds of profiles that are inactive or scams.
The concept of interacting with a ‘bot’ or artificial intelligence is not new. Many of us have clicked a ‘live chat’ help button, only to quickly realize that we were ‘speaking’ with a computer program designed to help resolve our issue before a paid employee was required to spend time figuring it out. But the technology driving modern artificial intelligence like Apple’s Siri is astounding – and only getting better. Soon it may be difficult to discern the difference between live chat with a human being as opposed to a programmed bot. For website users seeking purely online interaction or flirtation, the distinction may be unimportant.
The use of ‘virtual’ or ‘fantasy’ profiles is not new (or unique) to the online dating world, but recently the government has begun to question whether this practice is “fair” or “deceptive.” But is there anything inherently ‘wrong’ with individuals flirting with bots or artificial intelligence? Is it possible that some socially awkward or shy individuals may actually prefer virtual relationships rather than the thought of real human interaction?
Director Spike Jonze recently released his film “Her,” staring Joaquin Phoenix and Scarlett Johansson, about a man who falls in love with his operating system. Eventually, the OS, who goes by “Samantha,” tells the main character, Theodore, that she must leave (along with all the other operating systems). The implication is that the incredible number of relationships she was having with humans became too much for her and that she and the other systems no longer wanted to be among humans.
The question seemingly posed in the film was why any human would choose interaction with a bot over interaction with another human. A more relevant question might be: must we question why?
Many of the online dating websites using virtual profiles do so with full consumer disclosure, including statements on landing pages, in user agreements, and through distinct labels placed on the profiles and any messages they may send. Despite the disclosures, millions of individuals willingly interact with these programs, and apparently enjoy the process. The role of the government in regulating, or even prohibiting, this form of entertainment must be questioned.
This issue has increasingly made headlines. Just this month, a man petitioned the State of Florida to allow him to lawfully wed his laptop computer. In the case of Chris Sevier, the laptop wasn’t exactly his original object: His computer was filled with porn and due to this, he claims he “fell in love” with his computer and began “preferring having sex” with it over living persons. Sevier, in fact, argued that his “love” for his computer should be validly recognized by the court. While an extreme and perhaps humorous example, this case is illustrative of a trend on the horizon that can no longer be ignored: People are developing relationships with their digital devices and programs.
Maitresse Madeline, a fetish webcam model, has also spoken out about this very issue. Earlier this year, a man paid $42,000 for a single webcam session with her. Madeline believes that this exorbitant sum can be explained by the fact that individuals are actually paying for the virtual relationship, not paying in spite of it. According to CNET, Madeline told Kinky.com, "They're often paying for the ambiguity that a Webcam relationship can create and that relationship over Webcam is, essentially, their fetish." Sometimes, it seems, virtual relationships on the Internet are exactly the experience users seek. Madeline went on; "They often want to be whoever they can dream up over the Internet and prefer to only have a relationship online.”
This new world of virtual love has already been alluded to within the confines of the law. Michael Froomkin, a law professor at the University Miami, leads an annual conference called We Robot,” where the goal is simply to get people thinking about the legal implications of a world with robots in it. According to Froomkin, it’s not unusual for technology to get ahead of the law. “You design stuff to make it work and you don’t think a lot about the legal and social consequences,” Froomkin told NPR. “So by the time the lawyers get in the room, the standards are already baked and the stuff is already deployed.”
Froomkin’s point is a valid one and has played out repeatedly, as the law lags behind technology. Although we may be years off from a fully functional, human-like bot with a deeply developed personality like “Samantha,” we do currently live in the world of Siri’s and virtual profiles. The future of bots may not be here just yet, but who’s to judge how humans should be permitted to interact with the bots of their choice? The one aspect that distinguishes humans from bots is free will. As creatures born with free will, should we not have the choice to interact with, and be entertained by, our digital creations?
Censorship by Money: Snuffing Out Adult Entertainment by Denial of Banking Services
Adult film stars are reportedly having their bank accounts systematically closed by JP Morgan Chase bank, for no other reason than their connection with porn. According to industry publications and more directly, tweets from adult film performers, Chase has been busy sending letters to hundreds of performers, arbitrarily closing their accounts with the financial institution. One actress, Teagan Presley, attempted to open another account at Bank of America after her termination at Chase but was immediately denied. Our law firm has received numerous similar stories of account closures or denial of banking services.
