This blog is part 1 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 #1: Some critics of the CASE Act suggest that large companies will use the threat of federal court as leverage to coerce people to consent to the small claims process.
The Facts: Participation in the small claims process is 100% optional.
The process is entirely optional, which makes it impossible to “coerce” someone into court or to bring “frivolous claims” against them. If someone thinks a claimant is a copyright troll or trying to bring a frivolous claim, they can simply choose to opt out of the case, and it disappears.
Rep. Jeffries, the lead sponsor of H.R. 2426, the Copyright Alternative in Small-Claims Enforcement Act of 2017 (CASE Act), said it best when he said that the small claims tribunal’s purpose is to help “the creative middle class who deserve to benefit from the fruits of their labor,” but who often lack the financial resources to enforce their rights in federal court, leaving them with a right with no remedy. It is not designed to encourage large companies to bring suit against “the little guy”—they already have the ability to do so in federal court if they so choose. What this legislation does is even the playing field by providing the creative middle class with options they haven’t had in the past. Today, these creators have no practical option for enforcing their rights and protecting their work against infringement. If passed, the CASE Act would change that. Today, if a large company wants to bring suit against an individual infringer, that person would have no choice but to bear the expense of defending him or herself in federal court. This legislation offers a cheaper, more convenient alternative that otherwise wouldn’t exist.
It is important to reiterate that, under the CASE Act, a respondent has the choice to participate in the small claims process, or not to participate and potentially defend themselves in federal court, if the claimant brings a case in federal court. Today, the alleged infringer/respondent has no choice. So in reality, the CASE Act is about choice, not coercion.
Myth #2: Some critics of the CASE Act suggest that copyright owners will bring frivolous claims under the CASE Act.
The Facts: Copyright small claims court legislation contains safeguards to prevent the bringing of frivolous claims.
The CASE Act includes a number of safeguards to prevent instances of abuse. For example, the proposed legislation provides that:
– The Copyright Office may limit the number of cases that a claimant can bring during a calendar year. This limitation will help ensure that claimants are selective in asserting only those claims with a strong factual basis and that the bill does not create a so-called copyright trolling problem.
– The Copyright Claims Board (CCB) has the unbridled discretion to dismiss a claim if it finds that it’s “unsuitable for determination” by the Board.
– The CCB is permitted to award attorneys’ fees of up to $5,000 to an aggrieved party in the event that a claim is initiated in bad faith (e., “for a harassing or other improper purpose, or without reasonable basis in law or fact”). The CCB is also permitted to award attorneys’ fees in excess of $5,000 in extraordinary circumstances of bad faith conduct, and if a party is found to have initiated claims in bad faith on more than one occasion during a 12-month period, that party will be barred from bringing additional claims before the CCB for a year and all pending cases will be dismissed.
Importantly, these safeguards do not currently exist under federal law.
Finally, one of the most prominent and important features of the copyright small claims legislation is that it provides for an optional tribunal. If a respondent believes that a frivolous claim has been initiated against them, all they need to do is simply opt out of the proceeding. When coupled with the fact that a claimant must pay a non-refundable fee to file a claim which they lose if the respondent opts out, the bills contain sufficient safeguards to prevent the bringing of frivolous claims. Therefore, there is simply no merit to the argument that the small claims process will encourage or facilitate frivolous claims or trolling.
Myth #3: Some critics of the CASE Act suggest that the opt-out process is so easy to use that all respondents will opt out and no one will use the new tribunal.
The Facts: Copyright small claims court legislation includes incentives to encourage parties to use the process.
While the small claims court proposed by the CASE Act is completely optional, the bill provides several incentives to encourage parties to participate in proceedings before the small claims tribunal. Those incentives include:
– a streamlined process for faster resolution of the dispute;
– a significant cost reduction by avoiding federal filing fees and the need to hire an attorney;
– a cap on damages that dramatically reduces the infringer’s potential liability;
– a bar on the award of attorneys’ fees, except in cases of bad faith;
– subject matter expertise among the Copyright Claims Officers; and
– the ability to resolve the matter without having to appear in person.
Therefore, although a respondent can always opt out of the proceedings, it may be in their best interest not to.