The Copyright Alternative in Small-Claims Enforcement Act of 2019 (the “CASE Act”) was buried in the enormous COVID relief and stimulus bill (i.e., the Consolidated Appropriations Act for 2021) and signed into law on December 27, 2020. Copyright owners and accused infringers should take note of the advantages and limitations of the new “small claims” court created by the CASE Act.
The CASE Act establishes the Copyright Claims Board (the “CCB”), an entirely new administrative court within the U.S. Copyright Office. It’s designed to provide a less expensive and more efficient forum than federal court for litigating certain copyright infringement claims, counterclaims and defenses under U.S. copyright law. The CCB is scheduled to begin operating by December 27, 2021 and will be comprised of three full-time judges (called “Copyright Claims Officers”) appointed by the Librarian of Congress for four, five, and six year initial terms respectively, along with at least two full-time attorneys to assist them.
The CCB is authorized to hear certain civil copyright claims, counterclaims, and defenses such as infringement claims, declarations of non-infringement, and claims for misrepresentations in connection with a Digital Millennium Copyright Act (DMCA) takedown notice. The CCB can award monetary damages and facilitate the settlement of both claims and counterclaims. Importantly though, the CCB can only “render a determination,” i.e., rule on copyright infringement claims if the underlying copyrighted works at issue are already registered. The CCB is not permitted to rule on claims based on unregistered works or hear certain other claims such as those previously determined by, or still pending before, a federal court (unless that court grants a stay and permits the CCB to proceed), or claims against parties residing outside the United States, unless that party initiates the CCB proceeding.
To initiate a CCB proceeding, the filing party (called the “claimant”) must file one or more claims which the CCB then reviews. If the filing complies with the CASE Act, the CCB will then notify the claimant in writing that their claim(s) can proceed. The claimant then has 90 days within which to serve the accused infringer (called the “respondent”) a copy of the filed claim(s) and notice, and then file proof of that service with the CCB.
Critically, the respondent must affirmatively opt out of the CCB proceeding within 60 days after being served or they’re deemed to have consented to the proceeding and will lose their legal right to litigate the same matter in federal court. If the respondent successfully opts out by filing an opt out notice with the CCB within the 60 days, the CCB will dismiss the matter without prejudice, leaving the parties in the same legal positions they were originally. If the respondent doesn’t opt-out and the CCB proceeding goes forward, it’s designed to progress quickly with limited discovery, no formal motion practice, and no in-person hearings. Unlike federal court, all appearances are always virtual via internet-based applications such as Zoom, Microsoft Teams, or similar programs.
The amount of total damages the CCB can award in each proceeding is capped at $30,000 maximum. For copyright infringement claims based on “timely registered” copyrighted works, the claimant is eligible for an award of up to $15,000 in statutory damages per work infringed, with a total of $30,000 possible in any one proceeding (excluding attorneys’ fees and costs).
Notably, the CASE Act allows recovery of statutory damages even if a copyrighted work is not “timely registered” which is a significant change in the law. In that event, the claimant is only eligible for an award of up to $7,500 in statutory damages per work infringed, with a total of only $15,000 possible in any one proceeding (excluding attorneys’ fees and costs). Before the CASE Act, copyright owners suing in federal court could never recover statutory damages unless the works were registered before the infringement started (for published works) or within three months after first publication.
As an alternative to statutory damages, the claimant can instead elect to recover their actual damages and profits of up to $30,000 maximum (excluding attorneys’ fees and costs), regardless of the types and number of claims brought. Attorneys’ fees and costs of up to $5,000 can also be recovered but only in cases where the opposing party has demonstrated “bad faith conduct,” defined as pursuing “a claim, counterclaim, or defense for a harassing or other improper purpose, or without a reasonable basis in law or fact.” If the prevailing party represents themselves without an attorney, the CCB can award them their “costs only” of up to $2,500 where bad faith conduct is found.
Additionally, although the CCB cannot consider whether a party infringed a copyrighted work “willfully” when considering a statutory damages award, it can consider whether that party “agreed to cease or mitigate the infringing activity” as an additional factor in awarding statutory damages.
The CASE Act provides copyright owners and accused infringers with an entirely new forum to litigate their copyright claims, counterclaims, defenses, and declarations of non-infringement. Whether or not it proves to be a good alternative to federal court remains to be seen. Although parties can represent themselves in the CCB, there are unseen pitfalls to avoid, including various nuances that could prove costly to the unaware. As such, both copyright owners and accused infringers would be wise to work with an experienced copyright attorney to determine how best to enforce and defend their legal rights and remedies without mistakenly limiting or prejudicing them.