The Copyright Small Claims Court Provides Additional Solution for Enforcement
The Copyright Claims Board – A New Avenue for Enforcement
Businesses with any amount of creative content should protect their content under copyright law. But this means more than just identifying valuable content and registering the copyrights with the US Copyright Office. Businesses need to understand how to enforce their copyrights efficiently. Before 2022 there were only two options—filing a lawsuit for copyright infringement, or using the DMCA takedown procedures to have infringing content removed from online media platforms. Now, there is a third option that fits between the other two—the copyright small claims court—officially known as the Copyright Claims Board (“CCB”).
How the Copyright Claims Board Works
The CCB has a lot of potential as an alternate means of protecting a business’s copyrights over a traditional lawsuit, but the CCB is still too new to get a sense for how useful it will actually be. Even though it has been operational for over a year, it has yet to render a final determination, even on a default judgment. However, we should start getting a better feel for how the CCB handles these cases in the next year.
What is the CCB? The Copyright Alternative in Small-Claims Enforcement Act of 2020 (the CASE Act) created a “Copyright Claims Board” within the Copyright Office for administering proceedings through online and teleconferencing facilities without the requirement of in-person appearances by the parties. Although the CASE Act was singed into law in December of 2020, the new Copyright Claims Board did not start hearing cases until June of 2022.
The CCB is limited to awarding up to $15,000 in damages per work infringed up to a total of $30,000. These proceedings are voluntary in that a respondent can simply opt out of the procedure within 60 days of being served. If a respondent opts out, the case is dismissed without prejudice and the copyright claimant must either file a federal lawsuit or let the matter go. But if the respondent does not respond, the Board can enter a default judgment. The CCB also offers a more streamlined “smaller claims” track, for claimants seeing no more than $5,000.
Cases the Copyright Claims Board Handles and Procedural Issues
There are only three types of cases that the CCB hears: 1) copyright infringement claims; 2) declarations of non-infringement (where a party seeks a declaration that it is not infringing someone else’s copyright); and 3) claims for misrepresentation related to false statements made in a DMCA takedown notice or counter-notice.
In its first two years of operation, the CCB received over 500 claims. Of those claims, 350 have been dismissed for various reasons. Common reasons for dismissal are failure to serve the respondent within the required time, failure to pay filing fees, and instances where the respondent opted out of the procedure. A review of the claims filed within the first few months of operations shows that there have not yet been any final determinations, but the CCB has recently issued some proposed default determinations. Based on the language of these early notices, the first final determinations of default will likely issue in September.
Where Did the Idea for the CCB Come From?
The idea for a copyright claims board/small claims court had been floating around for over a decade. The congressional history of the copyright small claims court begins with the first hearing on the topic back in 2006. In 2011, the House Judiciary Committee formally requested that the Copyright Office study the concept and furnish specific recommendations. And in 2013, in response to this request, the Register of Copyrights and Director U.S. Copyright Office presented its findings and recommendations in a report titled “Copyright Small Claims.” An earlier version of this legislation had been proposed in 2017 but failed to get out of committee. What made this version of the Act different from previous proposals is that it had strong bipartisan support.
Copyright Claims Board Procedures
The procedure starts with the copyright owner filing of a claim with the Copyright Claims Board. The initial filing fee is only $40. The litigants—including businesses—can represent themselves or be represented by an attorney. In some circumstances a party may be represented by a law student.
One area of the procedure that differs dramatically from standard court procedures is that the claim is first reviewed by a Copyright Claims Attorney to ensure that the claim complies all applicable laws and regulations. If it does, the claimant has 90 days to serve the claim on the respondent. If the respondent opts out of the proceeding during that 60-day period, the proceeding will be dismissed without prejudice. If the respondent does not opt out the claimant will have to pay an additional $60 filing fee.
This procedure also has a built-in mediation option that lets the parties request a conference with a Copyright Claims Officer for the purpose of facilitating settlement discussions.
