You’ve Been Served! – Dealing with Subpoenas

Adult business operators are forced to deal with a number of legal hassles. One of them is getting served with a subpoena seeking information about you, your operation, your finances, or your data. Given the increasingly hostile climate in the adult entertainment industry, operators and performers should understand how to react when served with a subpoena. If you run a website that accepts members, you likely acquire a substantial amount of personal and financial information from users which may be of interest to law enforcement, administrative agencies, or private lawyers. Performers also receive significant information and communication from their subscribers or fans which can become the subject of a legal proceeding. This article will help you understand your legal rights and obligations when receiving a subpoena.

First off, don’t panic! If you receive a subpoena, that usually means someone wants information that you have about others, and you are likely not the target of the investigation. There are many exceptions to this rule, but getting a subpoena does not automatically mean you have done something wrong. Subpoenas are commonly used by state and federal authorities to investigate crimes and are routinely issued to individuals or corporations that are not involved in wrongdoing. Civil claimants also use subpoena power in lawsuits to learn about the claims and defenses and investigate their case.

Most often, a subpoena asks for production of records or computer data. This is called a Subpoena Duces Tecum. While the subpoena will usually contain lots of scary language about contempt, appearing in court, or testifying, compliance is usually accomplished by simply emailing the requested documents by the deadline provided in the document (called the “return date”).

While your first inclination when receiving a subpoena may be to cooperate and immediately hand over the requested information, that is not always the right course of action. Some documents may be privileged or outside the scope of the subpoena. Sometimes subpoenas are sent by investigators or attorneys from other jurisdictions where they cannot be enforced. In still other instances, the recipient of a subpoena has an obligation to object and require the requestor to obtain a court order or search warrant before handing over the information. For example, operators of online platforms cannot turn over stored user communications to the government in most circumstances in the absence of a court order, under the Stored Communications Act.

To determine the scope of your subpoena compliance obligations, it is always best to consult with an attorney. You are entitled to legal representation when responding to a subpoena. Often, your lawyer can interface with the sender of the subpoena to narrow the scope of the requested documents and minimize disruption to your business or personal life. If you intend to deal with a subpoena on your own, there are several important points to keep in mind.

The first thing to understand is that you have a legal obligation to preserve all the documents or data requested in the subpoena. For example, if the subpoena asks for text messages and your mobile device automatically deletes messages older than 30 days, you have an obligation to change the auto-delete setting to ensure that you are not responsible for destruction of evidence. Your preservation obligations also extend to any archive or backup programs that are under your control. Therefore, the best thing to do when you receive a subpoena is to identify all of the potentially responsive information and make sure it is preserved. Tampering with, or destruction of, evidence is a crime and can result in significant civil sanctions as well.

Can you be compensated for your time and costs in responding to the subpoena? The short answer is yes. Most court rules allow for some reasonable compensation to be paid to the individual or company that has the burden of responding. However, the amount of compensation varies from jurisdiction to jurisdiction. If you will be seeking financial compensation, it is wise to discuss these issues with the sender of the subpoena before incurring any costs. In many cases, pulling the requested information can be done quickly and will result in little to no expense. But for significant research projects or vast data requests, the respondent is entitled to be paid. If the amount of compensation cannot be agreed between the parties, a court will resolve the issue upon request.

Frequently, subpoenas will ask for information about one of your customers or vendors. Can you notify the affected company or individual that you will be disclosing their information? The answer depends on the type of investigation. In civil cases, you typically have the right to notify third parties that you received a subpoena. Doing so will allow the affected party to assert any privacy rights or other legal challenges to disclosure of the information in a timely manner. The exception is where a court has issued a “gag” order prohibiting disclosure of the existence of the subpoena. This is done in cases where someone is concerned that providing notice of the subpoena will cause the affected party to destroy evidence or disappear. With criminal subpoenas, it is never a good idea to notify the affected party. Doing so can compromise the investigation and may constitute obstruction of justice. Criminal subpoenas are usually accompanied by instructions not to disclose the pending investigation.

Receipt of a valid subpoena requires you to conduct a thorough search of all your records, devices, computers, and data to identify responsive information. This is a serious legal obligation which should not be taken lightly. Failing to disclose information subject to a subpoena can result in significant legal sanctions being imposed. Any information that is in your possession, custody, or control should be evaluated for possible disclosure. This includes online databases that you can lawfully access, even if stored by a third party service. The most common error in responding to a subpoena is failure to conduct an exhaustive search. If you determine that you missed information that was subpoenaed, you should immediately inform the party that issued the subpoena and provide the omitted records unless legally privileged.

