The "Judge Judy" of Copyright Lawsuits?

The Copyright "CASE Act" Would Create a Small-Claims Court Equivalent for Copyright Enforcement

By Leon D. Bass

Creative rights holders often learn the hard way how impractical it can be to enforce their copyrights against infringers.  Attorney's fees can often exceed the value of the copyright just to draft a lawsuit, let alone litigate it through trial.  Copyright cases can average over $200,000 or more than double that in some types of cases that continue to appeal.  Moreover, many rights holders fail to register their copyrights prior to an infringement, which limits their damages to the actual value of the copyright as opposed to statutory damages of up to $150,000 plus attorney's fees.  For many rights holders, even if the damages are high, the cost of attorneys is beyond their reach.  As a result, a majority of potential copyright claims likely never see the inside of the courtroom.  Many don't even justify the cost of an attorney's cease and desist letter. 

For rights holders, and even some defendants, the Copyright Alternative in Small-Claims Enforcement Bill brings hope.  The bill, if passed, would create a "court" at the U.S. Copyright Office that can be used as an alternative to filing a lawsuit in federal court.  The forum would utilize technology to streamline the process and dispose of the need for parties to appear at the Washington, D.C. Copyright Office in-person.  In addition, parties would be able to choose to pursue or defend claims "pro-se", meaning they do not need an attorney, but they may choose to have an attorney or law student assist them if they desire.

 

The system would be completely voluntary; therefore, a defendant would have thirty days to elect to opt-out of a proceeding, forcing the plaintiff to choose between pursuing the claim in the much more expensive federal court or bowing out of enforcement.  If a plaintiff does proceed to file claims in federal court, the potential statutory damages per copyright jump from $7500-$15,000 up to $150,000 plus attorney's fees.  Attorney's fees in CASE Act claims would generally not be available, except in rare circumstances and would be limited to $5000.  Like in federal court cases, a plaintiff in a CASE action would be able to elect to seek their actual damages and profits in lieu of limited statutory damages. 

 

Notably, if a party opts-out of a CASE Act proceeding, a federal court, when deciding to award damages and attorney's fees, would be permitted to consider the fact that a losing party that could have opted to proceed in the CASE forum elected not to.  Thus, a plaintiff or defendant that either could have filed a CASE proceeding, or a defendant that otherwise opted-out, would risk getting hit with a larger attorney's fee award than they otherwise may have expected.  Therefore, while the process is technically voluntary, there would be potential repercussions for failing to use it in addition to the generally higher costs of federal court litigation.

 

The CASE Act's "judges", to be known as "claims officers", would consist of up to three attorneys that have at least seven years of copyright law experience, with a requirement that the court is stacked with attorneys that have experience representing both copyright holders and defendants in copyright cases.  The claims officers would review the record in the proceeding and apply federal law as interpreted by judicial precedent to render a determination of law and facts, as well as an award of damages if applicable.

 

In addition, in cases where statutory damages would not be available in federal court (for example, if a copyright owner did not register the copyright prior to the infringement), the CASE Act would limit statutory damages to $7500 per copyright and $15,000 total per filing, rather than $15,000 per copyright and $30,000 per case.  Note that the CASE Act would create the ability for a copyright holder to obtain statutory damages, albeit limited, in cases where they would otherwise only be able to obtain actual damages in federal court.  In those instances, it appears the CASE Act would create the opportunity to obtain higher damages than in federal court when the actual damages are likely below $7500.

 

Note, however, that unlike a federal court, which can award attorney's fees when statutory damages are applicable, a CASE Act claim would not allow for attorney's fees awards except in cases of "bad faith," which are extremely limited to acts such as pursuit of a claim for harassing or improper purposes or without a basis in law or fact.  Finally, when determining the amount of statutory damages to be awarded, the claims officers may consider whether the infringer has agreed to cease or mitigate the infringing activity. 

 

If a losing party does not pay any amount ordered in a CASE Act matter, the ruling could be converted to a judgment in the District Court in the District of Columbia within a year of the ruling, and therefore may be enforced like any other court judgment.  In such a case, the District Court must award expenses and attorney's fees.  In addition, either party would be able challenge a CASE action's final determination in District Court by filing for review within ninety days of the ruling.  The district court would have the authority to vacate, modify or correct the determination; however, only in limited circumstances.  These would include a determination that there was fraud, corruption, misrepresentation or other misconduct, or if the claims board exceeded its authority.  It would also do so in cases of default if it finds that the default was excusable.  

 

The full text of the bill is available here.

 

Advantages to Plaintiffs:

  • Potentially significantly lower litigation costs.

  • Lower filing fees.

  • Attorney not required.

  • Ability to get limited statutory damages even if failure to timely register.

  • Faster and less complicated than federal court, thus even if an attorney is used, it would still likely be far less expensive than federal court.

  • · Potential free mediation.

  • Potential award of costs and attorney’s fees if forced to enforce by filing for court judgment.

  • If defendant opts-out can use that against them as factor in federal court when arguing for higher award.

 

Disadvantages to Plaintiffs:

  • Defendant can opt-out, causing plaintiff to lose filing fee and waste time filing a CASE claim first.

  • Limited statutory damages.

  • Attorney's fee award unlikely. 

  • Still would need to file in district court to enforce after default judgment if defendant's doesn't pay. 

  • Case can still be reviewed by district court, and thus may be appealable, which ultimately would add additional steps in the litigation process. 

  • If cases end up in district court for review or judgment, only the federal court in the District of Columbia can be used, which would likely be an inconvenient forum for most plaintiffs and their attorneys.

 

Advantages to Defendants (reasons not to opt-out):

  • Likely savings on litigation costs and attorney's fees.

  • Statutory damages are drastically limited and attorney's fees award unlikely.

 

Disadvantages to Defendants:

  • May be plaintiff's only practical remedy; thus failure to opt-out may allow a case to proceed that would be impractical in federal court. 

  • Threat of up to $7500 in statutory damages that may not have been available in federal court. 

  • Case moves quickly and is less complicated than federal court, making it more difficult to defend cases and establish leverage for settlement.

Celebrating
21 Years
In Practice  * 1998--2020

Leon D. Bass / Of Counsel*

Taft Stettinius & Hollister LLP

E:  Lbass@taftlaw.com

P:  614-431-2277

65 E. State St.  Ste. 1000

Columbus, OH 43215

  

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Kathy Cox

Legal Assistant to Leon Bass 

E:  kcox@taftlaw.com

P:  614.220.0228

*Leon Bass is licensed as an attorney to practice law in Ohio and the U.S. Virgin Islands

Brown, Blaique J.

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