Anonymous Incs & LLCs end in 2024… Time to Report the Beneficial Owners

I am sure that over the past few days, you have either received an email or read an article stating that you need to immediately contact your attorney or CPA. If you have an LLC or Inc. Well, that’s not exactly accurate. There’s no need to panic just quite yet.

With the effective date of the Corporate Transparency Act (CTA) approaching at the start of 2024, it is necessary to start to examine what needs to be done so you can be compliant by no later than January 1, 2025. This when reporting requirements for existing LLCs and Incs goes into effect.

Domestic entities that are subject to reporting include corporations (both C corporations and S corporations), limited liability companies (LLCs), and other entities formed by the filing of a document with a Secretary of State. Similar foreign entities that are registered to do business in any state or tribal jurisdiction are also subject to the reporting requirements.

LLCs and Incs must disclose the following information regarding the entity: legal name, trade name, business address, jurisdiction information, and US Internal Revenue Service taxpayer identification number.

This information needs to be submitted for anyone who is a Beneficial Owner of the Inc or LLC and anyone who owns more than 25% of the shares of the Inc or has substantial control over the company.

Companies created or registered in 2024 will have 90 calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial reports.

So if you have an LLC or Inc, please make sure you contact your attorney or CPA to submit the necessary information to FinCEN prior to January 1, 2025. If you plan on starting an LLC or Inc in 2024 be aware that your information will need to be submitted to FinCEN within 90 days of the formation of your Inc or LLC.

We can certainly handle the submission of your information if you choose not to do it yourself.

Be aware that the civil penalty for a violation is $500 per day, while criminal penalties include fines of up to $10,000, imprisonment for up to two years, or both. If a report is filed that contains inaccurate information and the reporting company did not have actual knowledge the information was incorrect, it will be given a 90-day safe harbor to submit an accurate report.

Click here for a comprehensive guide from FinCEN – https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf

Abuses on Set: How Studios and Content Creators Can Protect Themselves: Part 2 of 2

In Part 1 of this series, I discussed how studios and production companies can protect themselves by not hiring and/or terminating the services of someone who is abusive. The easiest way not to have problems on set is not to hire anyone that will cause problems on set. However, there are other means which studios and production companies, including content creators can protect themselves.

I often recommend to my clients the use of cameras and/or consent directors.

Consent directors are people who are hired to work with talent so that any abuse on set can be eliminated or prevented before it becomes an issue. Having a consent director on set will cause your overall costs to increase, but often you can use someone like your production assistant or make-up artist to work as a consent director while filming is taking place.  

The job of a consent director is to watch the scene closely, and as filming is happening to understand the needs and limitations of the performers so if there appears to be a boundary violation – the consent director can call “cut” and stop the scene. The consent director can then check with talent to determine if there is anything happening that they feel is a violation of their consent boundaries.

This will require the consent director to be completely familiar with the limitations of each performer and be able to devote themselves fully to watch the scene being shot and to notice any violations. It is imperative that the consent director to have lengthy conversations with the talent prior to the shoot to confirm such limits and boundaries.

Also, during breaks, the consent director should also speak with the talent and ask how they may be doing, how they feel the scene is going and if they have any complaints. The performers need to fully trust in and believe that the consent director is there to assist them.

Through the use of a consent director employers can hopefully prevent any issues from arising or prevent an abuses on set from rising to the level of being actionable in court.

While protecting performers on set is necessary, sometimes it is also necessary to protect the employers from false allegations. And that is when I recommend the use of cameras. Many of my studio and production company clients set up stationary cameras around the set to capture everything that occurs on set for two purposes. The first reason is to ensure that anyone that has been hired will not be the victim of abuse, however, this doesn’t prevent abuse as it occurs. Rather, the provides the studio or production company with the ability to determine if anyone they hired has complied with their on-set regulations so they can make a determination whether to hire that person on a continuing basis.

The second reason is to be able to defend against any false claims of abuse. Obviously, as much as a studio or production company wants to be able to protect their employees from abuse, they also want to be able to protect themselves from reputational damage and lawsuits.

There have certainly been false claims of abuse made in the industry. The motiving factor why someone would claim abuse is not important but with the use of cameras, a studio or production company or content creator can defend themselves in the court of public opinion as well as with any law enforcement agency if in case an employee or performer files a false police report.