What if you don’t want to provide the requested records, or believe that the information should not be disclosed? A process exists to deal with those situations. Typically, the subpoenaed party will serve “objections” to the subpoena and identify the legal basis for withholding the information. Any information withheld based on privilege should be listed in a “privilege log” which is sent along with the non-privileged documents. In other instances, you or your attorney might file a motion to quash the subpoena with the issuing court, and make legal arguments as to why the subpoena is not valid or why the information cannot be produced. Such legal proceedings can get expensive, so the parties typically attempt to resolve these issues on their own before involving the courts. But in some circumstances, an agreement cannot be reached, and the court will decide the issues.

In some cases, a subpoena will actually command you to show up in court and provide testimony. If the primary goal of the subpoena is to produce documents, you can often submit a records custodian certification or affidavit to authenticate the documents instead of testifying in court. However, there are instances where the requesting party needs your live testimony on some issue. Again, you have the right to counsel in these proceedings. If your testimony may incriminate you in criminal activity, you also have a right to remain silent and invoke the Fifth Amendment on those issues. In current times, most court hearings occur remotely, so testimony can be provided with a minimal disruption of your business. If you are forced to travel to court for live testimony, you have a right to receive a witness fee and travel expenses which are set by law in the relevant jurisdiction.

Generally, a subpoena can only be issued in connection with an ongoing legal proceeding or investigation. Occasionally, people seeking information will send documents that look official and demand production of sensitive information. You have the right to verify the authenticity and validity of any document request before sending a response. Most court records are online, and the existence of pending litigation can be confirmed by checking the case docket for the relevant court. Criminal investigations are confidential, however the identity of the requesting agent should be confirmed before records are sent. Government emails are often spoofed by scammers seeking information that is otherwise unavailable. Therefore, some due diligence is necessary before transmitting documents in response to an official-looking request.

In the era of ecommerce where people are conducting business globally from their computers or mobile devices, subpoenas or other law enforcement requests can come from any jurisdiction – even foreign countries. Generally, a subpoena must be issued from a court of “competent jurisdiction” to be enforceable. As a result, not all subpoenas are binding on the receiving party. However, there may be reasons to consider cooperation with subpoenas even from foreign jurisdictions. Some countries have established Mutual Legal Assistance Treaties or other international agreements that allow foreign subpoenas to be enforced. Ignoring a subpoena is strongly discouraged.

While you may never receive a subpoena in the operation of your adult business, subpoenas are becoming much more common and can come from just about anywhere. Learning about your rights and obligations when receiving a subpoena in advance can help mitigate stress and confusion when confronted by this legal process.

Lawrence G. Walters heads up Walters Law Group. Nothing in this article constitutes legal advice. Mr. Walters can be reached at www.firstamendment.com or on social media @walterslawgroup.

Dangerous Intersections

Can a webcam model also be a paid escort and an active member of a “hookup” dating site?  Naturally, the answer is “yes,” but at what costs?  Blurring the lines between these adult-themed user categories creates an uncharted hybrid of legal exposure for both the individual model/escort and those operating the associated websites.  However, more and more frequently we’re seeing this sort of crossover in the live webcam, escort, and casual dating industries.  Historically, escort sites have operated on the legal assumption that their advertisers do not engage in sexual activity for hire, but simply offer paid companionship services.  Live webcam operators routinely engage in sexual activity on cam, but are typically prohibited from any “real world” meetings with users, so as to avoid concerns with prostitution and solicitation.  Finally, adult dating sites have avoided prostitution-related issues based on the fact that they merely serve as a forum for social interaction, and should any sexual activity occur between users, it is not in exchange for money or anything of value. However, when the same individual acts as a webcam performer, an escort, and a hookup site user, these important legal distinctions and assumptions can start to break down.

Importantly, no law prohibits an escort from having a normal, romantic dating life, complete with sexual activity.  Similarly, live webcam models are not legally prohibited from offering companionship escort services, or submitting profiles to casual dating sites in search of an occasional tryst.  The legal danger arises in the not-so-rare scenario, linking all of these activities together in some way. For example, escorts who provide sexually explicit performances via webcam must be careful to separate any discussion of escort activities or reference to online escort profiles, to avoid sending the wrong message to users.  Without clearly distinguishing between webcam and escorting activities, the government will likely argue that any explicit webcam activity is indicative of the services the model might provide when acting as a paid escort.  Whether such argument would be successful in a court of law is another matter, but the risk exists.  Escorts should be similarly cautious when linking to any dating site profiles that reference sexual activity, so as to avoid conveying any misconception regarding the limited, non-sexual nature of the activities that the escort is willing to engage in during a paid session.

