An Alternative Forum for Copyright Infringement Claims: A Synopsis of the Copyright Alternative in Small-Claims Enforcement Act

Intellectual Property

by | Jun 15, 2021

The Copyright Alternative in Small-Claims Enforcement Act of 2019 (the “CASE Act”) was signed into law on December 27, 2020. The CASE Act established a Board which shall become effective on December 27, 2021 to act as “an alternative forum in which parties may voluntarily seek to resolve certain copyright claims,” namely for situations in which a claimant seeks Thirty Thousand Dollars ($30,000.00) or less in damages.[1]  The Board will consist of three (3) full-time Copyright Claims Officers who will be appointed by the Librarian of Congress for staggered six (6) year terms.[2] The Officers will be assisted by at least two (2) full-time Copyright Claims attorneys who will also be hired by the Register of Copyrights (the “Register”).[3]

The purpose of the Board is to hear and determine copyright infringement claims in which a claimant seeks less than Thirty Thousand Dollars ($30,000.00) in damages. As everyone knows, the costs of litigating copyright infringement claims in federal court can be very high: discovery and pre-trial preparation may cost upwards of Ten Thousand Dollars ($10,000.00) per month. According to a 2019 report issued by the American Intellectual Property Association, it costs approximately Three Hundred Ninety Seven Thousand Dollars ($397,000.00), on average, to pursue a federal copyright litigation claim through trial for a claim valued at less than One Million Dollars ($1,000,000.00).[4]  Additionally, unless the claimant has registered copyrights and is eligible to recover attorney’s fees, many attorneys are not willing to file infringement claims on a contingency fee basis. It is also economically inefficient to file an infringement claim if the anticipated recovery amount ends up being only a few thousand dollars.  Therefore, the establishment of this special forum provides a less costly means for resolving infringement claims in a way that is akin to small claims court.

The following categories of copyright infringement claims can be adjudicated by the Board:

  1. Infringement of an exclusive right in a copyrighted work provided by 17 U.S.C. §106.[5]
  2. A declaration of non-infringement of an exclusive right in a copyrighted work provided by 17 U.S.C. §106.[6]
  3. A claim for failure to remove or disable access to allegedly infringing content after Digital Millennium Copyright Act (“DMCA”) takedown procedures have been followed.[7]
  4. A claim under 17 U.S.C. §512(f) for misrepresentation in connection with a DMCA notification of claimed infringement or a counter notification seeking to replace removed or disabled material.[8]
  5. A counterclaim that arises under 17 U.S.C. §106 or 17 U.S.C. §512(f) and out of the same transaction or occurrence, or agreement pertaining to such transaction or occurrence, that is the subject of the claim of infringement.[9]
  6. A legal or equitable defense under Title 17 of the United States Code such as the first-sale doctrine or the fair use doctrine, or otherwise available under law, in response to a claim.[10]

However, please note that the CASE Act contemplates that the scope of the Board’s authority may be narrowed in regulations to be promulgated by the Register, and may be further modified or even expanded after the Copyright Office issues its report on the efficacy of the first three (3) years of the Board’s operations.[11]

Here are some key notes regarding how Board proceedings will operate:

