Congressional Proposal for Copyright Small Claims Court – What Does It Suggest?

In the last few weeks, we’ve seen almost daily press reports of new lawsuits against media companies being sued for the use of photos on their websites without permission of the photographers. We’ve written many times about copyright issues that can arise if media companies put content on their website without getting permission of the copyright holder. Most recently, we wrote about the legal issues that can arise by taking photos or videos from Internet sites and reposting them to your own site, or using them in on-air productions. We’ve also written articles about how your ASCAP, BMI and SESAC license don’t give you rights to use music in video productions or to post online music that can be accessed in any on-demand fashion – so that such rights have to be cleared directly with copyright holders for such uses – including the use of music in podcasts. Even though these concerns exist, some copyright holders have been reluctant to sue, as litigation over these matters sometimes costs more than the likely recovery (though broadcasters, too, are concerned about litigation as the costs of defending against such a lawsuit can be very high). One idea has been kicking around for a long time – some sort of small claims court for resolving smaller copyright claims at less cost to the parties. Last month, a bill was introduced in Congress to create such a court – a new Copyright Claims Board.

The bill was sponsored by a single Congressman, and has thus far received the support of only a single co-sponsor. Given the time left in the current Congressional session, it would be unlikely to go any further this year. But with a promised examination of the Copyright Act generally on tap for the next Congress, some part, or all, of this proposal might again see the light of day next year. For a bill sponsored by a single Congressman, introduced late in the Congressional session with little time for approval, the bill is actually quite detailed, setting out a complete structure for the new court, as well as specific procedures that would be followed by any copyright owner seeking to adjudicate their claims through this new process.

The bill proposes that the Board will be comprised of three “Officers” (essentially Judges), and two other attorneys, all experienced in copyright claims, and many required to have experience in mediation of such claims. The Copyright Office will render legal and administrative assistance to the new Board, but the Officers are supposed to be independent in their decision making. Their decisions are reviewed by the Copyright Office to assure that they were reasonable decisions based on record evidence, and are appealable to the US District Court in Washington DC, but only on limited grounds. The decisions of the Board while resolving the specific controversy before it will, for the most part, not have precedential weight in other actions brought regarding the same copyrighted work.

The use of the Board would be voluntary – and could be initiated either by a copyright holder claiming that their work was infringed on, or by a user who has received a claim that they have infringed the work of a copyright holder when the user wants a declaration that their use was not in fact infringing. If an action is initiated, the party on the other side, once served with notice of the action, could opt out of the Board, and in that event, any case would have to be pursued in Court. Presumably, it is expected that this process would be quicker and cheaper than going to court – but the damages are proposed to be limited to actual damages or statutory damages of no more than $15,000 per infringement and $30,000 per proceeding – not the $150,000 that could be theoretically available to a claimant in a court action. The proposed statute specifically calls on the judges to consider, in deciding on the amount of statutory damages whether the alleged infringer has taken steps to limit or mitigate the damages suffered by the copyright holder – a factor often, as a practical matter, considered in court but not spelled out in statute.

To minimize costs, many of the proceedings are to take place by written submissions or electronic hearings (Internet-based services are specifically recognized as acceptable means by which to hold these hearings). Parties can be represented by counsel – and there is also a specific provision allowing representation by law students not yet admitted to any bar. Initial filings are reviewed to make sure that there is a real basis for a claim, and the Officers are empowered to hold mediation sessions on the request of either party. Discovery is generally limited to requests for admission and document production – not depositions. Written decisions are required in each case that is not settled, and the decisions will be public. A full record of the proceeding is to be kept so that decisions can be reviewed.

It is an interesting proposal that, if adopted, could help to mitigate some of the costs that parties seem to be facing in the myriad copyright claims that are now brought before courts or otherwise threatened. Of course, by offering a cheaper way to litigate, the Board could also have the effect of encouraging more litigation. Seemingly, in any proposal adopted along these lines, there should be even greater attempts to mediate disputes – and to perhaps even require that the parties try to settle their differences on a reasonable, market-based basis before any claims are brought. When so many demands for infringement ask for huge payments to avoid lawsuits for uses of works that might have, in the marketplace, been worth only a few dollars, there often seems that there is no middle ground to avoid litigation. Thus, reasonable settlements should be encouraged even more than they already are under this proposal. But this proposal is at least an interesting first step in trying to provide a forum for resolving small copyright claims.