Unless you have been vacationing in the Amazon, by now you know that Attorney General Gonzales has approved and published revised regulations implementing 18 U.S.C. Section 2257. It would be an understatement to say that the new regulations have created an uproar in the industry. I cannot recall a time when our office has received so many calls from clients and other information seekers regarding a legal subject. Clearly, “2257” compliance is on the front burner for webmasters, content providers and video producers across the country.A number of industry attorneys and legions of board contributors have commented on the regulations. Unfortunately, there are some erroneous and confusing interpretations in circulation regarding both the new and existing regulations. This is understandable given that the regulations are very complex and often misleading, perhaps intentionally so. Moreover, the regulations pertain to a very wide range of business models involving content production and distribution at every level in the industry.

Our experience counseling clients regarding 2257 issues over the years has taught us that interpretation of how the regulations apply to a particular business is very fact intensive and often depends on what activities the business is engaged in or is contemplating. This is particularly the case regarding our Internet-based clients that often implement new and innovative business models and procedures not directly or clearly addressed in the regulations. Consequently, in contrast to many other legal topics for which we have published detailed information, our firm’s policy is that 2257 compliance matters are simply too complex, too fact-based and too easily misunderstood to appropriately, let alone comprehensively, address in legal op ed pieces. We believe that 2257 compliance is the type of matter that simply requires direct legal guidance from a qualified adult entertainment attorney.

I think the matter was probably best stated recently by my good friend and colleague, Jeffrey Douglas, at last month’s Free Speech Coalition general meeting addressing the new regulations, where he said:

“Basically, I know that every sane human being doesn’t want to hear this from a lawyer, but it is suicidal madness for anyone who’s producing not to pay a fuckin’ lawyer (who knows what they’re doing) to come and take a look and check it out, because no matter how smart you are, no matter how hard you do the research, it is first of all virtually impossible that you can have it all together. There are just too many rules, too many applications, and there’s not like a place that you can go and read the rules. So much of it has to do with what the Justice Department interpreted ALA v. Reno to mean, versus Sundance, and all this crap. Hire a lawyer to take a look; it’s worth it.”

Consequently, this article is not a 2257 compliance primer. It is, however, a call to arms.

The Government Has Thrown Down the Gauntlet

The new regulations are nothing short of a declaration of war against the adult entertainment industry. The government now directly threatens tens of thousands of tax-paying and law abiding creators and publishers of constitutionally protected material with five years of incarceration for the slightest failure to comply with a complex and outrageously onerous set of regulations. In fact, compliance with the obligations and burdens imposed by the revised regulatory scheme will simply be impossible for many adult entertainment businesses.

Consider the following, which are only a few of the many onerous and unjust requirements imposed by 2257 which confront the industry:

1. Almost everyone in the business needs to have copies of all the records required by 2257 and to maintain them as a “producer.” This is because the comments accompanying the new regulations make it clear that the government intends to apply the entirety of the record keeping requirements statutorily imposed on “producers” to an expanded class of “secondary producers” which will now include by definition any person that:

“inserts on a computer site or service a digital image of, or otherwise manages the sexually explicit content of a computer site or service that contains a visual depiction of an actual human being engaged in actual sexually explicit conduct, including any person who enters into a contract, agreement, or conspiracy to do any of the foregoing.” Sec 75.1(c)(2).”

While our firm has always counseled our clients about the likely application of secondary producer requirements to webmasters, what is new is the government’s extension of the secondary producer requirements to those who are merely contracting with one or more parties that insert subject content onto a site or managing a site’s content. What is also new and troubling is the government’s strident and disingenuous repudiation of the 10th Circuit Court of Appeals opinion in Sundance Assoc., Inc. v. Reno, 139 F.3d 804 (10th Cir. 1998).

In Sundance, the court held that the statutory definition of “producer” did not distinguish between “primary” and “secondary” producers and entirely exempted from the record-keeping requirements those who merely distribute or those whose activity “does not involve hiring, contracting for, managing, or otherwise arranging for the participation of the performers depicted.” 18 U.S.C. 2257(h)(3). While the reasoning employed by the court in Sundance was constitutionally sound, the applicability of the ruling has always only extended to the states within the 10th Circuit (Utah, Wyoming, Colorado, Kansas, New Mexico and Oklahoma). Unfortunately, many webmasters in the industry outside of the 10th Circuit have elected not to create and maintain a record keeping system regarding content on their web site obtained from third party producers, choosing instead to bet that Sundance would become the law of the land. The DOJ’s comments make it clear that any party relying on the ruling in Sundance, perhaps even parties in the 10th Circuit, should beware. Specifically, the accompanying comments claim that Sundance does not reflect the correct view of the law and explicitly rejects comments to the contrary. Federal Register: May 24, 2005, Vol. 70, No. 99, page 29609.