Ultimately, a safe and professional set can be created by not hiring those who would cause other harm, through hiring consent directors to assist talent on set and by using cameras to determine if any abuse as occurred so certain employees can be terminated or not rehired in the future.

Copyright Registration and How Infringers Can Get Around DMCA Notices!

One of the least popular topics in the adult industry is registering your content with the US Copyright Office. Very few content creators, studios and producers actually register their content for copyright protection. However, registering your copyrights will give you a distinct advantage over all other content creators.

Most content creators use a DMCA takedown service to send DMCA Notices to various websites that have, without authorization, posted the creator’s content. What few DMCA takedown services will tell you is that your DMCA notice may be legally immaterial unless you have a copyright registration to back-up your DMCA Notice.

When you send a DMCA notice, either personally or through a DMCA service, the platform that receives the notice to will usually forward your notice to or inform the person/account (“infringer”) that posted your content that they have received a DMCA Notice. The infringer will then have between 24-72 hours to dispute your DMCA Notice and file their own counter-notice. By filing the counter-notice, the infringer is basically stating that they do in fact have the legal right to post your content. They are challenging your copyright(s). There is no legally required time frame for the infringer to file their counter-notice, but from my experience, most DMCA compliant sites give infringers 24-72 hours to send a counter-notice. If after that time, no counter-notice is received from the infringer, the platform will remove the content based on the DMCA Notice. And the “DMCA dance” stops there. Your content is removed and you are happy.

Well what happens if the infringer files a counter-notice to your takedown notice?

If the infringer files a counter-notice then your content will be restored and posted back up on the platform. The platform is not the judge or jury in a copyright case. They are merely a third party who needs to follow what the DMCA requires. And once a counter-notification is filed, the platform must restore the content. Your content, the content you claim is being infringed will be made available to the public again. And it will remain publicly available.

What happens next is completely dependent on whether you have registered your content for copyright protection.

After a counter-notification is filed and the content is restored, the legal owner of the copyright(s) to the content has at most 14 days to file a copyright infringement lawsuit against the infringer. If the legal owner of the copyright does not file a lawsuit, the content will remain up on the platform. It is not the platform’s responsibility to do anything other than process your takedown notice and the counter-notification. After that, the responsibility to protect the content falls back upon the owner of the copyright.

In most cases, you will need to file your copyright infringement in a United States federal court. In order to file your case in federal court, most courts required that you already have your content registered or that you have at least filed the application for copyright registration.

The US Copyright Office may take anywhere from 6 weeks to a few months to finalize your application. If you have 14 days to file your copyright infringement lawsuit, this means that there is only one way to possibly secure a registration within the proscribed time limits – expedited copyright registration service. Expedited copyright registration service that will allow you to file a lawsuit will cost more than $1300 and should happen within 5 business days.

Practically speaking, once you receive the counter-notification from the platform, you will have 14 days to retain a lawyer or law firm, file for the expedited copyright registration and receive it back from the US Copyright Office and file the lawsuit. This is almost impossible.

By filing your copyright registration application prior to publishing your content, you can react quickly if your content is not removed.

Content Creators: Should you form an LLC or Inc & Where ?

Now that you are getting into the adult entertainment industry you have to start considering the business aspect of what you are doing. Instead of being paid personally you have the ability to form a company and have anyone paying you to pay that company instead. There are numerous advantages to having a company. Two of the best are to help lower your taxes and to increase your privacy.

There are several ways you can structure your business, i.e., Sole Proprietorship, Corporation, Limited Liability Corporation, but which is the right choice for you. There are numerous reasons for choosing each entity, and there are associated tax consequences and benefits for each, and therefore I recommend that you also speak to a CPA before deciding which to use.

Sole Proprietorship

By far this is the easiest and simplest structure. It only consists of someone setting up and operating a commercial business. This is also one of the least expensive types of structures to set-up. However, be aware, that even operating your business as a sole proprietorship might still require you to pay certain fees to register the business, secure a fictitious business name certificate and obtain other licenses that might be necessary from your county or city.

