The CASE Act Passed, and I’m Not Happy

NOTE: To readers outside the U.S., I haven’t forgotten about you in writing this article, but I cannot find any credible information on how the CASE Act might affect U.S. claims from plaintiffs residing internationally. My assumption would be that if the U.S. federal district court would have jurisdiction over a claim you would seek to bring within the U.S., that you would also be permitted to pursue the claim via the CASE Act, but please check with your legal counsel.

On December 21, 2020, The U.S. Congress passed the Copyright Alternative Small-Claims Enforcement Act of 2019 (the CASE Act), as part of the omnibus spending and COVID-19 relief bill, and it has since been signed into law. The basic purpose of the Act is to create a “small-claims-like” venue to provide individual content creators and small businesses with the option to resolve lower-dollar-value infringement disputes, without the formality and expense of litigation in federal court. Since its inception, the CASE Act has enjoyed bipartisan support, a rarity in today’s dichotomous political climate. Numerous photography industry organizations have also stated support for the Act, including the Professional Photographers of America and the American Society of Media Photographers.

However, in stark contrast to its relatively uniform support among lawmakers, the CASE Act has been met with some civilian opposition both within and outside the photography community. Organizations such as the Electronic Frontier Foundation are concerned that the accessibility of filing in a small-claims environment will expose people to claims over simply posting a meme on social media or other uses that they believe would fall under the fair-use exemption. The term “copyright trolling” has recently entered the industry lexicon due to certain litigated cases that judges have deemed to be frivolous or predatory in nature, and it seems that the EFF’s opinion is that a lower barrier to entry will encourage this sort of behavior. Funnily enough, my personal misgivings about the CASE Act in its current form, as a content creator, seem to be similar to those of companies who would be on the opposite side of such disputes, but for different or opposite reasons (again, more on this later).

As a photographer who consistently enforces my copyrights and encourages others to do the same, colleagues are often surprised to learn that I do not support the CASE Act in its current form. At first glance, it sounds amazing: a low-cost, fast, informal way to resolve infringement claims, presumably without even the need for an attorney. A more thorough review of the Act’s provisions, however, reveals numerous caveats that, in my opinion, will be very easy for a resourceful infringer to exploit. But before we get into why I think this well-intentioned legislation has devolved into feckless and performative bullshit that ends up serving big business and not the individual creators and small businesses it purports to help, it’s first important to understand why the need exists for an alternative to the current process in the first place.

DISCLAIMER: I am not an attorney and nothing in this article should be construed as legal advice. The topics and content outlined in this article are meant to provide talking points for a conversation between you and your attorney. Some or all of the topics discussed here may not pertain to your individual circumstances, and the information is provided without warranty or guarantee of any kind.

Problems With the Current Process

Many folks agree that the largest barrier to content creators seeking to enforce their rights under Copyright Law is the requirement that all proceedings take place in federal district court. Unlike a dispute over something like an unpaid $3,000 invoice, you cannot sue someone in small claims court for a copyright action, because the nature of the claim (copyright) is handled exclusively at the federal level, an authority enshrined in Article III of the U.S. Constitution. As a consequence, the rules, requirements, and procedures of federal district court necessitate hiring an attorney to represent you throughout the process. If you are an individual/sole proprietor, you can technically file as a pro se litigant (meaning you represent yourself), but due to the strict requirements, you wouldn’t likely get very far.

Another issue is the availability of statutory damages. If you’ve read my previous article on assessing your options in an infringement claim, you will recall that whether or not it makes sense to pursue a particular claim, in many cases, hinges on whether or not you’ve timely registered the work with the Copyright Office. “Timely” means registration must be effective either before the infringement occurs, or within three months of the first publication of the work. The option of statutory relief (and, just as importantly, attorney fees) provides powerful leverage to a plaintiff. Assuming your case is credible, many attorneys will be willing to represent you on contingency (meaning you pay them a percentage of the settlement or judgment they obtain on your behalf), and the potential judgment amount can be significant depending on the circumstances (up to $150,000 per work if the infringement is determined to be willful). If judgment is rendered in your favor, even if it’s a small amount, the other party would generally also be required to pay your attorney fees. This provides the infringing party with particular incentive to be cooperative and reasonable in reaching a mutually agreeable settlement before judgment, especially since they must also pay their own attorney throughout the process. However, when you have not registered the work timely, you lack this leverage. In such a case, you can only pursue actual damages, which can be significant but both difficult and expensive to determine, and you must bear your own costs in retaining an attorney. Many infringers, especially “repeat offenders,” know this, and timely registration will be the first thing they seek to verify when you send a demand letter or—please don’t do this—an invoice. Without the option of statutory relief, a combative yet well-informed infringer would probably be wise to tell you to go pound sand. However, even with the availability of statutory damages, the fact remains that, at a minimum, pursuit of a copyright claim is an expensive, time-consuming, potentially lengthy process for both parties.