Thus, the government’s view is clear: regardless of whether you are a primary producer or a secondary producer of content subject to the 2257 regulations, you must acquire all the 2257 records pertaining to that material and you must maintain those records in the manner prescribed by the regulations. This would include, among other things, the maintenance of a copy of each depiction in an alphabetical or numerical cross-referencing system that includes the depiction’s title or identification number, the names and aliases of all person’s depicted in the material, the dates of production, and as of June 23, 2005, “a copy of any URL associated with the depiction or, if no URL is associated with the depiction, another uniquely identifying reference associated with the location of the depiction on the Internet.” Sec. 75.2(a)(I)(ii). After June 23rd, it would also appear that the URL association and depiction copy requirements would even apply to content dynamically, or even transitively, associated with different URLs.

2. Compliance with the regulations requires disclosure of the actual names and other personal information of performers to thousands of persons in total disregard of the peformers’ privacy rights. Because of the expanded definition of “secondary producers”, in addition to webmasters and other content aggregators, now even web designers appear to be required to acquire and maintain the records required by 2257. This means that tens of thousands of persons may gain access to personal information of models and performers, including their addresses, driver’s license numbers and even social security numbers. Fair-minded individuals, let alone law enforcement policy makers, should see this requirement as utterly incomprehensible at a time of rampant and increasing identity theft, cyber stalking, and other identity related crimes that the government has so far shown virtually no ability to slow down, let alone prevent. Moreover, anti-terrorism experts have repeatedly warned of the terror potential of widespread abuse of personal information obtained by terrorists to undermine the public’s confidence in the nation’s banking and other economic institutions.

The government’s 2257 policy regarding private information disclosure is incomprehensible unless, of course, the real aim of the regulation is to dissuade persons from ever performing in adult content. Consider the following and judge for yourself.

During the comment period last year, a large number of attorneys and others expressed concerns and provided data to the government regarding the likelihood of misuse of personal information provided by the performers. For example, we warned of increased physical danger to the performers that would inevitably result from the broad dissemination of their personal information contemplated by the regulations. Additionally, we pointed out that, while identity theft, stalking, cyber-terrorism and other national security matters are real, current and growing problems, since the passage of 2257, only three underage performers are known to have presented fake identification in over 100,000 industry titles released during that period. This is the government’s response:

“Sixty-two commenters commented that revealing personal information of performers, for example, in the form of their addresses on drivers’ licenses used as identification documents in compliance with this regulation, is an invasion of performers’ privacy and could lead to identity theft or violent crimes. Forty commenters commented that including the names and addresses of businesses where the records at issue are located would similarly lead to crimes against those businesses. The Department declines to adopt these comments. While the Department is certainly concerned about possible crimes against performers and businesses that employ them, the necessity of maintaining these records to ensure that children are not exploited outweighs these concerns.” Federal Register: May 24, 2005, Vol. 70, No. 99, page 29615.

3. Live and recorded video streams with “actual sexually explicit conduct” will constitute “depictions” that must be copied and maintained in both the primary producer’s record keeping system as well as in every secondary producer’s 2257 record keeping system. According to my friend and esteemed constitutional attorney Reed Lee, “assuming you’ve got a Web site that’s doing 12 parallel streaming videos, 24 hours a day, 7 days a week for the seven-year minimum that you’re required to keep the records … we’re talking about 500 terabytes worth of information.”

Remember, this requirement might well apply to each party “who enters into a contract” with a third party who provides (i.e.,“inserts”) a video stream on their computer site. Sec. 75.1(c)(2). Virtually every adult entertainment attorney commenting on the regulations last year pointed out the absurdity of requiring the redundant creation of such huge archives. The government’s cavalier response should make your blood boil:

“Thirty-two commenters commented that the requirement that a copy of each depiction be maintained would be unduly burdensome, leading to vast stocks of magazines and videotapes, and even storage of computer images would be unmanageable and prohibitive for small businesses. Thirty-five commenters also commented that the requirement to keep copies of each image is impossible to comply with due to the vast amount of data involved in storing digital images, especially, e.g., producers of live streaming video. The Department declines to adopt these comments. Maintaining one copy of each publication, production, or depiction is critical to making the inspection process meaningful. Commercial publishers and producers can reasonably be expected to comply. Furthermore, modern computer and disk storage capacities make digital archiving and back-up relatively inexpensive and space-efficient.” Federal Register: May 24, 2005, Vol. 70, No. 99, page 29613.

