Bill Introduced To Create Copyright Small Claims Court... Which Copyright Trolls Are Going To Love

from the flooding-the-system dept

For a while now, some in the copyright community have been pushing for a copyright "small claims court" as an alternative to filing a federal lawsuit over copyright law. It's true that, especially for small copyright holders, the cost of filing a lawsuit may appear to be rather prohibitive. But it's not clear that a small claims court is the answer. A few years ago, we wrote about some potential concerns with such an approach, but have also admitted that if set up right, it could have some advantages. But that requires it be set up right.

Unfortunately, a new bill has been introduced, by Rep. Hakeem Jeffries, along with Rep. Tom Marino, to officially set up such a system -- and it's done in a way that looks like it will not be well-designed, and instead will lead to a massive rush of small claims, especially by copyright trolls. The bill is called the Copyright Alternative in Small-Claims Enforcement Act of 2016, or CASE Act, and... it's got problems.

The "good" news, if you can call it that, is that claims that would go before this appointed tribunal, made up of copyright lawyers recommended by the Register of Copyrights and appointed by the Librarian of Congress, would have much lower statutory damages availability than the federal courts. A copyright claim in a federal court has statutory damages up to $150k, for willful infringement. In the small claims system, the maximum statutory damages would be $15k. But, really, that's just half of today's official statutory damages -- because if there's no willful infringement, the Copyright Act puts a cap at $30k. In the small claims world, there's no option to claim willful infringement.

Another potentially good feature is that this small claims setup would be able to hear two kinds of claims: the standard ones involving claims of someone violating one of the established rights under copyright law... but then also to hear cases about abusive DMCA notifications, under Section 512(f) of the DMCA. Of course, as we've noted in the past, the federal courts have effectively written 512(f) out of the law and refuse to punish those who file bogus DMCA notices. It's not at all clear how things would change here. The bill explicitly notes that the remedies for a 512(f) bogus DMCA notice claim would be limited "to those available under this chapter." But it's unclear if that really means that you could get $15k for a bogus DMCA filing. And that's because the section on statutory damages is clearly written only with people suing for copyright infringement in mind, and not people suing over bogus DMCA takedowns.

For example, it notes that in order to qualify for the $15k maximum statutory damages, it only applies to "works timely registered." But... how does that make sense for 512(f) claims? In those cases, the question of whether or not the defendant timely registered a copyright makes no sense at all. If someone sends a bogus DMCA takedown over a copyright that doesn't exist or that they don't hold, why should its registration status matter? It's almost as if Rep. Jeffries (or the lobbyists who wrote this bill) only tossed in the part about 512(f) claims to appease people concerned about abusive DMCA takedowns, and then completely forgot about it after they included that.

But the really big problem in my mind is that this seems likely to just be swamped by copyright trolls. We already see that they're flooding the federal court system, where multiple rulings against joinder (i.e., the ridiculous bundling of thousands of possible file sharers together) has meant that when trolls do sue, they're generally limited in how many people they can sue. Making the process cheaper, but still offering statutory damages amounts that can be quite scary to the average American, and that can still get the job done of scaring threatened users into paying up fines that are much smaller than the $15,000.

And, yes, this small claims system will allow for discovery, which is the key feature that trolls want. They want to sue, and then get discovery where they can send demands to ISPs for names of subscribers based on IP addresses, and there doesn't appear to be anything in the bill to stop that. It does note that parties seeking discovery need to show "good cause" to enable discovery, but that may be a fairly low bar. It also notes that responding to discovery requests to non-parties in the dispute will be "voluntary" so perhaps ISPs will resist, but that's not certain. And thus, this three-panel board may find itself on the receiving end of a ton of ridiculous claims from trolls who have no intention of following through with the case. One would hope, with the federal court system's copyright docket currently overrun with trolling cases, that whoever drafted this law would have thought through a better plan to stop that from happening here.