Once the CCB issues its final determination, the parties have 90 days to challenge the determination by the Register of Copyrights, or by filing an action in a Federal District Court, but the court will only have limited authority to vacate, modify, or correct a determination.
If a losing party fails to pay the damages or otherwise comply with the relief awarded by the Copyright Claims Board, the wining party will need to apply to a United States District Court for an order confirming the relief awarded and reducing it to a final judgment. This must be done within one year of the final determination. The Board will not award attorney’s fees as part of its relief, but if the District Court issues an order confirming the relief awarded by the Board, it is required to impose an award of the reasonable expenses required to secure the order, including attorneys’ fees.
Unique Aspects in Use of the CCB for Copyright Claims
Registration is not required to file a claim as long as the claimant has filed “a completed application, a deposit, and the required fee for registration of the copyright to the Copyright Office.” However, in the event that the claim is filed while the application is pending, the CCB cannot issue its final determination until the registration is issued.
Additionally, if the infringement occurred after the registration, or the claimant is not otherwise entitled to an award of statutory damages because the registration was not made within three months after the first publication of the work, the damages available are cut in half ($7500 per work infringed, and $15,000 per claim).
What Are the Benefits of the Copyright Claims Board Procedures?
The key benefits of brining a claim in front of the CCB rather than filing a more traditional copyright infringement claim in federal court are the speed in which they are resolved, the overall cost, and the fact that they are conducted remotely.
The key benefits of opting into this system if you are a respondent are the same low cost and convenience factors as well as a limit to the amount of damages that can be awarded against you. Additionally, it provides a structured path to settlement.
When is the Copyright Claims Board Not a Good Idea?
For many businesses, a cheap and easy shot at getting an enforceable default judgment might make the CCB look like a good first step to try before filing a traditional copyright infringement law suit. However, as we have seen so far, just obtaining a default judgment can take over a year. While filing a claim with the CCB does toll the statute of limitations, there are several points of delay and then the 60 day period in which the infringer can use up before opting out. There are situations where it could be over six months before you get notice that the accused infringer has opted out. Additionally, the damages are limited to $15,000 per infringed work, $30,000 per claim, and attorneys’ fees are generally not awarded. Therefore, this is truly only suited to small claims.
Other Useful Features of the CCB - (Gaming the System)
As mentioned above, filing a claim with the Copyright Claims Board tolls the statute of limitations. There are times when a party may not be ready to proceed in court, but is concerned about the three year statute of limitations. For instance, if the copyright is not yet registered the owner of the copyright cannot file suit in the district court. If the infringement of the unregistered copyright occurred nearly three years ago, and resulted in significant damages, waiting for the government to issue the registration could be a serious problem. But you can file in the CCB even if the registration has not yet issued. The CCB is a very cheap ($40) and quick way to put the brakes on the statute of limitations. This tolling can be extended by filing a defective complaint—it will be rejected after the review period and the claimant will have 30 days to correct it. This can go on for several rounds. Once the claim is approved, the claimant will have an additional 90 days to serve the respondent before the claim is dismissed without prejudice. This is more than enough time to obtain a registration from the copyright office.
Key Takeaways Regarding Copyright Small Claims Court
Although the procedures are simpler than a traditional copyright infringement lawsuit, practice in front of the Copyright Claims Board still requires knowledge of statutory law and the precedential case law. The voluntary nature of the proceeding adds a level of gamesmanship to its overall usefulness, but it will likely be effective as a weeding out tool for larger copyright holders with multiple small infringement problems. Here are some of the important takeaways:
Less expensive than traditional lawsuits with no need to appear in court
Voluntary with a built-in mediation path
Limited to $15,000 per work infringed and $30,000 per claim
Reasonable expenses and attorney’s fees are only available for collection efforts
Filing with the CCB tolls the statute of limitations
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This article has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company. © 2023 Klemchuk PLLC