"In contrast to previous economic eras,
intellectual property will be the primary source
of new wealth in the 21st century."
- Gregory A Piccionelli, 1989
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The Times They Are A-Changin’

APRIL 2008

This election year each of the presidential candidates have endeavored mightily to be identified in the voters’ minds as the candidate of “change”. That fact is not terribly surprising given that this year’s crop of presidential contestants have been confronted with an American electorate that has endured the better part of two terms of what is widely regarded as one of the most, if not the most, incompetent and destructive administrations in U.S. history. I think that at this point the only folks left that support ‘ol George and lament his departure are persons ignorant of the damage his administration has caused, enemies of our country that hate our freedoms, and perhaps, a group that is a bit of both: the religious right.

But our countrymen’s disdain for Bush, while understandable, does not entirely explain what seems to be happening all across this great land in this most unusual of election years. From the record primary voter turnout, to what has been called the “Obama” phenomenon, there is something almost electric in the air. Something that I think is simply, and perhaps best, characterized by Bob Dylan’s famous lyric “the times they are a-changin’”.


For adult entertainment businesses, a change in federal policy that diminishes the government’s hostility toward the industry would be good news indeed. And fortunately, given that our next president will likely be either Obama, Clinton or McCain, there is reason to be guardedly optimistic that, unlike Bush, our next president will be much less likely to make the harassment and prosecution of adult entertainment companies a national priority. Assuming that will be the case, I for one will happily welcome a return to a time when most of my clients’ legal concerns focused primarily on business and intellectual property law matters and not on an ever-present threat of criminal prosecution.


While a significant change in attitude toward the adult entertainment industry may be right around the corner, it is still, unfortunately, too soon to dismiss the possibility that the departing administration could initiate a wave of obscenity indictments against adult companies, intentionally leaving the next administration with the problem of prosecuting the cases. If a democrat wins in November, leaving the democrats holding the bag on a number of obscenity cases filed just before the end of Bush’s term might even be a cleaver political parting shot. If they did so, the Bush administration would be in a position to tout the indictments to the religious right as a Bush administration accomplishment while simultaneously saddling their democratic successor with the serious prosecutorial problems associated with successfully prosecuting such cases. This could put an incoming Department of Justice (“DOJ”) in a real pickle. One could imagine, a scenario, for example, in which the incoming DOJ under a democratic president would not want to expend DOJ resources for the prosecution of adult businesses but the DOJ finds itself inheriting dozens of obscenity cases filed at the end of the Bush term. If the new DOJ dismisses the cases, the republicans will have a field day claiming the democrats are soft on porn and don’t care about the moral wellbeing of children. If the incoming DOJ attorneys prosecute the cases but lose a substantial number at trial, because, for example, the materials charged were simply not obscene, then the republicans will likely be able to convince voters that the DOJ under a democratic president incompetently prosecuted the cases. More likely still would be the claim by republicans that the democrats “really didn’t want to win the cases” because of their “true agenda to support smut peddlers”.


So, while the end of the Bush presidency is in sight, the current administration will retain the power to commence obscenity and 2257 prosecutions until its constitutional termination on January 20, 2009. Besides, regardless of who becomes the next occupant of the Oval Office, every adult business owner should continue to scrupulously comply with all applicable criminal laws, including the 2257 regulations. Also, even after the change in administrations, every participant in the business should also continue to strongly support the efforts of the Free Speech Coalition in its efforts to invalidate 18 U.S.C. Sec 2257 and the Utah “do-not-email registry” law, and FSC’s lobbying efforts to prevent new anti-industry legislation from becoming law.


But while it may be too soon for adult businesses to let down their guard against the possibility of a parting gift by Bush in the form of a prosecutorial sweep, it may be time to start considering what changes in the legal environment in the post-Bush era are likely and how a typical adult entertainment business might prepare for, and even capitalize on, those changes. The following are some likely areas we will probably see changes in governmental policy that are likely to affect the adult entertainment industry


  • Shift away from criminal prosecutions. In the next administration, particularly if a democrat is elected, we are not likely to see very many federal obscenity prosecutions or enforcement of the 2257 regulations, particularly under an Obama administration. The focus of federal regulatory activity for the adult industry is also likely to shift from criminal cases prosecuted by the DOJ to civil actions for violations of the CAN-SPAM Act and false or deceptive trade practices brought by the FTC (Federal Trade Commission).


