Copyright Small Claims
Author: Karen Y. Kim
Copyright lawsuits are required to be brought in federal court, which can be very costly to litigants in both time and money. Recognizing this issue, in December 2020, Congress passed the Copyright Alternative in Small-Claims Enforcement Act of 2020 (CASE Act), directing the Copyright Office to establish the Copyright Claims Board (CCB) in order to provide a more efficient and economical option to resolve modest-sized copyright disputes. The CCB is to be a three-member tribunal that will provide an alternative forum to resolve copyright disputes that involve less than $30,000 in damages, seek declaratory judgment of non-infringement, and pursue certain claims related to the Digital Millennium Copyright Act (DCMA). The CCB should be available to hear claims by December 27, 2021.
One benefit of the CASE Act is that, unlike in federal court where you have to have a copyright registration before filing a lawsuit, you will be able to bring a claim to the CCB if you have filed an application with the Copyright Office to register the work(s) at issue. Further, filing fees will be low, discovery will be limited, formal motion practice will not be permitted, and the recovery of attorney’s fees and costs will be very limited. This is meant to make the CCB efficient and low-cost and will likely increase the number of copyright infringement claims brought in the United States.
However, the low barriers to bringing and adjudicating an infringement matter before the CCB may also bring a bevy of frivolous or questionable claims which had previously been deterred by the high cost of federal court litigation. To safeguard against abusive practice, under the CASE Act, parties bringing claims, counterclaims, or defenses in bad faith may have to pay the other party’s reasonable costs and attorneys’ fees (up to $5000). Here “bad faith” is defined as “for a harassing or other improper purpose, or without a reasonable basis in law or fact.” Further, the CCB will be able to ban bad faith parties from filing any new claims for one year and dismiss all of a bad faith party’s pending claims (without prejudice). The CCB may also limit the number of cases one party can file in one year.
Participation in CCB adjudication of copyright claims is voluntary, but once served with the claim, you must affirmatively opt out of each Board proceeding within 60 days in order to preserve your right to resolve the dispute in federal court. If you fail to opt out, you consent to the Board proceeding, forfeit your right to have the dispute resolved in federal court, and waive the right to a jury trial. The same claims or counterclaims cannot be brought before both the CCB and federal court. You must choose between the two.
Another thing to keep in mind is that with the CCB, the total damages in any single proceeding are capped at $30,000, regardless of the number of claims and the type of claims. Statutory damages for works registered prior to infringement will be capped at $15,000 per work (subject to the $30,000 overall cap). Works that were not registered prior to infringement will be eligible for statutory damages of up to $7500 per work (subject to the $30,000 overall cap). The CCB will not consider whether infringement is willful in assessing statutory damages. This means that responding parties can be assured that they won’t face damages as high as those available in federal court, which can be up to $150,000 per infringed work. Conversely, claimants who think their works may have been willfully infringed will have to give up the possibility of those high statutory damages.
The CCB will have three Officers who are independent experts in copyright law. They will not necessarily be judges. A final determination must be reached by at least two of the three Officers, and determinations will be published and made available to the public. These determinations will not be precedential, meaning neither the CCB nor any federal court or other adjudicating body will be able to follow the decisions in other cases. If you disagree with a CCB decision, in limited circumstances, you will be able to seek review. If a party fails to pay damages or otherwise comply with the relief granted by the CCB, the damaged party has one year to seek an order from a federal district court to confirm the relief and compel the delinquent party to comply and to pay the reasonable expenses (including attorney’s fees) required to secure the order.