Section 2257 is Back from the Dead with New Ruling

I.  Introduction

 On September 1, 2020 the Third Circuit Court of Appeals issued an opinion in the long-running litigation brought by the Free Speech Coalition, and others, challenging the constitutionality of 18 U.S.C. §§ 2257 of the Child Protection and Obscenity Enforcement Act of 1988 and 18 U.S.C. 2257A of the Adam Walsh Child Protection and Safety Act of 2006, along with the related federal regulations (collectively, “Section 2257”). The decision reverses the previous nationwide injunction against enforcement of the vast majority of Section 2257, which was issued by the district court on First and Fourth Amendment grounds. While the recent decision provides some glimmers of hope for the adult industry, Section 2257 has now been resurrected from the dead.

II.  Historical Background

Section 2257 imposes criminal penalties on producers of sexually explicit materials who fail to comply with federal age verification, record-keeping, and labeling requirements. A person who fails to inspect IDs, create and maintain records, or properly label sexually explicit materials is subject to up to five years in prison for a first-time violation or ten years in prison per subsequent violation.

Since 2009, Section 2257 and the related regulations have been constitutionally challenged as a violation of free speech rights under the First Amendment by two adult entertainment trade associations and ten producers. As a result, the United States Court of Appeals for the Third Circuit has issued three prior opinions on the matter. Separately, the lower court previously issued the above-referenced nationwide injunction which prevented enforcement of Section 2257’s criminal provisions against any individual, based on the fact that Section 2257 was unconstitutional as applied to the ten producers in this line of cases.

In the first case, the Third Circuit determined that Section 2257 was content neutral and subject to intermediate scrutiny, but the court allowed the plaintiffs to move forward with an as-applied claim and overbreadth challenge.

In the second case, the Third Circuit determined that the two trade associations did not have standing to bring as-applied claims on behalf of their members, because they could not show the degree to which each member’s speech was unnecessarily burdened. The Third Circuit rejected the ten producers’ as-applied claims, because Section 2257 served the government interest in preventing producers from purposefully or inadvertently using underage performers, given that each producer used youthful-looking adults. The Third Circuit also upheld Section 2257 despite the plaintiffs’ overbreadth challenge.

In the third case, the court reviewed a then-recent Supreme Court decision, Reed v. Town of Gilbert, which the plaintiffs argued meant that Section 2257 was content-based and required the more onerous strict scrutiny review. A Third Circuit panel rehearing the case agreed with the plaintiffs and remanded the case back down to the District Court for further review.

The District Court held that (1) the trade associations lacked standing to bring as-applied claims on behalf of their members, (2) the age verification requirement was constitutional as applied to primary producers, but unconstitutional as applied to secondary producers, (3) the record-keeping and labeling requirements are unconstitutional as applied to both primary and secondary producers, (4) the criminal penalties are unconstitutional if used to enforce requirements that themselves are unconstitutional, (5) the plaintiffs failed to show that Section 2257 was substantially overbroad, and (6) the plaintiffs were entitled to an injunction prohibiting nationwide enforcement of the unconstitutional requirements by the Department of Justice. The District Court also formalized a ruling from the Third Circuit that found the warrantless inspection requirements of Section 2257 to violate the Fourth Amendment. At this point, Section 2257 was essentially dead other than requiring primary producers to verify age of performers.

III.  The Latest Opinion

In reviewing the lower court’s recent decision, the Third Circuit released a fourth opinion which changed the legal landscape and enforceability of Section 2257 yet again.

First, the Third Circuit held that the two trade associations lacked standing to challenge Section 2257 on behalf of their members. The court explained that the claims require an individualized inquiry of each association member, since what may be narrowly drawn and the least restrictive means for one association member will not necessarily be so for another.

Second, the Third Circuit held that Section 2257 violates the First Amendment rights of ten specific producers. The Court explained that Section 2257 is not the least restrictive way to protect children from sexual exploitation, since it applies to producers that use models who no reasonable person could mistake for a child. In other words, Section 2257 is invalid insofar as it applied to producers that used models that are at least thirty years old.

Third, the Third Circuit held that the criminal penalties for noncompliance are unconstitutional as applied to the producers, because the underlying age verification, record-keeping, and labeling requirements are unconstitutional as applied to the producers. The plaintiffs had asked the court to declare the application of harsh criminal penalties for technical records-keeping violations unconstitutional. The court rejected this argument but found that the penalties could not be applied against these specific plaintiffs since the law itself was unconstitutional as applied to them. Same result – different reasoning.

Fourth, the Third Circuit held that Section 2257 was not facially invalid under the overbreadth doctrine. The court explained that Section 2257 can be validly applied in an extensive number of situations, since many sexually explicit productions involve youthful-looking performers. The court also noted that the statute would be impermissible if applied against (1) producers that use models that are clearly adults, or (2) consenting adults who share sexually explicit images between themselves for purely private purposes. However, these two invalid applications were outweighed by Section 2257’s vast legitimate sweep.

Finally, the Third Circuit held that a previously imposed nationwide injunction against enforcement of Section 2257 was broader than necessary to provide full relief to the ten specific producers. The court explained that the injunction improperly applied to enforcement against all individuals, even though Section 2257 had only been held unconstitutional as applied to ten specific producers. In other words, Section 2257 cannot be enforced against the ten producers in this case, but the law can be enforced against everyone else. However, the opinion suggests that Section 2257 may be unconstitutional when applied against (1) producers that use only models that are clearly adults, or (2) consenting adults who share sexually explicit images between themselves for purely private purposes. The court left open the possibility that the criminal provisions may also be unenforceable against all secondary producers but did not expressly decide this issue.

This recent ruling also recognized that the warrantless inspection requirements violated the Fourth Amendment. The Third Circuit had already ruled on that issue in an earlier decision, so the government was unable to challenge it again in this appeal.

In response to this ruling, the plaintiffs can ask the full panel of judges on the Third Circuit to rehear the case (“rehearing en banc”), can seek review by the U.S. Supreme Court, or can allow the case to be remanded (sent back) to the District Court for final judgment in accordance with the rulings. Time will tell which path the litigation will take.

IV.  What Does This Mean?

Until this recent opinion, the adult industry could take comfort in the fact that a federal court had prohibited the government from enforcing Section 2257 against anyone other than primary producers who fail to verify the age of performers. That prohibition has now been lifted. While there may be constitutional problems with attempts to enforce Section 2257 in various circumstances, the Department of Justice can file criminal charges against non-compliant producers. A criminal prosecution can cause devastating consequences for any company or individual, regardless of the outcome.

Fortunately, the continuing prohibition on warrantless Section 2257 inspections means that producers who follow the law and do not use underage performers are unlikely to face an inspection. Presumably, the government would need to obtain a subpoena or warrant to inspect records. Nonetheless, all producers are encouraged to follow Section 2257 obligations to the letter.

