**January 2017 Update: This bill was introduced during the 114th Congress (2015-2017) but was never passed.**
**April 2018 Update: This bill has been re-introduced during the 115th Congress as H.R. 3945 – CASE Act of 2017**
Creative business owners know that it’s only a matter of time until their work is copied.
- Your photograph gets posted on a free stock site
- Your illustration ends up on Zazzle for dozens of print-on-demand products
- Your hand-lettered quote ends up on Tumblr and then gets pinned thousands of time
And when it happens, creatives get told that they should be flattered because it signals that they’ve “made it.” But it’s not flattery or a signal that you’ve made it. It only shows that you’ve been lucky enough to come across a person or business that places short-term profits, or a lack of respect for others, as its highest priority.
Part of what’s fostered the culture of copying is the barrier to enforcing copyrights.
Creatives know that in the typical copycat scenario, it costs more in legal fees and costs to pursue the copycat than they will get in return.
So your might send a cease and desist letter. But chances are it will get ignored. Leaving your remaining option—filing a lawsuit in federal court, which ultimately comes with a six-figure price tag.
Because of this, the current copyright laws are virtually unenforceable for creative business owners. This means that most creative business owners do nothing, or at best take to social media to try to shame the copycat into stopping.
Starting in 2011, the U.S. Copyright Office investigated the challenges and barriers creatives faced in enforcing their copyrights. In 2013, they issued a report proposing legislation to solve this roadblock. Since this report came out, various trade and non-profit organizations have lobbied Congress to take action. Together these efforts culminated in H.R. 5757, the Copyright Alternative in Small-Claims Enforcement Act of 2016 (or CASE Act of 2016).
In the rest of this super meaty blog post, you’ll find:
- an explanation of the “small claims court” that H.R. 5757 creates
- the pros and cons of the bill
- how you can take action if you support the bill (with a free letter template!)
H.R. 5757 – CASE Act of 2016
The big picture goal of H.R. 5757 is to provide a voluntary, fair, cost-effective, and streamlined setting to resolve copyright infringement claims valued less than $30,000.
Copyright Claims Board
Right now, the only option for copyright cases is being heard in federal court. H.R. 5757 creates a second option—an administrative panel to review cases. This panel is called the Copyright Claims Board.
The panel will be appointed by the Librarian of Congress and overseen by the U.S. Copyright Office. This three-member panel will be based in Washington D.C. However, participants will not need to travel to Washington, D.C. to pursue their claims. And that’s because all proceedings will be done in writing, over the telephone, or via Internet conferencing. To resolve a claim, the panel must reach a majority decision and deliver it in writing. These decisions will be publicly available, but cannot be relied on for future cases since the panel will only be making fact-specific decisions, not setting legal precedent.
Participation in the process created by H.R. 5757 is voluntary. However, rather than opting in, participants are required to opt-out. If they wish to opt-out, they have 30 days from notification of the claim to submit their decision. This must be done in writing to the Copyright Claims Board. If a party opts out, the claim is dismissed, and the only option will be a lawsuit in federal court.
Granted, this is not ideal because if a party opts out, creatives are in the same situation they are now: unable to afford filing a federal court lawsuit and effectively having no recourse against the copycat. However, there are sound constitutional law reasons for the requirement that participation be voluntary. (This is going to get into some nitty gritty constitutional law, so please bear with me.)
Under the Seventh Amendment of the U.S. Constitution, those suing in civil court for more than $20 have the right to a jury trial. So a decision by an administrative panel, not a jury, circumvents this Constitutional right. However, courts have also ruled that citizens can voluntarily waive this right. Thus a voluntary system where an administrative panel makes decisions, preserves citizens Seventh Amendment rights.
You might remember from civics class that one of the key components of the Constitution is checks and balances. The founding fathers tried to prevent any branch of government from having too much control. They did this by restricting what each branch could do and ways for branches to keep each other in check. Article III of the Constitution gives the power to administer justice to the Judicial Branch (AKA the federal courts). The U.S. Copyright Office, where the Copyright Claims Board will be housed, is part of the Executive Branch. Its authority is granted in Article II.
