A year has flown by since the launch of operations of the small-claims copyright tribunal, the Copyright Claims Board (CCB), by the U.S. Copyright Office on June 16, 2022. The CCB and Copyright Office staff have worked tirelessly to create and set up the CCB, and to ensure that the tribunal is serving as an effective, voluntary, and streamlined alternative to federal court. Since the launch of the CCB, we have been regularly monitoring the CCB’s docket of cases, compiling statistics on just about every aspect of the cases and claims that are moving through the CCB system.
Six months in, we took a look at the cases filed with the CCB and noted several observations that we detailed in our six-month snapshot blog, including how a surprising proportion of claimants were using attorneys, the unexpected participation of foreign claimants, and issues with claimants filing claims and serving respondents. To help address some of the issues we observed, we posted numerous educational materials on our CCB Explained web page including a guide to service of process that should aid claimants who are confused by the process. Now, as the CCB celebrates its first anniversary, seems like a good time to take another look at the CCB and how it’s operating.
CCB First Anniversary: Case Information
One year into the CCB, and we have a better picture of who is using the CCB and more information about the cases themselves—including two decisions issued by the CCB (technically referred to as “final determinations”).
- Case number 22-CCB-0035, Flores v. Mitrakos: The claimant argued that the respondent had filed a knowingly false DMCA takedown notice that caused Google to remove materials from the Chrome Web Store. After the case became active, the parties reached a settlement agreement which included concessions from the respondent that the information in the takedown notice was false and an agreement that the respondent will not file any future false takedown notices or counter-notices related to the claimant. The CCB approved the settlement agreement, dismissed the claim with prejudice (meaning that the claim cannot be brought again), and closed the case.
- Case number 22-CCB-0045, Oppenheimer v. Prutton: The case was referred to the CCB from the federal district court for the Northern District of California. Since the respondent admitted to copying and displaying the claimant’s photograph on the respondent’s website, the CCB analyzed the respondent’s defenses of fair use and unclean hands. Ultimately, it found for the claimant on copyright liability, holding that the respondent failed to meet its burden of proof on the fair use defense by failing to address three out of the four fair use factors, and that the respondent also failed to present sufficient evidence to support a finding of unclean hands. The CCB awarded the claimant $1,000 in statutory damages. We discuss the lessons and takeaways from that decision in an earlier blog post.
It’s not surprising that the CCB has only issued two final determinations at this point since the period of time from the claimant’s filing of claims to when the proceeding becomes an “active proceeding” could take five months or longer due to procedural timelines, like service of process and the opt out period as well as the time it may take a claimant to properly amend claims in the claims compliance process.
We have seen some interesting CCB cases filed that have not (as of yet) resulted in determinations, including a claimant that keeps returning to the CCB—and it may be working out for them. That claimant is Joe Hand Promotions which describes itself as “a Pennsylvania corporation that specializes in commercially licensing premier sporting events to commercial locations such as bars, restaurants, lounges, clubhouses, and similar establishments.” Joe Hand Promotions is an exclusive licensee of sporting events, including UFC fights and has almost hit its 12-month limit for filing cases—having filed 29 cases since July 2022 (a claimant is limited to filing 30 cases in a 12-month period). Their claims may be a way to read the tea leaves on how parties interact with the CCB.
Of Joe Hand Promotions’ 29 cases, 11 of them are active proceedings. Four of those proceedings are still in the early stages, while the other seven are in the default stage. But it seems that the CCB is still providing respondents ample time and opportunity to participate in the proceeding, even in the default stages, as it is taking roughly more than three months to get from the point when the case becomes “active” to a point where the CCB will issue an order for the claimant to make a default statement and submit evidence to begin default proceedings.