Another potential issue: the bill would let individuals go after not just actual infringers, but also service providers if they fail to follow through on a DMCA takedown notice. Basically, it exports the DMCA safe harbors to this small claims process as well, but that may mean that internet platforms are going to get dragged through this process that was meant to focus on small claims that could be easily adjudicated.

There's also this oddity. After laying out the specific responsibilities of the three individuals who will handle all of these small claims cases, the bill notes:
When not engaged in performing their duties as prescribed in this chapter, to perform such other duties as may be assigned by the Register of Copyrights.
What, exactly, is that going to entail?

Who knows how this will actually play out. A few years back, the UK introduced its own small claims copyright system. But I have no idea how it's doing. I haven't seen any numbers or indication of how widely it's used. Perhaps it works great and is a useful tool for dealing with small scale infringement issues. But I do worry about the way the bill is currently written and how it can be abused, especially by trolls who just want to pressure people into settling, and where the threat of a $15k award might be plenty.

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  • icon
    Mason Wheeler (profile), 15 Jul 2016 @ 11:59am

    Another potential issue: the bill would let individuals go after not just actual infringers, but also service providers if they fail to follow through on a DMCA takedown notice. Basically, it exports the DMCA safe harbors to this small claims process as well, but that may mean that internet platforms are going to get dragged through this process that was meant to focus on small claims that could be easily adjudicated.

    ...so in other words, it applies the DMCA takedown system exactly as intended?

    Because let's not pretend that's not what's happening. The DMCA takedown system was never meant to keep anyone safe; from the very beginning, it's been a tool of extortion: "Extralegally delete this content that we don't like, with no due process whatsoever, or we will sue you."

    reply to this | link to this | view in chronology ]

    • identicon
      Brian, 14 Sep 2016 @ 4:53pm

      Re:

      Thats allready in the DMCA law. That rule was in the original DMCA law is how it works right now. ISP are not immune if they don't comply with a DMCA take down. But that doesn't mean that the reciever can't discuss it.

      Also for the guy who this article. This copyright court will not have any neat DMCA reverse lawsuit. Because that's not why their creating this court.

      Its not for that. You'll have discuss that with an attorney if you get sued.

      I know one of the inconveniences of having a web business.

      Congress is slow, and the new copyright court was designed to favor copyright holders not the other way around.

      The author who wrote this article is a little confused.

      reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 15 Jul 2016 @ 12:10pm

    Does the Government bear the fees for the defendant and then charge the plaintiff if the charges are meritless? No? Then it's more of the same. And note that there's no mention of helping people protect their fair use rights in an easier venue but only about 'small copyright claims'.

    Prenda, Malibu et all are feeling warm and fuzzy inside.

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 15 Jul 2016 @ 12:18pm

    So in other words this is a bill to make the RightsCorp model profitable.

    You will send our threat letters disguised as DMCA notices or you will pay us 15K each time.
    You will turn over names so we can harass them easier, and try to leverage you being required to help to remove having to pay you for doing the lookups.

    $150K is scary, but it is laughable... but $15K can represent more than half of someones income. Nothing like destroying people on nothing more than a snapshot of an ip address.

    We can get discovery by burying the panel in BS, then troll through all of their data and if we can find anything (our or not) we can say they must be guilty and have it stick.

    There is no right to getting your costs established yet, so we don't have to do our typical cut and run case management. We can keep this going for as long as we like, and bother you until you decide its cheaper to pay us instead of a lawyer.

    I can see 3 amendments I'd like to see...
    1 - fixing the damages for bad DMCA notices & more penalties for repeating the behavior.

    2 - capping the award of "damages" in these cases at 2x retail. $15k for a shitty movie you can buy on Amazon for $1 seems like a windfall for those holding the rights to craptastic films, especially if there is no cap to the number of times they can get cash. The filmed for $50K flop, makes $500 at retail yet gets $300K in settlements in the first year.

    3 - if they are involved in a honey pot scheme (looking at the 14 names for a single German company behind 99% of copyright cases) the copyright gets cancelled & any money taken in has to be returned with interest. Creating the incidents to profit from has/can/will be done as long as there is no downside.

