Copyright “Small Claims” Quasi-Court Opens. Here’s Why Many Defendants Will Opt Out.

A new quasi-court for copyright, with nationwide reach, began accepting cases this week. The “Copyright Claims Board” or “CCB,” housed within the Copyright Office in Washington DC, will rule on private copyright infringement lawsuits from around the country and award damages of up to $30,000 per case. Though it’s billed as an “efficient and user-friendly” alternative to federal litigation, the CCB is likely to disadvantage many people who are accused of copyright infringement, especially ordinary internet users, website owners, and small businesses. It also violates the Constitution in ways that harm everyone. 

Even if this were a perfect process, there is bound to be confusion when a whole new regime for demanding money springs up. And the rules surrounding the CCB are far from perfect, so we want to hear from people who are hauled before the CCB. If you feel you’ve been wronged by the CCB process, please email [email protected] and let us know.

It’s Voluntary—Except When It Isn’t

The Copyright Office calls the CCB a “voluntary” system. Copyright holders can choose to bring infringement cases in the CCB as an alternative to federal court. And those accused of infringement (called “respondents” here, rather than defendants) can opt out of a CCB proceeding by filing forms within a 60-day window. If a respondent opts out, the CCB proceeding goes no further, and the rightsholder can choose whether or not to file an infringement suit in federal court. But if the accused party doesn’t opt out in time, they become bound by the decisions of the CCB. Those decisions mostly can’t be appealed, even if they get the law wrong.

Although cases will vary, we think most knowledgeable parties will choose to opt out of the CCB process—again “knowledgeable.” The concern about this system mostly hurting regular users, website owners, and small businesses that don’t have staff who have been watching the CCB unfold cannot be understated. Every reason a knowledgeable party might decide to opt out is also a complicated legal issue that the average person should not be expected to know.

Not-So-Small Claims

Damages awards at the CCB will be limited to $15,000 per claim and $30,000 per case. That’s smaller than the maximum statutory damages a federal court can award on an infringement claim, which is $150,000. But is $30,000 per claim really a “small” claim? It’s 44% of the 2020 median US household income. It’s higher than the maximum damages allowed in the small claims courts of nearly every state. And three years from now, the Register of Copyrights can raise the CCB’s damages caps even higher—the statute puts no limit on increases.

The damages caps also hide a big liability pitfall. In federal court, massive and unpredictable statutory damages are generally only available if the rightsholder has registered their copyright before the alleged infringement began. Without advance registration, a rightsholder is limited to recovering the actual damages caused by the infringement, which they must prove and which are often much smaller than statutory damages. In practice, that rule has limited the possibility of big payouts in a copyright lawsuit to works where the author has either made a small proactive effort to protect against infringement, or that have significant market value.

The CCB, though, dispenses with the timely registration rule. In CCB proceedings, a rightsholder can recover up to $7500 in statutory damages per work without any proof of harm, even if they register their copyright the same day they file a claim with the CCB. That means nearly every photograph, tweet, scrap of prose, or scanned scribble can potentially be the basis for a profitable CCB lawsuit, even if it has no commercial value, or even any personal value to the author. It means that website owners and other internet users can face a CCP complaint even for low-value works that would never have merited a federal lawsuit. And it means that in many cases, opting out of CCB “small claims” proceedings will actually lower your financial risk.

Copyright Parking Tickets

The CCB will also have a worrisome “smaller claims” procedure for claims of $5,000 or less. For these claims, proceedings will be even more informal and the responding party’s ability to request evidence from the rightsholder to help in their defense, such as records of copyright ownership and licenses, may be extremely limited. We suspect that responding parties will face significant pressure to settle claims for cash—equivalent to paying a very large parking ticket—where a more careful consideration would show that they have a valid defense such as fair use. There’s a real risk that even clear cases of fair use won’t get their due in these “smaller claims” proceedings.

Cloudy with a Chance of Pro-Rightsholder Bias

Congress handed the Copyright Office a monumental task: creating the first federal “small claims” tribunal, and the first such body with nationwide jurisdiction. The rules that the Copyright Office has created over the past eighteen months strive for evenhandedness. But they still won’t do enough to overcome pro-rightsholder bias.

First, the CCB is housed within the Copyright Office, which has historically acted as a champion of rightsholders over users of copyrighted works. A former head of the Copyright Office, who now leads a publishing industry lobbying group, famously said that “copyright is for the author first and the nation second.” The Office has close relationships with major media and entertainment companies, including co-hosting events and maintaining a “revolving door” of leaders who move between the Office and these industries. “Regulatory capture” is a problem that affects many government agencies, but it’s especially concerning for an agency that is now running a court.

Second, we expect that a relatively small group of rightsholders and rightsholder attorneys will be “frequent flyers” at the CCB, while the responding parties will more often be first-timers to this new tribunal. All decision-making bodies tend to prioritize the desires of repeat players over new participants, and the CCB will be no exception. Compounding this problem, we expect that respondents who know the law well, or have the resources to hire a lawyer, will opt out of CCB proceedings, so that the majority of respondents judged by the CCB will be people with less practical ability to raise the defenses that the law gives them. This dichotomy could warp the CCB “Claims Officers’” perceptions of all of the parties that come before them.

Constitutional Concerns

The CCB was modeled in part on small claims courts at the state level. But the CCB is different in a significant way: it’s not part of the judiciary. The Copyright Office sits within the Library of Congress, which is part of the Legislative Branch. The Office is sometimes considered an executive agency, but either way, the Constitution doesn’t allow either the Legislative or the Executive branches to run courts that rule on disputes between private parties. (Administrative law judges who rule on questions about what rights and benefits the government owes to people are a different story.) This restriction isn’t just a technicality—the independence of the courts is one of the most important protections for individual rights. “Claims Officers” who are hired by and report to the Register of Copyrights can’t truly render independent judgments. This violates the Constitution, and is yet another reason why many people will opt out of a CCB proceeding.

The CCB has other constitutional defects as well. For example, the absence of a meaningful appeals process and the lack of a jury likely violate the Fifth and Seventh Amendments, and the ability to opt out doesn’t necessarily cure these problems.

The staff of the Copyright Office are dedicated public servants, and in setting up the CCB they are doing what Congress asked of them. But care and good intentions won’t be enough to make this unprecedented judicial experiment fair or constitutionally sound. As the CCB starts rendering decisions, EFF would like to hear from people who have been wronged by the process. Email us at [email protected].