Unfortunately, the aforementioned requirements, are only a selected sample of many more absurd burdens that 2257 brings to the adult entertainment business, unless we, the industry and its attorneys, convince the courts to enjoin this censorial madness and malevolent targeting of constitutionally protected materials.

Every Now and Then There Comes A Time When You Must Fight.

Bugs Bunny has always been one of my heroes. This is, in part, because Bugs is basically a pacifist and a live-and-let-live kind of rabbit. It is only after an antagonist, usually an arrogant bully, refuses to let Bugs live in peace, that the clever rabbit will fight. But from that point on, the other guy is screwed.

Bugs Bunny is the animated embodiment of the phrase “right makes might.” He is the epitome of a good fellow that obeys the law and basically just wants to live his life in peace. He is, therefore, I believe, the perfect metaphor for the adult industry, an industry that obeys all the child pornography laws and would just as soon carry on making money without making any waves. Unfortunately, like the antagonists in the Bugs Bunny cartoons, the Administration’s unprovoked and unjustified attack on the adult entertainment industry in the form of new onerous regulations is nothing short of mean-spirited bullying and harassment. This is especially so in light of the DOJ’s acknowledgement of receipt of numerous clear and lucid explanations, arguments and other commentary regarding why the new regulations would be so burdensome, impractical, inefficient, counterproductive, unfair and even dangerous.

Exacerbating the injustice of the situation is the fact that it is clear that the DOJ knows there are much simpler and much more effective ways of providing the government with reliable data that evinces that all performers in adult materials are adults. The DOJ has been informed of numerous other methods that would do a better job of protecting children while also protecting the rights of performers and adult entertainment businesses. For example, one proposed system would employ an encrypted centralized database accessible by law enforcement. Another proposed system involves content that could travel on the web with the 2257 data encoded in encrypted form in the content itself. One such system is even the subject of a 1999 patent application in which I am a named co-inventor. The product built to implement that technology was repeatedly brought to the DOJ’s attention, to no avail over the last six years by the bay area software company that acquired the patent rights.

In fact, the DOJ has stubbornly refused to implement any regulations that would effectively use currently available technology. For example, instead of mandating the creation of a single intelligently secured database which might discretely include all the required information for adult content distributed in the country, the DOJ has elected instead to require the creation of thousands, or even tens of thousands of separately located databases.

In sum, the administration has elected to implement regulations that will do little more than infringe the rights and scare the hell out of the greatest number of persons in the adult entertainment business possible. This is exactly opposite to the way regulations impinging on constitutional freedoms are supposed to be promulgated. In fact, our legal system requires that if cherished constitutional freedoms are to be diminished, if at all, they may only be diminished for compelling reasons, and then only to extent absolutely necessary to accomplish a limited and compelling purpose. Assuming the validity of the 2257’s stated purpose, to protect children, implementation of the current 2257 regulatory scheme is like using a chainsaw instead of a scalpel.

Consequently, at this point, I think it’s safe to say that the bully has crossed the line . . . big time. Our response? I can see Bugs face looking directly into the camera and saying “Of course you realize this means war.”

The Free Speech Coalition Wants YOU.

The challenge to the adult entertainment business, the privacy rights of the peformers and all of our civil rights presented by the DOJ, will not go unmet. Several months ago, attorney Jeffrey Douglas and I, in association with the Free Speech Coalition (FSC), commenced work on the organization and funding of at least two independent lawsuits to challenge the new 2257 regulations on behalf of the FSC. The lawsuits are being spearheaded by Paul Cambria’s law firm (Lipsitz, Green, Fahringer, Roll, Salisbury and Cambria), and Louis Sirkin’s law firm (Sirkin, Pinales, Mezibov & Schwartz).
Both firms are litigating at substantially discounted rates and are assisted on a discounted or pro bono basis by many other industry attorneys including Jeffrey Douglas, Larry Walters, J.D. Obenberger, Reed Lee, Robert Sarno and myself.

A successful challenge to 2257 could, and probably will, result in a judicial order enjoining the enforcement of the law for many years. In fact, it is our hope that the most, if not all, of the most burdensome regulations, if not the whole regulatory scheme, will be held to be unconstitutional.

If you are in the adult entertainment business, particularly one of the Internet-related segments, I strongly urge you to donate any amount you can afford to the special 2257 litigation fund that the FSC has set up. I have personally contributed $5,000.00 in cash to the fund and I will be contributing an additional $20,000 in pro bono services related to FSC’s court challenges.