While compelling legal arguments can be made in support of the legality of live webcam sites, escort sites, and hookup sites, those legal arguments can be negatively impacted by linking such activities together in some manner. In a perfect world, escorts would never engage in sexual activity, webcam models would never meet users offline, and adult dating site participants would never be compensated for anything having to do with erotic interaction.  Unfortunately, however, reality is messy.  Escorts and webcam models are entitled to a healthy sex life, like anyone else.  But as the escort, webcam, and adult dating business models become more popular and profitable, site operators will be forced to make difficult but important decisions regarding the extent to which any co-mingling of activity will be permitted or referenced on the site.

In the immortal words of The Offspring: “You gotta keep ’em separated.”  But with many operators permitting posting of user generated content with limited or no pre-publication review, along with real-time social network feeds, the ability of a site operator to control the intersection of these three areas of online adult entertainment can be challenging.  That said, pre-publication review of user posts/profiles creates its own set of complications, and may negatively impact the legal protections afforded to online service providers under federal statutes like Section 230, the DMCA, and Section 2257.  Thus, actively attempting to control linkage of these various activities could impact the site operator’s legal defenses to claims arising from the publication of this third-party content. Coherent operating policies should be adopted in connection with the publication of any such material, taking into consideration all of the factors.  However, given the serious legal consequences attached to the promotion of sexual activity for hire in the United States, site operators, escorts, and performers should be forewarned regarding these dangerous intersections. 

Update: The passage of FOSTA in April, 2018 has significantly impacted the legal issues addressed in this post.

Feminism or Fascism: Iceland’s Stunning Ban on Pornography May Be Spreading

Iceland recently made headlines with the latest project on its allegedly progressive agenda: a nation-wide ban on pornography.  No stranger to proscribing activities related to commercializing sex, Iceland has already passed laws banning printed pornography, prostitution and stripping, and has done so all in the name of feminism.  Rattling off the standard laundry list of the evils of porn, the Icelandic Parliament noticeably lingered on the “damaging effects” adult material has on the children who view it and the women who participate in it.  Iceland’s Office of the Interior Minister defended the ban by stating that Icelandic citizens deserve to live and develop in a non-violent environment, therefore, the resulting law is “not anti-sex, but anti-violence.”  What’s potentially more concerning is that this feminist backlash against commercial sexualization is gaining serious momentum throughout Europe, as evidenced by the European Union’s recent parliamentary vote on a blanket pornography ban.  Taking a page from the Nordic view on feminism, the EU claims the ban will foster gender equality and combat sexual stereotypes by sanctioning individuals and businesses “promoting the sexualization of girls.”  With Parliament disclosing very little about the potential ban, most Europeans are looking to the recent path blazed by Iceland for some guidance on what’s to come.*  So what is the likelihood of Iceland being the first democratic state to successfully ban pornography?  The answer to that question probably depends on your definition of success…

Given that Iceland is expected to implement similar blocking filters to those used in China and Iran, it stands to reason that Iceland would enjoy comparable success in restricting online content.  However, the environmental and temporal differences between Iceland’s efforts and that of middle and far east authoritarian regimes, shouldn’t be so easily dismissed.  Countries like China and North Korea limited citizens’ access to online content, but such restrictions have been in effect practically since the Internet’s inception.  Any armchair psychologist will tell you – and any parent of a toddler will confirm – it’s human nature to want what you can’t have.  And if whatever you can’t have, is something that was in your possession but was taken from you, well that ups the ante even more.  Like most citizens across the globe, Iceland’s people have had unfettered access to online adult material.  To put it bluntly, it doesn’t matter how inherently progressive a country is, when you confiscate a piece of personal autonomy, there’s bound to be consequences.

Even if the Icelandic government seamlessly weathers whatever discontent that’s thrown its way, there’s still the matter of enforcement.  Logistically speaking, Iceland will employ filters barring citizens from accessing flagged websites, and fire walls prohibiting Icelandic credit cards from purchasing adult content.  But what about the tangible transport of digital pornography?  Streaming, downloading and cloud access aren’t the only ways to retrieve digital content.  What’s stopping someone located in another jurisdiction from entering Iceland’s borders with a pornographic DVD?  With so many vehicles capable of transporting digital content, common sense says that it would be impossible to inspect each and every tablet, flash drive, laptop, and Smartphone that crosses Iceland’s borders.  As long as there’s been contraband, people have been smuggling contraband – the digitization of such contraband has only made it that much easier.

