From: nobody@cypherpunks.ca (John Anonymous MacDonald)
Date: Wed, 9 Oct 1996 05:22:40 -0700 (PDT)
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Subject: Porn and commerce
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           Copyright (c) Virginia Law Review Association 1996.
                           Virginia Law Review

                              April, 1996

                           82 Va. L. Rev. 535

ESSAY: VIRTUAL REALITY AND "VIRTUAL WELTERS": A NOTE ON THE COMMERCE 
	     CLAUSE IMPLICATIONS OF REGULATING CYBERPORN

			Glenn Harlan Reynolds

    In recent months, there has been a great deal of publicity regarding 
the availability of pornography over the Internet and other computer 
networks, along with proposals for regulation. n1 Recent months have 
also seen the prosecution of one couple, located in California, by  
authorities in Memphis, Tennessee, for the contents of a computer 
bulletin board they operated. n2 According to media accounts, the Memphis 
location was chosen for its conservative juries, who were expected to be 
unsympathetic to Bay Area pornographers. n3 No doubt more such  
prosecutions, by both federal and state and local authorities, are on the
horizon.
 
    As the first of its kind, this prosecution raises interesting  
questions regarding the appropriateness and nature of "community  
standards" n4 developed to deal with local entities like bookstores n5 
and movie theaters n6 as applied to almost locationless entities such as 
computer bulletin board systems. Indeed, the American Civil Liberties 
Union has argued in court that the appropriate community standard for 
such cases is that of the online community, rather than of any particular 
geographic area. n7
 
    My point here, though, is a narrower one: that we need not even  
reach the First Amendment to discover serious difficulties with  
locality-based regulation of computer bulletin board systems. Instead, we 
may look to the Supreme Court's Commerce Clause jurisprudence for some 
useful guidance on the inappropriateness of such regulation. Only where 
regulations pass the Commerce Clause test is it even necessary to address 
First Amendment issues, and, as I will suggest, even there the test 
provides significant guidance.

   Computer Bulletin Boards

Most readers by now are familiar with computer networks and bulletin  
boards, but a brief review may nonetheless be helpful. Traditional  
publishing of books, magazines, and movies gave the publisher  
near-complete control over their markets and destinations. Typically, 
sales required local distributors (bookstores, movie theaters, etc.), who 
would be knowledgeable concerning local laws and mores and who could 
limit purchases by minors.  

    Computer bulletin boards, on the other hand, work quite differently. 
When accessed via the Internet, all computers are virtually equidistant: 
as I can attest from personal experience, it is no more trouble to 
browse the collection of a library in Sydney, Australia than of the one 
next door. Computer "publishers" do not distribute the product to their 
customers; their customers come to them. A user desiring to acquire 
sexual images (or, for that matter, plans for building birdhouses) must 
seek out the service in question and download the product, having it 
sent over the network to his or her computer. Not only do the operators 
of such services have no local presence, nothing takes place in the 
customer's geographic location that is not initiated by the customer. 
Thanks to the proliferation of computer technology, computer bulletin 
board services (both free and for profit) have become numerous. An 
individual service might, in a given day, reach millions of users in 
scores of different states and nations.

   The Interstate Sales Tax Analogy
 
Although this fact has generated a great deal of interesting First  
Amendment literature already, with more certain to be on the way, it raises 
another issue that has so far received no attention. In short, the 
trading of information (including, but not limited to, sexually explicit 
information) among states is interstate commerce. State regulation of 
interstate commerce is subject to limits, even where Congress has not 
acted, under the so-called "dormant" Commerce Clause. n8
 
    In a strikingly similar situation, the Supreme Court has repeatedly 
struck down state laws aimed at commercial activity that, but for its 
multistate character, would otherwise be subject to state power. These 
cases involve state efforts to apply sales tax laws to interstate  
catalog merchants.

    The leading case is Quill Corp. v. North Dakota, n9 decided in 
1992. Quill involved an effort by North Dakota's taxing authorities to 
levy sales taxes on Quill's catalog sales in North Dakota, a somewhat 
cheeky effort in light of the Supreme Court's 1967  National 
Bellas Hess decision that barred just that sort of thing. n10 Quill had 
no physical presence in the state. Its only contact was the mailing of 
catalogs and flyers to customers in North Dakota. North Dakota maintained 
that this was sufficient contact with the state to support taxation. 
Quill Corp. argued that such taxation violated its due process rights, 
and furthermore was inconsistent with the Commerce Clause.
 
    The Supreme Court rejected the due process argument, holding that 
the purposeful mailing of 24 tons of catalogs and flyers per year into 
North Dakota was sufficient contact with the state to support taxation. 
According to the Court, this conduct indicated that "Quill has  
purposefully directed its activities at North Dakota residents." n11 In 
light of this behavior, the Court held, subjecting Quill to taxation did 
not offend due process.
 