The only real advantage to a sole proprietorship is that it is inexpensive and that you are entirely in charge of your business affairs. However, on the other hand, you will also be personally responsible for all the business’s debts and liabilities. Which basically means that if something goes wrong, you as an individual will have to pay for it. Just closing the business will not relieve you from any liability.

Corporation

Corporations are the usual choice for most business in the United States, since this type of structure provides tax advantages as well as protection of your personal assets from the debts and liabilities of the company. Usually, corporations can be organized in two forms, C-corporation and S-corporation. However, in order to protect your assets, the corporation must be properly formed and maintained, otherwise it might be considered a shell, and you will not be afforded the protections that you would be if the business was properly organized.

In order to properly form a corporation, California and most states require the drafting of Articles of Incorporation and payment of fees to the Secretary of State in order to be recognized as an official corporation. You will also have to pay certain fees to the tax board of your state as well to maintain your corporate status. A corporation may be owned and operated by a single person, however, most involve several shareholders. Further those that own and operate a corporation have titles such as President, Vice President, Chief Operating Officer, Secretary etc.

There are numerous websites that can form and register your corporation for a fee, usually costing around $750.00. I strongly recommend that if you are going into content creation, you seek the legal advice of competent legal counsel when you seek to incorporate. It can be quite beneficial to start a relationship with your “corporate counsel” early on. While the online services can do it cheaper and perhaps quicker, they are not usually operated by attorneys and cannot give specific legal advice, and specifically advice about being in the adult industry.

Limited Liability Corporation

A LLC is a structure that has the benefits of a partnership, in regard to flexibility and the protection of personal assets from the liabilities and debts of the corporation. However, not all states recognize limited liability corporations. For those states that do recognize this structure, sometimes the protection afforded them is not as complete as the protection afforded corporations. The formation and the operation of a limited liability corporation can be very complex and difficult to understand. Failure to properly organize and maintain the LLC can cause you to lose whatever protections you might believe you have with this type of structure.

If you are going to have several partners in the LLC you will need to have a properly drafted Operating Agreement in order so that all the rights and responsibilities of all the partners are clearly spelled out. The one issue that most partners in an LLC fail to do is to have an Operating Agreement. The operating agreement is significant since it will usually cover issues such as what will happen if one partner wants to sell his/her part of the business. Or even what happens if one of the partners passes away. These are all issues that you must plan for when drafting an Operating Agreement.

Where You Should Form Your LLC or Inc?

One of the questions I am most often asked is how do I protect my privacy when forming my Inc or LLC. Being a content creator comes with special issues that many attorneys or accountants might not understand if they do not specialize in the adult industry. Choosing the wrong state or the incorrect way to establish your Inc or LLC may expose your identity and real name. As a content creator with a fan base, special care should be given as to where you incorporate and how it should be done to maximize your anonymity.

And once your Inc or LLC has been incorrectly filed in the wrong state, it is not something that can be fixed. You will need to dissolve that entity and form a new one, probably in a different state.

There are only 4 states where you can register an Inc or LLC without having to disclose your name publicly; Delaware, New Mexico, Nevada and Wyoming. Each one has its own benefits and drawbacks. Each one has a different cost associated with it. Not only the cost of the formation but also the yearly costs of maintaining your Inc or LLC are different for each state.

When you choose to set up your Inc or LLC, you will need to file your Articles of Formation or Organization, have an office address, and a Registered Agent for receiving any legal notices. I would highly recommend against using your home address as your office address as well as being your own Registered Agent. That will compromise your privacy.

In order to maximize your privacy, you may choose to establish two corporations or LLCs so that you can keep your name off any public records. One Inc or LLC may own or be the Managing Member of the other Inc or LLC.

It is strongly recommended that you consult and retain an attorney with adult industry experience to set up your Inc or LLC. Your privacy is worth the costs. The costs of setting up an LLC or Inc will depend on what state you chose and what level of privacy you demand.

Whatever business structure you choose, do so based on the advice of an adult industry lawyer as well as a CPA. Owning your own company can provide tax benefits and write-offs that you might not otherwise receive filing your taxes as a single/married individual.