The Free Speech Coalition, along with the other plaintiffs and their talented legal team, has worked tirelessly for many years to challenge Section 2257 on behalf of the adult industry. They deserve thanks and support for fighting this important constitutional battle.

Section 2257 – still crazy after all these years!

 

Lawrence Walters heads up Walters Law Group and has advocated for the interests of the adult entertainment industry for over 30 years. Nothing in this article is intended as legal advice. Mr. Walters can be reached at www.firstamendment.com or on social media @walterslawgroup.

Taking Your Strip Club Virtual

Introduction

Coronavirus lock-downs are slowly being lifted and businesses are starting to reopen, but it may still be some time before adult clubs are able to operate at full function across the nation. Reduced customer capacity mandates and the threat of a second wave of infections in the fall create additional uncertainty. Social distancing guidelines present their own unique challenges for all businesses that rely on close human contact.

In the meantime, many clubs have begun exploring options to take their adult performers into the virtual world. Strip clubs are uniquely situated to effectively and efficiently move into the online space. Club operators have relationships with dancers that are looking for a way to make money from home, and a base of clientele that are itching for some entertainment. The club has a brand, customers, and entertainers – the missing piece is an online platform on which to conduct business.

The Internet offers a variety of options for virtual strip club entertainment. Some operators seek to recreate the club environment online, complete with a DJ, music, and live stage performances. Others focus on creating live webcam platforms for individual dancers to interact with paying customers throughout the world. Yet another option is a club-branded social media platform that allows entertainers to develop their own profile and sell recorded content and other items. Regardless of the specific business model or theme, the legal issues facing online platforms are much different than many club owners are accustomed to in the brick and mortar world. This article is an introduction to those novel concerns.

Corporate Structuring

Any time a business offers a new service, it opens itself up to new legal liabilities. Any operator looking to explore online entertainment should consider creating a separate corporate entity to diversify risks. Many of the legal risks associated with website operations, like copyright infringement or federal age verification laws, are completely foreign to the brick and mortar club business. Segregating online operations from physical club operations through corporate structuring is often a wise first step.

Performer Age Verification

Federal law imposes certain record keeping requirements on producers of sexually explicit materials. These laws do not apply to live, unrecorded performances in strip clubs. Therefore, a full understanding of “Section 2257” is essential for any club operator considering online entertainment. Those who produce depictions of actual or simulated sexually explicit conduct must strictly comply with the age verification and records-keeping obligations of Section 2257. This is often accomplished by creating a Section 2257 file for each performer, with information such as legal name, all stage names, date of birth, date of first production, and other information required by federal law. This data, along with a copy of the performer’s government-issued picture ID card, must be maintained in a Section 2257 file along with all URLs depicting the performer’s content. The website must publish the physical address where these files may be inspected by the Attorney General. Some online business models are exempt from these Section 2257 requirements, depending on the operator’s role with respect to the content. Also, the law is subject to a pending legal challenge by the Free Speech Coalition which may result in invalidation of many of these legal requirements. For now, full compliance is recommended for any producers of sexually explicit content.

A separate federal law, Section 2258A, imposes certain legal obligations on website operators to report instances of child pornography to the National Center for Missing and Exploited Children (NCMEC). Failure to do so carries criminal penalties, while reporting the unlawful material provides a form of legal immunity in connection with the reported content. Online strip club operators should become familiar with this legal obligation and implement procedures to report any apparent underage content.

Online Agreements

Unlike a strip club which does not require its customers to sign a contract whenever they enter the club, commercial websites typically require users to agree to detailed user terms before accessing the site. These terms cover such things as billing procedures, user conduct, intellectual property rights, dispute resolution, etc. A separate model agreement is recommended for any entertainers who perform on the site. A model agreement will address issues such as release of rights, content ownership, compensation, performance rules, and the like. Website operators, or their attorneys, should carefully draft these online agreements and implement them properly on the site.

Copyright Infringement / DMCA Safe Harbor

Federal law imposes hefty civil damages and potential criminal penalties for copyright infringement. Numerous copyright-related issues arise from the operation of an online strip club. The parties must decide who owns the rights to the live or recorded performances, and what licenses are provided. Performers should avoid publishing infringing content during their performances such as unlicensed music, television broadcasts, and even background paintings. Decisions need to be made on who can pursue infringers if the dancers’ content is stolen by pirate websites. Importantly, some business models can take advantage of the protections offered by a federal law called the Digital Millennium Copyright Act (DMCA). If structured correctly, the site may be entitled to assert “DMCA safe harbor” in connection with any copyright infringement claims based on the performer’s content. This can provide a valuable defense to copyright infringement lawsuits in appropriate circumstances.

FOSTA/SESTA

In 2018, Congress passed a billed labeled FOSTA/SESTA in an effort to fight online sex trafficking. Since the statute is limited to online activities, many club owners have not encountered the difficulties created by this relatively new law. By way of summary, FOSTA/SESTA created a new federal prohibition on using a computer service to promote or facilitate prostitution. It also removed the previous legal immunity that many website operators relied upon to avoid liability for user-posted content. After the law was passed, many adult-oriented websites shut down, and others moved overseas. Since it can be extremely difficult for an online platform to determine whether some user-posted video or post somehow promotes or facilitates prostitution, many website operators have censored any sexually oriented content as a way to reduce legal risks. Given the serious criminal penalties associated with FOSTA/SESTA, online platforms have developed various content moderation tools and procedures to identify problematic users or posts. Legal compliance efforts in this area are critical for any virtual strip club operator.

 Privacy Policies & Data Retention

Websites often collect a lot of data on their users. This data can be both a benefit and a liability. There is no equivalent in the physical strip club space where customers can remain somewhat anonymous. As such, strip clubs that are looking to offer online entertainment services in the future must be sure that they comply with relevant data privacy laws which vary from state to state and country to country. A written privacy policy should also be published on the website.

Trademarks

While club owners are generally familiar with the importance of protecting their brand name, the issues change when the business operates in the online world. When the owner launches a website, the club is suddenly engaged in interstate commerce and promotion. A brand which may not infringe on a third party’s rights when used locally may now infringe on a trademark owner’s rights even if they’re located on opposite ends of the country. Interstate use of a brand name may have certain benefits as well, such as the ability to register a federal trademark with the USPTO. Any use of a brand name on a website platform must be carefully evaluated and protected.

Conclusion

With the state of coronavirus and associated lock-downs in flux, strip clubs will continue to innovate and bring exciting experiences to their customers. Some entertainment will move online, which generates a new set of rules and legal compliance obligations. A full understanding of this new environment can open doors to significant opportunity for both club owners and performers.

 

Lawrence G. Walters heads up Walters Law Group, and has represented adult industry clients for over 30 years. Nothing in this article is intended as legal advice. Mr. Walters can be reached through the firm’s website, www.firstamendment.com, or on social media @walterslawgroup.

