CASE Act does not offer viable solution to online infringement

The Senate Judiciary Committee is taking up a bill today that would change copyright enforcement in the U.S. and open up startups and their users to new risks.

The bill, the CASE Act (S.1273), would create a process for copyright holders to address online copyright infringement by establishing a Copyright Claims Board within the U.S. Copyright Office to adjudicate copyright infringement and award substantial financial damages without the traditional safeguards of federal court. 

The current proposal does not offer a fair and viable solution to online infringement but instead would incentivize bad faith copyright infringement claims and create potential traps for startups and their users.

We have already articulated our concerns with this bill, and previous similar bills. Two of the biggest problems are the outsized statutory damages awards that bear no relationship to the alleged harm suffered by copyright owners and the minimal safeguards to protect against meritless claims. 

As to damages, the CASE Act allows statutory damages of up to $30,000 per case ($15,000 or $7,500 per work infringed). These statutory damages are not “small,” and significantly exceed the maximum damages available in traditional small claims courts. These damages also bear no relation to the potential harm from, e.g., a single instance of copyright infringement where a user unknowingly shares a copyright-protected photo on a personal social media feed. 

The CASE Act also fails to provide safeguards for accused infringers—for example, there is no meaningful opportunity for judicial review of the Copyright Claims Board’s decisions and the Board is empowered to award default judgments. And while the CASE Act allows respondents to opt-out of the Board’s jurisdiction, individuals and startups without legal advisors may not realize the consequences of not opting-out. (On the other hand, large companies with legal departments will understand the value of opting-out.) In practice, it seems the CASE Act will do little more than create an unaccountable quasi-judicial tribunal—whose sole purpose is to make it easier for copyright owners to file claims—and that enters default judgment or adjudicates claims against smaller players who fail to appreciate the significance of foregoing the protections of federal court. Under these conditions, it would be easy for bad actors to file or threaten claims, even weak claims, and coerce unwary respondents to settle for less than the statutory damages amount. 

In addition, we are concerned with how and how quickly this bill is progressing without the opportunity for meaningful vetting. The CASE Act was introduced for the first time in the Senate on May 1, 2019, and to date there have been no hearings on it. We encourage the Committee to take the time to formally collect stakeholder perspectives and weigh alternative approaches that could give copyright owners the benefits they seek without the harmful consequences startups and users would face under the current proposal.