This blog is part 3 of a series of 3 blogs. Our CEO Keith Kupferschmid shares what’s true and what’s not around facts about the copyright small claims court.
Myth #7: Some critics suggest that that the damages proposed by the CASE Act are too high.
Fact: Statutory damage ceilings provided for in small claims legislation are not too high and, in fact, are significantly lower than what is presently provided for under federal copyright law.
In federal court, a successful plaintiff may be awarded damages of up to $150,000 in statutory damages per work infringed. In small claims court, a successful claimant may only be awarded up to $15,000 in statutory damages per work infringed — 10% of the damages presently available in federal court. The CASE Act also limits total amount of damages that can be awarded in each case to no more than $30,000, as compared to federal court, which has no limit whatsoever. Therefore, there is no basis for the assertion that the damages proposed in the CASE Act are too high.
Myth #8: Some critics suggest that a small claims tribunal is unnecessary because there is already a procedure in place for streamlining copyright small claims are incorrect.
The Facts: The CASE Act’s small claims process is easier, less expensive, and more streamlined than any federal court procedure, including ones involving Magistrate Judges.
Suggestions that a small claims tribunal is unnecessary because there is already a procedure in place for streamlining copyright small claims are incorrect. Although there is a procedure employing federal magistrate judges that copyright owners could use in theory, in reality that process is much more expensive and complex than the small claims process proposed in the CASE Act. For example, this process would require the copyright plaintiff to first file a complaint for infringement in federal court — thereby incurring a more expensive filing fee than the one set out in H.R. 2426 and S. 1273 — followed by a set of motions to join defendants and refer the case to a Special Master, and “if necessary, seek leave to take early discovery to identify John Does.”
As compared to the process set forth in the CASE Act, this method is neither streamlined nor accessible without hiring an attorney. Not only does it involve a degree of expertise and familiarity with motions practice and the Federal Rules of Civil Procedure that would require the assistance of an attorney, it is also significantly more complex, more expensive, and does not guarantee the copyright expertise that the Copyright Claims Board would.
Myth #9: Some critics of the CASE Act assert that the opt-out process will result in respondents routinely and unknowingly failing to respond to notices of proceedings against them, resulting in the issuance of default judgments.
The Facts: The CASE Act includes numerous safeguards to protect against inadvertent default judgments.
The CASE Act provides respondents with numerous opportunities to opt out throughout the process, and allows ample time to do so.
FIRST: The CASE Act gives respondents 60 days to opt-out before the proceeding becomes active (which is double the response period provided for in prior versions of the bill). This provides respondents with ample time to make an informed decision about whether to opt-out or proceed. The Board may also extend the opt-out period beyond 60 days “in the interests of justice.” That gives a respondent potentially four months to respond.
Not only does the CASE Act require the claimant to serve a notice on the respondent consistent with the Rules of Federal of Civil Procedure, that notice must also: (i) explain “the respondent’s right to opt out, and the consequences of opting out and not opting out”; and (ii) prominently state that by failing to opt-out, the respondent will “forgo the opportunity to have the dispute decided by a court created under Article III of the Constitution of the United States and … will be waiving the right to a jury trial.”
SECOND: Not only is a respondent notified by the claimant, but they will also be notified by the Copyright Claims Board (CCB). The purpose of this additional notification is to reinforce the seriousness of the proceeding and potential consequences, and the importance of the respondent reading and understanding the notice and the nature of the claims against them. Since this notice will be sent from the CCB, it is unlikely to be ignored.
THIRD: Before a default can occur, the respondent is notified a third time. This third notice, which is sent by the Copyright Claims Board (CCB), warns the respondent about the legal significance of a default judgment and gives the respondent another 30 days to respond. That gives a respondent potentially a total of five months to respond.
FOURTH: Even if the respondent fails to respond to the first three notices and a default is issued by the Board, the respondent is given a fourth opportunity to prevent a default judgment from taking effect by granting a respondent an additional 90 days to challenge the default judgment in federal court. That gives the respondent potentially eight months to respond.
Myth #10: Some critics have suggested an “opt-in” approach would work better than an “opt out” approach.
The Facts: The “opt-in” does not work and is nothing more than the status quo.
Using an “opt-in” approach for small claims proceedings would create a framework nearly identical to current alternative dispute resolution (ADR) solutions that are presently available and do not work for these small creators any better than the expensive and complex federal court system. If a respondent is required to “opt-in” to a small claims proceeding, the system is not much different than agreeing to a mediator or an arbitrator in lieu of going to federal court. In short, an “opt-in” approach would be a waste of Congress’ time because the approach already exists today through ADR.
The only real difference between an “opt-out” approach and an “opt-in” approach is that a respondent can completely ignore an “opt-in” approach. However, with an “opt-out” approach, the respondent must at least consider whether they are willing to participate in a small claims proceeding. If a respondent took the time to copy and distribute an image, song or other creative work without seeking permission, the very least they can do is to take some time to consider the interests of the person who created the work and respond to him or her. In essence, all small creators are asking is that they not be ignored by those who steal their work.
Read part 2 on Busting the Top Ten Myths About the CASE Act (Myths 4-6).