Congress Makes the “CASE” for a New Copyright Tribunal, While Dissenters Express Concern
By Emilio Nicolas
As 2019 draws to a close, we begin reflecting on a seminal year for copyright law. The year brought us a pair of unanimous Supreme Court decisions, the expansion of works in the public domain for the first time in 20 years, and more. But the year is not over yet, which leaves time for an even more significant event to occur with the potential passage of the Copyright Alternative in Small-Claims Enforcement Act of 2019, H.R. 2426, or “CASE Act.”
If enacted, the CASE Act will provide an alternative forum for litigants to resolve relatively low-dollar copyright disputes outside of the federal court system. The CASE Act provides for a voluntary small claims tribunal within the Copyright Office called the Copyright Claims Board (CCB). A panel of three Copyright Claims Officers appointed by the Librarian of Congress will preside over the CCB, resolve questions of fact and law, and render binding decisions. Cases will be governed by the procedures of the CASE Act, regulations promulgated by the Copyright Office, and substantive federal copyright law.
Earlier iterations of the CASE Act date back to 2016. The legislation gained significant traction this fall when, on October 22, the United States House of Representatives passed the bill with a staggering vote of 410 to 6. The bill is now before the United States Senate.
Here are several highlights of what is in store should the current version of the bill become law:
- The CCB can hear infringement claims, non-infringement declaratory judgment claims, and DMCA takedown notice misrepresentation claims, as well as counterclaims arising under agreements pertaining to the same transaction or occurrence as a pending infringement claim.
- Filing a claim with the CCB will toll the statute of limitations for that claim in federal court.
- The CCB may consider certain documentary evidence and sworn testimony “without [the] application of formal rules of evidence,” see R. 2426, § 1506(o).
- Like a federal court, the CCB may award either (1) statutory damages or (2) actual damages plus profits for copyright infringement. However, the amount of statutory damages is capped at $15,000 per work infringed (or a lesser amount if the copyright was not timely registered); and the total amount of monetary damages in a single proceeding is capped at $30,000, exclusive of any attorneys’ fees and costs awarded for bad faith conduct.
- The CCB cannot issue injunctions, except to enforce an agreement of the parties to cease an infringing activity or the submission of DMCA notices containing material misrepresentations.
- The parties must bear their own attorneys’ fees and costs exclusive of bad faith conduct.
- Once served with a notice and claim, a defendant has 60 days to “opt-out” of the CCB proceeding, in which case the proceeding will be dismissed “without prejudice”. Otherwise, the proceeding will continue and the defendant will be bound by the CCB’s decision.
- Federal courts must stay any action that is the subject of a pending CCB proceeding; and confirm the final decisions of the CCB.
- A federal court’s ability to overturn an unfavorable CCB decision is, much like its ability to overturn an unfavorable arbitration award, narrow. The CCB decision must be the “result of fraud, corruption, misrepresentation, or other misconduct”; the CCB must have “exceeded its authority or failed to render a final determination concerning the subject matter at issue”; or, in the case of a default judgment or dismissal for want of prosecution, the appellant must establish that “the default or failure was due to excusable neglect,” see R. 2426, § 1508(c)(1).
- To curb potential abuse, the CCB may prohibit a plaintiff from filing new claims for a year if the CCB finds that, on more than one occasion within a 12-month period, the plaintiff pursued a claim “for a harassing or other improper purpose, or without a reasonable basis in law or fact,” see R. 2426, § 1506(y)(3). Also, as alluded to above, bad faith litigants may be sanctioned up to $5,000 in attorneys’ fees and costs.
Proponents of the CASE Act highlight its ability to afford artists, songwriters, and other content creators a means to enforce their copyrights without the high costs and complexities associated with the litigation of claims in federal court. Indeed, copyright litigation is a specialized area and a costly endeavor. The expense of litigation through trial, let alone the initial phases of discovery, can easily eclipse the amount of damages awarded for a single claim; and a prevailing plaintiff’s ability to recover litigation expenses are not guaranteed when an award of attorneys’ fees is discretionary and the average defendant cannot afford to pay.
But the CASE Act is not without its critics. For example, in an open letter this year to the House Judiciary Committee, the ACLU stated that “[a]ny system to enable easier enforcement of copyright runs the risk of creating a chilling effect with respect to speech online,” and that the CASE Act is no different. The ACLU contends that the CASE Act will allow for an increased number of copyright infringement claims and adverse decisions (including claims brought by and decisions rendered in favor of copyright trolls), while possibly depriving defendants of “their right to a jury trial and [the loss of] most, if not all, access to substantive judicial review.” The ACLU also contends that participation in a CCB proceeding is not really “voluntary” because if an unwitting defendant misses the 60-day window to opt-out, then he or she will have “waived his or her right to a jury trial and los[t] the opportunity for review by an Article III court, except in narrow circumstances”; and, “[i]f a default judgment results, [then he or she] may be on the hook for up to $30,000 in damages, even if they fairly used the copyrighted work or were otherwise innocent of infringement.” Other critics have taken a more hardline position arguing that the CASE Act is outright unconstitutional.
 See Ltr. from ACLU to House Reps. J. Nadler & D. Collins (Sept. 10, 2019)
Entertainment and intellectual property law partner Emilio B. Nicolas is an experienced content and information attorney. His practice includes entertainment, media, technology, and intellectual property litigation and transactional work, with a particular emphasis on copyright, trademark, and privacy law.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.