In the courts this month, the Third Circuit Court of Appeal again struck down the Child Online Protection Act (“COPA”). The law has never been enforced and was sent back to the Third Circuit Court of Appeals from the United States Supreme Court to consider additional arguments that the Circuit Court did not resolve the first time around..JUDICIAL UPDATE

In the courts this month, the Third Circuit Court of Appeal again struck down the Child Online Protection Act (“COPA”). The law has never been enforced and was sent back to the Third Circuit Court of Appeals from the United States Supreme Court to consider additional arguments that the Circuit Court did not resolve the first time around.

One concern that the court noted in striking down the law is that in attempting to define “harmful material,” COPA makes no distinctions between things harmful to a five year old and something appropriate for a seventeen year old.1 Also, since the law requires that surfers desiring to view erotica provide a credit card number, this unfairly requires adults to identify themselves before viewing constitutionally protected material.2 Another review by the United States Supreme Court is likely as a result of this decision.

Meanwhile, Texas Republican Representative Lamar Smith unveiled what he calls the “Child Obscenity and Pornography Act of 2003,” which would prohibit the sale or trading of child pornography or obscenity involving prepubescent children.3 Of particular concern is porn peer to peer file swapping which uses services such as Kazaa as a “swap meet” for child pornography.4 One way or another, we will wind up with more federal restrictions on providing adult materials to children.

The United States Supreme Court rendered an interesting ruling this month: The Court ruled against lingerie seller Victoria’s Secret on its trademark claim against a small sex toy and adult video store named “Victor’s Secret.”5 The Court noted that federal trademark law requires substantial evidence that a competitor actually caused harm by using a similar-sounding name.6 Notably, this ruling produced a unanimous decision in favor of an adult entertainment establishment. With Justices Scalia and Reinquist voting in favor of a sex store, perhaps there is hope for justice at the High Court. Notably, this case is not a green light to use sound-alike names – do so only with extreme caution and sound legal advice.

LEGISLATIVE UPDATE

Congress recently passed the new virtual child pornography law, creatively entitled “The Child Abduction Prevention Act of 2003.”7 Apparently, our lawmakers did not understand the import of last year’s United States Supreme Court decision striking down portions of the Child Pornography and Prevention Act of 1996, which was Congress’ first attempt to regulate “virtual” child pornography. Many of the same concerns are created by the new legislation, although the House is certainly bobbing and weaving in its attempt to come up with something that will pass constitutional muster. Section 1466A of the Bill prohibits the production, distribution, receipt, or possession with intent to distribute, of any visual depiction which is, or is indistinguishable from, that of a prepubescent child engaging in sexually explicit conduct. This Bill will certainly be challenged if it is passed into law, and the United States Supreme Court may once again be faced with a difficult decision on the constitutional reach of the government’s authority to regulate depictions of pretend children. Because it is limited to prepubescent minors, however, there will be less impetus to challenge it because responsible businesses always stay clear of such images. The likely challenges will come from criminal defendants.

More disturbing than virtual child pornography restrictions are the other add-ons to this Bill, relating to deceptive domain names and federal records keeping requirements. The Bill contains a new prohibition on the use of “misleading” domain names by adult Websites. “The Internet can be used to deceive children into viewing inappropriate material,” said Representative Mike Pence (R-Ind.), who drafted the domain name amendment to the Bill.8 Specifically, Section 2252B(b) provides, “Whoever knowingly uses a misleading domain name with the intent to deceive a minor into viewing material that is harmful to minors on the Internet shall be fined under this Title or imprisoned not more than four years, or both.”9 Interestingly, Webmasters who use the words “sex” or “porn” are provided a safe harbor from prosecution. Couldn’t the Representatives come up with a few more words that clearly denote adult content? That project might have provided an interesting afternoon task for some House staffers. The test for determining what is “harmful to minors” under this new Bill is the same test used in the COPA law, which is the subject of substantial federal court litigation regarding its constitutionality. If COPA is struck down by the United States Supreme Court this time around, the misleading domain name law likely will fall with it.

Perhaps most disturbing is the last sub-section of the Child Abduction Prevention Act that requires the Attorney General to submit a report to Congress detailing the number of times since January, 1993, that the Department of Justice has inspected Section 2257 records of adult content producers.10 This sub-section also requires Attorney General John Ashcroft to disclose the number of violations prosecuted as a result of those inspections.11 It seems as though any member of Congress could simply pick up the telephone and call General Ashcroft to ask him these questions. Accordingly, it is unlikely that the purpose of the legislation is really to obtain this statistical information. Rather, it is to light a fire under the Department of Justice to persuade federal agents to begin inspecting records and prosecuting violations. This provision, buried in the fine print of this proposed law, should be of extreme concern to all Webmasters who have any question about the extent of their §2257 compliance. It is reasonable to assume that the Department of Justice will begin inspecting §2257 records on a widespread basis, even if this section of the Bill is defeated (fat chance!). Compliance with the dictates of Title 18, U.S.C. §2257 cannot be overemphasized in these uncertain times for the adult industry.