The ability to control infiltration of the banned content leads directly to the next hurdle – the black market.  We live in the Internet Age; every technological restriction is met with a response circumventing that restriction.  Whether it’s a scrubbing tool used to mask IP address identification or software that scrambles collected geo-location location, there are countless techniques enabling the average Internet user to evade government-imposed limitations.

Without getting too high up on the First Amendment soap-box, this type of regulation tends to invoke the constitutional scholar in all of us.  If Iceland wants to completely ban pornography, exactly what kind of material is considered “pornography”?  Without careful and meticulous drafting, any such law will inevitably encompass content as innocuous as the mere display of genitals.  Some reports say that the ban would only include “violent or degrading content.”  As admirable as that is, we’re still left with the subjectivity surrounding the definitions of “violent” or “degrading.”  Another variable to throw into the mix in determining what would constitute pornography is the intended purpose of the material in question.  Specifically, was the content created for private consumption or commercial use?  If Iceland’s chief concern is to prevent the commercialized sexualization of women and children, logically, only material disseminated commercially would violate the ban and any application of the law beyond that specific scope would be a flagrant infringement on privacy rights.  Given the widespread creation and sharing of private erotica, a substantial amount of pornographic material would presumably be unaffected by the legislation.

In a very short time, Iceland will undoubtedly find itself at the age-old prohibition impasse, asking which holds more clout: a government imposed ban or the tenacity of those looking to circumvent that ban?  As shown with most government-sanctioned goods or services, a black market develops; those participating eventually monopolize the marketplace; a consistent profit is generated; and ultimately standard supply and demand principles are used to exploit and perpetuate a marketplace devoid of legislative supervision.  Government-imposed prohibitions might change behavior, but a behavioral change does not prove that the problem was solved; only that it has been forced underground.  On that note, one must question whether the “problem” existed in the first place.  One person’s degrading porn, is another’s…you know the rest.  Ultimately, Iceland is unlikely to become a porn free zone irrespective of the pending legislation.  If history has taught us anything, it’s if there’s a will, there’s a way.

 

*As this post went to press, the EU Parliament voted against the anti-porn proposal due to censorship concerns: “Language that would ban online pornography has been dropped from a report approved by the European Parliament.”

The Politics of Porn – 2012

By the close of 2011, the Republican presidential hopefuls had their work cut out for them. It was starting to look like the people had gotten their fill of Michele Bachmann’s eccentricities. Such a sentiment was confirmed at the Iowa Caucuses, when the Tea Party Chair, receiving only 5% of the votes, placed sixth among the other candidates, ultimately resulting in Bachmann’s withdrawal on January 4, 2012. Despite consistent double-digit polling numbers since early fall, January claimed another candidate in former Utah Governor, Jon Huntsman. Withdrawing from the race on January 16, the former ambassador pledged to ”stay relevant” in the race, and has kept that promise by actively supporting Mitt Romney. Then, of course, there’s Herman Cain – once his luck ran out with the ladies, the voters soon followed. Despite suspending his candidacy back in December amidst allegations of sexual misconduct, Cain has done his best to remain in the spotlight, still lobbying for his 9-9-9 Plan and has yet to formally endorse one of his former competitors. And we can’t forget 2012’s latest casualty, Texas Governor, Rick Perry. After his promises to end “Obama’s war on religion” evolved into concerns of Perry’s War on the Establishment Clause, steam behind Team Perry was waning towards the end of 2011, and finally came to an end on January 19.

At this point, it’s almost mid-February and oh how the tides have turned. Deemed a misfit for most of his political career, Ron Paul has ridden the ‘rebel, nonconformist’ wave all the way to its peak. With that success, comes mainstream popularity and partial loss of Paul’s famous underdog status. Struggling to reconcile the Congressman’s political identities, voter support seems to be reaching a plateau, although not necessarily declining. The likely result: Paul is applauded for his valiant effort, but ultimately directed by the GOP powers-that-be to graciously keep the rebel rousing within the confines of the Texas state line.

Former Speaker of the House, Newt Gingrich, was thought to be down and out this past summer after a series of questionable spending excursions and the infamous mass exodus of several high-ranking campaign officials. But ever the true politician, Newt has overcome the instability of his early campaign and gained enough momentum to be considered a genuine presidential hopeful.

