The CASE Act: The Road To Copyright Trolling Is Paved With Good Intentions

from the this-will-be-bad dept

We've written a few times in the past about the serious problems with the CASE Act, a bill that will create a thriving industry of copyright trolling and shakedowns. On Thursday, the Senate Judiciary Committee passed the CASE Act out of Committee, meaning that it could go to the floor for a full vote. Stan Adams, from CDT, has written a detailed, and thoughtful critique, noting that even if there are good intentions behind the CASE Act, it has many, many problems. We're reposting it here, under CDT's CC-BY license.

Sometimes ideas based in good intentions are so poorly thought out that they would actually make things worse. This seems to be especially prevalent in the copyright world of late (I'm looking at you, Articles 15 and 17 of the EU Copyright Directive), but the most recent example is the Copyright Alternative in Small-Claims Enforcement Act of 2019 (CASE Act). This bill intends to give photographers and small businesses a more streamlined way to enforce their rights with respect to online infringements by reducing the costs and formalities associated with bringing infringement claims in federal court. Pursuing infringement claims can be expensive and time-consuming, so this may sound like a good thing, especially for rightsholders with limited resources. It is not.

The CASE Act would establish a quasi-judicial body within the Copyright Office (part of the legislative branch) empowered to hear a limited set of claims, make "determinations" about whether those claims are valid, and assign "limited" damages. The bill structures the process so that it is "voluntary" and lowers the barriers to filing claims so that plaintiffs can more easily defend their rights. Without the "quotes", this description might sound like a reasonable approach, but that's because we haven't talked about the details. Let's start at the top.

The bill would establish a Copyright Claims Board (CCB) in the Copyright Office. This would not be a court and would be entirely separated from the court system. The only option to appeal any of the CCB's determinations, based on the CCB's legal interpretation, would be to ask the Register of Copyrights to review the decision. It would be theoretically possible to ask a federal court to review the determination, but only on the grounds that the CCB's determination was "issued as a result of fraud, corruption, misrepresentation, or other misconduct" or if the CCB exceeded its authority. So if you disagree with the CCB's legal interpretation, or even its competence to make a decision, you are out of luck. This raises red flags about potential due process and separation of powers problems under the Constitution.

The "small claims" part of the bill is also troubling, in that the CCB can award damages up to $30,000 per proceeding. This amount is only considered small in the context of copyright statutory damages, which range between $750-30,000 per work infringed, unless the infringement was willful, in which case, damages can be $150,000 per work. The $30K cap is a 2x-10x multiple of the maximum awards for small claims courts in 49 of 50 states. (Side note: what's going on, Tennessee?) So losing a single small-claims action before the CCB could be a financial disaster for many people, potentially for nothing more than uploading a few pictures to your blog.

You may be thinking, "I won't infringe copyright, I'll just make sure not to use any protected works." Here's why that will not be as easy as you might think. First, copyright is automatic. This means that when someone snaps a new photo, they immediately hold the rights to it. If you found a photo or other work that you wanted to use, you would need to get permission from the rightsholder. In some cases, determining who to ask is relatively easy. You may know the photographer or there may be clues indicating who likely owns the rights, such as watermarks or attribution information (photo courtesy of x). However, the only sure way to identify the rightsholder for any given work is to check with the Copyright Office to see who registered the work.

Even though the Supreme Court recently ruled that the registration process must be completed (either the Copyright Office granted or denied the application for registration) before filing infringement claims, registration is not required to bring an action under the CASE Act. This leaves everyone (other than the original author/photographer) with no guaranteed way to determine who holds the rights to unregistered works. Even if you identified someone as a potential rightsholder, it could be difficult or impossible to verify their claim of ownership without the official recognition by the Copyright Office. So even if you are acting in good faith and attempt to obtain permission before using a work, you may not be able to do so and there is no guarantee that you will have obtained permission from the correct party, leaving you exposed to claims via the CASE Act.

For example, you see an image (perhaps a vacation photo) on a friend's social media page and ask their permission to share it with your network. They agree and you share, not realizing that your friend copied that image from somewhere else, perhaps a travel company website. Your friend did not have the rights to that photo, and you made and distributed an unauthorized copy, exposing you to the possibility of an infringement claim from the actual photographer. Sharing that single photo could cost you $7500.

So, to recap, it may be impossible to obtain the correct permissions to use a work, and using a work with or without permission (relying on the fair use doctrine) may leave you exposed to claims up to $30,000, which will be determined by a panel of non-judges, whose decision you will have almost no way to appeal. Once their decision is final, you are also barred from relitigating your loss in federal court (unless you can prove fraud, etc). You may remember that this process is "voluntary." Let's talk about what that means in reality.

The process created in the CASE Act allows defendants to opt-out of the process. Specifically, defendants are given 60 days from when they are notified of the claim to tell the CCB that they do not wish to be subject to the procedure. (This is how the bill's drafters hope to skirt around all the constitutional issues—by getting people to voluntarily give up their due process rights and willingly accept the legal determinations of a non-judicial body.) So it's easy, right? Simply opt-out.

Yes, for many would-be defendants, especially the more legally sophisticated ones like large internet companies, opting out of each claim brought against them is not likely to be difficult, even if it is time and resource intensive. However, think about what you might do if you received an envelope claiming to be from a governmental body you have never heard of and asserting that you are potentially liable for infringing copyright. Many would simply ignore it or simply not understand the significance or the potential consequences. Others might perceive this notification as a form of phishing or a potential scam. 60 days elapse and you are now subject to the determinations of the CCB. The next letter you receive may be correspondence from a law firm (on behalf of the claimant) offering you a settlement deal that lets you buy your way out of the legal fight and the possibility of a $30,000 liability. Now what should you do: settle or try to defend yourself at the risk of a higher liability amount?

This litigation model is often called "trolling" and the CASE Act sets up a process that serves that model well. Sure, the process is voluntary, which means that only the least legally savvy people will be defendants. Yes, the statutory damages are reduced (compared to those available through federal courts), but they are still plenty high enough to push defendants toward settlement, especially given the limited options for appeal.

Despite its good intentions, the CASE Act is a legal disaster waiting to happen.

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Filed Under: case act, copyright, copyright trolling, good intentions, small claims