When authority is given to those outside the Judicial Branch to make “judicial decisions,” it must be done carefully because it cannot violate the separation of powers. If you want the nitty gritty details, more than twelve pages of the 2003 Copyright Office Report delve into this issue. The short version is that this subject is full of murky and at times conflicting court cases. Ultimately, the Copyright Office recommended that to avoid violating the separation of powers:
- participation must be voluntary
- the majority of cases decided could never practically be litigated in federal court
- decision makers could not create legal precedent, only apply existing legal decisions to the case at hand
- the types of cases decided must be limited
So while not ideal, mandatory participation would never hold up in court because it violates the Constitution. And as such, a voluntary system is the only option.
For several reasons, the Copyright Claims Board is limited in the types of cases it can take.
Under H.R. 5757, The Copyright Claims Board will allow parties to file cases raising the following issues:
- copyright infringement
- request for a non-infringement decision
- misrepresentation in submitting DMCA takedown notice or counter-notice
To defend and show that there is no infringement, a party will be able to raise the following issues:
- the party filing the original claim is not the copyright owner
- there is a contract between the parties covering this use
- fair use
It’s also important to note that claims will not be accepted for any of the following:
- claims related to cases that have already been decided in federal court or are currently being litigated in federal court
- claims against either the federal or state government
- claims against a person or business residing outside of the U.S.
- claims related to the removal of copyright management information governed by Section 1202 of the Copyright Act
I am disappointed that the removal of copyright management information is not included in the list of claims, but the rest are not surprising.
The one that might disappoint you, as a creative, is the fact that the Copyright Claims Board will have no authority over overseas companies. So you won’t be able to make a claim against those creating copies of your work overseas and selling them to U.S. importers. (But you might be able to bring a claim against the importer.)
Finally, to have a claim reviewed by the Copyright Claims Board, it must be filed within three years. This deadline matches the existing deadline to file a lawsuit in federal court.
U.S. Copyright Office copyright registration
A registration with the U.S. Copyright Office is required to file in federal court. Under H.R. 5757, this will not change.
An application for registration, along with the filing fee, and the deposit of the material to the U.S. Copyright Office is required to file a claim with the Copyright Claims Board.
However, a registration certificate is not required. But if it hasn’t been issued, the Copyright Claims Board will not make a final decision until it is. (The case will be put on hold pending a decision by the Copyright Office.)
There is one important difference between statutory damages for Copyright Claims Board claims. Currently, to get statutory damages, registration must be filed either:
- before the infringement occurred or
- within three months of first publication
These are what I like to call the “two magic windows”. This will change for claims brought before the Copyright Claims Board.
All claims before the Copyright Claims Board can opt for statutory damages. But the statutory damages cap varies depending on the timing of the registration application.
If the copyright registration application was filed in the two magic windows, the Copyright Claims Board can award up to $15,000 per infringed work and up to a total of $30,000 per claim. This means that for works registered in the two magic windows, you could get no more than:
- $15,000 for two infringed works
- $10,000 for three infringed works
- $7,500 for four infringed works
- $6,000 for five infringed works
If the copyright registration application is not filed within the magic windows, the Copyright Claims Board can still award statutory damages. These damages, however, are capped at $7,500 per work, with a maximum of $15,000 for any given claim.
There is the option to elect actual damages and profits for claims before the Copyright Claims Board. However, these damages are also capped at $30,000.
It’s true that many creative business owners fail to register their copyrights, so this will be a welcome addition for many. But I have mixed feelings about awarding statutory damages for unregistered works (which I discuss in detail in the pros/cons section).
The claims process
So H.R. 5757 passes and is signed into law. What would the process look like?
First, you can either hire an attorney or complete the process yourself (the legal term for this is pro se). However, as mentioned above, if you hire an attorney, you’ll have to pay them out of your pocket.
