Copyright Battleground Expands as New Small Claims Venue Debuts

The US Copyright Claims Board opening Thursday for low-dollar disputes has the potential to have a huge—and unpredictable—impact on the copyright landscape.

The range of possible outcomes is vast given the novelty of the litigation alternative designed to be cheap, streamlined, remote, and navigable without an attorney. Unknowns include how many and who will make use of the voluntary system, its capacity and efficiency, and whether it might advance a broader public understanding and appreciation of creator rights and fair use.

The CCB was conceived as a remedy for photographers, artists, and other creators seeking modest sums for whom the costs of federal lawsuits—$400 to start, and generally at least tens of thousands to finish—aren’t realistic. Filing at the CCB will cost $150, and damages are capped at $15,000 per work and $30,000 per case.

Copyright Office general counsel Suzy Wilson said the office is “feeling positive about everything” and “very excited” after a year and a half of preparation. She acknowledged the uncertainty regarding how many will use the tribunal. But she said the substantially lowered costs and stakes for both claimants and respondents, plus the speed and ability to file remotely, should prove widely appealing.

“There are categories of works and potential disputes that are not being served currently,” Wilson told Bloomberg Law in an interview. “But we think at the beginning there’s going to be a learning curve as people learn about us.”

Critics of the new system decry that parties who don’t respond to a small claim would unconstitutionally waive their right to a jury. Such failure—or an overzealous decision—exposes parties to largely un-appealable damages that could cripple individuals or small businesses despite the caps, they say.

Proponents counter that various safeguards will ensure clear notice of rights and deter abuse of the system.

Parties will have to ask themselves “what am I getting new from this procedure that I didn’t have before,” copyright law professor Michael Carroll of American University said. Despite lowered cost and risk, some may for example cling to the barrier and settlement-leverage that high litigation costs provide and opt out, he said.

“I can imagine fact patterns where the board makes sense to both parties, but it strikes me that it’s a relatively narrow path of cases,” Carroll said.

Anticipating Appeal

Copyright attorney Jacqueline C. Charlesworth of Charlesworth Law headed an initial 2013 report on the idea of a small claims court while general counsel at the Copyright Office. She also wrote the first draft of the eventual law creating the CCB, which calls for three claims officers and a small support staff.

“There’s no precedent for this in the federal system. It will be interesting to see how people will react to it,” Charlesworth said. “It’s a question of who’s going to come and how quickly.”

The board can hear claims for infringement, declaratory judgment of noninfringement, or bad faith Digital Millennium Copyright Act notices or counter-notices. Respondents can opt out, forcing the other party to sue or drop their case. Discovery, briefing, and damages are limited. The tribunal can’t address willfulness, nor award attorneys’ fees outside of a bad faith finding.

That will appeal to rightsholders with simple claims for relatively modest damages, Wilson and Charlesworth said. Photographers were a particular focus as the law was crafted.

“I get five to 10 emails a week asking when it’s opening, and that’s been going on for months now,” said Thomas Maddrey, general counsel for the American Society of Media Photographers.

One practical question will be whether a CCB manned by less than 10 people will be able to handle the nationwide caseload. Wilson said the officers, who are copyright experts, will be able to efficiently adjudicate cases given streamlined proceedings and their right to boot overly complex cases.

And if the three officers set by law prove insufficient, the Copyright Office would be “thrilled if we’re too busy and need to ask for more staff,” Wilson said, even if copyright owners may not rush to file immediately.

Charlesworth is also optimistic, and said “a number of my clients” have cases that would benefit from a system “so much less expensive and burdensome,” and that she knows she’s not alone.

“I’m hoping it will relieve a lot of pressure and frustration in the copyright system just because of how expensive it is to be in federal court,” she said.

‘Trolls,’ Safeguards

The CCB will not just help exploited creators, but also a class of litigants whose business models center on coercive threats for minor and non-infringement, said Mitch Stoltz, competition director for the Electronic Frontier Foundation.

CCB proponents say there’s no reason for so-called “trolls” to abandon the greater potential awards and leverage of federal court. But Stoltz said the CCB will be cheaper, faster, and easier for them as much as anyone, possibly yielding four-figure settlements from pro se respondents with little effort, he said.

Stoltz also said while administrative, non-judicial bodies handle disputes between government and private parties, it’s unprecedented and likely unconstitutional for one to handle disputes between two parties, especially without express consent of a respondent. While acknowledging the broader problem of an inaccessible federal court system, he said the CCB is a fundamentally flawed answer that risks trampling other rights.

“We do not want a world where copyright enforcement is ubiquitous and automatic,” Stoltz said. “Court enforcement of copyright should be reserved for things with significant value. Otherwise we’re seriously into a world of limitations on freedom of expression.”

Wilson pointed to “a lot of safeguards” to ensure that parties are properly notified of allegations as well as their right to opt out to ensure they aren’t prematurely defaulted or dismissed. A step-by-step CCB user guide and copyright education materials will also help participants understand the contours of copyright law and board proceedings. Other guardrails include limiting parties to filing no more than ten claims in a year to prevent a small number from dominating or abusing the tribunal.

The vast copyright experience of CCB officers on both sides of litigation should ease concerns of outsized awards, she said. But Stoltz countered that the Copyright Office “historically has a strong pro-rightsholder bias, which we expect to be reflected in the proceedings of this tribunal.” He also noted the unpredictability of statutory damages even in courts, and that the CCB allowance of statutory damages for unregistered works means the small claims court offers some litigants a greater potential award.

‘Humanize’ Copyright

Wilson and assistant general counsel John Riley said providing an accessible venue for addressing copyright disputes could ultimately broaden public understanding and respect for copyright and its importance. For example, the office has worked to create accessible materials explaining often-misunderstood concepts like fair use, and all CCB cases will be available online, they said.

“It might build the culture and respect for people’s rights,” Riley said. “We’ll see what happens, not just practically, but socially.”

Riley noted that the UK’s small claims court introduced in 2012 saw an initial learning curve followed by increased use that eventually led to more settlement discussions.

Maddrey said the tribunal could help “humanize” copyright claims, causing them to become less associated with multi-million dollar cases in the news, and more with individual creators simply trying “to continue in their careers.”

“This is one of the best developments for the individual creator that has come along in quite a long time,” Maddrey said. “I’m looking forward to seeing how it all works.”