MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco. He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org www.calawyersforthearts.org Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!
Since July I have had a number of inquiries on my opinion of the proposal that the Copyright Office set up Small Claims Court. I’ve been mulling it over. Here are my thoughts:
On July 14th, Rep. Hakeem Jeffries of New York introduced to the United States House of Representatives a bill, known as the Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2016. https://assets.documentcloud.org/documents/2993945/CASE-Act-Jeffries.pdf
CASE is for the most part based on a Copyright Office Report released in 2013 speaking to the question of whether or not such a forum would be in the public’s best interest. There is certainly good reason to consider the prospect. Under the existing Copyright Act, the only forum for infringement claims, large or small, is Federal Court. This is truly a situation where a wronged party whose original work has been copied, plagiarized or distributed without their permission has no choice but to “make a Federal case of it,” unless the matter can be resolved informally. CASE would set up an alternative forum intended to be more accessible and efficient than your local Federal District Court. Would it be? That is yet to be seen.
In my practice, I have had no real problem resolving infringement claims on behalf of my plaintiff clients and avoiding drawn out litigation. The reason for this is that my clients have been advised to register their copyrights within three months of first publication. Having done so, I can leverage the two key benefits of registration into quick and (usually) substantial settlements.
As mentioned in previous January 2015 bLAWg, registration benefits include the right to claim statutory damages of up to $150,000 and obtain prevailing party attorneys’ fees and costs against the infringing party – instead of being limited to “actual damages (the infringer’s profits if any), and being out-of-pocket for attorneys’ fees and cast. http://annietroe.blogspot.com/2015/01/bos-blawg.html
Even the most obstinate infringer will capitulate when their own attorney tells them they will have put up a large retainer to defend the claim and, when they lose, they will also have to pay my substantial fees. When faced with this reality, I rarely have to file an action. When I have to file, as soon as the defendant looks to retain counsel, I get a decent settlement offer.
However, I also get calls quite often from prospective clients whose works have been infringed, but who have not previously registered their copyright. If the infringer does not have ‘deep pockets’ (assets) and there is no viable ‘downstream’ wholesale distributor or retailer with substantial profits from the infringement, it is clear that despite being harmed, such claimants have no viable remedy. That is where I can see a Copyright Small Claims Court play an important role.
CASE describes the establishment of a reasonably well-conceived Copyright Claims Board with qualified copyright attorneys serving as “Claims Officers” empowered to hear infringement matters. They would assure parties proper use of procedural due process, oversee basic discovery, conduct hearings and issue findings that would be published, and subject to filing as Judgments in the District Courts for collection purposes. Unlike most State Small Claims Courts, parties can use attorneys or certified law student counsel. All well and good.
Like the 1976 Act, claimants would be entitled to elect either Actual Damages (including the infringing parties’ profits), or Statutory Damages. However, statutory damages would be capped at $15,000 instead of $150,000 – but only in the event of a registration prior to infringement (or within three months of original publication). In the absence of such registration, the statutory damages limit would be $7,500.
Since it is easy to leverage settlements with pre-existing registrations, it is hard for me to imagine anyone electing to pursue the Small Claims alternative unless they did not have a registration before the infringement. In that regard, and given the prevalence of infringements where there are little or no actual damages or profits, the $7,500 statutory damage prospect would be a keen advantage – one that may pave the way for settlement early in the Small Claims process if the Defendant is at risk of that.
HOWEVER, what I believe to be the fatal flaw in the CASE legislation, is that participation by the parties is voluntary. (See Section 1403(a).) The defendant may “opt out!” (See 1405(h).) Facing a potential statutory liability of $7,500, why wouldn’t they opt out knowing that the Claimant will be out-of-pocket to bring an action in Federal Court, and no statutory damages are available.
Nor is the Copyright Claims Board empowered to grant injunctions against ongoing infringements. That limitation in itself would rule out Small Claims as a reasonable forum for many situations where what is critical is not present damage, but the long-term damage if the infringing activity is not stopped immediately.
While I can understand the basis for not affording the Copyright Claims Board the authority to consider and grant injunctive relief, until the opt out provision is fixed, I fear that the CASE court will end up being the forum that is used by ‘copyright trolls.’ There are many entities that search the internet for copied illustrations, photographs, music and/or film clips and make unreasonable demand$ upon the website owners who have innocently or mistakenly allowed uploading of infringing material.
Taking down the offending image or material is not enough for these outfits. Once they have identified what they believe to be an unlicensed use, they continue to send demand letters and threaten legal action. Rarely, however, do the actual copyright holders take the initiative to go after such infringing use if the offending item has been removed from the website. In the case of ‘innocent’ infringement, it is likely the damages awarded in Federal Court will be as low as $200. Nor will the Court necessarily award them prevailing party fees since the damage was minimal and the defendant complied promptly with the ‘cease and desist’ letter.
I know a number of artist organizations are supporting the legislation. The Graphic Artists Guild appears to endorse the supporting efforts of the Coalition of Artists which includes the American Photographic Artists (APA), American Society of Media Photographers (ASMP), Digital Media Licensing Association (DMLA), National Press Photographers Association (NPPA), North American Nature Photography Association (NANPA) and Professional Photographers of America (PPA). https://graphicartistsguild.org/news/copyright-claims-board
Perhaps they do not share my concern over potential misuse of the Small Claims Courts or that their members will not be able to make meaningful use of it due to the Opt Out provision. Or, perhaps they are pursuing changes in the CASE provisions to address those matters. If you are a member, I recommend that you share your own view with them.
Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com