The following statement is attributed to Evan Engstrom, Executive Director of Engine, regarding last week’s introduction of the Copyright Alternative in Small-Claims Enforcement Act:
Although the CASE Act is designed to provide small copyright holders with a process for addressing online copyright infringement, we are concerned the legislation will instead create potential traps for small startups and further incentivize bad faith copyright infringement claims.
The act establishes a Copyright Claims Board within the U.S. Copyright Office--a largely unaccountable tribunal with almost no independent judicial review that is empowered to grant substantial financial damages awards. Without the traditional safeguards of federal courts, this new copyright court would be open to abuse from litigious parties looking to target unwary users and companies.
The CASE Act allows startups to ‘opt-out’ of this Board process, but enterprises without large legal teams may be unaware of the intricacies of the new venue and would end up forgoing the substantial protections of a federal court. Startups that end up before the Board would also be unable to appeal unfair and unjust outcomes, depriving them of due process.
Startups are already burdened by massive statutory damage penalties from copyright violations that are divorced from any real finding of harm. The CASE Act would allow for statutory damages awards of up to $15,000 per proceeding--hardly a “small claim” for many startup enterprises.
With virtually no independent judicial review, the Board will become a way for bad-faith actors to trap unsophisticated or unaware defendants. If a court is necessary for small claims to speed up settlements for copyright holders, startups and users should be allowed to opt-in, rather than opt-out, of the process.