Don’t Be Bamboozled by Public Knowledge’s Lies About the CASE Act

Public Knowledge Said: The CASE Act will establish an unaccountable small claims tribunal that will be exempt from the regulations and procedures of the judicial branch.

Why Public Knowledge is Wrong: There are numerous tribunals that exist outside the judicial branch, especially for intellectual property disputes. The Copyright Office already has a tribunal called the Copyright Royalty Board and the U.S. Patent and Trademark Office has two such tribunals. The suggestion that creating a tribunal is new and different or that it will be exempt from rule of law has no basis in reality.

Similarly, the claim that the Copyright Claims Board (CCB) will be “unaccountable” is equally without merit. The Copyright Claims Officers, who make up the CCB (i.e. the “Board”), are accountable. They are appointed by the Librarian of Congress (who is a Presidential appointee) and subject to sanction and removal by the Librarian. Two of the three Copyright Claims Officers must have experience representing “a diversity of copyright interests, including those of both owners and users of copyrighted works” and the Officers are bound by judicial precedent in rendering decisions.

Public Knowledge Said: Damage awards of $30,000 will bankrupt individuals.

Why Public Knowledge is Wrong: Like in federal court, an award of statutory damages does not mean that the prevailing party will get the maximum allowable award. Instead, as is the case in federal court, damages will be awarded commensurate with the harm to the copyright owner. Many of the claims will be valued in the hundreds or low thousands of dollars.

The CASE Act does not change the liability standards for copyright law. Anything that presently does not violate copyright law would continue not to violate the law under the CASE Act. Anything that presently constitutes fair use would continue to be fair use under the CASE Act.

Under the CASE Act, the highest amount of statutory damages that could be obtained for one copyright infringement claim is $15,000, not $ 30,000. By comparison, if an infringer were sued in federal court today, the statutory damages could be up to $150,000 per work infringed for willful infringement, and there is no cap on the total damage award.

Public Knowledge Said: The copyright small claims system will be an appealing business model for copyright trolls.

Why Public Knowledge is Wrong: Unlike in federal court, a respondent who believes they are the target of a frivolous copyright claim can simply opt out of the process. They are not being forced or coerced to participate. The process is completely optional. This means that trolls who try to abuse the CASE Act would actually lose money. When the respondent opts out, the claimant loses the non-refundable filing fee. This gives the respondent leverage, not the claimant, because if the claimant is a troll, they stand to lose money every time a respondent opts out.

Additionally, under the CASE Act, if a party is found to have brought claim(s) in bad faith, the Copyright Claims Board has the authority to not only dismiss the claim but also to: (i) award attorneys’ fees to the respondent of up to $5,000, or more in extraordinary circumstances; (ii) ban the claimant from filing a case for one year; and (iii) dismiss ALL pending cases filed by the claimant. These are substantial penalties, only the first of which is available when a case in filed in federal court.

The CASE Act also allows the Copyright Office to issue regulations limiting the number of cases any one person or entity can file in a year. Therefore, even if a troll could somehow abuse the system, the Copyright Office has the ability to limit or prevent that abuse. There is no such ability to restrict the number of cases that can be filed in federal court.

Public Knowledge Said: Most individuals will not even know that they can opt out.

Why Public Knowledge is Wrong: Under the CASE Act, respondents are made aware of their right to opt out and given numerous opportunities to do so. First, they are served notice, in compliance with the requirements under the Federal Rules of Civil Procedure. They are no more likely to ignore this notice then if the notice were for a federal court proceeding. In fact, they are less likely to ignore the notice because it will include a prominent statement about their right to opt out and the consequences of not opting out. In addition, the CASE Act also gives respondents about triple the amount of time to respond (60 days) than in federal court, and the Copyright Claims Board itself sends a follow up notification about the pending case and the consequences of not opting out.

Public Knowledge Said: There’s no appeals process under the CASE Act.

Why Public Knowledge is Wrong: While some level of judicial review of the CCB decisions is appropriate, allowing CCB decisions to be subject to extensive, broad judicial review in federal court would undermine the very purpose of the bill and destroy the effectiveness of the CCB. It would enable respondents to re-litigate their case in the very same federal courts that the claimants could not afford in the first place. This is one important reason why the process is optional. Every respondent has the right to decide whether they prefer unlimited potential liability, the expense of federal court, and the lengthy process of litigation in exchange for broader judicial review, or a streamlined and inexpensive process with limited potential liability and limited judicial review. It’s important to remember that the CASE Act takes nothing away from the status quo, it only creates an alternative option.

The CASE Act tracks the judicial review provisions of the Federal Arbitration Act (FAA). It permits a party to challenge a CCB decision on the basis of fraud, corruption, misrepresentation, or other misconduct. It also goes beyond the FAA by allowing those subject to a default judgment to seek review by the district court to have the judgment vacated upon a showing of excusable neglect. Significantly, this approach is consistent with constitutional norms. As the Copyright Office noted in its 2013 small claims report, the bill tracks Supreme Court precedent that provides that “the U.S. Constitution does not require states to provide appellate review as a matter of due process. States therefore may prescribe procedures for and place conditions upon the right to appeal, or decline to provide for appellate review.” See National Union of M. C. & S. v. Arnold 348 U.S. 37, 43 (1954) (emphasis added). Although state small claims courts are quite different than the federal copyright small claims court created by the CASE Act and probably should not be compared, it is worth noting, as far as due process is concerned, that small claims courts in states like Oregon, Hawaii, Arizona, Michigan, Connecticut, Louisiana, and North Dakota provide no right of appeal whatsoever. The CASE Act provides a right to appeal that exceeds many state small claims courts.

In addition, if a party disagrees with a decision of the Board, they can request that the Board reconsider the case. If the Board declines, that party may then request that the Register of Copyrights review whether the Board abused its discretion in denying the request for reconsideration.

get blog updates