A Faster, Less Expensive Alternative (In Theory)

Based on the foregoing, you could argue that the current system for pursuing copyright claims is somewhat broken, at least for some folks. It doesn’t make sense for people to spend thousands of dollars in attorney fees and clog up the federal docket with cases that arise out of relatively minor copyright disputes, does it? If only there was a sort of “copyright small claims” court that would allow the parties to resolve their dispute in a less formal, but legally binding, environment. Enter the CASE Act. This is precisely what the Act seeks to do—create an alternate forum that scales the litigation process to match the magnitude of the dispute. In theory, this will save both sides money on legal representation, allow much shorter timelines to resolution, and free up federal court dockets for cases with stakes high enough to warrant the formality and intense legal process. All this sounds great…in theory. As we go through some of the specifics, I think you’ll agree it’s not that simple.

Unpacking the CASE Act: Basic Provisions

Let’s break down some of the most salient aspects of the CASE Act. These are compiled from multiple sources, but many of these issues and other provisions of the CASE Act are covered in greater detail in a video by copyright attorney Leonard French on YouTube, which I recommend for further viewing.

• The CASE Act establishes a claims board of individuals with experience in copyright law, who are appointed by the Register of Copyrights.
• In order to file a claim, you must already have registered the image(s) at issue or at least applied for the registration. If you do not have your registration certificate in hand, further proceedings are stayed until you receive it. This is different from a federal district case, where you must have the approved certificate in hand before you can even file.
• The maximum award for images registered timely (i.e., otherwise eligible for statutory relief) is $15,000 per work and $30,000 per case. If the images are not registered timely, the maximum is $7,500 per image and $15,000 per case.
• Injunctive relief (e.g., removal of the images at issue) is possible only by agreement. If the defendant refuses to remove the images, only a federal court can order involuntary injunctive relief.
• The process is voluntary for both parties. If you choose to go the small claims route, the defendant has up to 60 days to opt out of the process (with some possible exceptions). If they opt out, the case is dismissed without prejudice and must be filed in federal district court. This is not a “change of venue”—you essentially have to start over.
• The proceedings are conducted remotely—you do not appear in person. The process is much less formal, with no particular “motions” needed to the court. The parties can speak in plain language.
• Discovery is limited to production of documents, interrogatories, and requests for admission (RFAs). Testimony must be in writing and under penalty of perjury.
• Final determination of the claim occurs by simple majority vote of the claims board officers.
• The standard for appealing a CASE Act claim may be more difficult than appealing in federal district court—this could adversely affect whoever loses in the claim.

By the way, another popular industry publication recently published an article which, at the time of this writing, seems to contain at least two important factual errors, or at least ambiguously-worded phrases. To avoid confusion, I’d like to clarify those points based on my understanding of the CASE Act. The other publication’s article states unregistered images are eligible for up to $7,500 each, with a maximum per-claim award of $15,000. This is erroneous because the claimant must at least file the registration before the claim can commence. The images do not need to be registered prior to the infringement in order to be eligible for the lower maximums under the CASE Act, but they do need to be registered before you can file the case. The article also states that the board can send the infringer a “notice” to cease the infringement, but as previously mentioned here, injunctive relief (if it can even so be called) is voluntary and the infringer cannot be legally compelled to cease the infringing activity based on a notice from the board.

Why I Oppose the CASE Act

My principal issue with the CASE Act is the voluntary nature of the process. In theory, the small claims option exists to provide a way to resolve copyright disputes less formally and expensively than federal district court. But usually, in a small claims setting, the defendant is subject to that court’s authority, whether they like it or not (with certain exceptions). In my opinion, that’s why small claims works—it’s already decided that the case will commence in that less formal, less costly, less complicated forum, because the amount sought in the claim falls within the prescribed limits. This is particularly helpful when the plaintiff is “the little guy,” an individual with likely limited understanding of the law and even more limited availability of funds to pursue the dispute. If small claims court was voluntary, assuming the defendant had deep pockets and knew that the plaintiff would have trouble hiring an attorney, they could “opt out,” effectively weaponizing that option against the plaintiff because they know the plaintiff is unable to follow through with filing in the higher court, or that hiring an attorney would cost the plaintiff more than they would be awarded in judgment.