    Removing the ability to get windfalls, might encourage them to service the market better rather than cling to a zombie business model they keep alive with stupid laws.

    reply to this | link to this | view in chronology ]

  • icon
    TechDescartes (profile), 15 Jul 2016 @ 12:37pm

    Not Even a Slap on the Wrist

    (2) BAD FAITH CONDUCT.—Notwithstanding any other provision of law, in any proceeding in which a determination is rendered and—‘(A) it is established that a party pursued a claim, counterclaim or defense for a harassing or other improper purpose, or without reasonable basis in law or fact; or (B) the claimant’s claim is dismissed for failure to prosecute pursuant to subsection (u)(2), unless inconsistent with the interests of justice, the Copyright Claims Board shall in such determination award reasonable attorneys’ fees and costs to any adversely affected party or parties in a total amount not to exceed $5,000; Provided, however, That if an adversely affected party appeared pro se in the proceeding, the award to that party shall be of costs only and no more than $2,500.
    While you have maximum risk of $15,000, a troll can proceed blatantly in bad faith and have maximum risk of $5,000 for your costs and attorney's fees. If you don't have an attorney, maximum risk: $2,500.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 15 Jul 2016 @ 2:53pm

      Re: Not Even a Slap on the Wrist

      As seems to always be the case when laws regarding copyright are suggested they aren't even pretending not to be heavily biased when it comes to writing it.

      Wrongfully accused? Have fun proving it(because in copyright 'Guilty until proven innocent' is the default position), and keep in mind that fifteen thousand hanging over your head if you lose.

      Wrongfully accuse someone? Eh, pocket change at most, to the point that a single judgement in your favor can be enough to cover three cases where the judge did the impossible and found your actions in bad faith rather than a perfectly acceptable 'accident'.

      reply to this | link to this | view in chronology ]

    • identicon
      Cynthia Conlin, 16 Jul 2016 @ 4:40am

      Re: Not Even a Slap on the Wrist

      To go through the discovery process to prove bad faith conduct, a defendant can easily incur way more than $5000 in fees. Looks like this would protect trolls from Rule 11 penalties or sanctions. Don't like that provision at all! Can't recall ever seeing a cap on sanctions.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Jul 2016 @ 12:48pm

    "three individuals who will handle all of these small claims cases"

    If this is one court, nationwide, that's another huge problem. Every state would need there own.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jul 2016 @ 7:13pm

      Re:

      If this is one court, nationwide, that's another huge problem. Every state would need there own.

      They'll probably just put it in Hollywood. That's who'll be running it anyway.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Jul 2016 @ 11:05pm

        Re: Re:

        It wouldn't surprise me. Make the defendants pay for travel expenses too. Then the game is the same. Just offer them a settlement to make their lives "easier", aka "more miserable". Add another $1000 or more for travel expenses that can't be recouped, and this is an ill thought out, disaster in the making.

        reply to this | link to this | view in chronology ]

  • icon
    Retsibsi (profile), 15 Jul 2016 @ 1:18pm

    https://www.citizensadvice.org.uk/consumer/copyright/the-internet-filesharing-and-copyright/if-your- claim-for-copyright-infringement-goes-to-court/

    Can't vouch for the advice but you might want to look at the financial penalties for small claims / non-commercial infringement...

    reply to this | link to this | view in chronology ]

  • icon
    Anarres (profile), 15 Jul 2016 @ 1:47pm

    While I don't know UK law, I get there seems to be a quick hearing, at which the judge listens to the parties, and it can award up to lost licensing fees to the (c) holder in case they win. With uplifts up to the court. Lawsuit fees can be around £100, with pro-bono lawyer.

    From my limited information, I'd say it works great compared to the times and costs of US copyright proceedings, at least for simple cases.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Jul 2016 @ 3:40pm

    Prenda II: Small Claims Boogaloo

    reply to this | link to this | view in chronology ]

  • icon
    sophisticatedjanedoe (profile), 15 Jul 2016 @ 6:30pm

    Also, the very people who are supposed to benefit from this law, most likely would be in disadvantage.