Joe Hand Promotions has seen some successes—seven of their cases have closed, and six of them resulted in a settlement. The case that did not result in a settlement was dismissed due to the respondents opting out of the proceeding. But two days after the CCB dismissed that case, Joe Hand Promotions (JHP) brought the case as a federal lawsuit against those same respondents who opted out—this time adding claims and remedies that could not be brought in the CCB—satellite and cable piracy claims brought under the Communications Act and additional damages of $110K per violation for violations thereof and maximum statutory damages under the Copyright Act ($150k). As we mentioned in our six-month snapshot blog, another claimant used the CCB as a “first step” before bringing the respondents to federal court, and it will be interesting to see if other claimants will do the same against respondents who opt out of the CCB proceeding and whether, like JHP, they bring additional claims and request additional and higher damages.
CCB First Anniversary: Settlements
Settlements also play a role in there being fewer CCB decisions. Settlement rates are more difficult to calculate and trace in the CCB docket since the public documents only reflect a settlement when the parties disclose it to the CCB (which they are not required to do).
The CCB docket definitely shows about 5% of the cases are settling. We know the actual number of settlements is larger than 5% because we have often heard from CCB parties that they have settled their case, but when we check the docket for the case it simply states that there was a voluntary dismissal by the claimant without reference to the settlement (because the parties did not report it as a settlement). Consequently, there could be many voluntary dismissals, opt outs, or other actions (or inactions) reflected in the docket that could actually be settlements between parties and we just do not know one way or the other.
Although settlements result in fewer determinations by the CCB, we think these settlements are a net positive. Prior to the launch of the CCB, these cases did not even see the light of day because claimants who could not afford to bring their cases to federal court had no other alternative to bring copyright claims. But now, with the advent of the CCB, these claims are being resolved—with or without an official determination by the CCB—and that is a good thing.
CCB One-Year Anniversary: Case Statistics
As of the end of May 2023, there were 471 cases filed with the CCB. Somewhat surprisingly, throughout the year, cases continue to be filed at a consistent rate—with close to two cases filed per day (since it launched). We initially thought that there might be a burst of cases filed at the start then the numbers would dwindle before reaching a consistent level. But instead, the cases seem to be being filed at a fairly consistent rate.
The top three kinds of works at issue in the cases are Pictorial, Graphic, and Sculptural Works at roughly 44%; followed by Motion Picture/Audiovisual Works at 20%, and then Literary Works (including software) at 15%. Of the cases filed, “smaller claims”—cases that are even more streamlined and where damages in the proceeding are no more than $5,000—represent about 36% of claims.
About a third of the claimants have legal representation. We explained in this blog post some reasons why that may be. It will be interesting to see if this number drops as parties become more acquainted with the CCB or increase due to claimants realizing certain aspects of the CCB may be more difficult than they first thought or that they need to hire an attorney because the respondent(s) in their case have hired one. It would also be interesting to know the number of respondent parties who have legal representation, especially in cases where a claimant is using an attorney, but unfortunately, the CCB does not make those numbers available for analysis.
We noted in our six-month snapshot that claimants were having trouble filing compliant claims. Unfortunately, that has not changed. The top reasons for why the CCB dismisses a case are still because of a failure to amend claims to comply with CCB regulations at 53% and a failure to provide proof of service at 21%.
Of course, claims are also dismissed because the respondent(s) opt out. The opt-out rate currently hovers a little below 50%. This rate has fluctuated quite a bit over the year as cases continue to progress in the CCB system and clear the initial claims compliance and service of process issues. But as mentioned earlier, an opt out does not necessarily mean that the dispute will go unresolved. Some of these opt outs may be leading to undisclosed settlements or lawsuits in federal court.
CCB Officers Are Taking Steps to Ensure the “Voluntary Nature” of the CCB is Preserved
Now that the CCB has been operational for a year, we have enough information to begin examining the opt-out process. One of the key features of the CCB is its opt-out mechanism for the respondent, which underscores the voluntary nature of the CCB.