You likely see where I’m going with this. In a CASE Act claim, the defendant has up to 60 days to opt out of the process, meaning you would go through all the work of filing the claim, pay what I assume is at least some kind of filing fee, and with one opt-out notice from the defendant, have all your efforts automatically rendered for naught, requiring you to hire an attorney and file in federal district court. And guess what—if the works at issue are not timely registered, that’s unlikely to happen, and the defendant likely knows it. If they’re a large company, registration is likely the first thing their attorney will seek to verify. And if they’re an individual or a small company? Since the advent of image discovery/recovery services who identify infringing uses of photographers’ work online and attempt monetary recovery on behalf of the photographer, there are now entire user forums dedicated to helping infringers fend off inquiries from organizations like Copytrack or Pixsy attempting to resolve such infringement disputes. I expect it will not take long for these same folks to figure out that if the works in question were not timely registered, a CASE Act claim has no more teeth than the empty threat of litigation, as long as they opt out within the 60-day timeline and verify the works were not timely registered.

The fact that the CASE Act process is voluntary, in my opinion, renders it moot. We already have a process for parties who disagree but are willing to voluntarily submit to a binding decision by someone other than a judge or jury. It’s called binding arbitration and it is a standard practice throughout the legal field. The process is remarkably similar to that described in the CASE Act, but without forfeiting so many rights on the part of the plaintiff in the process (see below regarding the lower maximum awards for CASE Act claims). Another option for parties who show mutual interest in resolving a dispute would be mediation, which is basically like couples therapy for businesses by having a third-party mediator help the parties decide and agree on what is fair. Mediation is not a binding process, but if the parties are genuinely interested in finding common ground, it can be a very effective form of dispute resolution.

A second important issue with the CASE Act would be the relatively low maximum awards and the fact that no attorney fees appear to be awarded in the determination. These two problems should be considered together because in a federal district case where statutory relief is eligible, that means that if judgment is rendered for the plaintiff, they would also generally be granted attorney fees in that judgment, in addition to the award of damages. Not only does this provide greater incentive for the defendant to be receptive to settlement negotiations; the negotiations themselves would likely somewhat factor in attorney fees already incurred by the plaintiff, even if they are not separately itemized. “But wait!” I can hear you say. “The whole point of the Act is that you don’t need an attorney so you actually keep more money in the end!” Not so fast. You would likely be interested in filing a CASE Act claim because you don’t have an attorney. That doesn’t mean the other side can’t have an attorney helping them through the process, especially if they have one on retainer, or even on payroll. Remember how I said the CASE Act seems to still benefit the large businesses more? This is a perfect example. Though simplified to some degree in the CASE Act, the discovery process involves requesting documents and/or information from the opposing side, which they must comply with and answer truthfully to the best of their knowledge. But you have to know what to ask for, how to handle it if they refuse, and how to refuse any discovery requests from them to which you object. In many cases, you’ll likely still need an attorney. Except now it’s at your own expense and you have a maximum of $15,000 or $30,000 from which the other side will already expect to settle for far less (or just wait for the determination). Keep in mind that even if you prevail, the maximum amounts are the most you will receive for the claim—it’s very possible you’ll get less.

I am also concerned that the lower maximum awards relative to the CASE Act could potentially set an unnecessary precedent for the supposed value of specific types of infringements. Obviously, not every infringement is worth the same—a local small business who posts one of our photos on their Yelp page would likely be valued differently from a large corporation using the same photo as a hero image on their homepage. Fundamentally, however, the damages currently available under the Copyright Act are designed to effectively deter infringing activity, particularly since statutory damages take into account the willfulness of the infringement. Many photographers do not realize the actual value of their own work when it is infringed and will likely undervalue the claim, at least initially. Plus, there is often much fact-finding to be done in order to reach a reasonable demand. This is why most copyright lawsuits will not specify a dollar amount the plaintiff seeks, but rather pray for all profits relative to the infringement or statutory damages as allowed by law, whichever is greater. If you estimate (without an attorney’s involvement) that the value of a single infringed image is $15,000, you will likely go ahead and file a CASE Act claim. However, if during the discovery process you realize the scope of the infringement was much greater, there doesn’t seem to be any recourse for you to then pursue the matter in federal district court, with potential damages better aligned with the scope of the infringement.