Probably the biggest candidate surprise of the campaign thus far is former Pennsylvania Senator, Rick Santorum. Battling disheartening numbers since the day he threw his hat into the ring only to surge ahead in 2012 by winning four of the eight presidential primaries thus far, Santorum is the very definition of a ”comeback kid.” Making no apologies for his socially conservative politics, Santorum ready and willing to squeeze out the very last bit of libertarian influence that might be left in the GOP, and based on recent numbers, he might just be able to do that.

The one constant since the beginning of the campaign trail is Mitt Romney’s title as the election’s front-runner. Romney is currently blowing everyone out of the water with ninety-five pledged delegates; that’s more than the other three candidates combined. Maybe the American people think a business consultant as President is the only way to completely pull out of this economic tailspin, or maybe we all harbor deep-seeded respect for Mormon’s with good politician hair – either way, Mitt Romney isn’t going anywhere any time soon.

So what do the Republican Presidential candidates have to say about adult entertainment issues? Not that the Obama Administration has been the champion of personal freedoms that was originally hoped for, but at least the DOJ’s decision to focus on child pornography instead of filing any new obscenity cases allowed the industry a bit of momentary relief. However, it’s safe to say that if a Republican takes over the presidential seat, it’s going to be a different ballgame all together.

According to Morality in Media’s (“MIM”) President, and former DOJ official, Patrick Trueman, “Vigorous prosecution of those who violate our nation’s obscenity laws is critical now. Our nation is suffering a pandemic of harm from pornography that is readily available – even to children on the Internet and in other venues.” Trueman has targeted Santorum, Romney and Gingrich for months, requesting that the candidates take a public stand in favor of his anti-porn efforts.

Heading straight for the newbie, Trueman successfully got Santorum to sign the Family Leader Pledge (made famous by former candidate Bachmann’s ”ban on porn”) all the way back in July of 2011. The pledge requires Santorum to uphold, among other things, the “Humane protection of women and the innocent fruit of conjugal intimacy — our next generation of American children — from human trafficking, sexual slavery, seduction into promiscuity, and all forms of pornography and prostitution, infanticide, abortion and other types of coercion or stolen innocence.”

Nothing if not persistent, Trueman continued MIM’s crusade this past October by demanding that the 2012 presidential candidates publicly disclose “their respective views on the enforcement of obscenity laws.” MIM officials eventually obtained statements by all three of the frontrunners after calling on MIM followers to continue the crusade through emails, calls, and meetings with the candidates urging them to respond to MIM’s request for disclosure.

In his response to MIM, Santorum wrote: “Federal obscenity laws should be vigorously enforced. If elected President, I will appoint an Attorney General who will do so.”

In a one-on-one interview with MIM staffers, Gingrich was asked if he will enforce existing laws that make distribution of hard-core adult pornography illegal, he responded:”Yes, I will appoint an Attorney General who will enforce these laws.”

The only candidate to reference online content in his written reply to the MIM demand, Romney stated: “It is imperative that we cultivate the promotion of fundamental family values. This can be accomplished with increased parental involvement and enhanced supervision of our children. It includes strict enforcement of our nation’s obscenity laws, as well as the promotion of parental software controls that guard our children from Internet pornography.” Although, Mitt’s status as one of MIM’s golden boys of piety may have hit some rough terrain as it was revealed that everyone’s favorite squeaky-clean Mormon accepted a maximum amount campaign donation from Daniel Staton, chairman of the board of the company that owns Penthouse. While this may not be tantamount to accepting a donation from Max Hardcore or Extreme Associates, this minor campaign faux pas is going to raise more than a few eyebrows.

With MIM sparking GOP discussions of a resurrection of strict enforcement of obscenity laws, notions of MIM President’s Trueman staging a re-entry into politics seem unsettlingly attainable. So is the country in imminent danger of the DOJ turning into the “Trueman Show” come January, 2013? Hopefully not, but with polling data saying one thing, schizophrenic primary numbers saying another, and public opinion exhibiting an extreme of the two on any given day, it truly is anyone’s race. The stakes are high for the country and our Constitutional freedoms. And with the top three presidential candidates pledging to reinvigorate the ‘War on Porn,’ one can’t help but hope that the adult industry won’t be one of the losers in 2012.

