The Copyright Alternative in Small-Claims Enforcement Act of 2020 (CASE Act)

As we reported earlier, as part of the coronavirus relief and government spending bill passed by Congress in the final days of 2020, a quasi-judicial small claims court was established within the Copyright Office to hear disputes over infringement cases valued up to $30,000. Although the Copyright Alternative in Small-Claims Enforcement Act of 2020 (the “CASE Act”) is still in the early stages of implementation, it is worth exploring the opportunities presented via this alternative to costly federal court litigation to protect copyright interests. The law was intended to eliminate the financial obstacles that have kept many copyright owners from enforcing their rights.

Key Provisions

The CASE Act requires the Copyright Claims Board (CCB) to be set up no later than December 27, 2021, with a possible six-month extension.

The CCB will have authority to hear copyright infringement claims, declarations of non-infringement and bad faith DMCA takedown and counter notices. There will be three copyright claims officers (CCOs), who will act as judges, and two claims attorneys to help with administration. In July the Copyright Office announced the appointment of the CCOs - David Carson, former top attorney at the Copyright Office and most recently head of copyright policy at the USPTO's Office of Policy and International Affairs; Monica McCabe, head of the intellectual property department at Phillips Nizer; and Brad Newberg, head of copyright and trademark litigation at McGuireWoods.

As a precondition to bringing a claim with the CCB, claimants need to have a registration from the Copyright Office for the work(s) at issue or (2) have filed an application with the Copyright Office to register the work(s) at issue either before or simultaneously with filing a claim with the CCB.  On August 17, 2021 the Copyright Office announced the adoption of a rule providing an expedited copyright registration option for unregistered work. Claimants or counterclaimants will now be able to obtain expedited review of their applications for a $50 fee. 

The CCB can award actual damages and profits. In addition, works that were timely registered will be eligible for statutory damages of up to $15,000 per work infringed, with a cap of $30,000 in any one proceeding. Works that were not timely registered will be eligible for up to $7,500 per work infringed with a cap of $15,000 per claim (a key difference from current law under which unregistered works are only eligible for actual damages). Except in the case of bad-faith conduct, parties bear their own attorneys’ fees and costs.

The proceedings are intended to be user-friendly. They will be remote with no formal motion practice and limited discovery and evidence. Parties can, but are not required to be, represented by an attorney or by a law student working pro bono. As under existing copyright infringement proceedings, a three-year statute of limitations applies.

If it appears that there is conflicting judicial precedent on a substantive issue of copyright law, the CCB is to follow the precedent of the federal jurisdiction in which the claim could have been brought if filed in a district court, or, if the action could have been brought in more than one jurisdiction, the law of the jurisdiction with the most significant ties to the parties and content at issue.

A significant limitation is that participation in the process is voluntary. If the CCB accepts a case, a defendant receives a notice and has 60 days to opt out of the proceeding. If the defendant opts out, the claimant’s only remaining recourse will be to file a claim in federal court.

If the defendant does not opt out, the decision of the tribunal is final, subject to a right to request reconsideration by the CCB or review by the Register of Copyrights  for abuse of discretion. The decision is not appealable to federal court except in cases of fraud, corruption, misrepresentation or misconduct or other very limited circumstances.

The Register of Copyrights is required to report to Congress in three years on the experience of the CCB, including, inter alia, its effectiveness in resolving claims and whether adjustments are needed to the authority of the CCB. Interestingly, the Register is also directed to report on potential mechanisms to assist copyright owners with small claims in ascertaining the identity and location of unknown online infringers.

Open Questions and Concerns

There have been questions raised as to the constitutionality of the CASE Act; for example, whether the method for selecting CCOs violates the appointments clause of the Constitution which requires “principal officers” to be appointed by the President and confirmed by the Senate. In the recent case of United States v. Arthrex, the Supreme Court determined that the appointment process of the Patent Trial and Appeal Board (“PTAB”)’s administrative patent judges (“APJs”) was unconstitutional but interpreted the Patent Act to give the PTO Director (a presidentially appointed official) the power and discretion to review and overturn final decisions of the APJs by rehearing. The CASE Act allows the Librarian of Congress to sanction or remove CCOs. Whether this is sufficient to survive a constitutional challenge will need to wait until there is an aggrieved party with standing to raise the issues.

In addition to the legal questions, there is concern as to whether the new bureaucracy will be unwieldy for copyright owners to navigate. And the extent to which the opt-out procedure will force copyright owners to choose between federal court litigation and foregoing their claims remains to be seen.

Further, some predict that the new scheme will make it easier for copyright trolls to bring abusive cases. However, several safeguards are designed to protect against this. The CCB can decline to take a case, and the CCOs can award attorneys fees for bad faith claims. Moreover, the CCB can cap the number of claims that one party can bring in a year to prevent serial abuse. Lutzker & Lutzker will continue to follow the implementation of the CASE Act. Even given the statutory limitations and the open questions, the CASE Act has the potential to give copyright owners a feasible route to bringing infringement claims and recovering compensation for the infringements.