Abuses on Set: How Studios & Content Creators Can Protect Themselves: Part 1 of 2

Recently, there was a long thread on Twitter posted by a female performer wherein numerous people in the industry, including studio owners, performers, directors, producers and photographers were all called out for being abusive on set and even off camera. Supposedly over 500 members of the industry were the subject of the allegations.

While I cannot speak to whether the allegations were true or not, this situation should be treated as a learning moment for everyone in the industry – mainstream and amateur. And the lesson should be, there is no room for abusers in the industry.

Whether you agree or not with calling out an abuser, the one fact that cannot be overlooked is the potential for lawsuits. Not only filed against the abuser but also the employers, content creators and production companies that employ them.

It is well settled law in California (and most other states) that performers are considered employees. The legal theory that performers are independent contractors hired for day simply will not be supported in a court – for the health and safety issues. A performer may be an independent contractor for tax issues but not health and safety on set.

See for more information click on;

Since performers and also likely, directors and photographers will be considered employees, it is imperative that those involved in production not hire known abusers since they can find themselves severally and jointly liable for their on-set abuse. Meaning, the employer can be sued and forced to pay 100% of whatever award is made in favor of the victim.

Be aware that employer is loosely defined under the law. Even a content creator who doesn’t have an Inc or LLC who hires someone to perform in content can be thought of as an employer. If you are paying something of value (it doesn’t have to be money) for someone’s performance, you will probably be deemed an employer.

According to California law, an employer is responsible for an employee’s negligence, carelessness, or willful misconduct if the company knew or should have known that the person posed a danger to others. This legal doctrine is “negligent hiring, managing, or keeping an employee.”

Negligent hiring claims arise when (1) the employer knew or should have known (had the employer exercised ordinary care) of the employee’s unfitness at the time of hiring, and (2) whether that foreseeable unfitness was the cause of the resulting injuries. Be aware that the standard for liability varies among the states. Talk to an employment attorney in the state where you produce content, not necessarily where your company is established. So if you have a Nevada LLC and produce in California, California law will apply to what happens on set.

The issue here really is “should have known.” It is not a defense to simply claim you didn’t know whether someone was abusive. With the thread on Twitter, noted above, it will be more difficult for an employer to claim they couldn’t have known if someone was abusive. The more their previous abuses are discussed publicly, the more they become common knowledge. Now all it requires is a simple Twitter search to discover if any allegations have been made against someone that your studio or production company employs.

The wrong decision is for an employer to bury their head in the sand and pretend that all is well. If you do so, you do so at your own peril. Any on set abuse should be thoroughly investigated and if the allegations appear to be supported by fact, that person should be terminated and never re-hired. This is not “cancel culture” – this is an employer protecting themselves and their best interests.

Terminating an abusive employee is not necessarily an admission of guilt. When measures are taken that would have made an earlier injury or harm less likely to occur, evidence of the subsequent measures is not admissible to prove:

  • negligence;
  • culpable conduct;
  • a defect in a product or its design; or
  • a need for a warning or instruction.

But the court may admit this evidence for another purpose, such as impeachment or — if disputed — proving ownership, control, or the feasibility of precautionary measures.

Overall, it is far better to investigate and terminate, if necessary, than to allow someone who is abusive to continue to work for you. An employer will set themselves up for a large award made to the plaintiff, if it appears that the employer knew about the abuses and did nothing to stop them.

I will post Part 2 of this series next week.

Model Releases and AI Content. Did You Sign Away Your Future Rights to Your Image?

The answer is not so clear. Model releases are contracts between a model and the photographer/videographer as to what the photographer/videographer can or cannot do with the photos/videos. Depending on the language stated in the model release, models can grant a broad range of rights, or they can narrowly define what the photographer/video can do with the photos/videos.

This is why models have to read every release they sign. And if necessary, have an attorney review the language of the model release to protect them.

So is it possible that your image will someday show up as an avatar somewhere? Quite possibly yes. But don’t they need to pay me for those uses of my image and likeness? Possibly no.

Again, an attorney should review the model release to see exactly what rights were granted to the photo/videographer. Just signing a model release now can mean that your career may be cut short at worst, or that you will be facing competing with your own image that can be digitally enhanced.

Imagine finding an account on one of the platforms that looks just like you but with perhaps different color hair, tattoos, body enhancements or different color eyes. All of that is relatively easy to change when digitally altering a photo or video.

