Intellectual Property: 1

Gregory Piccionelli
The amount of adult entertainment content available to consumers today is enormous and growing exponentially. In fact, there has never been so much explicit erotica so readily available as there is now. Yet industry profits have slowed despite the fact that total revenues continue to increase. Many industry observers attribute this unfortunate situation to an oversupply of content. While this almost certainly true, it is not the whole story. To understand how the industry got into this predicament requires an understanding of how there got to be a content glut in the first place.

While it may be surprising to some, the current oversupply of content is likely due, in large part to the industry's decades-long failure to effectively enforce its intellectual property rights. This month's article will explore how this failure is now propelling the industry into a true economic crisis that could undermine the profits of large segments of the adult entertainment business.

Adult entertainment producers create intellectual property. In fact, the primary products of the industry: videos, photographs, web sites, erotic stories, etc., are all works protected by the copyright laws of the U.S. and other countries. But despite the fact that adult entertainment companies are in the business of creating and distributing copyrightable works, from the beginning, with a few notable exceptions, adult content producers have generally shown little interest in enforcing their copyrights against infringers.

The reason given by some adult entrepreneurs for failing to protect their copyrights is that they do not want to expend the funds necessary to protect their rights. Others claim that, given the governmental hostility toward adult materials and those that distribute them, it is best for porn producers to steer clear of the legal system whenever possible.

Failure to Prosecute
Regardless of the reasons, however, owners of adult content have a long history of generally failing to prosecute parties that steal their content and infringe their trademarks.

Inevitably, the industry's passivity has nurtured a culture of adult content theft. In fact, one might even say the industry has actually incentivized and institutionalized the piracy of adult materials in some circumstances.

For example, can anyone doubt that a typical affiliate marketing program operator is much more concerned with an affiliate's ability to generate traffic than whether the affiliate has the rights to content used on the affiliate's site? As a consequence, a lot of traffic is being created and directed by parties who steal the content and infringe the copyrights and trademark rights of others.

Unfortunately, rather than being penalized for such theft, the parties are rewarded with fat affiliate compensation checks.

Now, not surprisingly, after literally decades of the producers' failure to effectively police their rights, parties that steal adult content can almost rest assured that their theft will, in most cases, never be prosecuted.

As a result, a substantial amount of adult content available the web and even on DVDs is pirated material. Some have estimated that infringements may account for as much as 50 percent of all adult materials available online world-wide. And the problem is getting worse.

Further compounding the piracy problem are a number of new sources of infringement that might soon make today's level of theft seem small by comparison.

These include, for example, adult free video sites emulating the user posting features of YouTube, adult community web hosting sites emulating MySpace, but neglecting, if not encouraging, user postings of third party content to boost traffic and adult content peer to peer networks, including those requiring, as a condition of participation, the posting of adult materials without serious regard as to the contributor's right to do so.

Energizing the use of these new mega-infringement machines, and further exacerbating the problem, is the entrenched, and growing, perception among the young that blatant and voluminous adult content sharing is a good thing.

Unfortunately, if left un-addressed, the piracy problem could soon become a profit sink capable of collapsing the profitability of large segments of the adult entertainment industry.

Like it or not, the business is being forced to confront the formidable challenges brought on, in large part, by its own inaction, in which rampant piracy was allowed to go unchecked.

What Can Be Done
Content owners are not defenseless in combating the onslaught of piracy they now face. Standing at the ready are powerful copyright laws that, when used effectively, can bring pirates and all those who knowingly benefit from their theft to task. Essentially, the copyright laws entitle a copyright owner to wield a "big stick" to enforce the copyright owner's exclusive rights. For example, if you own a work protected by copyright that is being infringed, to enforce your rights, copyright law entitles you to invoke the power of the U.S. federal court system and the law enforcement apparatus of the U.S., including the U.S. Marshals, the Customs Service and, potentially, even the Justice Department. And if you are a content producer, having these bad boys on your side for a change can put some real power behind an intellectual property rights enforcement program.

For example, the copyright laws of the U.S. provide for the awarding of damages to copyright owners for infringement of their works amounting to the profits made by the infringers plus losses sustained by the copyright owner.

Moreover, if an adult video, photograph, website or other expressive work is properly and timely registered with the copyright office, the owner may be entitled to payment of statutory damages of up to $150,000 per work willfully infringed regardless of whether the infringer made any money unlawfully using the content or the owner sustained any losses from the infringement. Yes, that's right, liability of up to $150,000 per work even if the infringer never made a dime from your content.

Also, should the industry pick up the gauntlet and begin to aggressively enforce its rights, it would soon discover that its interests are aligned with some of the most powerful and influential companies in the world.

This is because the problem of pirated content is not just an adult industry problem. The difficulty of preventing theft of digital content in the age of perfectly reproducible material that can be reproduced instantaneously and delivered anywhere in the world via the web is a problem that confronts the music industry, the motion picture industry, the computer games industry, the software industry and virtually ever other producer of digitizable content.

Some of these potential allies, most notably the music and film industries, are fighting back by suing many of the infringers of their content, even if the infringers are their customers.

While not a complete solution, this aggressive enforcement strategy has been credited, at least by the music industry, with stemming the tide and slowing the bleeding of music-industry profits.

So, what can be done by content producers and by the industry as a whole.

If you are a content producer and you are not currently enforcing your intellectual property rights you should start to do so as soon as possible.

Creation of an intellectual property rights enforcement plan is a good way to begin. This should be done with the assistance of a qualified intellectual property attorney. An experienced practitioner can help you determine how to best and most cost-effectively protect your rights and increase the value of your intellectual property assets.

Generally, most intellectual property rights enforcement plans can be divided into five parts:

First, the appropriate rights must be acquired and optimized for enforcement. In the case of copyright enforcement, usually, this entails that the content owner acquire via a "work for hire" agreement or other rights granting document all the rights in the content that are or might owned by persons who participated in the creation of the content.

This includes, depending on the type of work involved, rights granted by the models, actors, directors, video camera operators, photographers, editors, writers, music composers, music players, music producers, web site designers, and programmers, etc.

The second part of an intellectual property rights enforcement plan is the optimization of rights for enforcement.

In part two, we'll examine registration of copyrights, trademark enforcement and more...

Gregory A. Piccionelli specializes in Internet law; entertainment law, including adult entertainment matters; intellectual property law; and free speech issues. He is a licensed patent attorney admitted to practice before the U.S. Patent and Trademark Office. He can be reached at Piccionelli & Sarno, 1925 Century Park East, Suite 2350, Los Angeles, Calif., 90067, or by phone at (310) 553-3375

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