Back to the Future -Hatch Calls for More Obscenity Prosecutions Just in Time for the Presidential Bids

Gas up the DeLorean, because Orrin Hatch is taking us back to 1984. “As the toxic waste of obscenity continues to spread and harm everyone it touches, it appears the Obama administration is giving up without a fight.” The previous sentence is part of a statement issued by Senator Orrin Hatch last week in the wake of his very public, very brazen call to the Department of Justice to increase obscenity prosecutions.
Hatch, the Republican Senator representing Utah, along with House Representatives Mike McIntyre (D-NC) and Randy Forbes (R-VA), sponsored the letters to the DOJ, effectually calling out the Obama Administration’s lack of “vigorous enforcement” of obscenity laws; one to his legislative colleagues and one to Attorney General Eric Holder. The letter to Holder, signed by dozens of Senate members, demands that the Department of Justice and the FBI step-up their efforts in prosecuting producers and distributors of “hardcore adult pornography.”
The letter urges General Holder to examine the evidence gathered by sources like www.pornographyharms.com, in order to fully comprehend the “crisis” caused by adult obscenity and “urgent need” for action by the government. Incidentally, the website referenced in Hatch’s letter is operated by anti-porn crusader, Patrick Trueman, CEO of Morality in Media and Director of the War on Illegal Pornography Coalition. If you still think there’s a glimmer of possible impartiality located within the “evidence” (let’s use that term loosely, shall we) provided via www.pornographyharms.com, take a look at Trueman’s press release on Hatch’s letter where he references the “grave social costs documented by a plethora of researchers at http://www.pornographyharms.com and at a groundbreaking conference held by the Witherspoon Institute at Princeton University entitled, ‘The Social Costs of Pornography’.” The Witherspoon Institute? The same Witherspoon Institute that brought us such neutral and fair-minded studies and literary masterpieces like, ‘Politics & the Devil’, ‘Medieval Wisdom for Modern Universities’, ‘Where in the Constitution is the Separation of Church & State?’ and who can forget ‘Did Pius XII Lie to Save the Jews?’.

But as much as we’d like to pretend that this is yet another divine alliance between the consistently overlapping groups of Republicans and religious conservatives, it is most definitely not. Several democrats, including the unexpected addition of Dianne Feinstein of California, signed on in support of Hatch’s demands. Feinstein’s backing of the letter comes as a surprise given the fact that the adult industry companies the letter is targeting are the very same businesses comprising her southern California constituency. When asked to comment on Feinstein’s involvement in this new resurgence against obscenity, a spokesperson for the Senator pointed to her support of “several measures targeting child pornography in recent years” – which of course provides a crystal clear explanation for jumping on the witch-hunt bandwagon targeting completely lawful speech engaged in by adults.

Even more disturbing might be Hatch’s extremist allegations that “experts warn” pornography is related to sexual harassment, violence against women and sex trafficking. As if the Orwellian undertones of the letter aren’t enough, Hatch is channeling us back to the 80s with over-broad, feminist far-left propaganda, reminiscent of the Dworkin-MacKinnon Era anti-porn crusade. Note: unsuccessful anti-porn crusade.

An Assistant Attorney General has responded to the allegations of being “soft on porn” with a letter of reply, stating that the DOJ has made the realistic decision to focus its “limited investigative and prosecutorial resources on the most egregious cases, particularly those that facilitate child exploitation…” Given the DOJ’s unsuccessful attempt at its last high profile obscenity trial against Evil Angel owner, John Stagliano, it’s really no wonder that the DOJ decided to turn its attention to prosecuting media involving children as opposed to consenting adults. Stagliano’s obscenity trial last July, which resulted in a judgment of acquittal on all counts, was likely the final nail in the coffin for the now-defunct Obscenity Prosecution Task Force. The Task Force was a special Justice Department unit set up during the first Bush administration as a result of conservatives reacting to the abundance of allegedly obscene material available on the Internet. This recent disbanding of the DOJ’s ‘Porn Police’ may have been exactly what Orrin Hatch was waiting for to drop his bomb on Capitol Hill. Between Hatch’s demands for action on the DOJ and the fact that the 2012 presidential bids are being tossed around; is it possible the next year or so could provide the perfect storm for a resurgence of the Obscenity Prosecution Task Force?

Given the vagueness of the Obama Administration’s stance on obscenity prosecution, the possibility of a Republican taking over in 2012 leads to thoughts of a Reagan-era anti-pornography agenda renaissance. How likely is it that the incumbent will be able to stave off the Republicans for another four years; obviously everyone in every industry has their own prediction, but we all know it’s too soon to tell. However, with Obama’s approval rating plummeting daily and the GOP’s recent accusations that the democrats aren’t taking the budget crisis seriously enough, it’s not so far-fetched to see Obama throwing the conservatives a bone by entertaining Hatch’s demands in the near future. What would Trump do?