Once you decide to file a claim, H.R. 5757 lays out the following timeline:
(To make it easier, the person claiming her work was used without permission is the “Artist.” And the person the Artist claims copied her work the “Copycat.”)
- Artist submits claim along with filing fee to the Copyright Claims Board
- the claim is reviewed by Copyright Claims Attorney
- if the claim is denied, Artist has 30 days to make changes (this process can be repeated twice without an additional filing fee)
- if the claim is approved, within 90 days Artist must notify Copycat about Artist’s claim
- within 30 days of notice, if Copycat wants to opt out, Copycat must notify the Copyright Claims Board in writing
- if Copycat opts out, the claim is dismissed
- if Copycat does not opt out, the claim is considered active
- once a claim is active, Copycat has the option of filing a counterclaim
- if counterclaim is submitted, it is reviewed by Copyright Claims Attorney
- if counterclaim is denied, Copycat has 30-days to make changes (this process can be repeated twice)
- if counterclaim is approved, it is considered part of the overall proceeding
Once the claims and any counterclaims are filed, then the Copyright Claims Board can meet with the parties. These meetings might discuss the schedule, how discovery will proceed, or other transactional issues. (Discovery is the process where both sides produce relevant materials.)
Unlike federal court, H.R. 5757 does not allow for motions or extensive discovery. All that can be requested are relevant documents and written statements by the parties and other non-experts. There are a few exceptions, but this is the general rule. And while hearings are allowed, they are not required to make a determination.
After discovery and any hearings, the Copyright Claims Board will issue a written decision. This decision must be reached by a majority of the panel and explain the decision reasoning.
As discussed above, the total awarded in any given claim cannot exceed $30,000. And attorney’s fees and costs can only be granted in very limited circumstances. They will only be awarded when the claim was brought in bad faith. So creative business owners will need to represent themselves or pay for their attorney.
H.R. 5757 also incorporates a review of decisions. Options to request review include petitioning:
- the Copyright Claims Board
- the Register of Copyrights
- in limited circumstances, the federal court in Washington, D.C.
Finally, for a year, the party awarded money can appear in the Washington, D.C. federal court to confirm the award.
Pros and Cons of H.R. 5757
Voluntary nature cuts both ways
On first blush, it may appear that the voluntary nature of the Copyright Claims Board is a downside. But it hurts content creators of all size equally.
One of the cons that have been raised is that it allows those with aggressive tactics a way to elevate the stakes. For example, Getty regularly sends out thousands of letters to those using images in their collection. I not so lovingly call this the “whack a mole” approach. They send out thousands hoping to scare a few into turning over money.
Right now, if a letter from Getty is ignored, they have no recourse. And rarely will their contingency-fee attorneys up the stakes by filing a lawsuit in federal court. So those who don’t respond have no consequences. And under H.R. 5757, Getty can pay to file a claim, but opting out is still an option, thus leaving Getty in no better position than they are currently.
Only time will tell how many people opt out, but from my experience at California Lawyers for the Arts, I’m hopeful. California Lawyers for the Arts runs a voluntary dispute resolution service. Last year, more than 13,000 creative business owners and organizations participated in their services and 479 cases were resolved. This may not translate, but I continue to have faith that most people are good. And most people want to resolve issues, not have them hanging over their head.
Costs of filing with the Copyright Claims Board
One big benefit is that it will be affordable for creative business owners to file a claim. The minimum cost will be $100 and the maximum cannot be more than the cost of filing in federal court, currently $400. Additionally, you can opt to hire an attorney or you can represent yourself. If you choose to represent yourself, the law states that Copyright Claims Attorneys must provide help about the procedures and requirements of filing a claim.
California prevents attorneys from representing those in small claims court. And the small claims court law has a similar requirement to assist the public. As a result, there is an extensive online handbook to support those filing claims. Additionally, there are advisors in every county that help individuals file their claims and supporting documentation. I’m hopeful that the Copyright Claims Board will follow this lead and prepare similar materials.
