trends

Mission Critical: 1

Gregory A. Piccionelli
The adult entertainment industry was barraged with a lot of legal news last year. The industry press reported stories about landmark decisions in the areas of obscenity and copyright law, unprecedented enforcement activity by government agencies such as Cal-OSHA and the Federal Trade Commission, outrageous new anti-adult legislation including new 2257 regulations, no-email registries in Utah and Michigan and proposed taxes on adult entertainment. In 2005, the legal hits, so to speak, just kept on coming.

But as legally tumultuous as 2005 was, 2006 has the potential to make last year seem uneventful by comparison. This is because we already know of a number of important events expected to occur in 2006 that could powerfully affect the adult entertainment business.

Principally amongst these are:

  • A number of important court decisions in several critical industry cases;

  • The midterm congressional elections; and

  • Simultaneous introduction of several new product platforms, such as high-definition DVDs, Video iPods and practical Internet Protocol Television (IPTV).

We should expect that developments associated with each of these events will powerfully impact the industry in 2006 and beyond. Here's why:

Critical Court Decisions
If you distribute explicit sexual content in any medium in the U.S, first and foremost you should know that you are subject to a large number of very serious criminal laws. Among the most important of these regulations are the obscenity laws, the federal 2257 record-keeping and labeling regulations (18 U.S.C. § 2257 and 28 CFR 75 et seq.), and the laws that prohibit distribution of harmful matter to minors. Violation of any of these regulations can result in long jail terms, huge fines and, in the case of an obscenity conviction, potential forfeiture of your business and related assets.

Currently there are several critically important cases pertaining to each of these areas of criminal law for which we can expect important rulings in 2006. These rulings will almost certainly play a large role in shaping the future of adult entertainment regulation, and the industry itself.

For example, critical rulings in the case of U.S. vs. Extreme Associates are expected in 2006. Among these will be whether the U.S. Supreme Court will consider the issue of whether, in light of its recent privacy rulings, the obscenity laws can even be enforced against persons who distribute adult content to willing adults. If the Supreme Court accepts the case, its ruling could determine the future of obscenity prosecutions in the U.S.

Also, in 2006, we can expect to receive a crucial ruling of industry-wide significance in the case of Free Speech Coalition vs. Gonzales. As you may know, in June, the FSC petitioned the federal district court in Denver, to restrain governmental enforcement of the 2257 regulations. The issue of whether the court will enjoin all, part or none of the 2257 regulations is an issue of paramount importance to the entire adult entertainment industry. Regardless of how the court decides, however, it is likely that the ruling will be appealed by the losing side. Consequently, it is also possible that we will even see a critical ruling by the 10th Circuit Court of Appeal by the end of 2006.

We also are expecting a ruling in another FSC case of crucial importance to the industry in early 2006. As you might know, the FSC sued the state of Utah to restrain the state from enforcing its "do not email" registry. Utah's law is an example of a chilling new trend by several state governments seeking to criminalize the transmission of lawful messages to "contact points," such as email addresses, registered with the state, if such messages contain adult content or merely advertisements for products a minor is prohibited from purchasing.

Also in 2006, the long-delayed federal district court trial of the ACLU's challenge to the Child Online Protection Act (COPA) is scheduled to commence June 12. COPA, which is, in effect, the federal online harmful matter law, has been enjoined since 1998. At stake in this case is how the adult entertainment industry will be required, if at all, by federal law to restrict minor access to adult materials available online.

The New Year also is likely to see critical, and potentially dispositive, rulings in the Acacia patent litigation that has vexed the industry for several years. In the court's late-2005 ruling entitled "Further Claim Construction Order: Order Finding Claims Terms Indefinite and Claims Invalid," the judge requested that the parties file appropriate motions based on the court's interpretation of many of Acacia's patent claims to be invalid. For many of the defendants, this likely will mean the filing of summary judgment motions to effectively end the case.

In addition to expected rulings in ongoing cases, in 2006 the industry can also expect an increasing number of new obscenity cases filed by the Department of Justice, more Can-Spam actions filed by the FTC and a record number of copyright and trademark infringement actions filed by private parties.

In part two, we'll examine the impact of the the midterm elections, the introduction of revolutionary products and more.

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 www.piccionellisarno.com.

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