Notably, as this blog post goes to print, reports of adult filmmaker, Ira Isaacs, having been indicted on five new obscenity charges are hitting the newswire. These latest indictments join Isaacs’s three previous obscenity charges originating in 2006. Originally slated to go to trial in 2008, the case was postponed due to the controversial recusal of Judge Alex Kozinski. The trial, now set for May of this year, could commence within days of Isaacs’s arraignment on the new obscenity counts, unless his defense attorney can push off the trial again, in light of the new charges. Is this latest news pure coincidence or a knee-jerk reaction by Obama’s DOJ to the news of the day? Let’s sincerely hope that it’s the former because it’s a little disconcerting that the Attorney General might find it more damaging to be considered “soft on porn” than proceeding with a baseless fishing expedition against an easy target for the sole purpose of flexing his judicial muscles in some inter-branch, alpha-politician contest with Orrin Hatch.

So how does all this ambiguity ultimately affect the adult industry? This industry has traditionally been used as a tool in political agendas, unfortunately resulting in the First Amendment as the inevitable loser all too often. As referenced earlier in this post, Republican administrations going as far back as Reagan, have displayed blatant aggressiveness against the adult industry, citing the same ‘moral decay of society’-type rationale currently demonstrated by Senator Hatch and his supporters. On the other hand, the Democratic Party has traditionally been more receptive to the adult industry in general, but if recent years have shown anything, it’s that ‘liberal’ does not necessarily mean ‘libertarian.’ And now, especially with Capitol Hill reeling from some of the most volatile bipartisan infighting this country has seen in decades, one can’t help but wonder if adult entertainment is going to be a scapegoat yet again. So batten down the “Hatch’s” and get ready for another round.

*Note: This article was drafted with the purpose of addressing all political agendas affecting the adult entertainment industry and in no way was intended to act as a political endorsement of any candidate. It should also be noted that the author is not associated with any election campaigns or a member of any political party.

Legacy Learning Systems – The Beginning of the End for Review Affiliate Marketing

We’ve all seen the testimonial advertisements on TV at 2 am and undoubtedly asked ourselves the burning question, “Does Alex Trebek really think Colonial Penn Life Insurance is that great?” All joking aside, it’s common sense and courtesy that an individual should only endorse products or services that they have actually used. As simple as that sounds, the Internet makes the issue much more complex by way of the well-known practice of “affiliate marketing.”
Affiliate programs, which are both legal and a major component of the e-commerce world, allow for individuals or entities to register as an “affiliate” of a company and earn commission based on generated web-traffic to the company’s site or “signing up” new customers for the company. Some programs utilize “reviewer affiliates” who promote the company’s products or services via online endorsements in exchange for some form of payment.
Although the FTC has previously reprimanded a handful of companies for affiliate program advertising issues, this week was the first action issued by the FTC that resulted in a fine. Tennessee-based Legacy Learning Systems, Inc. was recently slammed with a $250,000 fine (among other sanctions) for engaging in an affiliate relationship with reviewers who were not disclosing the relationship between the two entities, resulting in the FTC claiming the relevant reviews were deceptive ads and Legacy was on the hook for them.
Legacy sells guitar-lesson DVDs and employed an affiliate program to recruit and subsequently compensate “review ad” affiliates to promote the DVDs via various online forums. Based on this business model, the FTC accused Legacy of false advertising by misleading potential customers into believing the reviews written by its affiliates reflected the unbiased views of ordinary consumers, therefore violating the FTC Act. Pursuant to the FTC’s 2009 revised guidelines on endorsements and testimonials a positive review by a person connected to the seller (or someone who receives cash or in-kind payment to review a product or service) should disclose the material connection between the reviewer and the seller of the product or service. And the disclosure shouldn’t be buried deep in a set of legal terms, or invisible type in the footer of the page.
Probably recognizing that a battle against the FTC is no way to kick off 2011, Legacy agreed to an administrative settlement and must pay $250,000 while also implementing a comprehensive reporting procedure whereby Legacy must, on a monthly basis, review each of its top fifty (50) revenue-generating affiliate reviewer websites plus a random sample of fifty (50) additional affiliate reviewer websites to make sure that the required disclosures are being made. If the disclosures are not present, then Legacy must immediately terminate the affiliate. Furthermore, Legacy must provide all future and current affiliates with a copy of the Consent Order entered into with the FTC and a signed statement by the affiliate that it received the order and agrees to comply with the FTC requirements or risk being terminated by the affiliate program. Probably not the best way to introduce your company to a new affiliate.
David Vladeck, Director of the FTC’s Bureau of Consumer Protection was quoted as saying, “Whether they advertise directly or through affiliates, companies have an obligation to ensure that the advertising for their products is not deceptive […] Advertisers using affiliate marketers to promote their products would be wise to put in place a reasonable monitoring program to verify that those affiliates follow the principles of truth in advertising.”
When the FTC published its revised advertising guidelines it was pretty obvious (as with most attempts to regulate the Internet when you’ve been in a brick and mortar mentality since inception) that there was eventually going to be friction in the online world – but no one knew to what extent. We’re finally getting a taste of the enforceability of those guidelines and something tells me that affiliate program hosts were not expecting the enforcement to pack such a punch. That being said, sites that engage in any type of compensated review system as a form of advertising are going to feel the aftermath of this one. Affiliate programs, like most marketing tactics, are about the bottom line – when the only alternative to ridiculously impractical mandatory monitoring is the FTC breathing down your throat, it makes you wonder how long until review affiliate program operators cut their losses and just shut down these programs completely.

