What a Reasonable Copyright Small Claims Court Would Look Like
What a Reasonable Copyright Small Claims Court Would Look Like
What a Reasonable Copyright Small Claims Court Would Look Like

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    Creators have an uphill battle in enforcing their rights online. A small claims court to allow creators to exercise their rights without full federal litigation is a good goal, and one that should be pursued. The Copyright Alternative in Small-Claims Enforcement Act of 2019, also known as the CASE Act, presents one potential, but flawed framework for such a court. It is not, however, the only potential framework. A robust, well-designed system would be designed to balance the interests of legitimate claimants and defendants against those of bad actors seeking to turn the forum into a quick cash grab. Below, we look at the key features of such a system, and why they’re important.

    Opt-in participation.

    A truly voluntary system requires opt-in from all participants.

    The practical difference between opt-out and opt-in is what happens to those individuals who fail to respond to the notice; under opt-out, they are subject to the CASE Act’s tribunal (the Copyright Claims Board), while under opt-in, they are not. It’s those people that we should worry about. First, if the policy goal is to subject as many people as possible to the CCB’s jurisdiction, then the correct route is to make a court under Article III of the Constitution — namely, to make it a regular federal court. An Article III court doesn’t require consent to exercise jurisdiction. This would avoid the sticky situation of trying to split the difference as a quasi-voluntary arbitration system. Second, opt-out catches people who may have failed to respond for any number of reasons that don’t themselves justify $30,000 in potential liability.

    Most importantly, the CASE Act specifies that, by failing to opt out, the respondent waives their right to a jury trial in federal court. That’s both practically and Constitutionally suspect. An opt-in system would remedy that, allowing for full and meaningful consent from all parties.

    Damages of up to $5,000 per infringement, $10,000 per case, with limits on how frequently those caps are adjusted. Streamlined process available for micro-claims under $1,000.

    Most small claims courts cap out at $9,000 total per case. A $10k cap would be above the national average and would be high enough to deal with the actual damages (such as lost licensing fees) involved in most small claims.

    For reasons that no one can quite articulate, the CASE Act allows for damages of up to $15,000 per infringement, and $30,000 per case. That’s more than half the take-home pay for the average American household, and the entire pre-tax income of more than a quarter of Americans. Importantly, there doesn’t appear to be any actual data backing up these numbers. The only source seems to be a 2013 Copyright Office study, which plucked $15,000 as the average among industry proposals (which are themselves almost entirely speculative).

    Meanwhile, CASE treats anything under $5,000 as a “micro-claim” that is exempt from the bare minimum due process requirements outlined in the bill. There’s no articulated reason for this separate threshold, but to the extent that any claims are truly “micro,” that threshold should be much lower — under $1,000.

    To the extent that lawmakers want the damages to be adjustable going forward, they can do that responsibly in a variety of different ways. One method would be to subject the entire Board to periodic Congressional reauthorization, which would allow legislators to determine the appropriate damage threshold. Another would be to use the model currently in the CASE Act (allow the Register to adjust the damages through notice-and-rulemaking) and set a schedule and maximum rate increase for adjustments. 

    Right now, CASE allows the Register of Copyrights the ability to unilaterally increase the claims threshold at any time, to any amount, via public rulemaking. Damage caps of $30k in 2019 could, without any Congressional input, double by 2021.

    Judgments and settlements both require approval conditioned on finalized registration.

    Ideally, a small claims structure would comply with the Supreme Court’s ruling in Fourth Estate, which requires that a work be fully registered before a rightsholder can bring an action in federal court. That’s a tough ask, for a number of reasons; rightsholders have pointed out that long wait times at the Copyright Office can create prejudicial delays. While this is true, the solution to that is to fund and modernize the Copyright Office (a proposal that everyone — from small artists to major industries to consumer groups to tech companies — can support), not to undercut the Supreme Court in a small claims bill that will (presumably) outlast the problems at the Office. 

    However, putting that aside, there are ways that a small claims system can provide relief while respecting Supreme Court precedent. The CASE Act requires that final judgments issue only after the registration has been completed. That’s a good start, but it misses a key element: Parties can settle at any time, and that settlement pressure is going to be the primary goal of a bad faith actor. Couple this with the fact that registration for certain kinds of works (such as compilations) is notoriously finicky and hard to obtain, and you have a very easy route for a bad actor to steamroll a defendant to settle before the Copyright Office rejects their registration as bogus.

    The least intrusive fix for this problem is to require that the CCB approve proposed settlements after the registration has been issued — or, at an even barer minimum, approve them conditioned on the subsequent approval of the registration. (And, in the meantime, join forces with folks across the copyright debate spectrum to push for increased funding and modernization of the Office.)

    Provide a broad right of appeal to federal courts.

    Any small claims court whose mandate includes resolving circuit splits on caselaw (a task otherwise reserved for the Supreme Court of the United States) and assessing five-figure damages must have a meaningful right of appeal to the federal court system. Simply put, the stakes for getting it wrong — in either direction — are too high to leave the system without meaningful accountability.

    In short, it is entirely possible to design a system which gives artists the tools to execute their legal rights, without inviting abuse or creating Constitutional concerns. We urge Congress to revisit the CASE Act with a critical eye, and make it better — and more useful — for everyone involved.


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