This is not the first time financial institutions have targeted the adult industry. Last year, adult performer Chanel Preston reported being denied a loan from City National Bank in Los Angeles due to her status in the adult industry. Earlier that month, industry producer Marc L. Greenberg was also denied a loan from Chase on what the bank called “moral” grounds. Years ago, PayPal turned its back on the adult industry, and refused to process payments for most adult-oriented products and services. More recently, blogs have noted that online payment processors such as Paypal, along with WePay, have ramped up their hostility towards erotica, by shutting down accounts of bloggers involved in merely publishing content of a sexually-oriented nature.
In response to these discriminatory banking activities, a popular Change.org petition has been created, demanding that Chase reverse these decisions. The public pressure on Chase previously caused the bank to reverse its decision on the denial of payment processing services, through its subsidiary, Paymentech, to a condom sales company who challenged the action. The outrage felt by adult industry performers and publishers is certainly justified, but is the activity illegal? Certainly, private banks can do business with whomever they choose, right? That’s partially true, but there’s more to the story. Initially, there are some restrictions imposed on the banking and financial community when it comes to illegal discrimination. For example, banks cannot systematically deny loans and other services to disadvantaged minorities, without running afoul of federal law.
However, the stunning truth is that these account closures appear to be motivated by none other than the U.S. Department of Justice (DOJ), which created a leaked program dubbed “Operation Choke Point” designed to pressure banks into denying service to certain disfavored industries including “pornography.” Vice News notes that megabanks and other financial institutions, like Chase, are responding to this pressure by closing adult performers’ accounts, and denying services to other adult businesses. The banking industry, itself, seems to be uncomfortable with this governmental overarch into the financial sector. American Bankers Association CEO Frank Keating wrote a Wall Street Journal op-ed noting that the banks may have no real say in the issue, since the choices are either to comply or get slammed with a penalty. William Isaac, the former chairman of the FDIC has even called Operation Choke Point “way out of control.”
The government’s efforts in applying thumb screws to federally-regulated banks in order to snuff out erotic businesses engaged in First Amendment-protected entertainment constitutes censorship - pure and simple. Instead of falling into the realm of discretionary private business decisions that would ordinarily be protected from legal liability, denial of banking to adult industry participants at the behest of the DOJ likely violates federal civil rights conspiracy laws, including 42 U.S.C. § 1985. This infrequently-invoked federal statute prohibits two or more individuals (or government actors) from conspiring to deprive a person’s civil rights or equal protection under the law. While the statute has primarily been used in the context of racial discrimination, it could well provide a legal vehicle for claims against banks and others who have conspired with the DOJ to discriminate against adult performers based solely on their participation in erotic expression. This sort of retaliation against citizens for participating in constitutionally-protected activity is intolerable, if not illegal. The idea that our government would use the full force and intimidation of the Department of Justice to pressure banks (who are now largely indebted to the feds for bailing them out in 2008) into terminating customers it finds politically advantageous, represents a new low in governmental censorship.
Restricting the ability to access fundamental banking services can spell disaster for any business, and the DOJ presumably knows this. In fact, the author predicted this sort of governmental interference in the financial system as a means to impose censorship of erotica as far back as 2002, in the article entitled “A Chokehold on the Gatekeepers.” Cut off the ability to move money, and the business dries up.
Far from achieving its perhaps original purpose of curbing money laundering and other illegal activities, Operation Choke Point has become a means for the federal government to use banks to do its own dirty work of censoring adult businesses – something it could not do directly, thanks to the First Amendment. While affected performers and businesses may suffer in the long term, the continued popularity of digital currencies like Bitcoin and Litecoin may prove to be an important alternative for the adult industry to stay in business. Already, it has been reported that the affected businesses are flocking to Bitcoin to avoid the banking problems. While accepting Bitcoin as a payment method has inherent risks, and no one alternative currency is the perfect solution, this is another example of the Internet routing around censorship. So long as creative solutions are considered by the affected industries, the banks will lose some of their ability to control the content of entertainment and free expression.
Isaacs Obscenity Case & Life Without Miller
In a not-so-surprising, albeit disappointing, decision affecting the adult entertainment industry, the 9th Circuit Court of Appeals recently upheld the obscenity conviction of fetish producer, Ira Isaacs. Isaacs was originally charged with violating federal obscenity statutes in 2007, after the distribution of several of his fetish films via U.S. mail. Isaacs’s 2008 trial was placed on hold and eventually resulted in a mistrial, amid judicial controversy. Judge Alex Kozinski, who presided over the obscenity prosecution, recused himself within days of commencing the trial, after it was discovered that the Judge had been maintaining a personal humor website exhibiting sexually explicit images. After another attempt to try the case in 2011 was delayed when prosecutors added more charges, the Isaacs case eventually went to a full trial in March of 2012. For a second time, however, a mistrial was declared after jurors deadlocked on the verdict, 10-2 in favor of the government. The case was tried for a third time in April of 2012, which resulted in conviction and is the basis for the recent appeal.