Protecting Stage Names in the Age of Newcomers

Online adult entertainment is booming in these otherwise difficult times. Traffic and profits are up as so many of us try to fill the days at home and away from each other. The new gold rush has attracted a lot of new faces – and new names. But some of these new performers are using old stage names that established models have spent substantial time and resources promoting. So how can a model protect his or her own stage name and prevent newbies from profiting off this hard work? Separately, how can newcomers make sure their stage names do not infringe on someone else’s rights?

Starting with the basics, a performer can choose an assumed stage name for their online persona. If the performer is running a business through this pseudonym, most states require that the name be registered as “fictitious name” or d/b/a (“doing business as”). This is done at the state or county level, and some states require publication of the intent to use a fictitious name in a newspaper before it can be registered. Registering a fictitious name does not give the performer any rights in the name or prevent anyone else from using the same or similar name. That is the realm of trademarks. If the name is distinctive enough, the performer can apply for a trademark registration at the state or federal level. Online performers are almost always engaged in interstate commerce, so they can seek federal registrations at the United States Patent and Trademark Office (USPTO).

Trademark applications can be tricky. First, the performer (or an attorney) should search carefully to determine whether anyone else is using the same or similar stage name for related services. If so, there is a potential for infringement, and a different name should be considered. Changing a few letters or the spelling of the name will generally not be sufficient if the chosen name is confusingly similar to a registered trademark. If the name is clear of potential conflicts, the next consideration is whether the name is a generic term, or if it describes the service being provided. If so, registration on the Principal Trademark Register will be difficult if not impossible. Assuming the name does not infringe someone else’s rights, and is not generic or descriptive, the performer can consider filing a trademark application with the USPTO. The filing will require that the performer describe the services connected to the name and provide a “specimen” showing how the mark is being used in interstate commerce. Importantly, when applying for a trademark that refers to real person (such as a stage name), that person will need to be identified in the filing and consent to the application. If this is all done correctly, the performer can expect to receive a trademark registration certificate in about 8-12 months.

For those models who have planned ahead and obtained a trademark registration for their stage names, stopping other models from using the same or similar name will be much easier. A trademark registration is considered presumptive proof of ownership of the brand. Online platforms like Twitter and Instagram will typically respond quickly to infringement or impostor claims based on violation of a registered trademark. Those who register domain names incorporating the registered trademark can be taken down efficiently using domain name arbitration claims filed with the World Intellectual Property Organization or the National Arbitration Forum. In the event litigation is necessary to stop infringement, a trademark registration will save significant legal costs that would otherwise be required to prove up trademark rights. Owning a trademark registration gives models powerful ammunition against newcomers who use confusingly similar stage names in the same industry.

What if the model does not have a trademark registration? This is where things get more complicated. It is not absolutely necessary to have a registered mark to stop others from infringing. Use of a name in commerce can generate “common law” trademark rights which are enforceable under certain circumstances. Therefore, if a model named “Blue Angle” discovers that another model is using the name “Blu Angle”, it all comes down to who started using the name first. The first to use the name has priority rights in the United States. One exception is where a party has filed an “Intent to Use” trademark application with the USPTO, reserving the right to use the name in the future. In most cases, however, the first to use the stage name as a trademark can stop the later user from utilizing a confusingly similar name.

In the current expansion of live cam, fan site, and tube site business models, many performers are using similar stage names. Some may be generic or descriptive which can pose substantial hurdles to pursuing any infringement claims. But others are unique brand names which are inherently valuable. Mass consumer confusion can result from competing models using the same or similar stage names in the adult industry. A model’s brand name is the sum total of his or her reputation, quality, personality, and business goodwill. Tolerating infringement of these rights by other models weakens the value of the brand and can ultimately result in loss of trademark rights through abandonment. Therefore, models using established stage names should consider enforcing their rights against trademark infringers.

New adult performers are also encouraged to properly vet their proposed stage name by making sure they have not chosen a name that infringes on the rights of established models. One way to do this is to search the USPTO for registrations and pending applications. Note, however, that searching the USPTO records does not automatically reveal confusingly similar names or names that may sound the same but are spelled differently. This type of search also does not reveal state-level trademark registrations or common law uses by other models. That kind of exhaustive search takes time and careful analysis. Attorneys typically provide this service in conjunction with various trade name clearinghouse databases. Whether name clearance is done with assistance of counsel or on your own, some effort should be undertaken to ensure your desired stage name is not a ticking time bomb for an infringement claim by a superior rights holder.

New models are typically welcomed into the adult industry with open arms. Groups like the Free Speech Coalition and Pineapple Support provide numerous resources for newbies in this industry. While there will always be room for new adult talent, all performers must respect each other’s trade name rights.

Lawrence Walters heads up Walters Law Group which has represented clients in the adult industry for over 30 years. Nothing in this article is intended as legal advice. Mr. Walters can be reached at www.FirstAmendment.com or on social media @walterslawgroup.

Card Associations Facing Pressure to Terminate Adult Sites

As part of the aggressive campaign to tie adult websites to sex trafficking, various anti-porn activists are pressuring the major credit card associations to stop doing business with the adult industry. A recent opinion piece published in the Washington Examiner posed the loaded question: “How can mainstream credit card companies process payments for an industry that is virtually guaranteed to profit from rape and sex trafficking?” This led to an article on CBN News claiming that “Your Credit Card Company is Likely Partnering with Porn Websites.” The proponents of this effort point to the fact that PayPal decided to stop processing payments for most adult sites in late 2019 and suggest that the major credit card companies follow suit. The public pressure campaign is accompanied by an effort to shut down a large adult site for allegedly facilitating sex trafficking and a bill designed to force online platforms to impose restrictions on underage content.

This campaign is fueled by the unproven notions that pornography contributes to sex trafficking and turns our youth into a bunch of degenerates.  Instead of proof, the activists rely on a small sampling of incidents where individuals claim “revenge porn” videos have been uploaded to large tube sites or point to the outlier sex trafficking prosecution against the GirlsDoPorn producers. With these examples in hand, some are seeking to shut down the entire adult industry which relies largely on credit card transactions. Given the vast amount of sexually-explicit content found online, it is hardly surprising that some minute portion may be created and uploaded by bad actors. However, these instances are being used to support widespread censorship of adult content by demanding denial of access to basic credit card services. While probably not surprising in the era of “Cancel Culture,” this call for financial disruption of the adult industry should be taken seriously.

Such deplatforming efforts are dangerous to free speech principles, but can be notoriously effective in suppressing controversial or unpopular expression. However, they are usually targeted at specific individuals or organizations. This recent campaign sets its sights on the entire category of erotic speech. If successful it could do lasting damage to the entire adult industry. With sale of DVD’s in steep decline, adult performers, producers, photographers, website designers, affiliates, hosts, and website operators all largely depend on the ability of the end-user to purchase content online with a credit card. If the card associations respond to the public pressure by cutting off adult businesses, the results will be devastating.