After the claims are served, respondents have 60 days to opt out of the proceeding, but there have been multiple situations over the past year in which the CCB has extended the 60-day opt-out period due to “exceptional circumstances.” The reasons for extensions include:
- the opt-out form arriving late in the mail;
- the respondent mistakenly believing that it had successfully opted out of the proceeding at hand because it had opted out of another CCB proceeding that was served on the respondent the same day;
- CCB administrative hurdles, including:
- defects in the claimant’s Proof of Service, which meant that the CCB could not send a second notice of the opt-out period to the respondent and
- the CCB noting an incorrect opt-out window for the respondent party; and
- the CCB excusing respondent mistakes on the opt-out form, including when:
Claimants probably find it frustrating to have the timelines extended, particularly when the respondent or the respondent’s attorney has made mistakes on the opt-out forms and processes. But in these extension orders, the CCB consistently stresses the “exceptional circumstances” of the situations and that “due to the intent of the voluntary nature of proceedings before the Board” the Board finds that “the interests of justice” an extension is warranted.
The CCB officers’ broad view of what constitutes exceptional circumstances is warranted so long as it is consistently applied to all parties under similar circumstances. But one thing to keep in mind is that the CCB is still relatively new and what the CCB deems to be exceptional circumstances now—as everyone is educating themselves about the CCB and how it operates (including the CCB itself)—may not be considered to be “exceptional” down the road.
Of the cases where the opt-out period was extended, 36% of those cases are now in the default stage of the CCB proceeding. It is important that the Board has been exceedingly willing to extend opt-out periods “in the interests of justice” and in the spirit of the voluntary nature of the CCB. In fact, the CCB seems to be taking this approach across all the stages of the CCB process, as also seen in the default stage as previously mentioned. We commend the CCB officers for taking this approach as it ensures that respondents have ample opportunity to decide whether to participate in the proceeding (compared to federal court which operates under much stricter default rules).
Copyright Registration Practices Should Change to Ensure Smooth Operations of CCB
Though rare, there are a smattering of CCB dismissals resulting from the fact that the Copyright Office refused registration for the work(s) at issue in the case. Under the CASE Act and CCB regulations, the CCB must dismiss a case without prejudice when the Office refuses registration in a pending registration application. For example, in Haxton v. Newman (22-CCB-0042) the Office refused registration for the work in question because the incorrect application form had been used for the registration. Using the Single Application registration form, Haxton had attempted to register an audiovisual work that may have had multiple authors. The problem was that the Single Application form can only be used to register a work with one author.
Unfortunately, when the CCB issued the order dismissing the claim, it had already notified Haxton that the claims were compliant and that Haxton could proceed with service of process. The saving grace though, is that the case was dismissed without prejudice, meaning that Haxton could bring the case again—hopefully with the registration process being more successful the next time.
This is less a CCB problem and more of an area of improvement that the Copyright Office should consider implementing to make registration easier and to accommodate the CCB process (and more generally for the overall registration system as a whole). Admittedly, a claimant or counterclaimant risks having their claims or counterclaims dismissed where the registration application is pending for the works in question. However, when registration applicants make these seemingly fixable and easy mistakes, like using the wrong registration forms, the Office ought to consider a mechanism whereby the application isn’t refused but instead the applicant is allowed to simply refile using the correct form. Otherwise, these simple but very easily fixable registration mistakes could entirely jeopardize and upend a CCB case—which is even more costly when the case is further along in the CCB process. The same concerns apply also in the context where respondents have not opted-out of the proceeding and are filing counterclaims for works which they may need to provide registration information.
Though most registrations done through the Office’s electronic systems are processed at an average of 1.2 months, a good chunk of electronic claims (approximately 23%) require correspondence with the Office, which results in average pendency times of 3.3 months. In the timeline of the CCB, this means that a case may have already moved past the claim(s) compliance process, or is in the service of process stage, or may even be an active proceeding. It would be a sensible solution to ensure that the Office’s registration practices align well with CCB processes to ensure smoother interactions between these different facets of the Copyright Office.
A year in, and it is clear that demand for the CCB is not waning, and many copyright owners were eagerly waiting for a chance to have claims heard before this expert tribunal. With the launch of any new operations, there are always growing pains and learning curves for all parties involved. There are still areas of improvement for CCB operations to be smoother, but we applaud the CCB and Copyright Office staff for their tireless efforts in implementing regulations and educating and working with parties in the spirit of the CASE Act to make this small-claims tribunal a voluntary and streamlined process.
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