After years of similar pending legislation, Congress passed the Copyright Alternative in Small-Claims Enforcement (CASE) Act, buried deep in the thousands of pages of the COVID-19 relief bill (Consolidated Appropriations Act). Two other IP-related bills were also passed in the bill: the Trademark Modernisation Act and the Protecting Lawful Streaming Act. The CASE Act section of the bill can be read in full here.
The CASE Act is being welcomed with mixed reactions, with some copyright owners excited for an alternative to federal litigation, but also concerned about the opt-out option. Similarly, others who frequently receive copyright claims view this with hesitancy, unsure of whether it will embolden copyright claimants to make unreasonable or more frequent claims rather than negotiate amicable resolutions or allow for easier and streamlined resolution.
This article examines the key components of the CASE Act and highlights how they differ from federal litigation.
The CASE Act will establish a small-claims court for copyright claims within the next year. It will be called the Copyright Claims Board and will be housed in the US Copyright Office. The board will be made up of three copyright claims officers, who will serve renewable six-year terms and be recommended by the register of copyrights and appointed by the librarian of Congress. In addition, the register of copyrights will hire at least two copyright claims attorneys who will:
- assist the officers;
- assist the public with respect to subpoenas and procedures before the board; and
- otherwise support the register of copyrights.
Proceedings before the board will be fully voluntary and any party may instead pursue a claim, counterclaim or defence in district court. Permissible claims before the board will include certain copyright claims – namely, copyright infringement, declaration of non-infringement and false Digital Millennium Copyright Act takedown notifications or counter-notifications, as well as counterclaims and defences. Multiple claims may be brought by one or more claimants against one or more respondents, but only if they all arise out of the same allegedly infringing activity or continuous course of infringing activities. Notably, claims cannot be brought by or against a federal or state governmental entity or against a person or entity residing outside the United States unless they initiated the proceeding.
Claims may be commenced before the board while a copyright application is still pending prior to the issuance of a certificate of registration. However, a final determination may not be rendered until the certificate has been issued. Accordingly, the proceeding may be held in abeyance pending registration determination. If an application is refused, the proceeding will be dismissed without prejudice.
Remedies will include actual damages, profits or statutory damages capped at $30,000 in total for all claims in the proceeding. If a work was timely registered, a copyright owner may recover no more than $15,000 in statutory damages for each work infringed. If the work was not timely registered, the statutory damages are limited to $7,500 per work or a total of $15,000 in a single proceeding. Interestingly, the CASE Act provides that the board may not consider or make a finding that infringement was committed wilfully in determining statutory damages; however, the board may consider as a factor in awarding statutory damages whether the infringer has agreed to cease or mitigate the infringing activity. The party seeking damages may elect their form at any time before final determination is rendered. Generally, the parties will bear their own costs and fees. Fees of up to $5,000 will be awarded only if there is a finding of bad faith conduct (ie, where "a party pursued a claim, counterclaim, or defense for a harassing or other improper purpose or without a reasonable basis in law or fact"). This may be increased in extraordinary circumstances, such as a pattern or practice of bad faith conduct. Further, if the board finds that a party acted in bad faith more than once in a 12-month period, the party will be barred for 12 months from initiating a claim before the board.
Overall, the act appears to have been drafted with the goal of keeping the proceedings efficient and accessible to the general public. The general requirements of the procedure are articulated in the legislation, which also provides that the register of copyrights may establish regulations for the proceedings, including filing fees, procedures and regulations to limit the number of permitted proceedings each year by the same claimant (in an apparent attempt to address concerns relating to prolific copyright claimants). The register will also establish regulations for 'smaller claims' that seek damages of less than $5,000.
To start a proceeding, a claimant will file a claim with the Copyright Claims Board. A copyright claims attorney will evaluate the claim to determine whether it meets the requirements, providing the claimant multiple opportunities to correct any deficiencies. Once a copyright claims attorney determines that all of the requirements have been met, the board will instruct the claimant to proceed with service. Because participation in these proceedings is voluntary, once served, the respondent will have 60 days to decide whether to opt out, dismissing the action without prejudice and leaving the claimant to pursue the claim in court.
Once the matter gets under way, the board will set the schedule, including for discovery and any hearings. Notably, board proceedings will be conducted online and via "other telecommunications facilities". Parties may appear pro se or may be represented by an attorney or an appropriately qualified law student appearing pro bono. Discovery will be limited to documents, written interrogatories and written requests for admission, but may be expanded in limited ways for good cause shown. Evidentiary hearings may also be conducted by the board to elicit oral presentations on issues of fact or law. Ultimately, the board will be tasked with making factual findings based on a preponderance of the evidence and issuing final written determinations, which must be reached by a majority of the board, with any dissents appended. Each final determination will be published to a publicly accessible website but will not be considered binding precedent.
Substantively, there will be room for complications. If there is conflicting precedent on an issue of substantive copyright law, the board is directed to follow the law for the federal jurisdiction where the action could have been brought. If there are multiple locations, the board must first determine the jurisdiction with the most significant ties to the parties and conduct at issue.
Following final determination, review will be somewhat limited. A party may make a request for reconsideration from the board itself. Thereafter, the party may request review by the register of copyrights, who will review whether the board abused its discretion in denying reconsideration. Review by a district court will be available, but only in limited circumstances, such as:
- to confirm relief and reduce it to judgment or to challenge the determination on limited bases of "fraud, corruption, misrepresentation, or other misconduct";
- if the board exceeded its authority or failed to render a final determination; or
- to show excusable neglect in cases of default or dismissal for failure to prosecute.
Overall, there will be a lot to watch in 2021 and beyond as the Copyright Office implements the CASE Act, enacts regulations, establishes facilities, retains vendors, establishes fees and ultimately carries out the many requirements imposed.