    Nonetheless, the Court found the taxation impermissible on the  
distinct ground of interstate commerce. Although the Court found sufficient 
"minimum contacts" to satisfy due process, it also found that there was not 
the "substantial nexus" needed to satisfy the Commerce Clause. "Despite 
the similarity in phrasing," the Court said, "the nexus requirements of 
the Due Process and Commerce Clauses are not identical. The two standards 
are animated by different constitutional concerns and policies." n12 In 
short, although due process relates to individual fairness, Commerce 
Clause concerns in this context have to do with "structural concerns 
about the effects of state regulation on the national economy." n13
 
    In the case of state sales taxes, the Court's concern was that  
subjecting interstate businesses to a multiplicity of inconsistent state 
sales tax laws would place a substantial burden on interstate commerce 
even if each individual sales tax were reasonable. As the Court said:

On its face, North Dakota law imposes a collection duty on every vendor 
who advertises in the State three times in a single year. Thus, absent 
the Bellas Hess rule, a publisher who included a subscription card in 
three issues of its magazine, a vendor whose radio advertisements were 
heard in North Dakota on three occasions, and a corporation whose  
telephone sales force made three calls into the State, all would be  
subject to the collection duty. What is more significant, similar  
obligations might be imposed by the Nation's 6,000-plus taxing  
jurisdictions. n14
 
The Court went on to quote Bellas Hess to the effect that the resulting 
"many variations in rates of tax, in allowable exemptions, and in  
administrative record-keeping requirements could entangle [a mail-order 
house] in a virtual welter of complicated obligations." n15 Because such 
complexity would subject interstate commerce to a burden that would not 
apply to intrastate operators, it constitutes a discrimination against 
interstate commerce that cannot be permitted under the Commerce Clause. 
n16 As a result, the Court struck down North Dakota's effort to tax Quill.
 
    From the Quill and Bellas Hess cases, then, we learn that even uses 
of state authority that are otherwise unexceptionable, such as the 
application of sales taxes, can be impermissible where the existence of 
multiple standards would create a significant burden for entities whose 
activities cross multiple states. n17 If this "interstate burden"  
analysis is sufficient to bar state action in the extremely important 
area of taxation, then it is difficult to see why it should not apply 
with equal force in the area of obscenity law. Taxation,after all, is 
the lifeblood of the state; regulation of obscenity can certainly
rank no higher on the scale of state interests, and quite probably 
falls several steps further down even if the important First Amendment 
aspects are not taken into account.
 
    These cases, and the principles that lie behind them, raise two  
important points. Most obviously, it would appear that state or local 
regulation of communication over computer networks on obscenity grounds 
is very likely a violation of the dormant Commerce Clause because of the 
variations produced by the community standards doctrine. After all, if it 
is too much of a burden for interstate merchandisers to keep track of 
variations in state sales tax rates and classifications, it certainly 
must be too great a burden for interstate publishers to keep track of 
variations in the far less certain "community standards" of obscenity and 
indecency.

    The second and perhaps more important point is that if we are willing to
grant interstate sellers of office equipment and porcelain "collector" 
dolls such extensive protection from local interference in the name of 
protecting commerce, surely we should be even more willing to provide such 
protection in the name of free speech. For the protection provided by the 
dormant Commerce Clause is merely a matter of judicial inference; the 
value of a free press, on the other hand, is explicitly spelled out in 
the First Amendment.

    Such an approach would, of course, limit the ability of communities to
develop unique standards of obscenity, and move us closer toward a 
uniform national standard. n18 While that development is not without its 
drawbacks,neither are the many other movements toward uniformity 
mandated by the Constitution. But we have accepted them nonetheless. n19
 
    Taking this approach seriously would mean barring prosecutions, 
under state or local law, of out-of-state individuals and entities for 
obscenity where the material in question came via computer connections. More 
interestingly, it would also mean that courts should regard even federal 
prosecutions that employ local community standards with a considerable 
degree of suspicion. For while Congress is generally regarded as having 
the power to override dormant Commerce Clause considerations through 
appropriate legislation, we should be reluctant to assume that it has 
done so by implication, simply because of the existence of federal 
criminal laws. n20 The idea of a national market, after all, is one that 
Congress may override through the passage of appropriate legislation,  
n21 but that is a far cry from saying that federal prosecutors should be 
able to do the same.
 
