Program Network Update
I. CUBA SANCTIONS
As part of the economic embargo that has been imposed on Cuba since 1963, the U.S. Treasury Department’s Cuban Asset Control Regulations heavily regulate transactions between U.S. companies, including foreign-based subsidiaries, and Cuba, including the acquisition from, or distribution to Cuba of television programming. The regulations generally prohibit the importation of Cuban goods or services into the United States, either directly or through third-party countries, heavily restrict exports of goods and services to Cuba, and severely limit travel to and within Cuba by U.S. citizens. The Treasury Department’s Office of Foreign Asset Control (“OFAC”) administers the regulations and has authority to impose fines for violations of these regulations as high as $1 million. Personal fines of up to $250,000 can be levied, and jail time also is a possibility. Although an exemption from the regulations exists for importing and exporting “informational material,” the exemption’s criteria can be difficult to satisfy. For example, to come within the information exemption, materials exported from Cuba must have been fully created and in existence at the time of the transaction; Cuba may not benefit financially from any material alterations or enhancements of the material; and the United States entity may not provide any marketing or business consulting services to the Cuban entity.1
Notwithstanding efforts last spring by a group of congressmen to relax the Cuban economic sanctions, the asset control regulations are still very much in place and OFAC is enforcing the regulations through the imposition of penalties. For example, in April, OFAC levied fines against numerous entities as part of enforcement settlements, including a $39,000 fine on ESPN, Inc., a $75,000 fine against The New York Yankees, and a $27,500 fine on Playboy Enterprises, Inc. Although the settlement terms are confidential and there is little detail available on the facts involved in each of the settlements, it is clear that in the case of ESPN, Inc. and the New York Yankees, the underlying allegations were that the companies had entered into an illegal contract with an entity in which Cuba had an interest; and, in the case of Playboy Enterprises, Inc., the underlying allegation was that Playboy had violated the Cuban currency and travel-related regulations.
The amounts of these fines are not insubstantial, and the fact that they were levied against several companies in the entertainment industry is significant. If you would like more information about the regulations, how they impact your business, and the procedures for seeking an exemption, please contact us.
II. CRB WEB SITE AUDITS
Program networks’ Web sites vary greatly in terms of complexity and content. Some networks have posted well developed, content-rich and interactive Web sites. Many of these interactive Web sites collect personal and non-personal information from visitors and use that information for a variety of purposes. Other program networks’ Web sites are still in the developmental stage, but will likely become more content-rich and interactive in the future. The most successful Web sites are highly dynamic – in other words, the content posted on these Web sites is not only interactive, but also constantly changing.
It is very important for program networks to periodically ensure, through Web site audits, that their Web sites comply with federal law. In addition, Web site audits are crucial for companies that wish to maximize protection of their intellectual property rights and lower the risk of incurring various types of content liability.
Please contact us if you are interested in learning more about our Web site audits.
1 Certain collateral transactions, such as the installation of an earth station in Cuba for up-linking or downlinking programming, may implicate related but separate regulations of the Departments of State and Commerce. The Department of State requires licenses only for the export and import of “defense articles and defense services” and “related technical data.” See 22 C.F.R. §§ 120.1(a), 120.9(a)(2), 121.1(a). The Department of Commerce regulates “dual use” items, which are those items that can be used both in military and other strategic uses and commercial applications. See 15 C.F.R. § 730.3.