If you do decide to hire an attorney, it will be an investment. But it wouldn’t surprise me if these claims turn into a flat-rate service for many attorneys. And that’s because there’s a limit to what the attorneys can do. (And if you are a young attorney and this passes, this is a revenue stream you should jump on.)
Overall, the costs of filing a claim seem likely proportional to the amount that could be recovered, which is not currently true with filing in federal court.
Statutory damages for unregistered claims
The primary downside is that statutory damages can be awarded regardless of registration status. I understand the inclusion of this provision in H.R. 5757. But this provision continues to fail to incentivize copyright registration. And failure to register will cost creatives dearly when the stakes are big.
Take, for example, the recent story in the press of Tuesday Bassen. If H.R. 5757 was law, she could file a claim with the Copyright Claims Board but at most be awarded $15,000. (She has said that she hadn’t registered her copyrights before the infringement.)
But if the claims she brought forward are true, is $15,000 an appropriate award?
Granted, we only have assertions at this time, not legal arguments. But if they are true, many would argue that $15,000 wouldn’t deter Zara’s practices or compensate Tuesday.
I fear that having a “registration out” will continue to de-prioritize copyright registration. And those who continue to fail to register their copyrights will at most be able to recover $15,000. And when a big company steals your work, will you be happy with $15,000? Because without a copyright registration, that might be your only option. So unless creatives change their registration practices, it will still be profitable for other companies to lift work, rather than license it.
For some, this will never come into play, but for those setting trends, this “out” may cost them dearly.
If you’ve made it this far, then you might be thinking, “This is awesome, but what can I do?”
The best thing you can do is to reach out to your U.S. Representative and tell them this is important to you.
To help you out, below is a template that you can cut and paste and send. You should send this to your Representative, not your Senator, because the bill was introduced in the House. Don’t know who your Representative is? Click here and enter your Zip Code to find out.
SUBJECT LINE: Please support H.R. 5757, the CASE Act of 2016.
Dear Representative [LAST NAME]:
Please support H.R. 5757, the CASE Act of 2016.
[I am a Republican/Democrat residing in [CITY]. OR I am constituent from your district residing in [CITY].] I run [BUSINESS NAME], a creative business in our community and am writing to ask for your support of H.R. 5757, the Case Act of 2016, which is currently referred to the Subcommittee on Courts, Intellectual Property, and the Internet.
Currently under the U.S. Copyright Act, the only remedy for copyright infringement is a lawsuit brought in federal court. These lawsuits easily can cost hundreds of thousands of dollars. As a creative small business owner, this cost effectively bars me from asserting my legal rights under the U.S. Copyright Act. H.R. 5757 will allow small creative businesses, like mine, access to our judicial system by creating an alternative to an expensive federal court lawsuit.
The National Endowment for the Arts (NEA) found that the creative sector adds more than 698 billion dollars to the U.S. economy. The NEA also discovered that artists are 3.5 times more likely to be entrepreneurial, with more than 33 percent identifying as self-employed. Supporting entrepreneurs and small business owners aid our economy.
I urge your support for H.R. 5757, the CASE Act of 2016.
[Thank you for your consideration. I would appreciate a response confirming receipt of this letter.]
- if your party affiliation matches the party affiliation of your Representative, use the first sentence in the second paragraph and state your party. For example, “I am a Democrat residing in San Francisco.”
- if you are not affiliated with a party or your party affiliation doesn’t match the party affiliation of your Representative, use the second sentence in the second paragraph. For example, “I am constituent from your district residing in San Francisco.”
- replace everything in [BRACKETS] with your information
- if you would like a response to your letter, include the final sentence.
I’ve got mixed feelings about the bill. But I’m sick and tired of seeing creative business owners disenfranchised. Especially when the Constitution grants the right to exclusively monetize creations. I’ve sent my letter of support to Representative Barbara Lee.