Sex workers faced a similar dilemma when their access to online platforms was decimated as a result of FOSTA/SESTA. Escort advertising sites suddenly found that credit card processors, banks, and other service providers were unwilling to continue doing business with them. Sex workers suffered the most severe collateral damage, and were forced into dangerous and often exploitative circumstances to protect their livelihood. A widespread termination of adult sites by major credit card associations would cause similar results, but on a broader scale. Performers, cam models, clip artists, and website operators, themselves, would be forced to find a new line of work, or see their income dramatically reduced. Adult sites could try accepting payment in alternate currency like bitcoin, but only a small percentage of consumers are familiar with these payment methods. Financial service providers have always had a choke-hold on the adult industry due to their indispensable role. Their prohibited content policies have become a sort of industry best practices since failure to adopt them will result in termination of merchant processing accounts. If the card associations decide to block all adult content based on alleged, unsubstantiated ties to sex trafficking, the future is bleak.

One of the biggest objections asserted in the most recent effort is the lack of age or consent verification procedures required for users to upload sexually-oriented content on video sharing sites. Activists cite to the ability of a user to upload explicit content with only an email address. However, the same policies are in place for most user-generated content platforms – whether adult or mainstream. Moreover, requiring age or identity verification for the user would not address the larger issue of whether the person depicted in the videos consented to the filming or distribution. This is seemingly an intractable issue, since there is no reliable method for an online platform to verify performer consent – at least not one that could be effectively implemented. For example, large video sharing sites could not be expected to interview every person depicted in an adult film to satisfy themselves that the individuals were aware of the nuances of the rights they were releasing by publication and distribution of the content. Any such effort would hopelessly stifle the user upload process and impose an insurmountable burden on the site operator. Picture teams of lawyers reviewing release documents, signatures, ID’s, production dates, and facial expressions of performers to discern whether valid consent was given by willing adults.

Existing federal law requires producers of adult videos to review and maintain “Section 2257” age verification documents, but does not require specific documentation of consent to filming or distribution. Such issues are typically handled in the civil courts, if a production is not supported by sufficient contractual releases. Even the age verification law was declared unconstitutional by a federal court, as a content-based restriction on speech. There is no legal support for the proposition that online platforms must investigate every adult video to confirm that the performers have consented to both the production and distribution channels. Liability is rightly imposed on the up-loader or producer, if there is a problem with consent.

Despite the focus on the adult websites as facilitators of sex trafficking, the vast majority of underage content reports come from Facebook. Yet, activists are not calling for credits card companies to cease doing business with mainstream social media sites. The adult industry is often a convenient scapegoat to be blamed for larger social problems. In this instance, the focus is sex trafficking and revenge porn. Many of the proponents that paint themselves as “anti-trafficking” are comprised of anti-porn activists seeking to censor constitutionally protected adult entertainment. That is the goal. The First Amendment provides a necessary buffer against government censorship, however private companies make their own business decisions when it comes to online payment services. Thus far, the calls to terminate credit card services to adult sites remain isolated and hyperbolic. However, the adult industry remains susceptible to decisions made by public pressure and mob mentality, instead of logic and facts.

Lawrence G. Walters has represented adult entertainment clients for over 30 years. Nothing in this article is intended as legal advice. Mr. Walters can be reached through his website, www.firstamendment.com, or on social media @walterslawgroup.

Guidelines on Sponsored Social Media Posts

Guest Post by Bobby Desmond, Esq.

Many adult entertainment companies hire models, performers, and other so-called “influencers” to review, advertise, market, or otherwise promote their goods and services to their followers on social media. These influencers provide companies with a valuable and often relatively inexpensive method of reaching new customers.

Since these sponsored posts often impact the purchasing decisions of social media users, the Federal Trade Commission (“FTC”) requires companies to ensure that influencers follow certain guidelines whenever the company provides something of value to the influencer with the expectation that the influencer will discuss the company’s products or services on their social media. “Something of value” can mean free samples, cash, prizes, and more. There are some exceptions to this rule.

 

First, companies need not make disclosures when offering free samples to its general customer base without expecting more from those recipients. Second, companies may interview customers about their experience with their products or services and then quote those customers in their advertisements. Companies may even pay those customers for the use of their endorsements. No disclosure is necessary so long as the customer provided the quote before expecting any compensation for doing so. For example, no disclosure is necessary if a company finds a positive vlog about their product, reaches out to obtain the customers consent to share the vlog on their twitter account, obtains that consent, and then provides the customer with a thank you gift after the fact.

 

Companies must make sure their influencers are honest and not misleading. Companies should not encourage influencers who have not actually used that product or service to make sponsored posts. Companies should instruct influencers to provide only their honest opinion and to avoid any claim that the company would not be able to legally make on its own.

 

The FTC suggests that companies provide influencers with a list of examples that they cannot say and a set of instructions to prevent claims from going too far. Additionally, the FTC expects companies to make a reasonable effort in periodically reviewing their influencers’ sponsored posts and following up on any questionable practices. The FTC has explicitly stated that it is unlikely to pursue a law enforcement action for a post by a rogue influencer if the company has a reasonable training, monitoring, and compliance program in place to prevent such problems. Ultimately though, the company is responsible for its advertisements, whether they are posted by the company, a public relations firm, or an influencer.

 

Companies should also inform influencers about properly fulfilling the disclosure requirements. Disclosures must be clear and conspicuous. This requirement is generally met when the disclosure is (1) close to the claims to which they relate, (2) if text, in an easy to read font and color that stands out from the background, (3) if video, on screen long enough to be noticed, read, and understood, and (4) if audio, read at an easily understandable cadence.

 

Additional disclosures are required in certain circumstances. For example, influencers that receive only samples can fulfill the requirement by stating “Company X gave me this product to try for free.” However, if the company pays the influencer or provides some compensation in addition to the free sample, the company should instruct the influencer to make further disclosures such as “Company X paid me to try this product.” Companies should also instruct influencers to disclose whether the influencer achieved above-average results or has some connection to the company that their followers would not expect, such as an employment or familial relationship.

 

While the FTC does not generally monitor paid social media posts, followers can and do report possible violations to the FTC. The FTC then evaluates those reports on a case by case basis before deciding whether to investigate or involve law enforcement. The FTC has enforced these rules in the past, so it is important that companies become familiar with the guidelines and instruct their influencers on how to follow them.

War on Porn 4.0

You can tell it’s election season, when radical politicians start banging the drum for another war on something. Recently, four Republican Congressmen wrote a hysterical letter to the Department of Justice, demanding that Attorney General Bill Barr make obscenity prosecutions a priority again. These lawmakers sought to remind the DOJ that obscenity laws still exist, and that then-candidate Trump signed some kind of pledge to wipe out porn. Their pleas echo demands by a small, vocal contingent of politicians and activists who have sought to declare pornography a public health crisis and tried to link it to human trafficking. While this latest campaign relies on some new buzz words and sales pitches, it is based on the same faulty logic as previous failed prohibition efforts.

