“Create! And protect your creations!” We reiterate this to our clients here at the firm nearly every day. These critical steps are necessary, but not, in and of themselves, sufficient. Truth be told, even after both these critical steps are taken, it is often quite difficult for our small business clients to enforce their rights when they are violated. The reason? Cost!
For example, the price tag for litigating copyright infringement claims in federal court often runs in the neighborhood of $10,000 per month for discovery and pre-trial preparation. According to a recent American Intellectual Property Association survey, it costs on average approximately $397,000 to enforce a federal copyright infringement claim through trial, even if the claim is valued at less than $1 Million.
Thankfully, relief may be on the way. We mentioned this change to the Copyright Law in our last IP Law Update and decided to provide further helpful information here. At the end of 2020, the Copyright Alternative in Small-Claims Enforcement Act of 2019 (the “CASE Act”) was signed into law. Under the CASE Act, a Copyright Office Board will become effective in December 2021, to act as an alternative forum in which parties may voluntarily seek to resolve certain copyright claims where the damages at issue are $30,000 or less.
While all the procedures are not currently known, a general framework has been provided for the Board’s proceedings. If a claim is filed with the Board, the respondent will have 60 days after service of notice to opt-out of the Board proceeding in writing. If a respondent opts-out, then the case will be dismissed “without prejudice” (meaning the claimant may refile the case in federal court). However, if the respondent does not opt-out, then the respondent will be legally bound by the Board’s determination of the claim.
Whereas a claimant must have a federal registration to file suit in federal court, that requirement has been lifted in Board proceedings. Notwithstanding, for the case to proceed, the claimant will still have to apply for registration. The Board’s determination of the claim will be held up until a registration certificate issues.
Similar to proceedings before the United States Patent and Trademark Office’s Trademark Trial and Appeal Board, the Copyright Board’s proceedings will take place “by means of written submissions, hearings, and conferences carried out through internet-based applications” and “without the requirement of in-person appearances by parties or others.” This should go a long way toward reducing costs. Further, discovery will be limited to written requests, i.e., interrogatories, requests for admissions, and requests for production of documents. Depositions will not be permitted. This will also cut down on costs.
Upon making factual findings, the Board may award either actual damages and the defendant’s profits, or statutory damages, up to the $30,000 limit. The amount of the statutory damages award will be reduced if the copyrighted work was not timely registered by the claimant pursuant to 17 U.S.C. §412. (Statutory damages are barred in federal court if the work is not timely registered. Timely registration is, therefore, nearly always a good idea.) Afterwards, a party may request reconsideration of the Board’s determination within 30 days on the basis of clear error of law or fact, or technical mistake. If that request is denied, the requesting party may seek review by the Copyright Register for an additional fee. If the Register finds an abuse of discretion, she may remand the claim to the Board for further proceedings.
Under the statute, the losing party may only challenge the determination in federal court on the basis of fraud, corruption, misrepresentation, or excusable neglect. If the losing party does not comply with the Board’s determination, the prevailing party may seek an order and judgment in federal court to confirm the Board’s determination.
This new procedure will likely result in many more copyright owners enforcing their legal rights. Accordingly, both content creators and content users may wish to consult experienced intellectual property counsel regarding how these changes in the Copyright Law may impact them and their businesses.
©2021 Albert F. Davis, Esq.
Disclaimer:
This law update is intended for general information purposes only. One should not consider the update legal advice or legal opinions relating to any specific facts or circumstances. An attorney-client relationship is not created by reading this update. Please feel free to contact A. F. DAVIS LAW for further information.
