Until this year, copyright infringement actions could only be brought in federal district court. 28 U.S.C. §1338(a). There was no small-claims court with jurisdiction to hear copyright claims in the United States. The problem, first recognized by Congress in 2011, is that the prohibitive cost of litigating in federal court disincentivized copyright holders from bringing suit for small claims. The system incentivized small-scale infringement.
The Copyright Alternative in Small-Claims Enforcement Act of 2020 (the “CASE Act”), included as part of an omnibus spending and COVID-19 Relief Bill, establishes a new Copyright Claims Board (“CCB”) to oversee claims of copyright infringement with damages as high as $30,000. The goal of the Act is to change the incentives around small-scale copyright infringement by making it more affordable and efficient to pursue copyright claims.
The CCB is comprised of a three-member panel of full-time Copyright Claims Officers. 17 U.S.C. §1502(b). Two Copyright Claims Attorneys are appointed to assist the CCB. 17 U.S.C. §1502(b). The Board may hear civil copyright claims, counterclaims, and defenses, and permissible remedies include actual damages, profits, and statutory damages. 17 U.S.C. §1504(e). Claimants may also request that the Board facilitate settlement among the parties. 17 U.S.C. §1506(r).
The CASE Act does not create new substantive Copyright claims or defenses. The Board may hear and determine the following: Claims for copyright infringement, where the total monetary recovery sought does not exceed $30,000 (17 U.S.C. §1504(e)(1)(D)); Claims for declaration of non-infringement (17 U.S.C. §1504(c)(2)); Claims brought under 17 U.S.C. §512(f) for misrepresentation in a notification of claimed infringement or a counter-notification seeking to restore removed or disabled material (17 U.S.C. §1504(c)(3)); Legal and equitable defenses to any of the above claims or counterclaims. 17 U.S.C. §1504(c)(5).
Joinder of multiple claims, claimants, and respondents is permitted, provided the claims arise out of the same infringing activity or continuous course of infringing activities, and the aggregate monetary recovery does not exceed the $30,000 cap. 17 U.S.C. §1504(c)(6).
The Board cannot hear claims by or against any Federal or State governmental entity. 17 U.S.C. §1504(d)(3). Except for counterclaims against plaintiffs, the Board cannot hear claims against any person or entity residing outside the United States. 17 U.S.C. §1504(d)(4). The Board cannot hear claims arising under section 106A, the Visual Artists Rights Act. The Board cannot determine claims pending before an Article III court of competent jurisdiction, unless the Article III court grants a stay to permit the claim to be proceed before the Board. 17 U.S.C. §1504(d).
The amount of statutory damages available under the CASE Act depends on whether the work at issue was timely registered in accordance with Section 412. 17 U.S.C. §1504(e)(1). Statutory damages for timely registered copyrights are limited to $15,000 for each infringed work, and actual damages are available up to $30,000 exclusive of attorneys’ fees and costs, which are capped. 17 U.S.C. §1504(e)(1). Works that were not timely registered are eligible for statutory damages up to $7,500 per work. 17 U.S.C. §1504(e)(1).
Participation in CCB proceedings is voluntary. Respondents may opt out of proceedings before the Board by providing written notice within 60 days of service by the claimant. 17 U.S.C. §1506(i). 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. 17 U.S.C. §1504(a) The opt-out procedure may incentivize infringers to force claimants with limited financial resources or less-valuable claims to pursue their claims in federal court, undermining a primary justification for the CCB. So the efficacy of the CCB will be studied.
The Act includes a provision requiring the Register of Copyrights to conduct a study, and report to Congress. 17 U.S.C. § 4. The study, to be issued no later than three years after the date on which the CCB issues its first determination, will focus on (1) the use and efficacy of the CCB in resolving copyright claims; (2) whether adjustments to the authority of the CCB are necessary or advisable; (3) whether greater allowance should be made to permit awards of attorneys’ fees and costs to prevailing parties; (4) potential mechanisms to assist copyright owners with small claims in ascertaining the identity and location of unknown online infringers; (5) whether the Copyright Claims Board should be expanded to offer mediation or other nonbinding alternative dispute resolution services to interested parties; and (6) such other matters as the Register of Copyrights believes may be pertinent concerning the Copyright Claims Board. 17 U.S.C. § 4.
Board proceeding are to take place solely “by means of written submissions, hearings, and conferences carried out through internet-based applications and other telecommunications facilities,” “without the requirement of in-person appearances by parties or others.” 17 U.S.C. §1506(c). Although the CASE Act simplifies discovery and other aspects of copyright litigation, the complexity of the Act and the CCB will leave unrepresented litigants at a distinct disadvantage. Copyright owners and defendants in infringement proceedings are still best served by seeking representation from experienced intellectual property counsel.