SALT LAKE CITY — Provisions of a new Utah law making adult websites liable if minors in the state circumvent geolocation efforts to bypass age verification, which were set to come into force on Wednesday, have been put on hold until Sept. 3.
As XBIZ reported in March, when Utah’s SB 73 was signed into law, the bill updates investigation and enforcement rules for age verification and imposes an excise tax of 2% on adult sites operating in the state.
The new tax does not take effect until Oct. 1, but the legislation’s new VPN rule was to take effect Wednesday.
That provision states: “An individual is considered to be accessing the website from this state if the individual is actually located in the state, regardless of whether the individual is using a virtual private network, proxy server, or other means to disguise or misrepresent the individual’s geographic location to make it appear that the individual is accessing a website from a location outside this state.”
On April 22, however, Pornhub parent company Aylo filed a complaint with the U.S. District Court for the District of Utah, Central Division, seeking an injunction against the VPN provisions of the law.
In a statement, Aylo told XBIZ, “It is our opinion that this new law is unconstitutional and that no single state has constitutional authority to set the terms under which a global company may operate on the global Internet.”
In its complaint, Aylo contends that the new law threatens adult entertainment companies with civil penalties and potential criminal liability unless they implement Utah’s age-verification system “for every user of their platforms, anywhere in the world,” which the company argues would constitute “impermissible extraterritorial legislation” since Utah is “projecting its policy choices onto conduct occurring entirely outside its borders, in states and countries that have made different legislative judgments.”
The complaint also argues that the law violates the dormant Commerce Clause and Foreign Commerce Clause by “imposing significant burdens on, and purporting to regulate, the national and international markets for adult entertainment.”
The complaint reads, in part:
“There is no feasible way for a private company like Aylo to reliably verify whether any particular individual is using a virtual private network (VPN), proxy server, or other location-masking technology — and therefore no way to determine whether a user who appears to be located outside Utah is, in fact, located inside Utah.
"This is not a temporary technological limitation awaiting a solution; it is an inherent feature of how VPNs and proxy servers work, which is precisely why individuals and businesses around the world rely on them for privacy and security. Indeed, Utah officials responsible for enacting and enforcing S.B. 73 have admitted that they do not know how a private company is supposed to comply with the law ...
"Because there is no reliable way for a company like Aylo to verify whether a user who appears to be located outside Utah is, in fact, located inside Utah, the only way for Aylo to eliminate the risk of liability is to implement Utah’s age-verification requirements for every user of its adult content platforms, worldwide. The Deemed-Location Provision thus transforms what is nominally a Utah regulation into a de facto global mandate: either age-verify every adult on the Internet in compliance with Utah law, or face significant civil penalties and potential criminal liability every time a user located in Utah accesses Aylo’s platforms through a VPN or other tool that masks their true location, whether or not the user intended to disguise their whereabouts.”
On Monday, attorneys for Aylo and for Utah’s Division of Consumer Protection and Department of Commerce agreed to a “period of forbearance” under which the VPN provisions will not be enforced until Sept. 3, or possibly longer should the court require more time to issue a decision. On Tuesday, District Judge David Barlow granted the motion.
According to Aylo, after the company filed its lawsuit, Utah agreed not to enforce the challenged provision for an additional 120 days — until Sept. 3 — to allow more time for the litigation to unfold.
"The parties will file legal briefs over the next several months, with the goal of obtaining an initial decision on the law’s constitutionality prior to Sept 3," Aylo told XBIZ.
It is not yet clear whether the period of forbearance agreed to by the parties applies only to Aylo and its affiliates, or to all adult sites. However, industry attorney Corey Silverstein told XBIZ that from a practical standpoint, Utah would find itself impeded from enforcing the law against any site or company until the pending motion for preliminary injunction is ruled upon.
Silverstein told XBIZ that he has reviewed the pleadings to date and completely agrees with Aylo’s legal position.
"I am very pleased that Aylo filed this lawsuit and made the decision to challenge this dreadful law on its own and at its own financial expense," Silverstein said. "This is a law that was ripe for a constitutional challenge and Aylo made the courageous decision to take on this legal challenge on its own. I hope that the court will see this law for what it really is and put a stop to this obvious attack on free speech."
As XBIZ reported on Monday, the VPN provision in the new Utah law reflects growing concern about the widespread use of techniques to circumvent age verification, which has inspired both state and federal efforts to close that practical loophole.
