The Implications of the Copyright Small Claims Court

With a new decade underway, copyright holders are one step closer to having a new avenue to protect their work.  On October 22, 2019 the House of Representatives passed the Copyright Alternative in Small-Claims Enforcement Act H.R. 2426 (“CASE Act”) with an overwhelming 410-6 vote. 

The CASE Act will create a Copyright Claims Board (“Board”), which will be a body within the United State Copyright Office.  This Board will serve as a voluntary alternative to copyright holders bringing a case in court.  If both parties voluntarily agree to have the dispute heard by the Board, they will forego their right to be heard in court, including their right to a jury trial.  However, if the plaintiff unilaterally chooses to have the proceeding heard by the Board, the defendant has a simple opt-out procedure.

The Board can hear copyright infringement claims, claims arising under section 512(f) for misrepresentation, as well as certain counterclaims and defenses pertaining to the subject matter of the claim brought by the original claimant. There are certain claims that the Board cannot oversee, such as any claim that has been finally adjudicated or is previously pending before a court of competent jurisdiction.  In addition, the Board cannot hear a claim or counterclaim asserted against a person or entity residing outside of the United States.  The Board may issue monetary awards for actual or statutory damages, but the award is capped at $30,000 total, with statutory damages to not exceed $15,000 for each infringed work.  In addition, unless there is a case of bad faith misconduct, each party is responsible for their own attorneys’ fees and costs.

Pursuant to the CASE Act, the Board’s final determination precludes re-litigating in front of the Board or in court, except in limited circumstances.  The three circumstances are if: 1) the decision was a result of fraud, corruption, or other misconduct; 2) the board exceeded its authority or failed to render a final determination; or 3) in a default ruling or failure to prosecute, the default or failure was excusable. Any party looking to vacate, modify or correct the Board’s final determination has 90 days from when the determination is issued or when the Register of Copyrights completes any process of reconsideration or review of the determination, whichever is later, to challenge the Board’s determination in Federal District Court.

A proponent of the CASE Act, Rep. Hakeem Jeffries (D-N.Y.), stated that the Act “will enable creators to enforce copyright protected content in a fair, timely and affordable manner,” there are looming concerns.  One of the biggest concerns is that CASE Act is voluntary and a defendant can simply opt-out via an affirmative writing.  This leaves the copyright holder in the same position they were in without CASE Act, to decide whether the claim is worth taking the defendant to court. Thus, if the copyright holder is forced out of the system created by the CASE Act and back into court, the underlying purpose of the Act, to promote fair, timely, and affordable protection of copyright protected content, will be easily defeated.

While the premise behind the CASE Act gives hope to more affordable and efficient means of enforcement under the copyright law, the actual outcomes and those implications remain unknown.  If this CASE Act passes, and is signed by the President, it will be interesting to see whether it can be effectively implemented and how it may impact the current framework of copyright disputes.

Posted in: Copyrights



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