Arguably one of the biggest changes to U.S. copyright law since the 1998 Digital Millennium Copyright Act (DMCA) was signed into law Dec. 27, 2020—The Copyright Alternative in Small-Claims Enforcement Act of 2020 (the CASE Act), setting up a new voluntary tribunal to hear copyright claims.
The new three-officer panel within the U.S. Copyright Office will hear claims for copyright infringement, declarations of non-infringement, and misrepresentations in DMCA takedown notices and counter-notices, plus certain related counterclaims. The tribunal is required to begin operations within a year.
This new forum’s creation is a potentially groundbreaking move, but it also has a loophole leaving its true impact uncertain: Participation is entirely voluntary. Within a prescribed time frame, respondents may opt out of the tribunal for any reason. Claimants and respondents alike will be able to decide whether to proceed in the tribunal or go the traditional course.
The CASE Act does provide incentives to both sides to use the new tribunal, but they come with tradeoffs.
Less Formal Forum for Claimants
For claimants, the tribunal may provide a dedicated, less formal forum to present infringement and certain related copyright claims. The Case Act states a party to a tribunal proceeding “may be, but is not required to be, represented by” an attorney or qualified law student. Thus, unlike in federal courts, a business can represent itself without counsel.
Additionally, there are no formal motions and generally no in-person appearances. Instead, the CASE Act allows limited (presumably less formal) requests relating solely to case management, discovery, and factual questions, and all proceedings are conducted through written submissions or remote appearances (with limited exceptions).
There are no formal evidentiary rules and no expert testimony absent good cause. All of the above unique features have the potential to create a forum that is easier and cheaper for private parties to navigate without counsel.
These benefits are not without cost: Claimants must limit demands to a maximum of $30,000 per proceeding. Moreover, they cannot join factually related, non-copyright claims (including those for breach of a related license agreement).
Additionally, the tribunal cannot consider willfulness or award attorneys’ fees and costs (except in cases of bad faith litigation). Statutory damages are capped at $15,000 per infringed work (compared to $30,000 per work absent willfulness and $150,000 per work with willfulness in federal courts)—though claimants may elect actual damages and/or profit disgorgement in lieu of statutory damages.
And the tribunal may only issue equitable relief pursuant to the agreement of the parties. Finally, the tribunal has no jury.
Pros and Cons for Respondents
Some believe that because respondents can opt out of the tribunal, they are incentivized to do so. By definition, all claims filed in the tribunal are so small that many litigants arguably would not bring them in federal court. Thus, respondents might well refuse to proceed in the tribunal with the hope that their refusal will end the case.
But it is also possible—particularly for self-represented individuals— that once claimants undertake the effort of filing a small claims case, even if the respondent opts out, the claimant may feel that they have sufficient investment that they choose to take the next step. That is, the claimant may file a federal lawsuit where they otherwise might not have chosen to litigate absent the potential to do so in the tribunal.
There may also be benefits for respondents to proceeding in the new tribunal. For example, the downsides for claimants described above regarding limitations and caps are all likely to benefit respondents.
Respondents, particularly businesses without counsel, may also benefit from being able to represent themselves. While the lack of procedural formality could eliminate a customary advantage of sophisticated litigants, the attendant efficiency could compensate, particularly for smaller claims or for respondents who routinely experience a high volume of relatively low-value claims.
Also, because discovery in the tribunal is limited, it would likely be cheaper and potentially less burdensome than federal court. And, unlike claimants, respondents may counterclaim for breach of sufficiently related agreements.
The tribunal’s decisions also have limited preclusive effect: They essentially only preclude re-litigation of the same claims between the same parties; determinations of copyright ownership are not preclusive; and all tribunal decisions are non-citable. Judicial review is also limited.
Finally, the tribunal has copyright expertise: At least two officers must have “substantial experience in the evaluation, litigation, or adjudication of copyright infringement claims” and the third must have “substantial familiarity with copyright law” and experience in “alternative dispute resolution[.]”
In short, the small claims court likely will have positives and negatives for both sides. Claimants who know at the outset their claims are small or who do not wish to incur the expense and complexity of federal court litigation may find the tribunal an attractive forum.
Respondents may find the tribunal offers a way to cap expenses and exposure in connection with small claims they believe may survive past the pleading stage. Or they may find it appealing because it offers a specialized forum with streamlined procedures and less risk of setting bad precedent.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
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Allison Buchner is a litigation and intellectual property partner in the Los Angeles office of Kirkland & Ellis LLP whose practice includes unfair competition, false advertising, trademark, copyright, trade secrets and patent matters. She also served as general counsel for Dollar Shave Club, where she was responsible for managing the company’s legal, regulatory and compliance functions.
Lauren Schweitzer is an intellectual property litigation partner in the Los Angeles office of Kirkland & Ellis LLP whose practice includes copyright, trademark, internet, and advertising litigation.
Maria Beltran is an intellectual property litigation associate in the Los Angeles office of Kirkland & Ellis LLP whose practice includes patent, copyright, trademark, and advertising litigation.