In 1969, the U.S. Supreme Court ruled that people had the right to view even obscene materials in their home. That triggered the first modern War on Porn by President Johnson, who created the “President’s Commission on Obscenity and Pornography.” However, the Commission did not deliver the report that the administration expected. Instead, it found no evidence that porn played any significant role in delinquent or criminal behavior, and had no effect on character or moral attitudes regarding sex. It also determined that most Americans believed that they should be able to read or see any sexual materials they wished. Naturally, the report was rejected by Congress, the Senate, and President Nixon, who succeeded Johnson. Obscenity prosecutions against “girlie magazine” publishers and adult film producers followed, and people went to jail.

In the early 80’s, adult video tapes became readily available in corner video stores across the country. People could finally watch their adult film star of choice from the comfort of their home without venturing out to the local XXX theater. As it turns out, they liked this idea and adult video rentals kept most of the small stores in business. In response to this phenomenon, President Reagan commissioned the infamous “Meese Report” on pornography. This time, the result was predetermined, and the report documented the purported harmful effects of pornography and the alleged connections between the adult industry and “organized crime.” The report was roundly criticized as being biased, not credible, and inaccurate. Yet the issuance of the report gave birth to the next War on Porn, in which video tape distributors and retailers were targeted by the Department of Justice with draconian racketeering laws. Numerous operators were prosecuted and imprisoned for selling videos of adults having sex. These efforts largely subsided with the election of President Clinton.

Then came the “W” years, when President Bush and Attorney General Holder revived the “Obscenity Unit” in the Department of Justice and began pursuing adult DVD distributors and website publishers. This effort was fueled by the exotic theory that watching porn produces erototoxins in the brain, which triggers addiction – just like the dreaded crack cocaine. U.S. attorneys were instructed to bring obscenity prosecutions against both large and small operators, to ensure that nobody could take comfort that they were too small to fly under the radar. Those prosecutors who refused to play along were fired, according to some reports. However, the proliferation of adult content online proved to be too much even for the most zealous anti-porn censors. By 2014, this War on Porn was lost. Adult video clips thrived on the Internet – particularly with the adoption of high-speed broadband access, and the popularity of adult “tube” sites.

That leads us to today. After a period of relative calm on the obscenity front, on December 6, 2019 Congressmen Jim Banks, Mark Meadows, Brian Babin, and Congresswoman Vicky Hartzler formally demanded that the Department of Justice stop the “explosion of obscene pornography” on the internet, cable TV, hotels, and retail establishments. The letter touched off a firestorm on the internet and social media, with numerous commentators demanding that the government step in and regulate pornography. It also created a rift between moral conservatives who want to ban porn, and the libertarian wing that resists government overreach. In support of the letter, Representative Banks claimed that children are struggling with pornography “addiction,” citing a UK newspaper article which anonymously quoted a single teenager claiming to be addicted. In a feat of mental gymnastics, he also managed to conflate concepts of pornography, child pornography, obscenity, violence against women, and human trafficking:

As online obscenity and pornography consumption have increased, so too has violence towards women. Overall volume of human trafficking has increased and is now the third-largest criminal enterprise in the world. Child pornography is on the rise as one of the fastest-growing online businesses with an annual revenue over $3 billionThe United States has nearly 50% of all commercialized child pornography websites.

What any of this has to do with the adult entertainment industry is anyone’s guess; however, the industry is historically on the receiving end of any call for obscenity prosecutions. There are specific laws prohibiting child pornography, human trafficking, and domestic violence. Obscenity prosecutions are not necessary to combat any of those crimes. Statements like those made by Congressman Banks are tremendously misleading, and it is time to set the record straight.

Increased popularity of online pornography did not lead to an increase in violence against women. In fact, violent crime has decreased over the last several decades, including the rates of rape and sexual assault. Those who commit rape appear to consume less porn than the general population.

Online pornography is not uniquely addictive. Those who become addicted to watching online pornography have the same inability to self-regulate and other psychological conditions as people with other compulsions or attachment disorders.

Legal pornography does not increase human trafficking. No credible study has demonstrated such a causal link. However, previous prohibition efforts have shown that criminalizing some product or service does not stop it from existing. Prohibition simply drives the activity underground, making it more dangerous for all involved. The previous concerns with porn’s alleged connection to organized crime would likely become more prevalent if the prohibitionists were successful.

The adult entertainment industry does not produce or endorse child pornography. This should be evident from the industry’s strong efforts to eradicate underage content through support of groups like asacp.org. Neither the business owners nor their customers want any involvement with underage materials. The fact that there have been exceedingly few documented cases of underage performers in professional adult films demonstrates the successful efforts undertaken to ensure that minors are not allowed to participate in the industry.

Putting adults in prison for making movies that other adults want to watch has always struck this author as outrageous, and antithetical to fundamental free speech protections. In the last round of obscenity prosecutions, the government suffered some embarrassing defeats. But juries in obscenity cases can be unpredictable, and the Miller obscenity test is far from clear. Unlike most other crimes, the defendant in an obscenity case does not know if he or she is actually guilty until the jury returns a verdict. The courts are split on whether local or nationwide standards should be used to evaluate online content. As a result of the uncertainty created by an obscenity prosecution, some producers and distributors have paid a heavy price for providing adult entertainment to the consuming public.

Using precious law enforcement resources to pursue this effort will do nothing to combat child pornography, human trafficking, or violence against women (or men). At most, some random lives will be ruined, and some videos may be taken off the market. Certain facets of the adult industry could be forced underground or overseas. However, there will be no appreciable impact on the production or distribution of erotic content.

The new War on Porn is different, as it tries to appeal to a broader segment of society than previous efforts, which were focused on morality and shaming. This newly-branded campaign is targeted at those who want to save victims and achieve social justice. Members of the adult entertainment community must be armed with the facts and defend their rights to sexual expression. If state or federal prosecutors decide to dust off outdated obscenity statutes and challenge the adult industry once again, they will likely find that freedom does not die without a fight.

Adult Content Production and Sex Trafficking Laws

For years, opponents of the adult entertainment industry have attempted to link pornography to sex trafficking.  In 2015, the National Center on Sexual Exploitation (formerly known as “Morality in Media”) hosted a symposium which pushed the narrative that pornography increases the demand for sex trafficking, child exploitation, and violence against women. The following year, the Department of Justice commissioned a study which concluded that consuming adult entertainment causes people to be dismissive of sex trafficking concerns. Since then, substantial federal funds have been allocated to bringing more sex trafficking prosecutions at the local, state, and federal levels. Those who claim to be victims of sex trafficking can sue the perpetrators, and any websites involved (thanks to FOSTA), under state and federal law.