  • Laws favoring filtering instead of prosecution to preventing child access to adult Internet content. In the wake of a federal court’s invalidation of the Child Online Protection Act last year, regardless of which candidate is elected, we are likely to see some new approaches to keeping kids away from adult content. According to their websites, both McCain and Obama appear to favor filtering over another COPA-type law that puts the burden of keeping minors out of adult sites exclusively on the website owners.


In fact, Obama’s website expressly states “Obama values our First Amendment freedoms and our right to artistic expression and does not view regulation as the answer to these concerns. Instead, an Obama administration will give parents the tools and information they need to control what their children see on television and the Internet in ways fully consistent with the First Amendment.”

While Clinton’s position on the subject not as clear as Obama’s or McCain’s, it is widely assumed that she also now favors filtering. But some have wondered about how firm Hillary’s support for filtering would be given that Bill Clinton signed both the Communication’s Decency Act and COPA into law, refusing to veto either. Both laws reflected placed onerous and unconstitutional burdens on website publishers and both were subsequently invalidated.


  • New health and safety laws to protect adult industry performers. In the next few years there is a good chance that adult content producers will face new regulations promulgated by state and federal governments mandating the use of condoms in filming and requiring broader sexually transmitted disease testing. Additionally, it is also likely that we will see greater enforcement of laws prohibiting producers from demanding of copies of private medical records as a condition to be hired. New federal laws in this area are more likely under a Clinton administration. But independently of what happens in Washington, California is likely to enact new adult performer health and safety regulations in the near future.


  • Changes to the copyright laws. The next administration will probably revisit the issue of liability insulation that is currently available to a large number of companies disseminating third-party content from their website. Look for changes in the copyright law that will allow copyright owners to more effectively enforce their rights online against bit torrents and other parties claiming the protection of such liability insulation under current law. Since virtually every adult entertainment company is a producer of intellectual property, changes this area of law will likely have far-reaching impact on the industry.


A little help from your friend.


It is likely that during the next presidential term, the adult industry will continue to make great strides in the process of maturation into a mainstream industry. As that happens, it will become increasingly important for adult companies to effectively exploit their intellectual property and other assets, and to avoid unnecessary and costly litigation. To assist our readers in that endeavor, over the next several months, I will address the issues highlighted above as well as several other important business law areas of increasing importance to every adult entertainment company, including the negotiation and drafting of good agreements, and the protection, exploitation and enforcement of copyrights, trademarks, patents, domain names and other assets. Of course, this column will also continue to analyze and report on important developments in criminal law affecting the industry, such as developments in obscenity cases, including my firm’s appeals court challenge of the first two webmasters to be convicted under the CAN-SPAM Act’s obscenity provisions, and FSC’s challenges to the 2257 regulations and the Utah Registry Law.


Ch-ch-ch-ch-Changes, Turn and face the strange.” – David Bowie.


By the end of the next president’s term, adult entertainment will likely reach unprecedented new levels of social acceptability, diversity and technological sophistication. We will likely see new types of adult products such as devices that will transmit and receive tactile sensations enabling the incorporation of the sense of touch into recorded content, live video chat and adult computer games. These and other new technologies will, in turn, generate new ways for people to meet and relate to one another sexually, by means such as by video chat enabled mobile phones and by participation in “virtual worlds”, where anyone can present themselves as any kind of synthesized avatar they wish. These and other developments that we cannot even conceive of currently will undoubtedly spawn new distribution means and new business models.


Meanwhile accompanying all of the change and innovation is the likely reality that exchangeable recorded content value will likely continue to plummet. Because of this, it is also likely that many businesses, wedded to old content value exchange models, including a few of today’s biggest adult companies, will simply not be able to profitably compete in the next era.


Once again Bob Dylan’s lyrics seem to appropriately capture this moment for the adult industry:


The line it is drawn, the curse it is cast

The slow one now will later be fast

As the present now will later be past

The order is rapidly fadin'.

And the first one now will later be last

For the times they are a-changin'.


Yes, indeed the times are a-changin’: as of this writing there are 315 days and 7 hours and 18 minutes until to end of the Bush Presidency.


1Gregory A. Piccionelli, Esq. is an adult entertainment business attorney. He can be reached at Piccionelli & Sarno at (310) 553-3375 or at greg@piccionellisarno.com.



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