The Copyright Small Claims Court: If You Build It, Will They Come?

Stephen Carlisle December 16, 2016

An idea that has been bandied about for some time is now closer to becoming a reality: the Copyright Small Claims Court.

This was first proposed by the Copyright Office itself back in 2013 in a special report dedicated to the topic. ¹ This was followed up by a bill proposed by Representative Jeffries and Marino in July of 2016, which has now been designated H.R. 5757 and is pending before the House Judiciary Committee. ² On December 8, House 2016 Judiciary Committee Chairman Bob Goodlatte and Ranking Member John Conyers, Jr. released a series of proposals for copyright reform, one of which was the creation of the Copyright Small Claims Court. ³ The very same day, Representatives Judy Chu and Lamar Smith filed a bill, very similar in text and theory to the H.R. 5757, also calling for the creation of a Copyright Small Claims Court. ⁴

The first thing that jumps out at you is that “small claims court” really isn’t a court at all. If it was truly to be a court, like all other small claims courts, it would have to be housed within the Judicial Branch of the United States Government. But that is not what is being proposed. Instead, the proposed bills place the small claims court within the Copyright Office, which is run by the Library of Congress, an arm of the Legislative Branch. ⁵ So, immediately we have a small problem with the doctrine of separation of powers.

In order to cure this problem, both bills make a concession which, while innovative, give rise to the most serious flaw in the entire program: the process is entirely voluntary. So, instead of a small claims court, what is being proposed is more akin to two parties agreeing to binding arbitration.

Indeed, what is proposed reads a lot like binding arbitration. An action is commended by a filing with the appropriate office within the Copyright Office. The dispute will be determined by a panel of three “judges” who must be attorneys with not less than 7 years legal experience. ⁶ The panel can hear only three types of disputes:

• Claims of infringement arising under 17 USC 106
• Declarations of non-infringement
• Claims of bad faith DMCA notices under 17 USC 512 (f) ⁷

Pre-trial motions are not allowed. ⁸ A party wishing to address an issue regarding case management or discovery may only request a “management conference.” ⁹

Appeals, though available, are greatly constrained:

• Appeals are called “requests for reconsideration” and are taken to the same Board who issued the original decision. This request must allege an “error of procedure, law or fact material to the outcome.” ¹⁰
• Further appeals are made to the Register of Copyrights whose review is limited to whether the Board abused its discretion in denying reconsideration. ¹¹

An appeal to a Federal District Court is available only in cases alleging:

• “[F]raud, corruption or as the result of misconduct or undue means.” ¹²
• The Board exceeded its authority. ¹³
• The Board so messed up the decision that the resulting decision is “neither final nor definite regarding the matter of controversy.” ¹⁴
• The Board issued a judgement on the basis of a Defendant’s default or Plaintiff’s failure to prosecute, and the failure was due to excusable neglect. ¹⁵

Damages that can be awarded are limited to:

• The sum of $15,000 of statutory damages per work infringed. ¹⁶
• Actual damages, not to exceed $30,000. ¹⁷
• Total sum of $30,000, regardless of the amount of works claimed to be infringed which are eligible for statutory damages (not including attorneys fees). ¹⁸
• Each side bears its own attorneys fees and costs, ¹⁹ except in the cases of a finding of bad faith in pursuing a claim, counterclaim, or defense. ²⁰
• Bad faith attorneys fees are limited to a total of $5,000, or $2,500 if a party is acting as their own attorney. ²¹

So, what is being proposed is a very limited system which determines specific questions with greatly streamlined procedures and a cap on the amount of damages that can be awarded.

The question then becomes: is anybody really going to use this?

Normal small claims courts have several features of the proposed copyright small claims courts, including streamlined procedures, limited motion practice, relaxed rules of evidence, and of course, a cap on damages. But the big difference is: if you are sued, you have to respond.

This procedure is completely voluntary. Within 60 days after service, a Defendant can “opt out” of the proceeding. ²² What defendant, with the ability to “opt out” of being sued, isn’t going to take that out?

Naturally, it comes down to a question of money.

If the defendant thinks that you do not have the money to file a full-fledged infringement action in Federal District Court, it’s going to opt out and tell you to go pound salt. So, regardless of how little money may be at stake, if your Defendant is Google, or FaceBook, or YouTube, you can expect that they will opt out and thumb their nose at you.

Or, if the infringer is located in another country, the procedure is not available because “service or waivers of personal service…may only be made within the United States.” ²³

Neither is the system going to encourage any increase in litigation by so-called “copyright trolls” ²⁴ as some have contended. This is because bit-torrent lawsuits are filed against “John Doe” defendants ID’d by their IP addresses. It is then necessary to request a subpoena to the Doe defendant’s ISP to obtain the person behind the IP address. Remember, in copyright small claims, there is no motion practice. Next, the proposed legislation only grants the Board the ability to “request special information” from third parties. ²⁵ Nowhere does it say the Board has subpoena power. And as we have seen, no ISP is going to voluntarily give up the ID of a subscriber accused of copyright infringement. ²⁶

So, the procedure is only really available to that claimant that is willing to back up a small claim with the prospect of a full-fledged Federal Court lawsuit. This procedure will work, if and only if, the Defendant believes that you will proceed formally if they opt out.

Further, as pointed out by Jonathan Bailey over at Plagiarism Today:

“Obviously we won’t know this one until some time after it begins but, if the Board is too favorable to rightsholders, defendants won’t participate but if it’s too favorable to defendants, plaintiffs won’t bother. Without knowing how balanced the court is, we can’t make a decision as to how likely it is parties will participate.” ²⁷

So, yes, we can build it. But will anybody come?