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Busting the Top Ten Myths About the CASE Act (Part II: Myths 4-6)

Busting the Top Ten Myths About the CASE Act (Part II: Myths 4-6) by Keith Kupferschmid

June 3, 2019

This blog is part 2 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 #4:  Some critics have alleged due process concerns with the CASE Act.

The Facts: The copyright small claims process would satisfy all due process requirements.

Due process requires that deprivation of life, liberty or property by adjudication be preceded by notice and the opportunity for a hearing appropriate to the nature of the case. The CASE Act provides for a tribunal that meets the requirements of due process.

Notice: To initiate a claim, the claimant “must cause notice of the proceeding and a copy of the claim to be served on the respondent, either by personal service or pursuant to a waiver of personal service,” and file proof of service with the Copyright Claims Board. The bill also provides for written notification to be sent from the Copyright Claims Board to the respondent. Additionally, a business entity can elect to designate a service agent to receive notice of a claim against it to ensure that entities with multiple facilities have notice served at the proper location and to the proper representative.

Some opponents of the legislation argue that the provision which states that a respondent’s non-response to a notice of the proceeding can result in entry of a default judgment against them in federal court raises due process concerns. This is incorrect because: (1) after the initial 60 day response period has expired, the Copyright Claims Board may “extend such 60-day period in the interests of justice”; (2) prior to issuance of a default determination by the Board, the respondent is notified about “the pendency of a default determination by the Copyright Claims Board and the legal significance of such determination” and given “30 days from the date of the notice to submit any evidence or other information in opposition to the proposed default determination”; and (3) following the issuance of a default determination by the Board, the respondent has 90 days to submit an application challenging the determination in federal court and “the United States District Court for the District of Columbia may issue an order vacating, modifying or correcting a determination . . . where it is established that the default or failure was due to excusable neglect.” Thus, the respondent is given FOUR opportunities to respond before a default judgment is entered.

Opportunity to be heard: A copyright small claims tribunal does not obstruct an individual’s right to be heard, as it is an optional tribunal. The copyright claimant would not be obliged to bring a claim via the small claims tribunal. Instead, a claimant would have an option that presently does not exist: the option to choose between federal court, and a less expensive alternative. Further, the small claims tribunal itself provides a proper opportunity to be heard, including discovery, and the submission of both documentary and testimonial evidence. The small claims tribunal allows for discovery of “relevant information and documents, written interrogatories, and written requests for admission” and permits the Board to “approve additional limited discovery in particular matters.” Parties may submit “statements of the parties and nonexpert witnesses, as relevant to the claims, counterclaims and defenses in a proceeding,” and in some cases “expert witness testimony or other types of testimony may be permitted.” At the request of either party, or upon its own initiative, the Board is also empowered to “conduct a hearing . . . to receive oral presentations on issues of fact or law from parties and witnesses to a proceeding, including oral testimony.” Further, the legislation allows a party to raise legal or equitable defenses in response to a claim or counterclaim, including a fair use defense.

Myth #5:  Some critics have suggested that the CASE Act raises questions about which precedent the Copyright Claims Board should follow.

The Facts: Small claims legislation sets forth unambiguous and fair rules to determine which court precedent to follow when there is conflicting judicial precedent.

The CASE Act directly and clearly addresses the issue of determining which court precedent to follow when there is conflicting judicial precedent. It explicitly states “to the extent it appears there may be conflicting judicial precedent on an issue of substantive copyright law that cannot be reconciled, the Copyright Claims Board shall follow the law of the Federal jurisdiction where the action could have been brought if filed in Federal district court, or, if it could have been brought in more than one jurisdiction, the jurisdiction that the Copyright Claims Board determines has the most significant ties to the parties and conduct at issue.” Consequently, there is no basis for any claims that the CASE Act raises questions about which precedent the Copyright Claims Board should follow.

Myth #6:  Some have suggested that the small claims court will be biased in favor of copyright owners, that simply is not the case.

The Facts: Small claims court legislation contains safeguards to prevent bias and ensure fairness.

The CASE Act contains provisions to ensure fairness and safeguard against bias. For example, in addition to the previously mentioned “bad faith” provisions, the proposals require that two of the three Copyright Claims Officers “shall have represented or presided over a diversity of copyright interests, including those of both owners and users of copyrighted works” (emphasis added). In addition, these Officers are bound by judicial precedent in deciding a case.

In fact, there are many provisions in the small claims legislation that are favorable to the responding party. Compared to the uncapped total damage ceiling, higher per claim statutory damage ceiling, possible attorneys fee award, and expensive discovery proceedings in federal court, the small claims process gives defendants a lowered ceiling on their total liability, a lowered per claim ceiling on statutory damages, a bar to an attorneys’ fees fee award, and a more cost-efficient proceeding. Thus, despite claims by some that the small claims court will be biased in favor of copyright owners, that simply is not the case.

Read part 1 here.

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