    Whether my suggestion will be taken seriously, on the other hand, 
is an open question at best. For one thing, it must overcome the natural 
tendency of academics, journalists, and judges to rush to the First 
Amendment whenever an issue involving speech or publication appears. For 
another, it must overcome the equally natural tendency to forget that 
parts of the Constitution outside the Bill of Rights  - even the Commerce 
Clause - may serve as important guarantors of liberty. And aside from 
these hurdles, it requires a recognition, that there is still a role for 
the nationalist parts of the Constitution, despite today's resurgence of 
interest in the powers of states and in dlimitations on the federal 
government. n22
 
    Despite all of these trends and tendencies, I think that there is 
still room to ask whether it is appropriate, or even constitutional, to 
allow states to govern expression under circumstances in which they would 
not be permitted to collect sales taxes on sales of Elvis dolls or K-Tel 
merchandise. Where it has been necessary, we have managed to update our 
view of the Constitution to accommodate changes in technology. It is time 
that we do so again. 



Glenn Harlan Reynolds in an Associate Professor of Law at the University of 
Tennessee. He holds a J.D. from Yale Law School and a B.A. from the
University of Tennessee. He is a member of the Advisory Board at the Center 
for Constitutional Issues in Technology. 

Fran Ansley, Fred LeClercq, Arnold Loewy, Gene Volokh and Larry Yackle 
provided helpful comments on this Essay. Kimberly Watson and Mark Vane 
provided valuable research assistance.


- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - -

   n1. Two cover stories in national news magazines fueled this interest. 
See Philip Elmer-Dewitt, On a Screen Near You, Time, July 3, 1995, at 
38; Steven Levy, No Place for Kids?, Newsweek, July 3, 1995, at 47. The 
Time story, based on a heavily-criticized study at Carnegie-Mellon 
University, itself came in for a great deal of criticism. See, e.g., 
Jeff Cohen & Norman Solomon, Time Magazine Pulls Cyberhoax on America, 
Ariz. Republic, July 24, 1995, at B5; William Webb, Too Much Porn on 
Internet - or in the Press?, Editor and Publisher, July 22, 1995, at 30. 
For more on the Carnegie-Mellon study itself see Bill Schackner and 
Dennis Roddy, Internet Brouhaha Entangles Researcher, Pittsburgh 
Post-Gazette, July 24, 1995, at A1. This publicity led to the passage of 
the so-called Communications Decency Act while this article was 
approaching publication. See Communications Decency Act of 1996, Pub. L. 
104-104, 110 Stat. 133, codified at 47 U.S.C. 223(a)-(h) (signed Feb. 8, 
1996). If ultimately upheld, this Act may answer some of the questions  
raised in this Essay, since Congressional action eliminates dormant 
Commerce Clause concerns. Important parts of the Act have been enjoined, 
however, by American Civil Liberties Union v. Reno, Civ. A. 96-963, 1996 
WL 65464, 1996 U.S. Dist. LEXIS 1617 (Feb. 16, 1996). In another sense, 
the points raised by this Essay remain important even if the 
Communications Decency Act is upheld. Legislation comes and goes, after 
all, but constitutional concerns are far more permanent.

   n2. United States v. Thomas, Nos. 94-6648, 94-6649, 1996 U.S. App. 
LEXIS 106 (6th Cir. Jan. 29, 1996).

   n3. Joshua Quittner, Computers in the 90s, Newsday, Aug. 16, 1994, 
at B27.

   n4. See generally Miller v. California, 413 U.S. 15 (1972)  
(establishing the Miller test for obscenity, and stating that reference 
to community standards is constitutionally adequate, as people in 
different states vary in their tastes and their attitudes).

   n5. See, e.g., American Booksellers Ass'n v. Hudnut, 771 F.2d 323 
(7th Cir. 1985), aff'd, 475 U.S. 1001 (1986).

   n6. See, e.g., Jenkins v. Georgia, 418 U.S. 153 (1974) (involving 
film Carnal Knowledge).

   n7. Brief Amicus Curiae of the American Civil Liberties Union 
Foundation at 20-31, Thomas v. United States, Nos. 94-6648, 94-6649, 1996 
U.S. App. LEXIS 1069 (6th Cir. 1996) (Copy on file with Virginia Law 
Review Association). In the interest of full disclosure, I should admit 
that I consulted with the ACLU attorneys working on this brief, and 
suggested that they make this argument. It is thus not surprising that I 
find it interesting. For a more general discussion on the kinds of 
free-speech problems raised by new technologies see Robert P. Merges & 
Glenn H. Reynolds, News Media Satellites and the First Amendment: A
Case Study in the Treatment of New Technologies, 3 High Tech. L.J. 1 
(1989).