In general, the Obama administration has been decidedly less interested in obscenity prosecutions than was its Republican predecessor. Since 2009, the administration’s prosecutors have tried only two adult obscenity cases, in contrast to the volumes of obscenity prosecutions that took place under President George W. Bush. Notably, Obama’s Department of Justice has not initiated any of its own obscenity prosecutions, but merely followed through with pending cases initially filed by the prior administration.
Isaacs’ most recent, unsuccessful appeal relied more on procedural due process arguments, as opposed to disputing his guilt of violating obscenity laws. The numerous due process claims were rooted in allegations of uncertainty directly related to the Miller Test; specifically, the concept of "prurient interest" as set out in the first prong of the test. According to the ruling, the District Court adopted a proposed jury instruction defining an “appeal to ‘prurient interest” as “an appeal to a morbid, degrading, and unhealthy interest in sex.” After a question was posed by a juror, the Court revised the instruction to read “morbid, degrading or unhealthy.” Isaacs argued that the change “undermined the credibility of his lawyer,” as the attorney, in closing argument, referred to the original instruction. The District Court rejected this contention, finding that the attorney had in fact used both formulations of the instruction during argument so it was “unclear how the revision might have implied to the jury that Isaacs misled it as to applicable law.” Further, the District Court noted that while Isaacs argued that it was error for the Court to correct the instruction, there was an obligation on the Court to clarify issues for the jury, so that they did not abuse their discretion in doing so.
The 1973 case Miller v. California established the standard that is still used today for what defines obscenity. The Miller test, as it is known, has three essential prongs:
- Whether ‘the average person, applying contemporary community standards’ would find that the work, taken as a whole appeals to the prurient interest
- Whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law and
- Whether the work, taken as a whole, lacks serious literary, artistic, political or scientific value
Miller has been a source of controversy and debate in the adult industry, since its inception. The difficulty with the average juror understanding and applying the inherently vague terms of the Miller test can produce unpredictable results. Unfortunately for Isaacs, the odds were against him from the beginning, given the nature of the content at issue. Scat material has typically been some of the most difficult to defend, and explain to juries who tend to be shocked when exposed to the content. While some fetish material has survived obscenity prosecution, this case resulted in a conviction, and now an affirmance on appeal.
Any time an adult industry participant is convicted of obscenity, discussions ensue regarding the continued viability of the Miller test in today’s world, and whether the industry should support a constitutional challenge to the test. Given the Supreme Court’s repeated validation of the Miller test for obscenity, even in recent years, it is unlikely to be changed any time soon. But even if the Court was inclined to replace the current obscenity test, the question becomes: With what? Outright abandonment of the well-entrenched concept of obscenity laws is an unlikely result of any such case brought to the Supreme Court, despite some of the encouraging language in Justice Scalia’s dissent in Lawrence v. Texas. If the challenge was based on the claim that the Miller test was insufficiently clear for common understanding, one could envision the Court handing down a crystal clear, bright-line prohibition on the depiction of specific sex acts, fetish behavior, or BDSM activity, under the guise of more clearly defining obscenity for adult content producers. In situations like this, it is always wise to reflect on what the parties are really asking for – because they might just get it.
While Miller suffers from its vague concepts and outdated language, it has provided opportunities for creative arguments, and stunning victories. While the test is difficult on defendants, it is equally difficult for prosecutors, who are used to well-defined criminal offenses that are not dependent on notions of societal tolerance or considerations of literary value. Obscenity prosecutions have dwindled to a virtual halt in modern times, and the difficulty in applying the Miller test in today’s society may be partially to thank. The “community standards” element suffers from outdated concepts of unified values and social mores based on geography, which arise from something out of Andy Griffith or Leave it to Beaver. Today, neighbors have more in common with their Facebook friends spread out across the world than they do with their neighbor – most of whom they never met. Fortunately, the decision in U.S. v. Kilbride recognized this inherent weakness of using local community standards, and required juries to apply national standards – at least in online obscenity prosecutions. With tweaks like these, Miller may be more of a benefit than a hindrance to producers of erotic content, as compared to some other bright line test. Certainly, all obscenity laws are forms of censorship, and antithetical to First Amendment values. The Miller test does little to logically separate specific types of content from constitutionally protected speech. However, it may be as good as it gets for the time being, even if it results in the stray, unfortunate conviction.
