Damages and Other Considerations when Bringing a Copyright Infringement Claim Before the USA's New Copyright Claims Board

Some barriers to entry in bringing or defending a copyright infringement claim in federal court include costs and the requirement for timely registration.

Concerning costs, the legal and expert expenses of federal copyright infringement lawsuits have made it difficult for plaintiffs and defendants who can not afford to spend a minimum of tens or hundreds of thousands of dollars, especially given that experts generally cannot be compensated on a contingent basis. (Further, in diversity actions, the minimum amount in controversy required to invoke the jurisdiction of the federal courts is $75,000.)

The US's CASE Act was designed to provide an avenue for plaintiffs to enforce their copyrights at lower cost and for defendants based in the United States to limit their copyright infringement damages to no more than $30,000 per proceeding by creating a so-called "small claims court" (technically a "Copyright Claims Board") for copyright infringement claims.  While there seem to be some big challenges in effecting the CASE Act's Copyright Claims Board's commencement of hearings, especially its reliance on law school programs and students who may be unwilling to participate, when it is up an running (hopefully later this year), I am optimistic that it may be a good option for potential clients who can't afford to retain legal counsel or experts and defendants who wish to limit their liability.

The second barrier to bringing a copyright infringement claim in federal court is the requirement that the infringed work (if it is a U.S. work) was registered timely with the Library of Congress (i.e., prior to the infringement or within three months after its publication).  If the work was not registered timely (and it is not a foreign work), the plaintiff cannot bring a claim in federal court. However, it can make a claim before the Copyright Claims Board newly established by the CASE Act. 

In any case, keep in mind that, the CASE Act process is voluntary; once a claim is filed, defendants have a sixty day period to opt-out. This method is not available to plaintiffs if the defendant is a federal or state government or a foreign entity, or for claims previously established in pending cases. Therefore, it may not be a proper venue for many cases, even before considering the damages limitations described below.

The maximum damages that the CASE Act's Copyright Claims Board can award are as follows:

• If the plaintiff seeks actual damages, up to US $30,000 per work may be awarded (subject to the limit of US $30,000 per proceeding, meaning that if a plaintiff proved in one case covering multiple works actual damages in excess of US $30,000 for each work claimed, the plaintiff would only be entitled to a maximum of US $30,000).
• If the plaintiff instead seeks statutory damages, awards are limited to US $15,000 per work and US $30,000 per proceeding.
• If the Copyright Claims Board finds that the copyrights claimed were not timely registered, the maximum damages mentioned above are halved to $7,500 per work and $15,000 per claim. 
• Claims under $5,000 are subject to different procedures, which are currently being established.
• The Copyright Claims Board may award reasonable costs and attorneys’ fees for bad faith conduct, which is capped at $5,000 for parties represented by attorneys and $2,500 for pro se claimants.

Also worthy of your consideration when selecting the proper venue to bring a copyright infringement claim is that the Copyright Claims Board can not grant an injunction, but it can approve an agreement between the parties to cease activities as part of its final determination.

This may be the best option for clients who can't afford your (or our) services, or who failed to timely register their copyrights, although, since the system is entirely untested and unproven, I would hesitate to direct one to bring or defend a case before the Copyright Claims Board until we have seen sample outcomes. The website to file a claim with the Copyright Claims Board just launched this month at https://ccb.gov/.

Copyright Infringement Claims Step #1: Identify the Works Infringed

Copyright infringement is a serious offense that can result in significant damages. One common mistake in copyright cases is that a complaint has not properly identified all of the works infringed, or the complaint identifies a plaintiff who has no standing to bring a claim. Further, in order to estimate your or your client's potential liabilities or amount of money a client may be entitled to receive, counsel should first identify the copyrighted works that have been infringed. This can be tricky, but with the help of this post, you should be able to do it. 

Counsel should consider the multiple categories copyrights that may or may not have been infringed. For example, in a music case, a complaint may focus on a singular claim, but reference multiple copyrights (e.g., "song" and "record" - which are separate works), including:

1. The specific underlying musical or literary work (i.e., the composition, song, or words)
2. Sound recordings of the underlying work
3. Audiovisual recordings of the underlying music or literary work and/or sound recordings
4. Album artwork
5. Trademarks and/or rights of publicity (we won't get into this because it is beyond the scope of copyright infringement damages, but at times there are other damages of concern which are in addition to copyright infringement claims).

Given that separate rights are accorded to each of the above examples, the parties will need to investigate authorship and ownership of all of the potential rights infringed before concluding to which works the plaintiff has standing to bring damages and other legal claims. At minimum:

• Procure or create a list of works potentially copied, including dates of creation, publication, renewal/extension, grant termination notification and grant termination, if applicable (to make sure the rights have not fallen into the public domain and in fact the chain of title supports the plaintiff's standing to make a claim)
• Obtain a copy of the infinged work(s) that were potentially copied (besides understanding what category of work(s) were copied, it may be useful later, in investigating whether the nature of an infringement was willful, to note whether the original work bore any copyright notices)
• Examine examples of the potentially infringing copies to identify which works were in fact copied (for example, in a musical case, were both the composition and the recording copied, or was it solely the composition which was re-recorded?)
• Obtain copies of all available agreements covering and notices of intent to use the works potentially copied.  If the agreements were verbal, ask questions to understand the intention of the agreement and what consideration was exchanged and actions were taken to support the claims of such intentions.
• If the agreement mentions that the work is a "work-for-hire," analyze whether the legal criteria were technically met for the work to be deemed a work for hire as defined in 17 U.S.C. § 101 (because it is not a work-for-hire merely because an agreement states so). 
• Search the Internet to identify prior public copyright claims and uses
• Search for and obtain records of copyright registration, copyright grant termination notices.  In the United States, the Copyright Office this year launched the Copyright Public Records System (CPRS) pilot, which will provide enhanced search capabilities as part of its modernization efforts. To participate in the pilot program and gain access to the latest search tools, users must attend a webinar, which can be found here.

While we do frequently assist legal counsel with such investigation, there are legal experts in chain-of-title research, so this may be something best outsourced to a specialist if you are unfamilliar with it.

If you are counsel to one or more plaintiffs, list the correct entities as the plaintiffs in your complaint, including any companies owned by your client(s), which may hold some of the relevant rights. Unfortunately for plaintiffs with loan-out companies, there may be certain drawbacks if the plaintiff is an entity as opposed to an individual.

Typically, either our engagement stops here because we learn that a plaintiff has no standing to make a copyright infringement claim, or the scope of the matter multiplies if we determine that the number of works infringed was greater than the plaintiff originally identified.