There are additional constitutional and due process issues with the CASE Act, though I won’t cover them in great detail here. Whether or not Congress has the authority to enact legislation to allow a “tribunal” outside the federal court system to adjudicate copyright cases remains somewhat undecided. Some have also questioned both the fairness and validity of the opt-out process. Given that the defendant’s consent to the CASE Act process is determined by absence of an opt-out response rather than to affirmatively opt-in, the process works somewhat similarly like a default judgment. Aside from issues of fairness, there are legitimate due process concerns where a defendant might not actually have received the notice but failed to opt out and, as a result, is compelled to participate in the CASE Act process, with a potentially difficult path to an appeal in federal district court. The ASMP contends that the CASE Act is constitutional. Others are not so convinced, such as in “Potential Pitfalls of the CASE Act” by Anthony Marcum. As CASE Act claims begin to go through the process, I expect that organizations advocating for broad fair-use allowances will object to the validity of these cases and that the Supreme Court will eventually have to weigh in on this issue.

Missed Opportunities

The CASE Act could have been amazing, with surprisingly few changes. Few would disagree that the current legal process for resolving smaller-value copyright infringements could stand to be streamlined; however, I believe the CASE Act fails of its essential purpose. As a copyright owner who consistently and timely registers my work with the Copyright Office, I have little motivation to take part in the CASE Act process because doing so would remove significant leverage on my part and severely limit my potential recovery, with limited potential benefit in the form of reduced legal costs. With few exceptions, the only time I’d seriously consider going the CASE Act route is if I have failed to timely register an image and the defendant is unwilling to settle the matter. However, as I mentioned before, that could very well be an exercise in futility, as a well-informed defendant could simply opt out of the process, realizing that I would not be willing to pay an attorney per hour to represent me in a case for actual damages (assuming the value of the case is not significant). Keeping in mind that I am not an attorney and am not 100 percent familiar with the best way to do this (including relevant constitutional hurdles), here are a couple of examples of changes that could completely change the effectiveness of the CASE Act from its current iteration.

As I mentioned before, we already have a process where copyright cases can be adjudicated in a less expensive and less formal venue than the courtroom. Binding arbitration is often a preferred alternative to litigation, as it’s less formal and often less expensive. However, in federal district cases, you still have to pay significant filing and service fees just to get the case going, and corporations/LLCs cannot represent themselves, so they need an attorney in order to answer the lawsuit. What I would propose is the option of a simplified case filing form that has a reduced filing fee and requests that the case immediately be moved to a form of specialized arbitration, with lower limits than federal district court on what can be awarded. The defendant would be required to participate in arbitration unless they can provide a compelling reason why doing so would harm or be unfair to them. The case would proceed in simplified form (similar to the copyright tribunal from the CASE Act), with no attorney representation allowed on either side (similar to small claims court). If it’s later discovered that the value of the case exceeds the limits set forth in the initial filing, the plaintiff could either accept that maximum award or proceed with trial by judge/jury (with the payment of additional fees). To me, this would satisfy constitutional concerns of the CASE Act while also making it easier for cases to move within the federal system, rather than have to be dismissed and refiled. While clearly it wouldn’t be quite this simple, I feel a process like this would provide an incentive for both parties to participate and force the parties to be on equal footing throughout the process.

The other change that I feel is needed is to have a way to effectively pursue smaller infringements in which the subject image is not registered timely. The CASE Act currently fails at this because of the defendant’s ability to opt out of the process. Utilizing the aforementioned simplified filing process would allow plaintiffs an avenue to compel the defendant to answer for the claimed infringement in an environment where the maximum award is lower than federal district court and neither party incurs attorney fees. A process would need to be established to combat frivolous or bad-faith filings, but in general, I feel this would be a process that’s equitable to both parties and deter would-be infringements from occurring at the feverish pace they currently do.

Key Takeaway From the CASE Act

Register your work—all of it! In my opinion, the CASE Act, in its current form, does very little to help copyright owners who have not registered their work in time to qualify for statutory damages and attorney fees in an infringement claim. Though you shouldn’t immediately write off cases where you can only pursue actual damages, the option of statutory damages and attorney fees remains, in my opinion, the strongest leverage you have in an infringement case. The issue isn’t even that you end up with more money at the end (which, trust me, doesn’t always happen anyway). The real issue is that the defendant will be motivated to reach a mutually agreeable settlement sooner than later in the process. The CASE Act relieves a great deal of pressure from the defendant, which I believe will ultimately lead to a more protracted and time-consuming process. My fervent suggestion to anyone reading this is that before filing any infringement action under the CASE Act, you first consult with a qualified attorney.

What do you think? Are you happy the CASE Act passed? Have I neglected to see a significant benefit to the process? Leave a message in the comments below.