    While copyright trolls are experienced in scaring people into paying, folks with legitimate grievances are not. The tribunal call can issue an injunction... and then what? There is no “small enforcement” procedure and the losing side can safely ignore the judgement because in order to collect, a "winner" will necessarily have to face significant expense, which is contrary to the whole idea of such system to begin with.

    It’s a lose-lose proposition. A bad idea.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 16 Jul 2016 @ 12:53am

    Copyright is the hallmark of a capitalist society. It must be done away with to bring in social equality and justice. Socialism is always better than capitalism in that there is less greed. Education, healthcare, communication and entertainment should be free. Thats the human way to do it. I am with Pirate Bay on this one.

    reply to this | link to this | view in chronology ]

    • icon
      John Fenderson (profile), 16 Jul 2016 @ 11:44am

      Re:

      "Socialism is always better than capitalism in that there is less greed."

      I don't think that's right. Greed seems to be pretty much a constant. I think that one of the ideals that capitalism aspires to is to leverage the greed so that it has a positive effect.

      As with all "-isms", the ideal cannot be achieved, but the idea itself is not without merit.

      I think the problem is not capitalism as such, but that -- like all "-isms" -- it comes with a cost, and if you have unbridled capitalism (as we seem to be coming closer to every year), that cost becomes quite high.

      I think the same can be said of socialism -- the idea is not without merit, but it comes with a cost (albeit a of a different sort) that becomes quite high as it becomes unbridled.

      This sort of thing is why I think that the best system is a mongrel system: take some from column A, some from column B, and mix them so that they never achieve meltdown.

      I think this, by the way, is one of the things that Americans should embrace and be proud of more. Although we are moving away from this strength, it is still true that a major strength of the US economic system is that it isn't a pure anything.

      reply to this | link to this | view in chronology ]

    • identicon
      Wendy Cockcroft, 20 Jul 2016 @ 3:00am

      Re:

      Copyright is the hallmark of a capitalist society. It must be done away with to bring in social equality and justice.

      That's the wrong tool for the job. Copyright (in America) was originally intended to provide a window of opportunity for creatives to make money from their works. That's about as socially equal and just as can be.

      Socialism is always better than capitalism in that there is less greed.

      People find other ways to express their greed. Shops for Party members only spring to mind. Neither Socialism nor capitalism are better than each other per se, they're only systems. We need a hybrid of sorts if we actually want social equality, etc.

      Education, healthcare, communication and entertainment should be free.

      Essential education, communication (e.g. emergency calls) and healthcare, yes. Elective education (e.g. flower arranging), elective healthcare (e.g. cosmetic surgery for vanity purposes), elective communication and entertainment should be subject to market forces.

      That's the human way to do it.

      Thousands of years of history disagree with you.

      I am with Pirate Bay on this one

      The Pirate Bay is apolitical.

      reply to this | link to this | view in chronology ]

  • icon
    leichter (profile), 16 Jul 2016 @ 3:40am

    Location, location, location

    Jokes about placing the court in Holywood notwithstanding, the issue of where such cases are heard is significant.

    In traditional lawsuits, the plaintiff gets to pick the location, as long as they can make a reasonable argument that they have a presence there. A low bar - hence all the patent lawsuits in Texas based on having an empty office with the patent troll's name on the door. If the traditional rules apply to these small claims, you better believe the trolls will have "offices" as inconvenient and expensive for defendants to reach as possible.

    It's not clear how to fix this. You can bias things by letting the defendant pick, but that doesn't work when the plaintiff is "the little guy" - e.g., DMCA 512(f) complaints, or an individual writer suing a mega-corp that's copied his work.

    Traditional small-claims courts almost exclusively deal with suits brought by individuals or small business, usually involving local, physical transactions with other individuals or small businesses; if a large corporation is involved, it's probably a defendant and the "plaintiff chooses location" rule works. Copyright lawsuits usually go the other way around, so the analogy breaks down.

    reply to this | link to this | view in chronology ]


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