If this happens to a model, there are some potential legal remedies. Beyond a claim that a producer, studio or fellow content creator breached the terms of the model release, a model could also bring claims for Invasion of Privacy and False Light, depending on the facts of the situation.

Perhaps, now is the time for content creators and models/performers to demand an industry standard model release that provides them the protection they need but also gives a studio enough rights to distribute the content without the possibility that the digital rights of the model or performer would be violated in the future.

This is a discussion that needs to happen on an industry-wide basis. Or at least, you should have your own model releases specifically drafted that you will only agree to sign. If a studio, producer or content creator refuses to agree to your release, you can simply decline to perform for them.

US Copyright Office Regs on AI Generated Art

If you have been wondering whether that AI image you created can be the subject of a copyright here is the official US Copyright Office regulations when it comes to AI generated art – of all types – and whether the art is solely the creation of a computer or is it a combination of both human elements and computer elements. The answer as to each might surprise you.

Generally, AI or computer generated art cannot be the subject of a copyright. Where it becomes more confusing is when you combine art that has both elements of human and computer originality.

https://www.federalregister.gov/d/2023-05321

2257 Compliance: US Based Content Creators are you Breaking the Law?

Two days ago I put up a poll on my Twitter account (@pornlaw) where I asked Content Creators to tell me what documents they were collecting when they produced their scenes.

Over 25% of the 223 Content Creators who responded indicated either they do not collect a 2257 Document or they do not even know what a 2257 Document is. I suspect that those who responded in that manner are new Content Creators, meaning that they began their career during or after the COVID pandemic when there was an explosion of self-shot content being made by amateurs.

Anyone and everyone who is a long term producer or studio in the adult industry are well aware of 18 U.S.C 2257, the US federal record keeping and labeling law. Mainstream companies and studios have been collecting and keeping these records for decades. (2257 record keeping began in 1988)

If you want to learn more about 2257 click here -> https://adultbizlaw.com/2012/10/22/porn-101-18-u-s-c-2257-the-basics/

To make 2257 easier for Content Creators to understand I created this illustration. I have listed each document that is needed and the legal requirements for each document. If your documents do not meet every single requirement listed then your docs are either violating the law or not legally valid (Please note that if your model release doesn’t state the compensation, it’s not a valid contract).

If you are a US based Content Creator and you are not collecting all 3 separate documents/IDs when you are producing your scenes, you are violating 18 U.S.C. 2257. Violations of 2257 are considered felonies and punishable by up to 5 years in a federal prison. Each violation is an additional 5 years.

While it is not likely you will be criminally prosecuted, what is far more likely is that your content is not “legal” and cannot be monetized. While you may be saying to yourself, I don’t believe you, my content is up on __________ platform, and I am making money from it. And while that may be true now, if your account is terminated at some future date you may not be able to sell it anywhere else.

If the platform you are on doesn’t insist on compliance with 2257; it might be because they are set up offshore, and they do not need to comply with 2257. It may be because compliance for them would be extremely cost-prohibitive, or they simply do not understand the law. Do not rely on the platform to protect you legally.

Whatever the reason may be, every US based Content Creator has to comply with 18 U.S.C 2257. You considered the Primary Producer. As the Primary Producer you MUST collect the documents, organize those documents, keep them available for inspection by the FBI and properly label your content with a 2257 Notice (that’s another requirement for another article).

The last time the US government pushed to enforce 2257 in 1997, 40 million pages of porn disappeared from the Internet overnight. History has a way of repeating itself. If 2257 were enforced today, 400 million of pages of porn may disappear.

This time it might not be the US government enforcing 2257, it might be VISA or Mastercard and the credit card processing companies. We have recently seen Pornhub and XVideos lose their credit card processing. It is not impossible that VISA and Mastercard may tighten up their 2257 requirements forcing platforms to ensure compliance. And if you cannot prove that you have the legally required documents, you might have your account terminated. So your side-hustle or perhaps your main career can be wiped out in a blink of an eye. Many Content Creators and producers were financially hurt by the loss of credit card processing by Pornhub and XVideos.

