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Congress Establishes New Copyright Board to Resolve Small Claims and DMCA Disputes

Major changes to copyright law were shepherded in through the Consolidated Appropriations Act, the highly publicized pandemic relief bill passed on December 27, 2020.

Amongst these changes was the enactment of the Copyright Alternative in Small-Claims Enforcement Act of 2020 (CASE Act), which establishes a Copyright Claims Board intended to facilitate and adjudicate civil copyright claims capped at $30,000 and claims stemming from DMCA takedown procedures.

A Broad Overview of the Board’s Scope and Operation

The Copyright Claims Board (the “Board”) and its accompanying procedures will be operational by December 27, 2021, unless the Copyright Office requests a delay. Once operational, the Board will serve as an administrative tribunal within the Copyright Office, providing an alternative forum for adjudicating copyright claims capped at $30,000 and for DMCA-related claims. These claims may broadly include: (i) the infringement of a Section 106 exclusive right, declarations of non-infringement of a Section 106 exclusive right, and counterclaims arising out of such transactions; and (ii) claims for failure to remove or disable allegedly infringing content in response to a DMCA takedown notice, claims of misrepresentation in connection with a DMCA takedown procedure, and counterclaims arising out of such transactions. The Board’s decisions will be determined by the Copyright Act, judicial precedent, and regulations promulgated by the Register of Copyrights. Excluding attorneys fees and costs, the total damages that may be awarded in each proceeding are capped at $30,000, regardless of the number and types of claims brought.

Notably, while resolving a dispute through the Board is voluntary, one must affirmatively opt out of the Board’s resolution proceedings in order to preserve the right to bring the matter in federal court. Failure to properly opt-out will serve as consent to the Board proceeding, and a forfeiture of rights to bring the claim in federal court and of rights to a jury trial. Conversely, the claim will be dismissed without prejudice if the respondent properly opts out by filing a notice with the Board within 60 days from the date of proper service.

What the CASE Act Means for Your Business

Broadly speaking, the CASE Act is expected to provide a less costly and more efficient means of adjudicating small copyright infringement and DMCA-related claims and counterclaims. This is because, in adjudicating a claim through the Board, the filing fees are capped below federal filing fees, the discovery is limited, formal motions are impermissible, the federal rules of evidence are inapplicable, the Board’s decisions have limited preclusive effect, and the proceedings are completely remote. Given these limited bars to entry, the CASE Act also provides various procedural safeguards intended to mitigate potential frivolous and bad-faith claimants that may have otherwise been dissuaded by federal court formalities and costs. These safeguards include allowing the Register of Copyrights to limit the number of proceedings a particular claimant may bring in a year, dismissing with or without prejudice depending on the claimant’s non-compliance with procedural requirements, awarding costs and attorneys fees against a bad faith claimant, and barring parties from initiating claims for 12 months after pursuing two or more bad faith claims within a 12-month period. Overall, businesses should expect to be on both the enforcement and defending sides of such adjudications before the Board. Further, as noted above, businesses should be careful to affirmatively and properly opt out of the Board’s proceedings should they wish to preserve their rights in federal court.

Takeaways

Ringing in the New Year is a sweeping change to the adjudication of copyright and DCMA-related claims. With the enactment of the CASE Act, businesses should expect to become more familiar with the Copyright Claims Board, whether as plaintiffs or defendants, upon its instatement in December 2021.

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