COPYRIGHT AND THE CASE ACT: A NEW ENFORCEMENT OPTION FOR ARTISTS, BUSINESSES, AND CREATIVE ENTREPRENEURS

Jan. 21, 2021 • by Jeffrey Pote

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On December 27, 2020, The Copyright Alternative in Small-Claims Enforcement Act (CASE Act) was enacted as a part of (the thousands of pages that make up) the Consolidated Appropriations Act, 2021.FN1 The CASE Act, as the name suggests, is intended to provide an enforcement alternative for copyright holders with small claims who may be unwilling or unable to incur the expense associated with adjudicating copyright claims in court.FN2 As a result, creative entrepreneurs, businesses, and other soon will have another option at their disposal to help them protect, enforce, and defend their copyrightable intellectual property rights. Thus, if you or your business develops, distributes, licenses, or uses any kind of creative work, you should read on!

Creating an enforcement alternative, the CASE Act requires the Copyright Office to establish a Copyright Claims Board made up of three Copyright Claims Officers who have the authority to adjudicate infringement claims, award damages, declare rights, and assist with settlement offers and agreements.FN3 This Board should provide an affordable and streamlined alternative to costly and time-consuming litigation in federal courts. But it is not without tradeoffs, discussed below, that should be carefully considered.

MONETARY DAMAGES

The first tradeoff to consider is the limitation on actual or statutory damages. In federal courts there is generally no limitation on actual damages and statutory damages may be as much as $30,000 or, in the case of a willful infringement, $150,000 per infringement of any registered work. The Copyright Claims Board, on the other hand, shall only be able to award damages (actual or statutory) up to $15,000 per registered work or up to $7,500 per unregistered work.FN4

The work 'COPYRIGHT' appears in blue text on a horizontal screen held in two hands by a woman.

Additionally, there is a cap on the overall damages that the Board can award to any claimant of $30,000 for registered works and $15,000 for unregistered works.FN5 Furthermore, unlike a federal court, the Board should not consider whether any alleged infringement was willful. However, they may take into account when issuing any award "whether the infringing party has agreed to cease or mitigate the infringing activity.”FN6

"Additionally, there is a cap on the overall damages that the Board can award to any claimant of $30,000 for registered works and $15,000 for unregistered works."

THE REGISTRATION REQUIREMENT

Another important consideration is whether a work is registered (or at least has a pending registration). Claims or counterclaims for infringement may not be brought before the Board unless registration for the infringed work has been issued or at least has not been refused, i.e. registration has been applied for and is still pending.FN7

Thus, in order for a copyright holder to bring an action or assert a counterclaim before the Board, they must at least apply for registration at the time they file their claim or counterclaim. However, as the preceding section underscores, not only are the monetary damages available to a registered work twice that of an unregistered work per infringement, but the overall cap on damages is also double for registered works compared to unregistered works. (Please note: These damage caps depend on whether the work was registered or not at the time of infringement, not at the time of filing an action before the Board.)

As a result, works that have or will soon be registered after publication may bring actions before the Board and can expect to receive greater monetary awards per infringement than their unregistered counterparts. For this reason, the enforcement alternative provided by the CASE Act is more valuable if you at least intend to register your creative works.

COSTS OF ENFORCEMENT

The costs of enforcement action are another tradeoff to consider when it comes to actions before the Copyright Claims Board. While the exact fees are yet to be determined, under the CASE Act, the filing fee to initiate an action before the Board is capped below federal court filing fees.

However, while the parties are permitted to have legal counsel, each party is generally expected to bear its own costs, including attorney's fees, except in the limited situation where the other party acted in "bad faith," which is defined as bringing a claim, counterclaim, or defense “for a harassing or other improper purpose or doing so without a reasonable basis in law or fact.”FN8 As a result, even a prevailing party is normally expected to cover its own legal costs and attorney's fees in actions before the Board. That said, in situations where the other party acted in bad faith, the Board may award attorney's fees up to $5,000 - and perhaps more when justified by "extraordinary circumstances."FN9

A skier in a red coat a snowy Colorado maintains on a clear sunny day sitting for a moment to take in the view with his ski gear set up next to him.

Since parties will generally have to bear their own costs, parties before the Board will likely be unrepresented or with only limited representation.

REMEDIES AND RELIEF

In thinking about your enforcement options, it is also important to consider the remedies and relief available. In particular it is noteworthy that the Copyright Claims Board is limited compared to federal courts in the kinds of remedies and relief available to the parties.

"The Board is unable to grant injunctive relief of any kind. This means that, while the Board can assist with a settlement agreement requiring particular conduct among the parties, the Board cannot itself order or compel an infringing party to undertake or cease any particular activity."

