The CASE Act: You Have Questions. We Have the Answers. by Keith Kupferschmid and Terrica Carrington
What is the CASE Act?
The CASE Act is the acronym for a bill called the “Copyright Alternative in Small-Claims Enforcement Act of 2019” (the “CASE Act”) that would create a three-“judge” tribunal called the Copyright Claims Board (CCB) within the U.S. Copyright Office to handle small copyright claims.
Why is the CASE Act needed?
Because federal courts have exclusive jurisdiction over copyright, and federal litigation is so expensive, many professional creators and small businesses simply cannot afford to defend their rights when someone infringes their copyrighted works. Visual artists, authors and songwriters are hurt the most by the high cost of federal litigation because the individual value of their works or transactions is often too low to warrant the expense of litigation and most attorneys won’t even consider taking these small cases. As a result, these infringements regularly go unchallenged, leading many creators to feel disenfranchised by the copyright system. In effect, these creators have rights but no remedies.
Who introduced the CASE Act?
The bill was introduced in the House and Senate on May 1, 2019. In the House, the lead co-sponsors are Reps. Jeffries (D-NY) and Collins (R-GA). The other original co-sponsors are Reps. Nadler (D-NY), Johnson (D-GA), Roby (R-AL), Chu (D-CA), Cline (R-VA), Lieu (D-CA), and Fitzpatrick (R-PA). The bill number in the House is H.R. 2426. The bill was also introduced in the Senate by Senators Kennedy (R-LA), Tillis (R-NC), Durbin (D-IL), and Hirono (D-HI). The bill number in the Senate is S. 1273.
Who drafted the CASE Act?
The bill is largely based on legislation recommended by the U.S. Copyright Office in 2013. The recommendation was issued after the Office solicited comments from all stakeholders during four days of public hearings and three rounds of written public comment.
Who supports the CASE Act?
There is a long list of supporters including:
American Association of Independent Music; American Bar Association (IP Section); American Intellectual Property Law Association; American Photographic Artists; American Society for Collective Rights Licensing; American Society of Journalists and Authors; American Society of Media Photographers; Association of American Publishers; Authors Guild; Chamber of Commerce of the United States; Copyright Alliance; Digital Media Licensing Association; Dramatists Guild of America; Future of Music Coalition; Garden Communicators International; Graphic Artists Guild; Horror Writers’ Association; Nashville Songwriters Association International; National Music Publishers Association; National Press Photographers Association; National Writers Union/UAW Local 1981; News Media Alliance; North American Nature Photography Association; Novelists, Inc.; Professional Photographers of America; Recording Academy; Recording Industry Association of America; Romance Writers of America; Science Fiction and Fantasy Writers of America; Screen Actors Guild‐American Federation of Television and Radio Artists (SAG-AFTRA); Society of Children’s Book Writers & Illustrators; Society of Composers and Lyricists; Songwriters Guild of America, and many others.
Who opposes the CASE Act?
There are a few groups that oppose the bill. Each of these groups have two things in common: (1) they are supported primarily by Google; and (2) they oppose any bill that would help creators and improve the copyright law (case in point, last year, these same groups were in a minuscule minority that opposed the Music Modernization Act (MMA), which was a bill supported by everyone in the copyright and tech communities and never received one negative vote Congress, and I think we all know how difficult that is to achieve.)
How are the CCB Officers selected?
The CCB officers are appointed by the Library of Congress. To be considered for the position, candidates must have represented or presided over a diversity of copyright interests, including those of both owners and users of copyrighted works. This helps to ensure that the officers are fair and unbiased. Also, unlike in federal court where the judge is handling a variety of different case and may never have heard a copyright case before, the CCB officers are subject matter experts, which should lead to more consistently correct decisions than in federal court.
What types of copyright claims can be brought before the CCB?
The tribunal created by the CASE Act can hear three types of claims by copyright owners and users, as well as all defenses (like fair use) and counterclaims allowed in federal court. The three types of claims that can be heard by the CCB are:
– Creators can bring infringement claims against those who are infringing their works;
– Users can request that the CCB issue a declaration of non-infringement stating that their activity does not infringe the copyright owner’s exclusive rights; and
– Users who received a DMCA takedown notice can challenge that notice if they believe it contains some form of misrepresentation relating to the alleged infringing activity. Creators who sent a DMCA takedown notice and then received a counternotice may also challenge that counternotice if they believe the counternotice contains some form of misrepresentation relating to material that was removed.