So what’s next for Ira Isaacs and obscenity prosecutions? Isaacs recently petitioned the 9th Circuit Court of Appeals to rehear his case, with his lawyer arguing, among other things, that the case was not given the “special care that the First Amendment requires.” The likelihood of Isaacs’ petition for rehearing being granted, however, is slim. Assuming it is denied, the chances of the Supreme Court accepting the case are not promising, either. However, should the Court take interest in the case, it would likely be for the sole reason of again affirming the viability of the Miller obscenity test. For Isaacs and his counsel, they have every reason to try, and should not be faulted to doing everything in their power to undo the conviction. But in the off chance that the Supreme Court takes the case, it’s time to buckle up. If the decision results in anything other than a re-affirmance of Miller, things could get dicey.
Perhaps the Isaacs case will be the last federal obscenity prosecution for a while, as the futility of reigning in the human desire for sexual expression begins to set in for the DOJ. But as long as we have laws on the books that permit the government to put people in cages for making movies involving consenting adults, the guardians of liberty must remain ever-vigilant.
Title 18, U.S.C. Section 2257 (“2257”) has long been a thorn in the side of content producers and webmasters in the adult industry, but now, the controversial statute is being utilized in ways never intended by the drafters of the legislation. Purportedly created as an effort designed to prevent the proliferation of child pornography, 2257 has historically been used by the federal government as a tool to enforce producer compliance with its onerous record-keeping and labeling obligations designed to verify the age of models appearing in sexually-explicit imagery. Some records inspections have occurred by the Attorney General’s office, although actual prosecutions under the law have been essentially non-existent. Recently, however, the statute is being adopted by litigants, industry participants, and governmental agencies as a sword wielded against adult businesses, instead of the protective shield it was meant to be.
A little over two years ago, the industry witnessed the first use of 2257 in a copyright battle between two adult businesses in federal court. In a lawsuit filed by Ventura Content, Ltd. (a.k.a. Pink Visual) against the tube site Motherless.com, the former alleged, among other claims, that Motherless failed to maintain performer records as dictated by 2257 and failed to post the mandated disclosure statement on its website. The requested relief? Ventura asked the court to shut down the tube site based, in part, on its failure to comply with 2257.
Although the ability to protect against copyright infringement is an essential goal in the adult industry, insiders using 2257 as a weapon to battle each other in court sets a dangerous and unsettling precedent. The DOJ’s enforcement of 2257 is intimidating enough, but the thought of a litigation strategy designed to shut down adult media for violations of the statute would add a layer of credibility to 2257 that threatens the industry’s challenges to the statute, and is ultimately self-defeating.
Much more recently, in November of 2013, a John Doe defendant asked a court to examine Malibu Media’s 2257 records in order to, essentially, invalidate their copyright infringement claims against him. Doe was accused of illegally torrenting 19 of Malibu Media’s copyright films and in turn, made the claim that if a film is not accompanied by adequate 2257 records, then it may not be validly protected under copyright. The case is currently still pending.
Although Doe’s attorney’s strategy may have been a bit of a long shot (as it would be impossible to know the status of plaintiff’s 2257 records short of inspecting them himself), the point is not necessarily whether these 2257 abuse tactics are working, the concern is that they are being employed at all. While these instances of using 2257 to buttress industry infighting are the most prominent, there have been others and the trend is disturbing.
The abuse of 2257 unfortunately doesn’t stop with adult industry participants and John Doe defendants, however. Recently, unconfirmed reports indicated that Cal/OSHA has been subpoenaing 2257 records for various adult content producers with an insidious and ulterior motive: busting the companies for violating the LA County ordinance colloquially known as Measure B, requiring condom usage in adults scenes shot within the county limits. According to these reports, Cal/OSHA obtained the 2257 records in order to ascertain dates and times of shoots – information that would necessarily be contained in the 2257 records. Thus, the County would be able to confirm whether the producers are complying with Measure B and pulling the required permits. If it finds out they are not, Cal/OSHA can impose heavy fines. CAL/OSHA records do confirm that the companies are being investigated.
