Gallet Dreyer & Berkey, LLP | Congress Creates a New Copyright “Small Claims” Tribunal
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  • Congress Creates a New Copyright “Small Claims” Tribunal
    The recently enacted Copyright Alternative in Small-Claims Enforcement Act of 2020 (CASE Act) creates a new administrative tribunal within the U.S. Copyright Office to provide a new “voluntary” alternative forum for deciding copyright disputes, capped at $30,000 in damages (actual or statutory), or for declaratory relief of non-infringement.  The tribunal is “voluntary” in the sense that a respondent has the right to opt-out of the proceeding within 60 days of receiving notice. 

    The goal of creating this new administrative forum is to provide an alternative forum that will alleviate perceived problems with the current system, and allow business owners and content creators to expeditiously resolve smaller copyright disputes that do not involve significant alleged damages.

    The law is the result of many years of study and congressional hearings addressing multiple perceived problems in our current copyright dispute resolution system.   It is not yet clear whether or not this new tribunal will help alleviate the perceived problems with the current system, or instead, create additional problems. 

    On one side, copyright owners and creators have expressed that it is difficult and expensive for them to enforce their rights in federal court unless they can get an attorney to pursue the claim on a contingency fee basis because filing a lawsuit in federal court is too expensive.

    On the other side, businesses who have been sued for copyright infringement have expressed concern about “copyright trolls” who assert multitudes of copyright claims with the goal of extracting excessive settlements based on the threat of a federal court lawsuit, even if the business has ceased the infringing activity.     

    This new small claims system, which likely will not be operational until the end of the year after the Copyright Office issues procedural regulations, is an attempt to address the concerns on both sides, as noted in the congressional testimony of the acting head of the Copyright Office.  But it is not yet clear whether the new system will help to address these problems, or instead, will create additional headaches, as some critics such as the Authors Alliance and Public Knowledge have suggested. 
    The law attempts to balance the concerns of all parties involved by enacting an entirely new system, with various procedures and limitations intended to make the dispute resolution procedure more efficient.  Here are the highlights:
    Who Decides the Claim and What Authority Do They Have
    • Claims will be decided by a three-judge panel of experienced copyright attorneys appointed by the Copyright Office, who each serve for a renewable six-year term.
    • The tribunal can enter damages (actual or statutory) only up to $30,000  (statutory damages may not exceed $15,000 for each work infringed), or a declaration of non-infringement.  The tribunal can consider as a factor in awarding statutory damages whether the infringer has agreed to cease or mitigate the infringing activity, and cannot consider whether the infringement was committed willfully.
    • The tribunal cannot order a party to cease infringing conduct unless the infringing party agrees to do so.
    • The tribunal cannot award attorney’s fees to the prevailing party unless the non-prevailing party engaged in “bad faith” conduct, and a fee award, if any, will normally be limited to not more than $5,000.
    How Are the Proceedings Conducted
    • The proceedings shall be conducted remotely, without in-person appearances, via written submissions, or by internet-based applications.
    • Discovery is normally limited to the written exchange of information, rather than depositions unless a party demonstrates “good cause.” 
    • Testimony can be submitted without application of formal rules of evidence in written form by affidavit.
    How to Start a Claim
    • A proceeding can be initiated even if the work is not yet registered, as long as the claimant has started the registration process, and the work becomes registered before the decision is made.
    • After filing the claim with the Copyright Office, the claim must be served on the respondent by formal personal service as provided under state law for service of lawsuits, and the notice must inform the respondent of the 60-day right to opt-out by notifying the Copyright Office.
    • If a respondent does not opt-out within 60 days and does not appear or defend, the tribunal can enter a default award, after giving the respondent one more 30-day notice before entering the award.
    • Parties are not required to have an attorney but may choose to do so.
    • The Copyright Office can adopt regulations setting a limit on the maximum number of cases a claimant may bring each year.
    • A federal court, hearing a copyright case, can refer the parties to seek resolution of their dispute in this small claims procedure on the consent of the parties.
    How to Appeal and Enforce a Decision 
    • If a respondent fails to pay an award, the claimant can obtain an order in federal district court confirming the award as a formal judgment, and the court can award reasonable attorney’s fees incurred by the claimant.
    • The right to appeal a tribunal decision in court is strictly limited to cases of fraud, corruption, misrepresentation, other misconduct, a showing the tribunal exceeded its authority, or in the case of a default award a showing that the default was entered due to excusable neglect
    • A decision shall not have any precedential value in any other proceeding.
    About the Author:
    David T. Azrin, a senior partner at Gallet Dreyer & Berkey, LLP and co-chair of the Intellectual Property Group, advises businesses and individuals and litigates matters, involving trademark, employment, franchise,  and other business law issues. Mr. Azrin is a co-chair of the American Bar Association Intellectual Property Litigation Committee newsletter committee.  He has been named by Super Lawyers magazine as one of the top attorneys in franchise and distribution law in the New York metropolitan area, and by Franchise Times magazine as one of the top franchise attorneys (“Legal Eagle”).
    ATTORNEY: David T. Azrin