You’ll notice that the types of claims that can be brought are mix of those brought by copyright owners and users, so this new tribunal isn’t just being created to help copyright owners. It will also benefit users with fair use and other claims.
Does the CASE Act require creators who are infringed to bring their small infringement cases before the CCB instead of federal court?
No. A creator is free to sue in federal court, pursue mediation or arbitration, or to take other or no action at all. No creator is required to use the new copyright small claims tribunal. What the CCB offers is a choice that creators presently do not have.
Does the CASE Act require those who are accused of infringement to defend themselves in a CCB proceeding?
No. One of the most prominent and important features of the CASE Act is that the process would be 100% optional. If an individual or organization that is accused of infringement by a creator in a CCB proceeding does not want to defend itself, they can simply opt out. When an opt out is submitted, the CCB proceeding is terminated.
If it is so easy to opt out, won’t everyone opt out?
Although it is quite simple to opt out of a proceeding, the CASE Act includes several incentives to encourage parties to participate. For example, in federal court, a successful plaintiff may be awarded damages of up to $150,000 in statutory damages per work infringed. The CASE Act limits that amount to a maximum of $15,000. The CASE Act also limits the 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. Capping the damages dramatically reduces the infringer’s potential liability and will incentivize them not to opt out. In addition, participating in the small claims proceeding is significantly less costly than participating in a proceeding in federal court, primarily because the process is so streamlined that there is no need to hire or pay an attorney.
How do the CCB Officers make their decisions?
CCB Officers are bound by judicial precedent in deciding a case. When there is conflicting judicial precedent, the CASE Act specifies that the CCB must 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 CCB determines has the most significant ties to the parties and conduct at issue.
How is a CASE Act proceeding different than a proceeding in federal court?
The CASE Act would create a much less formal, streamlined process than exists in federal court. For example, unlike federal court, attorneys and in-person appearances would not be necessary and discovery would be extremely limited. Damages for copyright infringement would be much less in a CCB proceeding than in federal court because the CASE Act limits statutory damages to a maximum of $15,000 per claim, with a cap on the total amount of damages that can be awarded in each case to no more than $30,000. In contrast, there is no cap on the total amount of damages allowed in federal court. Further, unless a party has brought a claim, counterclaim or defense in bad faith, the CCB cannot award attorneys’ fees or costs to the prevailing party. Lastly, the CASE Act also includes numerous safeguards to prevent against frivolous lawsuits and trolling that do not exist in the federal court.
How will the CASE Act prevent trolling and other abuses?
The CASE Act discourages bad faith claims, counterclaims and defenses, and other abuses by granting the CCB the authority to not only dismiss frivolous claims, but also to:
– award attorneys’ fees of up to $5,000, or more in extraordinary circumstances;
– prohibit the bad faith actor from filing a case for one year; and
– dismiss all pending cases filed by the bad faith actor.
In addition, the CASE Act allows the Copyright Office to issue regulations preventing any one person or entity from bringing a certain number of cases in a year. There is no such restriction on the number of cases that can be filed in federal court.
How are H.R. 2426 and S. 1273 different than previous versions of the CASE Act?
Some critics of the CASE Act previously raised concerns about the bill being used for so-called trolling and that unsophisticated users will routinely and unknowingly fail to respond to notices of proceedings against them, resulting in the issuance of default judgments. In response, the most recent version of the CASE Act makes the following changes:
– The CASE Act now gives respondents 60 days to opt out before the proceeding becomes active, which is double the response period provided in prior versions of the bill. This change provides respondents with more time to make an informed decision about whether to opt-out or proceed. (The CCB may also extend the opt-out period beyond 60 days “in the interests of justice.”)
– In addition to the respondent being notified by the claimant, the current version of the CASE Act provides that they will also receive a notice from the CCB. The purpose of the CCB notice 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 an office of the U.S. Government, it is unlikely to be ignored.
– To prevent notices from being misdirected, the CASE Act now allows organizations to designate an agent to receive service, which will be made publicly available so that the notices go to the correct person at an organization.
– The bill allows the CCB to penalize those found to be filing frivolous claims (i.e., trolling), counterclaims and defenses, or otherwise abusing the system by awarding attorneys’ fees in excess of $5,000 in extraordinary circumstances; prohibiting the abuser from filing a case for one year; and dismissing all pending cases filed by the abuser.
– The CASE Act authorizes the Copyright Office to issue regulations limiting the number of cases a person or entity can bring in a year.
There were also concerns raised about a provision allowing the CCB to issue third-party subpoenas, so that was removed from the bill.