Takeaways

The newly established Copyright Claims Board will provide a lower-cost avenue for litigating copyright infringement claims of up to $30,000. The optional small-claims proceedings may help to deter infringement.
This new procedure offers potential benefits and poses potential drawbacks to both copyright owners and alleged infringers.

According to Register of Copyrights in its 2013 Report on Copyright Small Claims, “small claims issues are anything but small. On the contrary, they present a range of complex considerations, from constitutional constraints to procedural concerns to questions of what claims should be eligible for alternative treatment.” Before the recently enacted CASE Act, there had not been a small-claims court with jurisdiction to hear copyright claims.

That changed in late December 2020, when Congress passed the Copyright Alternative in Small-Claims Enforcement Act of 2020 (the “CASE Act”) as part of an omnibus spending and COVID-19 relief bill. The CASE Act created a “small-claims court” as an alternative means of pursuing copyright infringement claims, rather than litigating in federal court which has exclusive jurisdiction under the Copyright Act over copyright claims. The CASE Act recognizes that the expense of litigating copyright claims in federal court can deter authors from asserting their rights and makes it impractical for attorneys to represent clients whose claims hold the potential for modest financial return. That deterrence in turn incentivizes infringement, as infringers often face little risk for low-profile unauthorized use of protected works unless the work was timely registered in the U.S. Copyright Office. In short, “the costs of obtaining counsel and maintaining an action in federal court effectively preclude[]many authors whose works were clearly infringed from being able to vindicate their rights and deter continuing violations,” as noted by the House Judiciary Committee in the Register of Copyrights’ 2013 Report.

The CASE Act establishes the Copyright Claims Board as the tribunal for resolving copyright claims with potential damages as high as $30,000. Statutory damages for claims brought under the CASE Act for timely registered works are limited to $15,000, and actual damages are available up to $30,000 exclusive of attorneys’ fees and costs, which are available up to $5,000 in instances of “bad faith” conduct. Bad faith is defined as when “a party pursued a claim, counterclaim, or defense for a harassing or other improper purpose, or without a reasonable basis in law or fact.” The amount of statutory damages available will depend on whether the work was timely registered. Works that were timely registered will be eligible for statutory damages up to $15,000 for each infringed work. Works that were not timely registered are eligible for statutory damages up to $7,500 per work, or a total of $15,000 in any given proceeding.

The Copyright Claims Board will be comprised of three full-time Copyright Claims Officers, and two Copyright Claims Attorneys will be appointed “to assist in the administration of the Copyright Claims Board.” The Board may hear civil copyright claims, counterclaims, and defenses, and may award monetary and declaratory relief. In addition, claimants may request that the Board facilitate settlement among the parties.

Alleged infringers may opt out of proceedings before the Board by providing written notice of their choice to opt out to the Board within 60 days of service of a notice and claim by the claimant. If the respondent opts out, the Board will dismiss the claim without prejudice, and the claimant may proceed with traditional litigation in federal district court. The opt-out procedure may incentivize infringers to force claimants with limited financial resources or less-valuable claims to pursue their claims in district court. This will likely be an area of focus for a follow-up study, which is mandated under the Act. The Register of Copyrights will report to Congress within three years of the Board’s first determination regarding, among other things, the effectiveness of the Board in resolving copyright claims.

Parties have the option to be represented by counsel in proceedings before the Board. The Board may, but is not required to, hold hearings, and may consider documentary and testimonial evidence as would a trial court.

Unlike general civil small-claims cases in many jurisdictions, the CASE Act provides some limited opportunity for review of the Copyright Claims Board’s decision – parties may challenge determinations on the basis of fraud, corruption, misrepresentation, or other misconduct. However, appeals to federal district court or other federal courts of appeal are not permitted, as such complete re-litigation would be contrary to the purpose of the small-claims board.

Litigants likely have time before they can take advantage of the CASE Act. The Act requires that the Copyright Claims Board begin operations not later than one year after enactment of the CASE Act. Rights holders and content creators should be aware of their options and obligations before the Board under the CASE Act, as we look for litigation to begin under the Act in 2021. This new procedure under the CASE Act offers potential benefits, but can also present drawbacks to both copyright owners and alleged infringers. As such, copyright holders and alleged infringers should carefully consider whether to avail themselves of this new procedure in each case.

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