And here’s where you need to panic, 2257 Documents cannot be back dated. They MUST be filled out, and the ID copied at the time of the production of the scene. If you have shot 200 scenes for your platform account, and you do not have all 3 of the required documents, you cannot backdate the form and make your content compliant. The only thing you can do is to collect the correct documents moving forward. Even if the platform does not require all 3 documents, you have to comply.

For foreign based Content Creators, since 18 U.S.C 2257 is a US law, you may not feel that you do not need to comply. However, if you want to start your own website at some point in the future, you should comply anyway. Most of the credit card processing in adult is handled by two large companies, CC Bill and Epoch. Both are US based and require compliance with 2257 in order to approve your account.

A legally compliant 2257 Document is part of my packet of production forms. I sell a packet of 7 forms that are updated and legally compliant not only with 2257 but also the new VISA and Mastercard regulations. (Click https://adultbizlaw.com/2694-2/ )

I always advise my Content Creator clients to keep 2 sets of records. One that you prepare for the platform, and a set that is legally valid and compliant. A platform may force you to use their documents. If so, use them for the platform and prepare another set for yourself. And if you work with talent that refuse to provide you a copy of their ID or sign the 2257 Doc, you simply cannot work with them.

If you aren’t compliant, start today.

If you need advice on how to become compliant, at the bottom of this page you can schedule a 30-minute consult online and pay for it through PayPal.

AI & Porn: Can You Stop the Future?

Recently there has been an explosion in the technology of artificial intelligence. Several different large software companies are working on AI applications. You have probably heard of ChatGTP. ChatGPT is an artificial intelligence chatbot developed by OpenAI and launched in November 2022. It is built on top of OpenAI’s GPT-3 and GPT-4 families of large language models and has been fine-tuned (an approach to transfer learning) using both supervised and reinforcement learning techniques.

In other words, what can ChatGTP do? Almost everything. Although the core function of a chatbot is to mimic a human conversationalist, ChatGPT is versatile. For example, it can write and debug computer programs, compose music, teleplays, fairy tales, and student essays; answer test questions (sometimes, depending on the test, at a level above the average human test-taker); write poetry and song lyrics; play games like tic-tac-toe.

What else can artificial intelligence do? It can create pornographic images.

One of the sites that is being used to create realistic looking pornographic images is;

https://pornpen.ai/feed

Here are a few photos that were created using PornPen.ai;

While there may be some debate as to how realistic these photos appear, rest assured that as the technology advances so will its ability to create images that are indistinguishable from photos of real human models. And eventually, photos will give way to videos.

What does that mean to models, content creators and studios?

Soon, the sheer volume of content that will be available on the Internet is going to grow exponentially. And that content may end up being free for consumers to use and enjoy. Without getting into the debate of how that may impact the industry, the question really comes down to can it be stopped – legally?

The answer to that question is going to be decided shortly. A case has recently been filed by an artist and lawyer against Stable Diffusion and Midjourney, and artist portfolio platform DeviantArt. The claim is that these companies have violated the copyright of the artist because these companies scanned the Internet for images/photos/art to help train the artificial intelligence that then uses this training (and the images/photos/art) to create new images/photos/art.

You can read more about the litigation here; https://www.theverge.com/2023/1/16/23557098/generative-ai-art-copyright-legal-lawsuit-stable-diffusion-midjourney-deviantart

and here; https://stablediffusionlitigation.com/

While the copyright infringement (direct and vicarious infringement as well as DMCA violations) aspect of this litigation is interesting, it is not where I believe their strongest claim lies.

I believe their strongest part of the case is in this cause of action;

California Right to Publicity Law

In California, the right of publicity is protected by both common law and statutory law. California Civil Code section 3344 states in part that someone who utilizes “another’s name, voice, signature, photograph, or likeness” on products or in advertising without that person’s prior consent will be liable for damages suffered by that person. Under the statute, the damages would be the actual damages suffered by the plaintiff, or $750 per unauthorized use, whichever is greater, plus any profits from the unauthorized use that really are attributable to the use. Depending on the circumstances, a court may also award punitive damages to punish the unauthorized user. Attorney fees may also be awarded to the plaintiff.