It has become increasingly clear that sex trafficking laws will be used against adult entertainment businesses. The first federal sex trafficking charges against an adult content producer have already been filed. Most content producers and performers react to this concern with disbelief. They have nothing to do with sex trafficking, so how could these laws ever be applied to their business?

Understanding this issue starts with the definitions used in federal statutes. For purposes of this discussion, sex trafficking occurs when someone recruits, entices, solicits, transports, or advertises an adult for a commercial sex act through force, fraud or coercion. The law also punishes anyone who attempts or conspires to engage in these activities, or who benefits financially from participating in a venture where such activities occur. The defendant need not intend that sex trafficking occur, if the defendant acts with reckless indifference. The punishment is severe: 15 years to life in prison. Unlike other crimes where the defendant is presumed to be entitled to a bond pending trial, the law presumes that accused sex traffickers should be detained until trial.

Sex trafficking laws can apply to those who are willingly recruited to engage in commercial sex acts. The elements of “force, fraud, or coercion” have been interpreted quite broadly by the courts. Actual force is not necessary. A threat of force is sufficient. Any scheme or plan which causes a victim to believe that physical restraint or serious harm might occur will meet the test. Creating a climate of fear is enough to prove coercion. “Fraud” is a notoriously broad concept which can include any form of deception, such as false promises of fame and fortune. With that in mind, consider the following scenarios:

  • An amateur clip producer occasionally includes her live-in boyfriend in boy/girl clips. The boyfriend loses his regular job and can no longer contribute to paying rent. The content producer tells him that he must perform in more clips to supplement their income or move out. Is this “coercion”?
  • A webcam model promises performers that she can make them famous in the adult industry, but they must participate in some of her cam shows to help launch their careers. The performers agree and participate, but never become famous. Is this “fraud”?
  • A professional video producer hires security guards on the set. A performer decides that she wants to stop filming and leave, but the security guards are stationed near the exits. Is this “force” through threat of physical restraint?

It is not difficult to imagine many circumstances where the facts can be manipulated to fit within the ambit of sex trafficking statutes. Those in charge of making these decisions may be politically opposed to adult entertainment or hold the belief that pornography fuels sex trafficking. In the case of a civil lawsuit, the plaintiff stands to benefit financially by making the claim.

Any allegation of sex trafficking is emotionally charged. There is an inclination to believe the victim. In many cases, that is the correct thing to do. However, the adult industry is now vulnerable to potential prosecutions and civil claims that are politically or financially motivated. Anti-porn advocacy groups which previously opposed adult entertainment on moral grounds have adopted the sex-trafficking rubric as a basis for their censorship efforts. We have seen numerous instances where run-of-the mill business disputes between producers and performers are starting to include claims of sex trafficking.

This is a sensitive issue. Sex trafficking is a horrific crime, and perpetrators should be punished harshly. But the scope of the problem is up for debate since accurate statistics are notoriously hard to come by, and some of the numbers are overblown. As governmental entities and advocacy groups try to conflate issues of pornography, prostitution, and sex trafficking, the industry must be on guard for misuse of these laws. Just as anti-porn advocates have previously attempted to smear the adult industry with claims of child pornography, there is an effort underway to suggest that adult content production implicates sex trafficking.

To help address these issues, both producers and performers are encouraged to adopt best practices that focus on disclosure and consent. All expectations should be identified in written agreements. Performers must be afforded an opportunity to read and understand such agreements before production. Compensation terms should be clear and unambiguous. Obviously, there is no place for threats or violence in the adult content production industry. The Free Speech Coalition has issued a statement condemning the types of activities that were alleged in the recent sex trafficking charges against adult content producers. Its Code of Ethics encourages clear written performer contracts with sufficient time to review. Some large content producers and industry groups also offer a performer Bill of Rights that focuses on respect, clarity, and consent. Efforts like these will go a long way towards eliminating the risks posed by misuse of sex trafficking laws as a weapon against the adult industry.

Nothing in this article is intended as legal advice. Lawrence Walters has represented the adult entertainment industry for over 30 years. He can be reached at firstamendment.com or @walterslawgroup.

Woodhull Panel – FOSTA & Internet Censorship

The Woodhull Freedom Foundation is the lead Plaintiff in the lawsuit challenging FOSTA. Its legal challenge started in the spring of 2018, when the organization began to struggle with its online promotion of events involving sex workers at its annual Sexual Freedom Summit. The law broadly prohibits the promotion or facilitation of consensual sex work using the Internet.  Facilitation generally means; “to make easier.”  Woodhull questioned how it could promote its 2018 Summit events involving sex worker advocacy and harm reduction, or publish the biographies of its sex worker presenters, without running afoul of the new law. Was it promoting sex work, or making sex work easier? FOSTA’s failure to define the words “promote” or “facilitate” or even “prostitution” made it difficult for any reasonable person to know where the line would be drawn. That struggle resulted in the lawsuit challenging FOSTA for violating the First and Fifth Amendments to the Constitution.

Since FOSTA was adopted, countless websites have gone dark and sexual content has been purged from large online platform providers. Sex workers now face increased danger, and law enforcement has lost its access to online information to prosecute traffickers. Woodhull, and the other Plaintiffs, have kept fighting. The appeal of the district court’s decision dismissing the case, based on lack of standing, was heard by the United States Circuit Court, D.C. Circuit, on September 20, 2019. AVN’s take on the Oral Argument can be found here.

Woodhull has continued to conduct its Summit, despite FOSTA. In 2019, it partnered with the Sex Workers Outreach Project (SWOP) in its efforts to support the sex worker community as Woodhull pursues its mission of affirming sexual freedom as a human right. The 2019 Summit included a panel specifically addressing the impacts of FOSTA – both on sex workers specifically, and Internet freedom generally. The panel included Emma Llansó, Director of the Center for Democracy and Technology’s (CDT) Free Expression Project, Ronald London, attorney with Davis Wright Tremaine, and the author, Lawrence Walters, of Walters Law Group.

The panelists are all involved in the fight against FOSTA in some form. CDT has been a staunch advocate for online freedom and helped sound the alarm bells when the FOSTA and SESTA bills were working their way through Congress. London, along with his partner Bob Corn-Revere, are counsel of record in the Woodhull v. United States, along with Walters and attorneys with the Electronic Frontier Foundation (EFF).

The FOSTA panel lasted over 90 minutes and provided a full update on how FOSTA has harmed sex workers, hampered law enforcement, and stifled online innovation. Llansó described how the FOSTA “monster” came to be, and how it dramatically changed existing federal law that provided immunity for interactive computer services which host third party content. Walters and London discussed the status of the lawsuit, and the potential outcomes. Ultimately, the case may be headed for a U.S. Supreme Court appeal.