The Marketplace Has Spoken… And At Least One Company Has Listened

It’s no secret that business revenue models employed by industries across the board have had to drastically evolve in recent years to keep up with advances in technology, and adult entertainment is no different. Oddly, however, the adult industry has lagged behind, in its recognition of consumer demand for ala carte-type pricing models employed by other facets of the entertainment industry. But “better late than never” must be the new mantra for Pink Visual, as the adult entertainment megacorp unveiled its latest venture earlier this month.
PVLocker.com is a cloud-based distribution site promising to provide your porn on your terms. PVLocker utilizes an open source browser providing the customer with an app store-esque environment to purchase the desired content on a per file basis. Upon purchase, the user may then access the files, which are stored on Pink Visual’s server cloud, anywhere and anytime via PC or mobile device.
Use of PVLocker.com will initially be limited to storing Pink Visual content only, however, the company plans to eventually offer storage of any user-owned content. Now before your Infringement Radar starts buzzing off the charts, have no fear, Pink Visual has no plans to allow content sharing on the site. Hence, allowing PVLocker to fill a very noticeable gap in the adult website marketplace, while still keeping happy the almighty copyright holder.
Even though Pink Visual obviously understands the necessity of business model evolution, it intends to continue distributing content through the traditional subscription basis as well, as long as it makes fiscal sense to do so. How long will that be? No one can be certain what kind of effect this model will have on the traditional monthly membership business model. But one thing is for sure, when you have the immediate gratification of one-click payment at your finger tips versus the hassle of recurring billing, obsolescence is a much more real possibility than ever before.
Much like the experiences of the recording industry a few years back, adult content distributors are finally taking notice of the fact that they have been fighting a losing battle and that the marketplace will always win. The recording industry fought these battles for years – litigating against Napster, Grokster, and others, in the attempt to beat back rampant audio file piracy. The recording labels then dipped their collective toe in the waters of end user infringement litigation, only to suffer a tremendous public backlash, causing a quick 180 reversal on that strategy. One would think that this trial and error would have provided an early roadmap for the adult industry, when it began struggling with its own piracy headaches. Instead, many companies appear wedded to the concept of replacing lost revenues with legal judgments against infringers. While every copyright holder is entitled to enforce its rights and bring infringers to justice, that effort should be tempered with a recognition that less infringement might be occurring, if a realistic alternative to the $29.99/month recurring membership model were routinely offered to adult content consumers.
Flexibility is key and nostalgia breeds irrelevance – Pink Visual is embracing the future of adult content distribution by providing its customers with their entertainment “when they want it, where they want it, and how they want it.” [Cue Queen’s “I Want It All.”] Continued inventiveness like this will always be preferable to reliance on litigation as a revenue line item.

Tube Site Business Model is Legal – Protected by Free Speech Principles

Kevin Cammarata’s lawsuit against redtube.com, a popular ‘tube’ site, and its advertisers, was dismissed, and that dismissal was recently upheld by the California Court of Appeals. In addition, the court determined the suit to be an illegal SLAPP Suit, and awarded attorneys fees.

The the operation of a tube site was described as “conduct of placing speech on the Internet where it can be viewed for free by the public.” The court rejected any claims of predatory business practices, and noted:

We reject Cammarata’s argument that his causes of action arise from [Redtube.com’s] predatory pricing, not its speech, because here the product being priced is speech.” See, Xbiz.com, Appeals Court Rules Against Cammarata in RedTube Case,

The ruling is important in the continuing development of the law surrounding user generated content website operation. The utility of sites such as forum for expression of protected speech cannot be underestimated. Hopefully the courts will continue to afford legal protection for this business model, and dismiss ill-conceived lawsuits, brought against online service providers operating venues for expressive activities.