As discussed above, the Board is capable of issuing awards of monetary damages for claims or counterclaims of infringement - although the damages available are limited compared to those available in federal courts - and the Board may also declare the rights of purported rights holders and claimants and adjudicate claims related to the notice-and-takedown system established by the Digital Millennium Copyright Act (DMCA).FN10 Additionally, as briefly mentioned above, the Board can assist the parties by facilitating "the settlement by the parties of claims and counterclaims."FN11

Conspicuous in its absence, the Board is unable to grant injunctive relief of any kind. This means that, while the Board can assist with a settlement agreement requiring particular conduct among the parties, the Board cannot itself order or compel an infringing party to undertake or cease any particular activity, including any activity that infringes the rights of the other party. If injunctive or other sorts of equitable relief matters to you, it would be wise to avoid committing yourself, by agreement or otherwise, to enforcing your copyrights only before the Board.

THE PROCEDURE AND PROCESS

Additionally, anyone interested in pursuing actions before the Copyright Claims Board should understand that procedure and process involved is quite intentionally different from that of federal courts. In large part, this is because an action before the Board is supposed to be a streamlined and affordable alternative to traditional litigation in court.

Accordingly, Board proceedings are entirely remote, motions (used to ask a judge to take some action) are generally unavailable, and discovery (which permits sides to gather and exchange evidence) is considerably limited.FN12 In order to initiate a proceeding, a claimant only needs to submit a “statement of material facts” instead of a lengthy complaint.FN13 This statement will then be reviewed by designated attorneys within the Copyright Office and then, if the claimant is allowed to proceed, notice may be served on the opposing party, who shall have the opportunity to opt-out of the proceeding before the Board and, if they fail to do so within sixty days, who must respond to the claims.FN14

If the proceeding moves forward, the Board will schedule and hold one or more virtual conferences with the parties to discuss the case and any discovery issues.FN15 Hearings may also be held virtually to take testimony from the parties or witnesses.FN16 Subsequently, the Board will make its factual findings and legal determinations based on the weight of the evidence and grant any appropriate and available relief.FN17

As noted above, an opposing party has the option and opportunity to opt-out of the Board's proceedings by notifying the Board of its decision to opt-out within sixty days from the date of service, i.e. when it received notice from the claimant. If an opposing party opts out of Board proceedings, the claimant would still be able to bring the same claims before a federal court.

APPEALS AND REVIEW

The final tradeoff to consider the is availability of appeal or the review of legal determinations. Here, as with the original proceedings, the CASE Act procedure is relatively simple and designed to keep costs down. Accordingly, appeal and review of Board decisions is much more limited than that which would be available in federal court.

Within thirty days from the Board decision, parties may in limited circumstances submit a request for reconsideration to the Board.FN18 In order to submit this sort of request, the party must identify a clear error of law or fact made by the Board that had a significant effect on its determination.FN19 However, the Board has the discretion to deny the request or amend its final determination.FN20

"The CASE Act procedure is relatively simple and designed to keep costs down. Accordingly, appeal and review of Board decisions is much more limited than that which would be available in federal court."

If the Board denies a request for reconsideration, the party has thirty days to request the review of the Register of Copyrights.FN21 However, the Register's review will be limited to simply a consideration of whether the Board abused its discretion in denying the request for reconsideration.FN22 Beyond this review within the Copyright Office, a party may be able to seek appeal in a federal court if that party can demonstrate that the Board engaged in misconduct or exceeded its authority.FN23 But these circumstances will likely be rare.

This article only highlights some of the most important considerations when it comes to your enforcement options and what to choose in forum selection provisions of your agreements. If you have questions or need to consult an experienced attorney, please Reach out, Today!

This article provides only general information and is not intended to be a substitute for legal advice.


Click Here to Toggle End Notes:

FN1: The 'Copyright Alternative in Small-Claims Enforcement Act of 2020' is the short title of Division Q, Title II, Subtitle A, § 212 'Copyright Small Claims', Consolidated Appropriations Act, 2021, Pub. L. No. 116-___ (Dec. 27, 2020). Section references throughout are to sections of the Copyright Alternative in Small-Claims Enforcement Act.

FN2: Despite its laudable intention to provide a new enforcement option for copyright holders with small claims, the CASE Act is not without its share of criticism from those who fear that it will encourage the filing of frauduent or frivolous claims. Whether this fear is wellfounded or overblown cannot yet be determined and will depend on how the Copyright Office implements the CASE Act and adjusts overtime.

FN3: § 1503(a)(1)(A)-(K).

FN4: § 1504(e)(1)(A)(ii)(I)-(II).

FN5: § 1504(e)(1)(D).

FN6: § 1504(e)(1)(A)(i).

FN7: § 1505(a)

FN8: § 1506(y)(2), and see § 1504(e)(3).

FN9: § 1506(y)(2).

FN10: § 1504(c)(1)-(6).

FN11: § 1503(a)(1)(F).

FN12: § 1506(m)-(n).

FN13: § 1506(e)(1).

FN14: § 1506(f)-(h).

FN15: § 1506(l).

FN16: § 1506(p).

FN17: § 1506(s)-(t).

FN18: § 1506(w).

FN19: Id.

FN20: Id.

FN21: § 1506(x).

FN21: Id.

FN22: § 1508(c).




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