  1. Resolving an infringement claim before the Board is voluntary, meaning that a claimant may choose to commence a proceeding with the Board instead of filing a lawsuit in federal court.[12]
    1. If a claim is filed with the Board, the respondent has sixty (60) days after service of notice to “opt out” of a Board proceeding in writing.[13] If a respondent does “opt out” of the Board proceeding, then the case will be dismissed without prejudice[14]. This means that the claimant will be permitted to re-file his or her claim in federal court based on the respondent’s request to “opt out” of the Board proceeding. However, if the respondent does not “opt out,” then the respondent will be legally bound by the Board’s determination of the claim.[15]
  2. Copyright owners may file claims with the Board without having a registered copyright beforehand.
      1. However, the case will not proceed until an application to register the copyright, along with payment of the required fee and deposit, has been made by the claimant. The Board also cannot render any determination on the claim until a registration certificate issues to the claimant.
  3. The Board proceedings will take place “by means of written submissions, hearings, and conferences carried out through internet-based applications” and “without the requirement of in-person appearances by parties or others.”[16]
    1. Removing an in-person appearance requirement will invariably be a cost-saving benefit for all parties, reducing travel expenses and associated costs.
  4. Discovery for Board proceedings will be limited to written interrogatories, requests for admissions, and requests for production of documents. Depositions will not be permitted and the Board cannot issue any subpoenas to non-parties.[17]
    1. Prohibiting depositions and third-party discovery will also be another cost-saving benefit for all parties and will require that all parties prepare written discovery that narrowly focuses on key facts in dispute.
  5. The Federal Rules of Evidence will not apply to Board proceedings, but the Board will still be able to consider testimonial evidence which will be limited to statements of the parties and non-expert witnesses, and in exceptional cases, expert witness testimony or other types of testimony may be permitted.[18]
  6. Parties to Board proceedings may be, but are not required to be, represented by an attorney.[19]
  7. The Board may consider written testimony and documents, and even hold hearings by electronic means.[20]
  8. The Board will make factual findings and issue a written determination which “shall be made available on a publicly accessible website.”[21]
  9. With regard to damages, the Board may award either actual damages and the defendant’s profits under 17 U.S.C. §504(b) or statutory damages under 17 U.S.C. §504(c), except that the Board “may not make any finding that, or consider whether, the infringement was committed willfully.”[22]
    1. If the copyright was timely registered under 17 U.S.C. §412, the Board may award statutory damages of up to Fifteen Thousand Dollars ($15,000.00) for each work infringed, subject to the maximum total award of Thirty Thousand Dollars ($30,000.00).[23] Whereas, if the copyright was not timely registered under 17 U.S.C. §412, the Board may still award statutory damages of up to Seven Thousand Five Hundred Dollars ($7,500.00) for each work infringed, subject to a maximum total award of $15,000.[24]
      1. Please note that this is a huge change from the existing law, which currently provides that plaintiffs may not recover statutory damages unless the work was timely registered under 17 U.S.C. §412.
  10. The Board cannot issue injunctions, but the Board’s determination “shall include” a requirement that the infringing party cease the infringing conduct if that agrees to do so and such agreement is reflected in the record.[25]
  11. As for post-determination procedures, within thirty (30) days, a party may request reconsideration of the Board’s determination on the basis of a clear error of law or fact, or a technical mistake.[26]
    1. If that request is denied, the requesting party may pay an additional fee and request a review by the Register, who can remand the claim to the Board if the Register finds an abuse of discretion occurred.[27]
    2. The losing party may challenge the determination in federal court only on the basis of fraud, corruption, misrepresentation, or excusable neglect.[28]
    3. If the losing party does not comply with the Board’s determination, the prevailing party may seek an order and judgment in federal court to confirm the Board’s determination.[29]
    4. A final determination precludes litigation of all claims asserted and determined by the Board, but otherwise does not have any preclusive effect in any other action or proceeding before any court or tribunal, including the Board.[30]
  1. Except under limited circumstances provided in 17 U.S.C. §1507 and 17 U.S.C. §1508, any determination of the Board may not be cited or relied upon as legal precedent in any other action or proceeding before any court or tribunal, including the Board.[31]

The Board must begin operating by December 27, 2021, but this deadline may be extended one hundred eighty (180) days for good cause. Within three (3) years after the Board begins operations, the Register will need to submit a report to Congress which analyzes the use and efficacy of this alternative forum. Indeed, the creation of this alternative forum should encourage more copyright owners to litigate their infringement claims, knowing that there is now a cost-efficient means of resolving an infringement claim without completely breaking the bank. Clients that have any questions or concerns about the recent changes to copyright law and their potential impact upon their copyrighted works or copyright infringement -based litigation are encouraged to reach out to TALG to discuss their concerns.

[1] 17 U.S.C. §1502; See also https://www.federalregister.gov/documents/2021/03/26/2021-06322/copyright-alternative-in-small-claims-enforcement-case-act-regulations#citation-20-p16157

[2] Id.

[3] Id.

[4]  See https://www.aipla.org/home/news-publications/economic-survey

[5] 17 U.S.C. §1504(c)(1).

[6] 17 U.S.C. §1504(c)(2).

[7] 17 U.S.C. §1506(f)(1)(C).

[8] 17 U.S.C. §1504(c)(3).

[9] 17 U.S.C. §1504(c)(4).

[10] 17 U.S.C. §1504(c)(5).

[11] 17 U.S.C. §1504(c); See also Consolidated Appropriations Act, 2021 §212(e)(2), (3) & (5).

[12] 17 U.S.C. §1504(a)

[13] 17 U.S.C. §1506(i)

[14] Id.

[15] Id.

[16] 17 U.S.C. §1506(c)(1) and (2).

[17] 17 U.S.C. §1506(n).

[18] 17 U.S.C. §1506(o).

[19] 17 U.S.C. §1506(d).

[20] 17 U.S.C. §1506(p).

[21] 17 U.S.C. §1506(t)(3).

[22] 17 U.S.C. §1504(e)(1).

[23] Id.

[24] Id.

[25] 17 U.S.C. § 1504(e)(2).

[26] 17 U.S.C. §1506(w).

[27] 17 U.S.C. § 1506(x).

[28] 17 U.S.C. §1506(x).

[29] 17 U.S.C. §1508(a).

[30] 17 U.S.C. §1507.

[31] 17 U.S.C. §1507 and 17 U.S.C. §1508.

Author

  • Ismail Amin

    Ismail’s legal experience encompasses serving Fortune 500 companies, mid-sized privately held companies, and entrepreneurs. He presently serves as Corporate and Litigation Counsel to large and mid-sized businesses throughout California, Nevada, Texas, North Carolina, and New York as well as General and Personal Counsel to high-profile hospitality operators in California and Nevada. Ismail’s practice emphasizes Business and Intellectual Property matters, with a focus on healthcare, biopharmaceuticals, biotechnology, and hospitality. Ismail has counseled the firm’s healthcare provider clients in acquiring or selling assets while maximizing return and minimizing risk. He has helped clients acquire or sell over $1 billion worth of healthcare-related assets, including hospitals.

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