Business and Legal Insights

Through the passage of the recent budget bill directed to providing COVID relief, Congress has also passed the Copyright Alternative in Small-Claims Enforcement Act (the “CASE Act”), essentially creating a small claims “court” within the Copyright Office itself.

The CASE Act creates the Copyright Claims Board (“CCB”) within the Copyright Office. The CCB is tasked with adjudicating copyright claims totaling $30,000 or less, exclusive of attorney fees. The CCB will be headed by (3) Copyright Claims Officers appointed by the Librarian of Congress for a term of 4 years, 5 years and 6 years, respectively. Copyright Claims Attorneys will be hired to assist the Copyright Claims Officers.

As a nod to virtual hearings conducted throughout the legal profession in 2020 necessitated by the response to the pandemic, the CASE Act appears to permanently embrace the movement away from in-person hearings.

The following represents a brief overview of some of the provisions of the CASE Act and is not a legal opinion:

Participation in a CCB Proceeding shall be on a voluntary basis and any party can opt-out and instead pursue a claim in district court.  The statute of limitations for commencing a proceeding before the CCB is “not later than 3 years after the claim accrued.”

The following claims appear to be permitted:

1. infringement;
2. declaration of noninfringement;
3. misrepresentation in connection with a notification of claimed infringement; and
4. legal or equitable defenses brought in response to such a claim.

The following claims are statutorily excluded:

1. claims not identified as permitted;
2. claims previously adjudicated by a court or pending before a court unless the court grants a stay permitting the CCB to proceed;
3. claims against Federal or State governmental entities; and
4. claims against person residing outside the United States unless that person initiates the proceeding.

In addition to the limitation of damages totaling $30,000 or less, exclusive of attorney fees, the CCB may award actual damages and profits or statutory damages in the amount not exceeding (1) $15,000 for each work infringed if timely registered; (2) $7,500 per work infringed, or a total of $15,000 in any 1 proceeding if the work is not timely registered. The CCB does not appear to be able to consider or adjudicate willful infringement, but may consider whether the infringer has agreed to cease or mitigate infringement as a factor for awarding damages. Upon determination by the CCB, the Board shall include a requirement to cease (1) infringing conduct or (2) cease sending a takedown notice. Attorney’s fees and costs are not available for the prevailing party except in the case of bad faith conduct.

Bad faith conduct occurs if it is established that a party pursued a claim, counterclaim, or defense for a harassing or other improper purpose, or without a reasonable basis in law or fact. The CCB may then award reasonable costs and attorneys’ fees to any adversely affected party of in an amount of not more than $5,000. Pro Se litigations may be awarded an amount of not more than $2,500. The CCB may award costs and attorneys’ fees in excess of the limitations and in extraordinary circumstances, such as where a party has demonstrated a pattern or practice of bad faith conduct. As well, if the Board find that on more than 1 occurrence within a 12-month period, a party pursued a bad faith claim, the party will be barred from initiating a claim before the CCB for a 12-month period.

For the proceedings, the CCB shall follow the law of the Federal jurisdiction in which the CCB determines has the most significant ties to the parties and conduct at issue. Notably, the proceedings will be conducted at the offices of the CCB without the requirement for in-person appearances, through the use of written submissions, hearings and conferences over internet-based applications. The CCB may make arrangement for certain physical or nontestimonial evidence that cannot be presented in this manner.

After filing the claim with the CCB, the claim is reviewed. If found to comply, the claimant is notified and instructed to proceed with service. In order to proceed with a claim against a respondent, a claimant shall, not later than 90 days after receiving notification, file with the Copyright Claims Board proof of service on the respondent. The notice must include an opt-out clause with a prominent statement: by not opting out within 60 days after receiving the notice, the respondent, ‘‘(A) loses the opportunity to have the dispute decided by a court created under article III of the Constitution of the United States;” and ‘‘(B) waives the right to a jury trial regarding the dispute.”

In order to comply with the opt-out procedure, the respondent must provide written notice of such choice to the CCB within 60 days (the 60 days only appears to be extendable under exceptional circumstances) and the proceeding will be dismissed without prejudice. Otherwise, the proceeding will be deemed active and the respondent shall be bound by the determination in the proceeding.

The CCB proceeding then moves forward with scheduling, party submissions, discovery, and hearings, upon which the CCB makes their determination. Following the determination, a party has 30 days to submit a Request for Reconsideration. If the CCB denies the Request for Reconsideration, a party then has 30 days to submit request review of the final determination by the Register of Copyrights. Not later than 90 days after the date on which the Register of Copyrights completes any process of reconsideration or review of the determination, the final determination or amended final determination may then be appealed to district court in the following cases: ‘‘(A) If the determination was issued as a result of fraud, corruption, misrepresentation, or other misconduct;” ‘‘(B) If the Copyright Claims Board exceeded its authority or failed to render a final determination concerning the subject matter at issue;” or ‘‘(C) In the case of a default determination or determination based on a failure to prosecute, if it is established that the default or failure was due to excusable neglect.” As well, if a party has failed to pay damages or comply with relief, the final determination by the CCB may be filed in the United States District Court for the District of Columbia or any other appropriate district court of the United States for an order confirming the relief awarded.