   n8. For a good overview of the Supreme Court's dormant Commerce 
Clause jurisprudence see Donald Regan, The Supreme Court and State 
Protectionism: Making Sense of the Dormant Commerce Clause, 84 Mich. L. 
Rev. 1091 (1986).

   n9. 112 S. Ct. 1904 (1992).

   n10. National Bellas Hess v. Dep't of Revenue, 386 U.S. 753 
(1967).

   n11. 112 S. Ct. at 1911. In National Bellas Hess, supra note 10, the 
Court had endorsed such a due process argument. Although it is beyond  
the scope of this brief Essay, I note that while the mailing of flyers in 
quantity was found in Quill to indicate that the corporation had  
"purposefully directed" its activities toward North Dakota residents, the 
same could not be said to apply to the connection of a computer bulletin 
board system to the Internet or to telephone lines. Because computer 
systems are equally accessible from almost anywhere, the mere operation 
of such a system could not fairly be characterized as "purposeful 
direction." As a result, a Bellas Hess type due process argument might 
find considerably more purchase in this context.

   n12. 112 S. Ct. at 1913.

   n13. Id.

   n14. Id. at n.6.

   n15. Id.

   n16. Id. at 1913.

   n17. It is this principle that distinguishes a Quill approach.  
Although there is one recent case that might superficially appear 
inconsistent, on closer examination it turns out to fit the Quill mold as 
well. In Goldberg v. Sweet, 488 U.S. 252, 267 (1989), the Supreme Court 
upheld a state sales tax on interstate telephone calls against a dormant 
Commerce Clause challenge.  
           
   However, Goldberg's outcome was based on precisely the same  
considerations that I have laid out by reference to Quill. In Goldberg, 
the court stated that the tax on in-state consumers was permissible under 
the Commerce Clause because such an approach resulted in fair 
apportionment of the taxes, and no excessive burden on interstate 
commerce, since only two states (the originating state and the
terminating states) would be allowed to tax interstate calls. Id. at 
265. Indeed, the Court noted that any other approach (for example, one 
based on the path taken by the call) would violate the Commerce Clause 
because the billions of possible electronic paths that a call might take 
could otherwise "produce insurmountable administrative and technological 
barriers." Id. at 264-65. This is consistent with the "virtual welter" 
language of Quill, which no doubt explains why the Court itself did not 
view the two cases as inconsistent. Such an approach, I might add, also 
supports the "online community" standard urged by the ACLU, which would 
have an analogous simplifying effect by subjecting a single service to 
only one standard, rather than a multiplicity of conflicting standards. 
See infra note 18.

   n18. Or maybe not. The American Civil Liberties Union's brief  
suggests that community standards might vary among online communities, or, 
alternatively, that some kinds of online obscenity might be placed 
effectively beyond regulation as a result of Stanley v. Georgia's privacy 
in the home doctrine. See Brief of the ACLU, supra note 7, at 27-31 
(citing Stanley v. Georgia, 394 U.S. 557 (1969) (holding that a state may 
not punish mere possession of obscene materials in home)).

   n19. Note that we already have a uniform national standard for  
indecency in broadcasting. FCC v. Pacifica Foundation, 438 U.S. 726 (1978). 

   n20. Cf. South-Central Timber Dev. v. Wunnicke, 467 U.S. 82, 91 (1984)
(requiring clear evidence of congressional intent to allow state regulations
inconsistent with dormant Commerce Clause). As one leading treatise puts it:

The Court will not find that Congress has removed state or local regulations
from the limits of dormant Commerce Clause principles unless Congress 
has expressly stated in legislative actions that the type of state 
regulation at issue is approved by Congress or unless the Court otherwise 
finds that Congressional intent to allow such state regulations of 
commerce is "unmistakably clear."
 
   John E. Nowak & Ronald D. Rotunda, Constitutional Law 282 (4th ed. 
1991). Such analysis is, obviously enough, not legally binding on federal 
prosecutors. But it should suggest caution where the kinds of prosecution 
discussed in this Essay are considered, by prosecutors or courts.

   n21. The dormant Commerce Clause is, of course, no barrier to 
congressional action. Congress remains free to legislate on the subject, 
and even to incorporate local standards of obscenity into such legislation - 
subject to whatever other constitutional provisions may apply. See Sable 
Communications of Cal. v. FCC, 492 U.S. 115, 124-126 (1989). Indeed, 
although I would oppose the Communications Decency Act, see supra note 1, 
on other grounds, there is no question that it answers these concerns 
and, if ultimately upheld, would largely eliminate them.

   n22. An interest, I stress, that is often justified. See generally  
Glenn H. Reynolds, Is Democracy Like Sex? 48 Vand. L. Rev. 1635 (1995) 
(calling for restoration of nondelegation and enumerated powers doctrines).