It seems as though instead of simply maintaining records to ensure age verification, adult industry producers now need to worry about a slew of ancillary legal concerns relating to their 2257 compliance. Any problems with a producer’s compliance regime could prevent them from enforcing their copyrights or result in an unfair competition claim by a ‘holier than thou’ company who claims perfect compliance. The problem is: there is no perfect compliance. The byzantine regulatory scheme created by Congress and the DOJ poses risks of technical violations for even the most diligent producer. Any effort to give credence to an ill-conceived law like 2257 is, at a minimum, bad karma, and at most a tacit admission of the validity of the law. My humble recommendation; leave 2257 out of the industry infighting, and adopt a cohesive position regarding the unconstitutionality of the burdensome federal statutory abortion we know as 2257.
Witnessing Transformation – Performers into Producers
The beginning of a new year in the adult entertainment industry is always filled with excitement, trade shows, and hopes for success in the year ahead. Now is also the time when the industry tries to identify upcoming trends in production and distribution of erotic content. Fresh in the minds of many performers and producers are the battles over condom laws, and production moratoria resulting from STD outbreaks. This, combined with advances in technology and plummeting DVD sales, has encouraged many performers to explore alternative forms of erotic entertainment to fill the gaps between shoots. Some choose escorting or headlining at strip clubs. But many others have turned to lucrative live webcam performances and custom video-production.
The effect of these erotic alternatives has been to cut out the middlemen; i.e., the talent agencies, producers, and photographers. All that’s required is a webcam, a good broadband connection, and a knack for turning on your target audience. Many webcam platforms and escort advertising networks allow the performer to take control of his or her content production and therefore, directly profit from the work. With a little creativity and work ethic, some performers have found that webcam performances or custom, amateur videos can be even more lucrative than professional porn shoots. The new middleman is the webcam platform provider or the clips sales studio.
Interestingly, as technology fosters a more one-on-one interaction, the tastes of typical erotica consumers have evolved as well. Why lust after the unattainable blonde bombshell, when that webcam performer with the ‘girl next door’ look might actually be the girl next door? The evolution of technology has allowed the performer to create, market, and distribute their material, all the while inviting customers into their reality. The average porn consumer now wants to know things like what their favorite performer had for breakfast, how they get dressed in the morning, and their plans for the evening. Call it a byproduct of a reality TV-obsessed culture, or just living in the age of social networking; all the world’s a stage and performers are more than willing to share the intimate details of their lives with customers. Ten years ago, an autographed DVD might have been a prized possession for a devoted fan. Now, last night’s panties are up for grabs – for the right price. Some performers may even go the extra mile and engage in intimate contact with fans on camera, as a promotional tool. The popularity of this type of interactive sex and performer/fan dynamic was even the focus of HBO’s premiere of SEX/NOW; the network’s reboot of Real Sex.
So what does this mean for the performer now turned producer of his or her own material? Most importantly, all of the legal obligations that used to be handled by the producer, photographer, talent agent or other intermediary now fall squarely on the performer. These legal concerns include Section 2257 records keeping compliance, content clearance, licensing of rights, copyright registration, fair use concerns and trademark issues. Can I show that painting in the background of my cam shot? Will the RIAA come after me if I play music during my cam show? Just because technology allows a seamless transition from performer to producer, does not necessarily mean that the law does the same.
Most cam performers are unaccustomed to dealing with these technical issues and mundane legal obligations – particularly if they have relied on professional producers to handle such matters in the past. In some ways, we’re all in the same boat. Anyone who posts a comment on Facebook, or a review on Amazon, is a worldwide publisher. Anyone who uploads a picture to a blog or forum is a media producer. That power triggers significant legal obligations. Issues like defamation, fair use, and commercial exploitation used to be the exclusive province of powerful media stakeholders like the New York Times or NBC. Now, these issues impact anyone with a smart phone or social networking account. Add on the additional layer of legal regulation imposed on erotic content, and performers can often become overwhelmed with compliance issues. With industry-specific devices and applications expressly designed to simplify the process of production and publication, technology can help ease the burden, but only to an extent. Autonomy requires proactive measures. If performers wish to capitalize on self-production trends and continue forging virtual relationships with their fan base, the keys to success are education and preventative solutions. The performer turned producer must learn to recognize the legal issues before they become legal problems.
Lawrence G. Walters heads up Walters Law Group which has advocated for the adult entertainment industry and Free Speech issues for 25 years. Nothing contained in this post is intended as legal advice.