Obviously it may be difficult to prove that an AI image resembles you but here is a photo I copied from Pornpen.ai that looks surprisingly similar to pornstar Tera Patrick.

At this point, I do not have any conclusions or opinions on this litigation other than it will be interesting to follow and as it works it way to the courts, it may provide a roadmap as to how courts will approach the legal issues of AI programs scrapping the Internet to learn to how to create adult content.

But it does lead us to our next blog post – Model Releases and AI Content. Did you sign away your rights?

Are you an Affiliate who is flooded with False DMCA Takedown Notices?

One of the most asked questions recently is;

I am an affiliate, and I am using the photos/videos provided by the program to promote them but I keep getting these DMCA takedown notices on the content from the models who are in it.

Is there anything I can do?

The answer is yes. If you are an affiliate that is using the licensed content provided by a program to promote that program, then you have a right to file a counter-notice to the DMCA notice filed by the model or content creator.

Often these notices are simple mistakes by the DMCA notice service, other times it is a targeted takedown of content by the model. Either way, as an affiliate you have license to use the content provided by the program. However, there are repercussions for filing false DMCA notices. But I will get to the in a minute.

I usually advise clients to file their counter-notification immediately. And then contact the program and let them know that their content is the subject of a false DMCA takedown notice. Obviously, you will send a copy of the counter-notification to the DMCA takedown service. However, you should also reach out to them directly and try to explain the situation. I recommend that you ask them to white-label your site in their system so that you do not continue to receive notices that are obviously intended for content pirates.

If the DCMA service refuses to white-label your site(s) or you continue to get barraged by false notices, now you should hire an attorney to step into the situation and represent you. My offices have been retained by several affiliates to stop the deluge of false notices.

The DMCA gives the receiver of a false DMCA takedown notice the right to file a lawsuit. Specifically, Section 512(f) of the DMCA states that the party issuing a false DMCA take down notice:

“…shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.”

Usually, filing a lawsuit is not necessary since most DMCA takedown services will try to immediately rectify the situation once they receive a letter from an attorney. Especially because not only is the DMCA takedown service liable for the false takedown notice, so is the model / content creator. You can also forward a copy of the letter to the model / content creator to let them know they will also be liable for damages.

If you do have to file a lawsuit, one of the strongest aspects of Section 512(f) is that it also allows a party to recover attorney’s fees for a false takedown notice. These types of cases have rarely been litigated in the past, but it does appear that more and more affiliates are willing to file suit to protect their business and obviously ranking on Google.

In a case filed in June 2022, damages of $7.6 million were demanded by an aggrieved party. According to Engaget.com, a YouTuber by the name of Lord Nazo received copyright takedown notices from CSC Global — the brand protection vendor contracted by game creator Bungie — for uploading tracks from their game Destiny 2’s original soundtrack. While some content creators might remove the offending material or appeal the copyright notice, Nazo, whose real name is Nicholas Minor, allegedly made the ill-fated decision to impersonate CSC Global and issue dozens of fake DMCA notices to his fellow creators. Bungie is now suing him for a whopping $7.6 million.

Read the entire story here -> https://www.engadget.com/bungie-sues-destiny-2-youtuber-lord-nazo-fake-dmca-notices-000022846.html

This is obviously a case that involves willfully filing numerous false DMCA takedown notices which is why CSC Global is asking for such a huge amount of damages.

There is a case that better illustrates what you can recover in DMCA litigation.  In Automattic Inc. v. Steiner, 2014 U.S. Dist. LEXIS 182295 (N.D. Cal. Oct. 6, 2014), in a lawsuit filed in response to a false DMCA claim with WordPress, the U.S. District Court for the Northern District of California awarded Automattic $960 in damages for Hotham’s lost work and time, $1860 for time spent by Automattic’s employees, and $22,264 for attorneys’ fees incurred by Automattic.

That decision is almost 10 years old, but it does give an affiliate a reasonable amount to demand in regard to settlement. And depending on the sheer volume and damages caused by the false DMCA takedown notice, it would not be unreasonable to ask for $100 to $500 per false takedown notice in addition to your attorney’s fees.

If you are an affiliate and are inundated with false DMCA notices, you can take a more aggressive approach and resolve the issue and possibly recover damages in a settlement.

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