Infringers Beware – The U.S. is Emphasizing Copyright Enforcement – JD Supra

The United States received two major copyright updates in the middle of the pandemic. Copyright owners should breathe a sigh of relief. On December 27, 2020, as part of the major COVID-19 Relief bill, the Copyright Alternative in Small-Claims Enforcement Act of 2020 (the “CASE Act”) and the Protecting Lawful Streaming Act of 2020 (the PLSA”) were signed into law.

The Problem:

Streaming is the thing—whether with music, television, movies, audiobooks, or videogames. Like with streaming, however, their illegal infringement is also everywhere and accounts for a nearly $30 billion loss to the U.S. economy per year.[i] The constant, pervasive nature of copyright infringement has historically made enforcement difficult. The CASE Act and PLSA provide copyright holders relief. The CASE Act:

The CASE Act created a “small claims” tribunal to hear copyright claims—the Copyright Claims Board. As with other inter partes proceedings, three-officer panels within the Copyright Office[ii] will hear claims of copyright infringement, declarations of non-infringement, misrepresentations in DMCA takedown notices and counter-notices, and other related counterclaims and defenses.[iii] These officers will also have copyright expertise—at least two officers must have “substantial experience in the evaluation, litigation, or adjudication of copyright infringement claims,” and the other must-have “substantial familiarity with copyright law” and “alternative dispute resolution.”[iv] With more copyright enforcement options, claimants and their counsel should consider the following:

Accessibility – In civil infringement actions, appellate courts have signaled that litigation should persist beyond the motion to dismiss stage and through discovery.[v] The Board offers a solution to both claimants and respondents in this respect—smaller claimants that experience meaningful infringement can enforce their copyright at a proportional cost and wrongfully accused respondents may more-economically defend their conduct. Chief among these cost-efficiencies is the elimination of formal evidence and discovery rules,[vi] and the exclusion of expert testimony, except in exceptional circumstances.[vii] These proceedings are voluntary though, and a party may “opt-out” for any reason.[viii] If a respondent opts out of the Board proceeding, then a claimant’s only likely alternative is to initiate civil litigation. If a respondent fails to opt-out, then their failure does have consequences.[ix]
Preclusion – In each proceeding, the Board must issue a written decision explaining their determination.[x] This determination may be preclusive with respect to the same parties to that proceeding and the same claims that were finally determined by the Board.[xi] Unlike in TTAB inter partes proceedings, however, the CASE Act made clear that Board decisions are not precedential and may not be relied upon regarding any determination of ownership.[xii]
Remedies – Claimants may still choose to pursue actual or statutory damages, but the Board may not award more than $15,000 statutory damages per infringed work and $30,000 overall in total actual or statutory damages per proceeding.[xiii] This Board is meant to act as a small claims court, so these limitations make practical sense. These caps apply regardless of the number of claims asserted and apply regardless of any evidence of willful infringement. The Board is also limited in awarding up to $5,000 in attorney’s fees and costs for bad faith conduct unless extraordinary circumstances exist to increase that amount.[xiv] Additionally, if a work is not timely registered, the Board can still hear the claims, but the available monetary award will be reduced to $7,500 in statutory damages per work and to $15,000 overall in any one proceeding. [xv]

This Copyright Claims Board should be active in December 2021, unless the Copyright Office seeks a six-month extension. Beyond these statutory guideposts, it is unclear exactly how these proceedings will operate. Litigators should be ready to analyze the regulatory framework once issued by the Register of Copyrights. One issue that should already pique every copyright litigator’s interest is Section 1506(a)(2) regarding applicable law. The Act provides that, if there is a conflict in judicial precedent on a substantive copyright issue, then the Board should apply the substantive law “of the Federal jurisdiction in which the action could have been brought” or, in the case of multiple appropriate jurisdictions, then the law of the jurisdiction that “has the most significant ties to the parties and conduct at issue.” Knowing the amount of substantive differences between just the Second and Ninth Circuit’s copyright law, perhaps the Board will be a unifying body for copyright issues.

The PLSA:

The Protecting Lawful Streaming Act of 2020 is also pro-copyright. The PLSA tightened up long-cited inadequacies in criminal penalties for large-scale piracy enterprises. Previously, prosecutors could charge felonies for the reproduction and distribution of copyright-protected material, but could only charge misdemeanors for the public performance of such works. The amended language now permits prosecutors to bring felony charges against a willful, commercial piracy enterprise that: (1) is primarily designed or provided for the purpose of publicly performing copyrighted works without the authority of the copyright owner or the law; (2) has no commercially significant purpose or use other than to publicly perform copyrighted works without the authority of the copyright owner or the law; or (3) is intentionally marketed or directed to promote its use in publicly performing copyrighted works without the authority of the copyright owner or the law.[xvi] Proponents of the Act have already urged Attorney General Merrick Garland to begin exercising these powers within his first 100 days.[xvii]

Attention to and improvement of copyright law is always exciting, but especially so when it improves accessibility for copyright-holders to protect their valuable creative works.

[i] U.S. Senator Thom Tillis, Bipartisan Legislation Led by Tillis and Leah to Fight Illegal Streaming by Criminal Organizations to be Signed Into Law, (Mar. 25, 2021, 8:00AM), https://www.tillis.senate.gov/2020/12/bipartisan-legislation-led-by-tillis-and-leahy-to-fight-illegal-streaming-by-criminal-organizations-to-be-signed-into-law.

[ii] 17 USC 1502(b).

[iii] 17 USC 1504(c).

[iv] 17 USC 1502(b)(3).

[v] Hall v. Swift, 782 F. App’x 639 (9th Cir. 2019).

[vi] 17 USC 1506(o).

[vii] Id.

[viii] 17 USC 1506(i)

[ix] 17 USC 1506(h).

[x] 17 USC 1506(t)

[xi] 17 USC 1507(a)

[xii] Id.