We are all in this together. Or as Benjamin Franklin said back in 1776, as the British forces approached our young country’s first capital at Philadelphia, “gentlemen, if we do not hang together in this time of crisis, be assured that we will all hang separately.”

Consequently, I call on every webmaster, content provider, news publisher, payment processor, gentleman’s club owner, adult bookstore owner, attorney, performer and every other person profiting from the adult entertainment business to match my donation or donate whatever you can to this just and worthy cause. If you can’t spare a donation, at least be sure that you and your business join the FSC. That way you and your business will be subject to any future court order enjoining governmental enforcement of the regulations against FSC and its membership.

Please contact the FSC at 866-FSC-9373 or my office at the number below for further details.

The C.U.R.E. to 2257 Paranoia.

Finally, I would like to address the 2257 fear factor. The publication of the new regulations and the resulting firestorm of commentary about the law by lawyers and lay persons alike have understandably produced an environment of fear and uncertainty. I think all of us, maybe particularly the attorneys, should do our best not to further inflame the situation. To that end I suggest we all adopt the following strategy of Calm, Unity, Resolve and Education to confront the challenges that lie ahead.

• Calm. Don’t panic. This is not the time for hasty and half-baked business decisions that you might soon regret. Have faith that we are in the right. If we do not break ranks and calmly state our case, reasonable minds in the judiciary, the national legislature, the media and the public at large will inevitably recognize the injustice of what the government is trying to do. While it is true that adult entertainment is disliked, even loathed in many quarters, the public has an even greater abhorrence of any attempt by the government to intentionally silence and stamp out of existence a whole class of protected free speech.


• Unity. The adult entertainment business is estimated to be a $15 billion a year industry in the United States alone. That’s bigger than baseball, bigger than football and bigger than the music business. Adult entertainment is one of the major exports of the United States. In fact, it is likely that a majority of the male population of the civilized world under forty is, or has recently been, a consumer of the American adult entertainment industry. In any given day over 100,000,000 persons view adult materials of one sort or another.
  

  
  These are numbers that represent true economic and political power in the raw. Unfortunately, because of the fragmented nature of the adult business, to date, the industry has yet to attain political or economic power remotely corresponding to its size. Because the 2257 regulations pose such a serious threat to virtually every part of the business, the current crisis presents a rare opportunity for the adult entertainment business to unify around a common focus like never before. The fight against 2257 could and should involve virtually every segment of the greater adult entertainment industry from video producers and distributors to webmasters and payment processors, from adult magazine publishers to audio text businesses, from adult toy manufacturers and distributors to performers, from gentlemen’s clubs and adult book store owners to satellite and cable companies carrying adult content. Literally everyone has a dog in this fight. If we can effectively unify for the purpose of employing the industry’s enormous economic and communications power to fund our court battles and communicate our message of freedom and tolerance, as I believe we will, our efforts will astonish our allies and confound our enemies.
  

  
  Unity also means civility to your fellow adult entrepreneurs, especially on the boards. The government is almost certainly monitoring all the avenues of communication used by the business. Consequently, perhaps we should all adopt an 11th commandment “Do not speak ill of thy fellow adult industry entrepreneurs for it is the government’s power abusing censors that are thy real enemies.”



• Resolve To Assist Those Challenging The Law, But Also Resolve To Comply With Law Until It Is Defeated. Please help the Free Speech Coalition and the attorneys in our challenge of 2257’s onerous provisions. Please donate whatever you can to the cause. But also, please, do all you can to comply with the law until it is enjoined and hopefully ruled unconstitutional.


• Education. It is critical that you understand how the various 2257 regulations apply to your business. A copy of the statute, the DOJ regulations and the government’s comments can be obtained at xbiz.com, avn.com and ynot.com. Additionally, a very thorough table comparing the old regulations, the proposed regulations and the final regulations which went into effect on June 23, 2005 can be accessed at J.D. Obenberger’s website at www.xxxlaw.net. But please remember, 2257 is very serious stuff and you simply must consult with a competent adult entertainment attorney that understands how the regulations apply to your business.

Finally, most of the attorneys in the business have been warning that this day would come for a number of years. Its arrival should come as no surprise to anyone. I think it’s fair to say that all the attorneys in the business, myself included, have been on the receiving end of some cheap shots from time to time regarding how the industry lawyers are just fear mongers trying to scare up business. Now, with the new regulations in effect, many in the business are simply not be in compliance. Perhaps it is now clear why we sounded the alert so far in advance.