By Sarah Nagae
The Copyright Office (the “Office”) recently released a report on the challenges of resolving small copyright claims in the current U.S. legal system. The report was created at the request of Representative Lamar Smith, Chairman of the U.S. House Judiciary Committee, and included the Office’s recommendations for changes to the system in order to improve the adjudication of such claims. Both the Office and Rep. Smith stressed that “small copyright claims” are anything but small to copyright owners, many of whom are writers and artists and rely on the protections afforded by copyright law to provide for themselves and their families.
The problem is that copyright claims must be litigated in federal court and federal litigation is prohibitively expensive and time-consuming. It can take years and up to hundreds of thousands of dollars litigate a copyright infringement claim, regardless of the monetary value of the claim. As yet, there is no simplified or expedited process for adjudicating relatively small dollar claims. In the words of the Graphic Artists Guild, that means that “[a]s a practical matter, except for large corporate copyright owners, our current copyright laws are virtually unenforceable when it comes to the infringement of visual works.”1
The report indicates that support for a copyright small claims process is widespread among creators and publishers alike. Unfortunately, constitutional constraints (specifically Article III and the Fifth and Seventh Amendments) limit Congress’s ability to design an ideal alternative process for such claims. The report contains a thorough analysis of the constitutional issues and the Office makes its recommendations with those limitations in mind. The following is a summary of the its recommendations:
– Congress should create a tribunal within the Copyright Office to adjudicate small copyright infringement cases valued at no more than $30,000 in damages. The tribunal would be a voluntary alternative to federal court, which means that alleged infringers would not be compelled to participate in the process. Copyright owners would be required to have registered their works or filed an application before bringing an action. Both actual and statutory damages would be recoverable up to the $30,000 cap and statutory damages would be limited to $15,000 per registered work and $7,500 per unregistered work. Those amounts are half of what a claimant could receive in federal court for non-willful infringement.
– The tribunal would be composed of three adjudicators. Two of them would have significant experience litigating copyright cases and one would have a background in alternative dispute resolution (ADR). The proceedings would consist of written submissions by the parties and hearings conducted through web and telephone conferencing.
– The Office recommended that Congress consider two mechanisms for initiating proceedings: opt-out and opt-in. The opt-out option would require formal service of process and give the responding party a period of time to opt-out of the proceeding. If the party ignores the complaint, then it will have consented to the jurisdiction of the tribunal. The opt-in option would require an affirmative written response from the respondent that it agrees to participate. Under both mechanisms, respondents would be allowed to assert all relevant defenses, including fair use, and limited counterclaims, as well as seek declarations of non-infringement.
– The proceedings would allow for limited discovery (no depositions) but no formal motions practice. The tribunal would be allowed to consider a respondent’s agreement to stop infringement activity and it could dismiss without prejudice any claim that it did not believe could be fairly adjudicated through the small claims process.
– The tribunal’s decisions would be binding on the parties only and would have no precedential effect. A party could appeal a decision to federal court for error, fraud, or misconduct. Similar to arbitration decisions, final determinations of the tribunal could be filed in federal court to ensure their enforceability.
From a copyright owner’s standpoint, a mandatory small claims process would be preferable to a voluntary one; however, such an option is unrealistic under current Article III jurisprudence. The damages cap and reduced cost would incent an infringer to participate in the proposed voluntary system only if it believed that the claimant could bring and potentially win a federal court action. However, a small claims complaint may prompt an unsophisticated infringer to cease infringing to avoid any legal action at all. At any rate, the report is a step in the right direction towards the creation of a copyright small claims process. As Rep. Smith stated in his October 11, 2011 letter to the Office, “copyright owners make an immeasurable contribution to the strength of our nation” and our legal system needs to provide them with the ability to enforce their rights even when their claims for damages are relatively small.
1 Graphic Artists Guild, Comments Submitted in Response to U.S. Copyright Office’s Oct. 27, 2011 Notice of Inquiry (Jan. 16, 2012)