Grossman LLP | ​<strong >Senate Considers Bill That Would Create </strong ><strong >A Copyright Small-Claims Court</strong >
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  • Senate Considers Bill That Would Create A Copyright Small-Claims Court
    In late 2019, the House of Representatives passed, with a rare show of bipartisan support, a bill that seeks to create what some have described as a small-claims court for copyright litigants.  The bill has now been sent to the Senate; if approved by the Senate and signed by the President, it would create an alternative forum for some types of copyright claims.
    Under current U.S. copyright law, copyright infringement claims must be brought in federal court.  This proposed bill (called Copyright Alternative in Small-Claims Enforcement Act of 2019, or the “CASE Act” for short) would provide another option—a small claims court housed in the U.S. Copyright Office called the Copyright Claims Board.  This bill, broadly speaking, does not create new substantive species of copyright claims or defenses; litigants using this proposed "small claims" avenue would generally be asserting the same types of copyright-infringement claims that we see now in federal court, and the same types of defenses (including fair use) would be available.  Rather, the goal, in essence, is to change the economics of copyright litigation, by making it more affordable and efficient to pursue copyright claims. 
    Proponents argue that the CASE Act will afford smaller content creators—think independent musicians, photographers, artists, or other members of what one of the bill's cosponsors calls the "creative middle class"—with a realistic way to seek redress if, for example, someone rips off their work.  The availability of this new path would provide an alternative way to protect their copyrights without having to embark on full-blown federal litigation.  Attempts to set up some type of small-copyright-claims mechanism have been underway for years, with support from entities like the Authors Guild.
    There would, of course, be tradeoffs.  For example, the bill, as currently written, caps a claimant’s potential damages in various ways, including an overall cap of $30,000 per proceeding.  And decisions would be made not by a federal judge, but by appointed members of the Copyright Claims Board.  
    Some critics, including the Electronic Frontier Foundation and the ACLU, have raised concerns that this proposal may pose a risk that more regular consumers may find themselves on the receiving end of copyright claims, even where they have not profited from their infringement.  (The bill provides for statutory damages even for infringement of unregistered works.  In contrast, current copyright law generally makes statutory damages available only where the work was already registered prior to the infringement; other plaintiffs must prove actual damages.)  Big content owners and copyright trolls alike will find it easier and cheaper to go after individuals for smaller-scale alleged infringement that wouldn't be worth pursuing in federal court, but may be worth a shot in this new small-claims forum.  Such a copyright ecosystem, critics fear, could even have a chilling effect on free speech and the exchange of ideas.  Proponents have responded that the Copyright Office should be able to issue rules and procedures to limit abuse of the new mechanisms.
    This new tribunal is, in theory, voluntary; a plaintiff can still choose to go to federal court, and a party accused of infringement would have 60 days to opt out of this new brand of proceeding and instead have the case litigated in federal court.  In practice, though, some have pointed out that this voluntariness may not fully accomplish the ostensible goal of aiding the independent artist.  Take, for example, the rash of litigation (see here, here, and here for just a few recent examples) that has been brought by independent artists who object when their work is "borrowed" without permission and turns up on merchandise or advertising for a major commercial brand.  It seems likely that large corporate defendants like the ones in those cases will simply opt out of this new procedure, meaning the independent artist will be forced to litigate in federal court anyway.  And conversely, if some litigation-savvy content companies or copyright trolls start using this new forum to more aggressively pursue small-scale infringers, it seems likely that at least some of those individual defendants may not act quickly enough to opt out, and will find themselves liable for damages that might be small potatoes to a large corporation but might be a big deal to an individual.  Further, some critics have observed that, unlike in federal court where a litigant may be able to appeal an unfavorable ruling, the CASE Act provides that the Board would be the final word in most cases (including in cases dealing with complex and difficult issues like fair use).  Moreover, there may be a latent constitutional problem with the CASE Act; as some commentators have noted, federal Article III courts have long had exclusive jurisdiction over copyright cases, and it’s possible that, if the CASE Act becomes law, someone may seek to challenge the constitutionality of delegating these cases to the proposed Board instead.
    Finally, as lawyers who deal frequently with copyright matters, we are skeptical of the idea that this forum would obviate the need to hire a lawyer.  Copyright law is complex, and even the country’s foremost federal judges struggle regularly with nuanced concepts like fair use and de minimis infringement.  It strikes us as unlikely that many individual lay plaintiffs (or lay defendants) would be able to successfully identify, let alone navigate, those types of issues without the advice of counsel.  Litigants before the proposed Board would likely either still need to pay for legal advice, or will go without it to their detriment.  And under the proposed legislation, legal fees and costs are not recoverable except in cases where the counterparty acted in bad faith.
    The issues underpinning the CASE Act are complex and involve a tricky balance of the interests of many stakeholders, in order to safeguard the rights of content creators while also ensuring that content consumers’ rights are respected.  We will continue to watch this proposal as it moves through the legislative process.   
    ATTORNEY: Kate Lucas
    CATEGORY: Copyright