The U.S. Copyright Office Will Issue Some Major Final Rules On How The New Small Claims Court Will Operate.
As we recounted in our CASE Act one-year anniversary blog post, the U.S. Copyright Office has been incredibly busy preparing new regulations and systems that will govern the new small copyright claims court established by the Copyright Alternative in Small Claims Enforcement Act of 2020. It’s now been almost a year since the Office issued its first public notice requesting input on how best to set up the new small copyright claims court, called the Copyright Claims Board (CCB), and three months since our last update. And since the Office just completed its last solicitation for public comments on their last set of rules, we thought it was time to check in again on the status of the Office’s implementation of the CCB.
In total, the Office released six total public notices requesting comments on how the CCB should operate (more details on these below). As it reviews and considers all the public comments submitted in response to the proposed rules, the Office will continue to release final rules, no later than the Office’s approaching June 25th Congressional deadline.
The Rulemaking Process
For those unacquainted with the rulemaking process, here’s a quick overview. The Office used a process similar to the rulemaking process it used in crafting the rules to implement the Music Modernization Act. It first issued a very general Notice of Inquiry (NOI) that solicited public input on just about every issue the Office might consider in drafting the CCB rules. It followed up that NOI with five Notices of Proposed Rulemakings (NPRMs), which included specific proposed regulations, on a variety of topics.
More specifically, the Office published the following public notices:
- CASE Act and CCB Implementation Regulations: In its first notice, issued on March 26, 2021, the Office asked the public to provide general input on how the Office should craft the rules on a myriad of topics including the content of standard forms, processes surrounding evidence, fees, the Register’s review of an appealed CCB determination, and the limit on the number of cases a CCB claimant can bring (among many other topics). The Office received 38 initial comments and 10 reply comments for a total of 48 comments.
- Expedited Registrations and FOIA: The first proposed rule was issued on April 26, 2021, and focused on the effect of the expedited registration option in a CCB proceeding and the scope of materials in a CCB proceeding that would be subject to the Freedom of Information Act (FOIA). The Office received a total of 4 comments. There was no reply comment period, and the Office released its final rule on this topic (which we discuss below) on August 18, 2021.
- Library and Archives Opt-out and Class Actions: On September 2, 2021, the Office proposed rules related to the procedures for libraries and archives to preemptively opt out of CCB proceedings, and procedures for a party who is part of a class in a federal class action lawsuit. The Office received a total of 131 comments. The Office will release its final regulations on this topic tomorrow, March 9.
- Initiation of Proceedings: On September 29, 2021, the Office proposed rules governing the procedures for the initial stages of a CCB proceeding including requirements related to filing a claim, serving a party, opting-out of a proceeding, and responding to a claim. The Office received 179 initial comments and 7 reply comments for a total of 186 comments.
- Active Proceedings and Evidence: On December 8, 2021, the Office proposed rules governing issues related to active proceedings, including defaulting parties, party conduct, settlements, scheduling, hearings, and review process of CCB final decisions. The Office received 13 initial comments and 3 reply comments for a total of 16 comments.
- Law Students and Business Entities Representation: On December 30, 2021, the Office proposed rules governing the procedures and requirements for representation before the CCB by law students and business entity representatives. The Office received 11 initial comments and 6 reply comments for a total of 17 comments.
The Office saw robust participation from all types of stakeholders in the copyright community, who submitted comments on a wide range of topics. Across all the public notices and rulemakings, the Office received almost 400 total comments from a variety of stakeholders. It’s clear that the copyright community is heavily invested in making sure that the new small claims tribunal is streamlined, effective, efficient and easy for parties to navigate—as Congress intended when it enacted the CASE Act.
Now that stakeholders have provided feedback on all the proposed rules issued by the Office, the Office is reviewing the comments and examining how to appropriately revise the draft rules, if at all.
The Most Significant Concerns with the Proposed CCB Rules
Congress intended for the CCB to be a voluntary, affordable, streamlined, and accessible alternative to federal court, especially for pro se individuals with little to no formal exposure to copyright law. Congress understood the problems rightsholders faced in a federal court system and responded by creating an opportunity for both creators and users of copyrighted works to access a streamlined, affordable, and easy to navigate tribunal in the form of the CCB.
The Copyright Alliance and many others identified a host of concerns with the proposed rules. For a detailed explanation of these concerns, you can check out all of our submitted comments on the Agency Filings page of our website. The three most significant concerns, that we and many others identified in the proposed rules, are:
The Proposed Rules are Too Complex
Many of the Office’s proposed rules were pretty complex for a process that was designed by Congress to be an easier and cheaper alternative to federal court for individuals with no legal training to navigate. Obviously, the Office wants parties to utilize and to be able to navigate the CCB, but some of the proposed rules are more complicated than they need to be.
