Juelsgaard Clinic Students Urge Fairness and Transparency in Copyright “Small Claims” Proceedings

Last month, Juelsgaard Intellectual Property and Innovation Clinic students Matt Krantz (JD ’22), and Peggy Xu (JD ’23) submitted a comment to the U.S. Copyright Office advocating for fair and accessible procedures in the Office’s new Copyright Claims Board. The clinic filed the comment on behalf of Engine, a non-profit technology policy, research, and advocacy organization that represents the interests of thousands of startups across the nation.

Juelsgaard Clinic Students Peggy Xu and Matt Krantz
Peggy Xu, ’23 and Matt Krantz, ’22

The Copyright Claims Board (CCB) was originally conceived through the Copyright Alternative in Small-Claims Enforcement (CASE) Act to address a valid concern: Copyright infringement cases can be slow and expensive to litigate in federal court, which means creators may choose not to file suit when their work is infringed. The CCB was intended to operate as an alternative “small claims” court and create an avenue for claimants to bring lower-stakes copyright infringement cases more easily, affordably, and quickly. Claimants can recover up to $30,000 in a CCB case, and respondents have a limited window to opt out of the CCB. After that window expires, respondents are stuck in the CCB and no longer have certain procedural protections like the right to appeal or the right to a jury trial.

While the intentions behind the CCB are good, the CASE Act exposes serious flaws with its structure and implementation. Several advocacy organizations have pointed out constitutional and procedural concerns with how the CASE Act would operate. Some, for example, have underscored the “chilling effect” that the CASE Act could have on protected speech and free expression. Others have cast doubt on the assertion that CCB proceedings are “voluntary,” especially if respondents aren’t given sufficient notice of their ability to opt out and/or do not understand the significance of that decision. Still others point out that a damages award of $30,000, far from a “small claim,” could bankrupt many Internet users. And several Internet platforms that serve small creators across the country—creators that the CASE Act was designed to help—have noted that the CASE Act “tips the scales of copyright law in favor of certain copyright owners and against small creators and rightful users of that content.”

The CASE Act opens doors for malicious actors to bring frivolous suits against everyday Internet users, too. Many of those users are legally unsophisticated and could feel pressured to resolve the case by paying large sums of money even if they have legitimate defenses. The Act also means anyone who shares a meme, reposts a video, or emails a photo could be at risk of getting dragged into a CCB proceeding and being ordered to pay tens of thousands of dollars in statutory damages, whether or not they actually committed a copyright violation, and particularly if they don’t have counsel or know what defenses they can mount.

Engine’s comment seeks to help protect startups and their users from these risks as the Copyright Office is developing regulations to implement the CASE Act and set up the CCB. The comment urges the Copyright Office, which will house the CCB, to make sure that CCB procedures balance the interests of parties on both sides of a dispute.

First, Engine’s comment advocates for additional safeguards around damages and default judgments— what happens when one party doesn’t show up to argue the case. Since respondents are often legally unsophisticated parties, they might be more likely to “default,” or not show up to CCB proceedings, and end up having to pay significant damages as a result. Large rightsholders could take advantage of this system by bringing CCB suits against everyday Internet users and simply collecting when they don’t show, or using the threat of that collection to encourage users to remove content that is non-infringing. To address these concerns, Engine recommends that the Copyright Office evaluate defenses that a respondent might have even if that respondent doesn’t show up to the proceeding. It also recommends that the Office anchor damage awards in all cases to the actual harm suffered rather than the much higher statutory damage amounts set by law.

The safeguards recommended by Engine would help ensure that respondents who default won’t automatically be on the hook for tens of thousands of dollars, and respondents across the board won’t be liable for damage amounts that far exceed the actual harm the claimant suffered. These safeguards would also discourage claimants from bringing overzealous or improper claims that drive users away from online platforms.

Second, the Clinic and Engine emphasize the importance of having flexible and accessible discovery procedures, so that parties—particularly pro se parties, those who don’t have lawyers—can get the evidence they need to make their case. Discovery procedures can be confusing for individuals who have never been part of a legal matter before. What’s the difference between an interrogatory and a request for admission? How should a legally unsophisticated respondent know what documents might be “relevant to the claims and defenses”? To support pro se parties in CCB proceedings, Engine recommends that the Copyright Office use “plain language” in discovery request forms, so that even parties who have no experience with the legal system can better understand how to produce and obtain the documents they need.

The comment also recommends that the Office give parties some flexibility to request more evidence in limited circumstances. To streamline proceedings, the CCB will have more restricted discovery procedures than federal courts. In certain types of cases, however, parties might need to gather additional evidence to prove their case, including emails, text messages, and testimony. Engine suggests that the Office allow parties to obtain these materials in particular cases, and more broadly supports loosening restrictions on new evidence requests as CCB cases develop.

Finally, the Clinic’s comment recommends that the Office collect data to increase transparency and prevent abuse of the CCB. Without data, the Office (and the public) will have no way of knowing whether claimants are, for example, intimidating respondents with demand letters or using shell companies to get around limits on the number of CCB proceedings they can file in a year. Collecting data—on party ownership, on the number of demand letters sent, and so on—would allow the Office to determine the scope of these challenges and adjust CCB procedures accordingly. Perhaps more importantly, general data on CCB proceedings and decisions can ensure accountability, keep the public informed, and shape future policymaking.

The Office will be finalizing rules and regulations for the CCB later this year. The safeguards and procedures that Engine recommended, if adopted, will go a long way toward making CCB proceedings fairer and more equitable, not least by protecting the interests and rights of everyday Internet users.