The panel delved into the numerous myths that fueled the adoption of FOSTA, such as:

  • Criminalization of prostitution works
  • All prostitution is sexual slavery
  • Sex trafficking is fueled by a proliferation of pornography
  • Decriminalization is harmful

Each of these myths have been debunked by facts, studies, or experiences in other countries that have decriminalized prostitution. The more criminalized sex work is, the more violence and exploitation sex workers face – by police, customers, and others. Consensual sex work is very different activity from sex trafficking, and cannot be effectively treated by one-size-fits-all laws like FOSTA.  As discussed during the panel, sex trafficking is not caused by pornography, despite persistent efforts to conflate the concepts. A similar strategy has been used by censors to link illegal child pornography with constitutionally-protected adult media. Jurisdictions that have decriminalized prostitution have seen fewer negative health and safety consequences for sex workers.

The damage already caused by FOSTA highlights the importance of Woodhull’s lawsuit. London pointed out how civil claimants are already arguing that FOSTA allows website operators to be sued for any state law violations that are consistent with FOSTA’s prohibitions. This greatly expands the potential legal exposure facing Internet platforms, and results in more censorship of erotic speech. Fortunately, Woodhull has many allies in its fight. Additional Plaintiffs in the suit include The Internet Archive; Alex Andrews / SWOP Orlando, Human Rights Watch, and Eric Koszyk (a licensed massage therapist who lost his opportunity to advertise on craigslist.org due to FOSTA).  Numerous other groups have filed briefs in support of the challenge at the appellate level, including CDT, Reddit, the Free Speech Coalition, Decriminalize Sex Work, the Institute for Free Speech, and the National Coalition for Sexual Freedom. London pointed out that some groups also filed briefs in support of the Government, such as a coalition of individual states. However, their brief actually supported the Plaintiffs’ arguments since they illuminated the credible threat of prosecution by states anxiously awaiting the opportunity to broadly enforce FOSTA against website operators.

The panelists fielded many questions from the audience on how they should operate in a post-FOSTA world, and the potential results of the litigation. Some wanted to know more details about the lawsuit or potential additional challenges to FOSTA. Some were curious about new threats to banking relationships or mandatory age verification. The panelists warned that other bills, modeled after FOSTA, are currently pending which would take away even more protection for online service providers and inhibit speech in other areas. Overall, the well-attended panel offered a realistic assessment of how FOSTA changed the internet for anyone operating in the adult or sex worker industries and provided a beacon of hope for change through the courts.

The full session can be viewed here: https://youtu.be/bJ-j9KJNr0M

 

Lawrence G. Walters heads up Walters Law Group, www.firstamendment.com. The firm represents clients involved in all aspects of the adult industry. Nothing in this article is intended as legal advice.

What’s In A Name?

Adult business operators often struggle with the legal complexities of trademarks, trade names, fictitious names, and corporate names. This is particularly true for amateur performers, producers, or distributors who have operated a small business under their own personal name but want to consider doing business under a corporate or brand name. Let’s try to sort through some of the confusion.

Personal Names

Anyone can operate a business individually, using their personal name and social security number as their taxpayer identification number. This is known as a sole proprietorship. This simple business format is user-friendly but provides no legal protection from claims against the business, and offers no anonymity for the owner.  If a personal name is used as a business brand, it can be registered as a trademark. More about trademarks later. But actors, authors, sports figures, and other celebrities frequently register their personal names as trademarks, in the class of services for which the name is being used.

Fictitious Names

An individual can operate a business under a fictitious name, also known as a “d/b/a” which stands for “doing business as”. A fictitious name is also known as a “trade name”. Most states require a business to register a fictitious name before using it to engage in commerce. Registration can occur at the state or local level – sometimes both. In some states, it is a criminal offense to use a fictitious name without a registration. The idea is to protect the public by allowing people to look up the name of the actual owner of a fictitious business name. Registering a fictitious name does not provide any legal protection for the owner of the business and does not automatically grant any intellectual property rights to the name. In other words, someone else can use the same fictitious name for a separate business, and your registration will not give you any rights to stop them. Both individuals and companies can register fictitious names.  Theoretically, any stage name or website name is a fictitious name of the individual or company behind the operation, and registration of these names should be considered as an element of basic legal compliance.

Corporate Names

Setting up a corporation or limited liability company (LLC) should be considered by any business, no matter how large or small. Conducting business through a corporate entity provides some protection against claims or debts of the company. Incorporation is often viewed as a form of cheap insurance. A corporation is considered a separate legal “person” from its owner(s) and has perpetual existence. A corporation can also obtain its own taxpayer identification number, and hold bank accounts or other property in its own name. The incorporation process is not complicated, but maintaining the corporate formalities can be challenging for small business operators who are not familiar with the process. All corporate entities should have a corporate book, records of ownership, and minutes of corporate meetings. Corporations should likewise have bylaws and shareholder agreements, while LLC’s should have operating agreements. These documents will describe how the owners are compensated, how shares are issued, and how disputes are resolved. The absence of a shareholder or operating agreement can result in significant problems, such as third parties claiming to be owners. In some instances, failure to observe the corporate formalities can also result in the individual owners becoming responsible for corporate debts or liabilities.

Corporations also provide some level of anonymity for the owners, since corporate ownership is typically not a matter of public record. The information necessary to set up a corporation varies from state to state, with some states requiring very little public information about those involved with the business. You can select any state for incorporation, regardless of the physical location of the business. Typically, however, a corporation must appoint a registered agent who is physically located in the state of incorporation.

Your corporate name need not be your business brand name. As noted above, a corporation can register a fictitious name that represents its brand. But in some circumstances, it can also register the name as a trademark.

Trademarks

Trademark registration is an important consideration for any business. If your brand name meets certain criteria and does not conflict with the rights of third parties, you may restrict others from using the same or similar brand for your business. Protecting your brand is essential, and a trademark can often become your most valuable business asset. In the event anyone infringes on your brand name, having a registered trademark can provide an expedited path toward resolution of the dispute. Importantly, not all brand names qualify for trademark registration. Brands which are generic, or merely descriptive of the business’s products or services, typically will not be accepted for registration as trademarks. In some cases, use of a descriptive brand for a sufficient period of time will allow for trademark registration, if the mark has acquired distinctiveness in the marketplace.

Trademarks can be registered at the state level, or at the federal level with the United States Patent and Trademark Office (USPTO). In order to qualify for federal registration, the brand must be used in some form of interstate commerce. Often, businesses will wait until they are actually using a brand before applying for registration. However, the USPTO allows business owners to file a trademark application if they have a bona fide intent to use the brand in the future. Filing the application sets your priority date and allows you to prevent others from using the same or confusingly similar brand in the future, so long as you ultimately receive a trademark registration.

Trademarks can be owned by corporations or individuals. The owner of the trademark will have the power to control the use of the brand name, and the power to license that brand for use by third parties. Sexually explicit trademarks have historically been refused registration by the USPTO, but that may change depending on a decision from the U.S. Supreme Court that is expected in the near future. Many adult business operators have sought registration of explicit brand names in the hopes that the Supreme Court will clear the way for registration soon.