The Filing Fee Should be a Tiered Fee
The Office proposed that the fee to start a CCB proceeding should be $100. On first glance, this doesn’t sound bad compared to the fee to file a case in federal court, which is about $400. But the biggest difference between a CCB proceeding and a federal court proceeding is that a CCB proceeding is a voluntary process where the responding party can simply opt out. Because of the unique design of the CCB, we and many others urged the Office to revise the fee structure to be a tiered structure (as suggested by the Senate in its report on the CASE Act) that would allow the creator to pay a much smaller initial fee (for instance, $25) to file a claim with the CCB, and then pay a second fee (for example, $75) once the other party does not opt out and is therefore an “active” case.
Limitation on Cases Should Be Based on “Active” Cases, Not “Filed” Cases
Under the Office’s proposed rule, if a creator files 10 cases with the CCB the creator is prohibited from filing any more cases within a twelve-month period. The problem with this is that if the other parties opt out in all 10 cases the creator would not have had a single case heard and would be prohibited from filing more for the remainder of the twelve month period. We suggested that, to the extent the Office believes a limitation is necessary, the limitation should only apply to cases that become active (i.e., cases where the other party does not opt out) in a CCB proceeding rather than applying the limit to the number of cases filed with the CCB. We also urged the Office to allow claimants to bring a greater number of “smaller claims,” since those claims are even more truncated and would incentivize claimants to consider that option when it is possible and lessen any burdens on the CCB.
We cannot emphasize enough that all the rules from the Copyright Office are proposed rules. The Office may very well take our comments into consideration and change the proposed rules so that none of the concerns we outlined above actually come to fruition. We are hopeful that will be the case.
The Office has Already Released a Few Final Rules
The Office already issued two final rules on some limited parts of the CCB process.
The first set of final rules were issued in August 2021, regarding the expedited registration process and FOIA disclosures related to CCB proceedings. A second set of rules were issued today, March 8. These rules relate to how corporations, partnerships, and unincorporated associations can designate an agent to receive service of process (i.e., an initial CCB notice of a CCB proceeding and claim against the entities). A third set of final rules will be issued tomorrow, March 9 on library and archives opt-outs and class actions.
A CCB claimant must have a registration certification or must have filed a registration application with the Office in order to bring an infringement claim before the CCB. In the case of a pending registration, the rule allows for claimants to request that the Office conduct a “small claims expedited registration.” Here are a couple specifics about that process:
- The process is done through the CCB (not through the electronic registration system).
- The Office will try to examine the pending registration application within ten business days of receipt of the expedited examination request.
- Claimants can only request the small claims expedited registration after a registration application is filed AND the CCB proceeding has become active.
- There is an additional nonrefundable fee for this process, but it is a one-time fee per registration application, not per work (i.e., the fee for expedited review of a group registration application is the same as it is for an expedited review of a single work registration application).
- If a CCB case is dormant for more than one year because of a pending registration determination, the CCB will provide notice to all parties that the case is dismissed without prejudice, meaning that it can be brought again to the CCB or in federal court.
- The CCB will deny an expedited registration request if it would be overly burdensome to the Office’s workload or budget when the request is made.
The Freedom of Information Act (FOIA) requires federal government agencies to either proactively disclose or disclose upon request, documents and information about a particular issue or topic. The Office’s final rule clarifies that only CCB decisions and materials which are posted to the U.S. Copyright Office’s website will be subject to a FOIA disclosure or request for disclosure; no other documentation will be made publicly available in response to a FOIA disclosure or request for disclosure.
Service of Process
The Office established some rules relating to designating an agent who can be served, which include:
- Entities can designate a service agent through the CCB website.
- The entity filing a single submission, designating a single agent for service of process can include other types of business entities that are under indirect or direct common control with the filing entity (as long as all entities are either incorporated in the same state or have their principal place of business in the same state). Filing entities can also include in the submission, up to 50 trade names (or “doing business as” names).
- Entities do not need to renew the information about their designated agent, but have a responsibility of updating the information in CCB’s public directory. If a claimant serves the wrong agent due to inaccurate or outdated information listed in the directory, the CCB may still deem that service was as effective.
Looking Forward to the Start of the CCB
We know that creating a small claims court “out of whole cloth” is no easy task. The Copyright Office staff has done a yeoman’s job in a very short time frame to craft these rules.
Once the final rules are in place and the CCB gets up and running, we at the Copyright Alliance will be here to help the creative community navigate the CCB, including a free updated CASE Act Guide for our Copyright Alliance members. We are tremendously excited about the CCB and look forward to the eventual day it opens its doors to start hearing small copyright claims.
Stay tuned for more resources, alerts and updates on the CASE Act, by visiting our CASE Act compilation page or better, sign up to become a member of the Copyright Alliance! You can also stay atop of all the latest developments on the CCB by signing up for our CASE Act Alerts.