OBSCENITY UPDATE

The Feds are at it again, with at least two new federal obscenity prosecutions directed at adult video content distributed through the United States Mail. Federal agents, postal inspectors and LAPD officers raided the offices of Extreme Associates on April 8, 2003, and seized records, videos and Model Releases relating to several movies.12 The raid on Extreme Associates came only days after the Justice Department arrested a West Virginia couple on obscenity charges relating to the operation of a “scat” fetish site, girlspooping.com.13 Justice Department officials have threatened to seize the couple’s home, out of which the business was allegedly operated. The case is pending in Bluefield, West Virginia – hardly a bastion of liberal thought.

It appears that the long-feared reinstatement of regular federal obscenity prosecutions against adult content has finally become a reality, prompting many adult industry participants to review their content and seek legal guidance regarding its defensibility. Thus far, distractions abroad have likely prohibited an all-out assault on the adult industry by the Department of Justice, just as a matter of resource allocation.

PAYMENT PROCESSOR PANIC

The big news on the payment processing front this month was the pull-out by PayPal from the adult Internet industry. Many Webmasters were surprised to receive a notice from PayPal that as of May 12, 2003, it would no longer support transactions for adult content or products. PayPal previously had served as a viable alternative means of paying for adult content, especially for smaller amateur sites that could not obtain a merchant account, or afford to comply with the new regulations imposed by the third party billing processors. Some industry leaders have speculated that PayPal’s pull out from the adult industry may be a signal of hard times to come; some even suggesting that the company was tipped off and given an opportunity to get out before the going gets tough. While such conspiracy theories are sometimes interesting to consider, there has been no official confirmation that PayPal had access to inside information.

Also generating some panic amongst adult Webmasters is the rumor that Visa will no longer provide processing services for AVS sites. Although there is no official word yet from Visa, it is interesting to note that AdultCheck has changed its description of services from an “Age Verification System” to an “Access Verification System.”14 These continued payment processing hurdles force one to consider whether at some point in the future, adult content might only be purchased by sending cash in the mail.

(Stay tuned for Part Two of Larry’s Adult Industry Update next week!)

1 “Court Strikes Down Law Intended to Keep Kids from Online Porn,” CNN.com (March 7, 2003).

2 Id.

3 C. Farrar, “Anti-Child Porn, Anti P2P Porn Moves in Congress,” AVN.com (March 18, 2003).

4 Id.

5 A.P., “Supreme Court Sides With Sex Shop,” MSNBCNews.com (March 4, 2003).

6 Id.

7 H.R. 1104, 108th Congress – First Session.

8 D. McCullagh, “House Vote Bans Deceptive URLs,” CNetNews.com (March 28, 2003).

9 Id.

10 Id. at §12.

11 Id.

12 T. Brown, “Extreme Associates Busted by Federal Agents,” AVNONline.com (April 8, 2003).

13 TheSmokingGun.com (March 27, 2003).

14 AdultCheck.com.

Lawrence G. Walters, Esquire is a partner with the law firm of Weston, Garrou & DeWitt, with offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all aspects of adult media. The firm handles First Amendment cases nationwide, and has been involved in much of the significant Free Speech litigation before the United States Supreme Court over the last 40 years. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, www.FirstAmendment.com or AOL Screen Name: “Webattorney”.

In the courts this month, the Third Circuit Court of Appeal again struck down the Child Online Protection Act (“COPA”). The law has never been enforced and was sent back to the Third Circuit Court of Appeals from the United States Supreme Court to consider additional arguments that the Circuit Court did not resolve the first time around..JUDICIAL UPDATE

In the courts this month, the Third Circuit Court of Appeal again struck down the Child Online Protection Act (“COPA”). The law has never been enforced and was sent back to the Third Circuit Court of Appeals from the United States Supreme Court to consider additional arguments that the Circuit Court did not resolve the first time around.

One concern that the court noted in striking down the law is that in attempting to define “harmful material,” COPA makes no distinctions between things harmful to a five year old and something appropriate for a seventeen year old.1 Also, since the law requires that surfers desiring to view erotica provide a credit card number, this unfairly requires adults to identify themselves before viewing constitutionally protected material.2 Another review by the United States Supreme Court is likely as a result of this decision.

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