Conclusions

Choosing the right name and structure for your business is an important decision for any adult business operator. Your brand name represents the reputation and goodwill of your business. Some brands may conflict with the trademark rights of other operators, so careful consideration should be paid when selecting your trade name, corporate name, or trademark. After some initial legwork, you can find the perfect brand name, and protect it from infringers for the life of your business.

 

Lawrence G. Walters heads up Walters Law Group, www.firstamendment.com. Nothing in this article is intended as legal advice.

Congress Considering Deep Fakes Law

The technological ability to create convincing “deep fakes” is getting some attention in Congress. The adult entertainment industry has already struggled with deep fake porn, and the unsettled intellectual property issues generated by this type of content. On the one hand, rights holders can assert trademark, copyright, and/or publicity rights claims against producers of deep fakes. Publishers, on the other hand, can argue “fair use”, Section 230 immunity, or First Amendment protections in certain circumstances. But the recent publication of a doctored depiction of Nancy Pelosi appearing to stammer through her words, has apparently caught the eyes of some politicians who are poised to take action.

In early June, 2019, Rep. Yvette D. Clarke [D-NY] introduced H.R. 3230, the Defending Each and Every Person from False Appearances by Keeping Exploitation Subject to Accountability Act of 2019, in the House of Representatives. The DEEP FAKES Accountability Act intends to “combat the spread of disinformation through restrictions on deep-fake video alteration technology.” If passed, the bill would create both criminal and civil penalties for failing to disclose a covered deep fake and for altering disclosures. The bill would also create a private right of action for those injured by covered deep fakes. The bill was referred to the House Committee on the Judiciary, Committee on Energy and Commerce, and Committee on Homeland Security. If the bill is passed, it will take effect one year after it is enacted.

Rather than imposing restrictions on all deep fakes, the bill would impose a watermark and disclosure requirement on all deep fakes which are “advanced technological false personation records” – meaning any deep fake that a reasonable person would believe accurately depicts a living or, in more limited instances, deceased person who did not consent to the production. The bill would apply only to those productions which appear to authentically depict the speech or conduct of a person by technical means. The bill would purposefully exclude productions that utilize the skills of another person capable of physically or verbally impersonating the falsely depicted living or deceased person. The bill would also provide an exception for parodies, historical reenactments, and fictionalized programming that a reasonable person would not mistake as depicting actual events.

All visual-only “advanced technological false personation records” must include an unobscured written statement at the bottom of the image for the duration of the visual element that the deep fake contains altered audio and visual elements and that explains the extent thereof. All audio-only “advanced technological false personation records” must likewise include at least one clearly articulated verbal statement at the beginning of the record that the deep fake contains altered audio and visual elements and explaining the extent thereof. This verbal statement requirement applies to every two minutes of audio. All audiovisual “advanced technological false personation records” must include both an unobscured written statement and at least one clearly articulated verbal statement. Finally, all “advanced technological false personation records” that include a moving visual element must contain a watermark clearly identifying the deep fake as containing altered audio or visual elements.

Software developers that reasonably believe their software may be used to produce deep fakes would be required to ensure that their software allows for the insertion of necessary watermarks and disclosures and includes terms of use that require the user to affirm their general awareness of their legal obligations under this bill.

If passed, an individual may be fined, imprisoned for up to 5 years, or both, for knowingly failing to include a required watermark or disclosure (1) with the intent to humiliate or harass by falsely, visually depicting a person engaging in sexual activity or in a state of nudity, (2) with the intent to cause violence or physical harm, incite armed or diplomatic conflict, or interfere in an official proceeding, and the deep fake did in fact pose a credible threat of doing so, (3) in the course of criminal conduct related to fraud, or (4) by a foreign power or agent, with the intent of influencing policy debates or elections.

The legislation also provides criminal penalties for  knowingly altering the deep fake to remove or obscure the watermark or disclosure with the intent to distribute the altered deep fake and with one of the four prongs listed in the paragraph above. In addition to prison time, the proposed law allows for a civil penalty of up to $150,000 per deep fake as well as appropriate injunctive relief. An individual or affiliated business entity who is falsely exhibited in a deep fake would be able to seek damages and injunctive relief against anyone that violates the disclosure requirements of anti-alteration clauses of this bill. Damages would be the greater of actual damages or $50,000 per deep fake, except the limit would increase to $100,000 per deep fake that depicts extreme or outrageous conduct by the falsely depicted person and would increase to $150,000 per deep fake containing sexually explicit visual content intended to humiliate or harass the falsely depicted person. An individual would be able to file the private action under seal if there is a reasonable likelihood that the creation of public records would result in embarrassing or harmful publication of falsified material.

The bill would also create a process by which producers of deep fakes may seek an advisory opinion from the Attorney General about the legality of their proposed deep fakes within 30 days. The Attorney General would not be able to enforce this law against any producer of deep fakes that relies on an advisory opinion in good faith. The Attorney General would also be required to issue rules governing the technical specifications of the required watermarks within one year of enactment. The Attorney General would designate a coordinator in each United States Attorney’s Office to receive reports from the public regarding potential violations by foreign states and agents as well as any violations depicting acts of an intimate or sexual nature.

In the year after the bill is passed, the Attorney General would be required to publish a report containing a plan to enforce the law, a description of foreign efforts to use deep fake technology to impact election and policy debates in the U.S. and abroad, a description of the impact of sexual deep fakes on women and marginalized communities, and official guidance to Federal prosecutors.  In addition, the bill would require the Secretary of Homeland Security to establish a “Deep Fakes Task Force” to combat the national security implications of deep fakes, research and develop technologies to detect, counter, and distinguish deep fakes from actual events, and work with the private sector on this issue.

The bill would not serve as a defense against, preempt, or limit any Federal, State, local, or territorial laws on deep fakes or related content. Producers will still be able to seek other legal remedies against those individuals that use their copyrighted content without authorization to create deep fakes. Those individuals falsely depicted in deep fakes would still be able to seek other legal remedies against those individuals that use their likeness in deep fakes including privacy, defamation, false light, and unauthorized use of likeness claims. Sites that host user generated content, potentially including deep fake material, would still be able to claim the defenses provided by Section 230 of the Communications Decency Act. However, some members of Congress have expressed their interest in amending Section 230 of the Communications Decency Act to more directly address liability for deep fakes.

Future regulation of deep fake technology is still uncertain, as Congress struggles to sort out the numerous legal and constitutional issues generated by this content. While the adult industry continues to wrestle with the problems caused by deep fake porn, politicians seem interested in nipping the issue in the bud, before a deep fake costs one of them an election.

This post was co-authored by Lawrence Walters and Bobby Desmond, of Walters Law Group. Nothing herein is intended as legal advice.