The CASE Act — A Windfall to Attorneys and Bad Idea for The Rest of Us
By Joshua Lamel and Sasha Moss
You know the old saying, “everything that is old is new again.” Recently, Congressmen Jeffries and Collins along with a host of Senators re-introduced for the third time, the “Copyright Alternative in Small-Claims Enforcement Act of 2019,” more commonly referred to as the “CASE” Act. And while some creators and their large conglomerate media partners think the legislation will go miles to make the lives of artists better, they could be no further from the truth. This legislation, if signed into law, will create problems for the everyday American, as well as small businesses, nonprofits and creators. The only beneficiaries will be large media companies, which have yet again fooled small creators and Members of Congress into believing this piece of legislation will benefit the little guy, when it actually will only fill their own inflated pocketbooks. In this first post in the CASE Act series, I examine how much consumers and artists stand to lose if this bill is signed into law.
Believe it or not, we have been down this road before in two areas of intellectual property law. Back in the early 2000s, Congress began drafting the America Invents Act with the goal of curbing abusive litigation by patent trolls who learned to game the system by attacking mom and pop shops. Bad actors or “patent trolls” would purchase patents that were overly broad or so generic, such as how WiFi is provided to customers in a Whataburger, and sue the end-user. However, it was not only companies who were targeted; small non profits and the everyday American suffered as well.. While the legislation did not solve the problem in its entirety, the Supreme Court stepped in to help curb this abuse.
Now, a little while before all of this was happening, copyright policy was also heating up and looked similar to the same problems in patent law: the everyday American was being attacked by a large company. You may remember this: the file sharing or “Napster wars.” In 2003, Big Hollywood, specifically the Recording Industry Association of America (RIAA), sued 261 American music fans including grandmas and teenagers for using peer-to-peer (P2P) file-sharing services like Napster, Kazaa, Grokster, and others to download content. And in a span of five short years, the recording industry filed, settled, or threatened legal action on at least 30,000 individuals. Americans were getting sued for millions, and they were mad.
The tactics of the RIAA during the file sharing wars was unconscionable. And it can be said, this conflict created a wedge between listeners, record labels, and even websites. It pegged the artists against their audiences. And for the most part, it was not driven by the artists themselves. For example, David Bowie and Prince famously embraced digital music sharing because they saw the internet as the future of the music industry and not an enemy of creatives. However, record labels had a different point of view driven by profit and not creative expression. In fact, most of the profits from extortion tactics on Americans have only gone to big media companies and not royalties for artists. If you are interested in learning more about the file sharing wars, please check out this extensive blog post by our coalition member, the Electronic Frontier Foundation.
What would happen if you combined the worst elements of the abusive legal tactics of patent trolls, with the pain and absurdity of the file-sharing copyright lawsuits? Well, this is exactly what the CASE Act would do. Copyright trolling is on the rise. A recent study shows that trolling behavior accounts for nearly 49.8% of the federal copyright docket. And new lawsuits are filed monthly, supplemented with so-called “pre-litigation” settlement letters with the sole purpose of scaring everyday Americans into settling and not fighting in federal court. Enterprising attorneys like Richard Liebowitz, Lincoln Bandlow, and Righthaven have exploited excessive statutory damages and new technologies to build trolling business models. The CASE Act would throw gasoline on this fire.
The CASE Act establishes an opt-in small claims procedure within the Copyright Office and on first look, it appears innocuous, but when you dive deeper, it is painfully close to the behavior of patent trolls and the file-sharing lawsuits.
The CASE Act provides for a swift process that will allot damages that may not exceed $7,5000 per work or $30,000 in a proceeding, exclusive of attorneys’ fees and costs that may be awarded. In addition, a work does not need to be registered to file a claim. Furthermore, the adjudication will not be located in the place of residence of the petitioner and the alleged infringer. It will be in the Copyright Office, which is located in Washington, D.C. If I were a constituent of original bill sponsor Senator Mazie Hirono from Hawaii, the cost of the trip to D.C. alone would make me furious.
Alleged infringers can be any mom and pop business or nonprofit as well as regular users of platforms like Instagram or Facebook. If you post a photo or song that you do not own — whether or not you know it violates copyright to do so — you will be subject to the small claims procedure. Even if you do all of your research by checking copyright registrations before using a work, you can be subject to a suit because registration is not required. No matter how much background work you do, how hard you try to not infringe a work, if you use it improperly you will be subject to damages that would be over half the annual take home pay for most Americans, without accounting for attorney fees and costs. And this is because a registration merely needs to be pending and awaiting certificate for a claim to be brought.
While advocates for CASE point to the 60-day opt-out period as a panacea, this will not change the fact that most Americans will not even know they are subject to a small claims procedure let alone know they can choose to not engage and go to federal court where copyright cases are litigated. Many will just ignore the notices, thinking they are yet another addition on the long list of scams that have propped up over the last decade. That will lead to a default judgment they will be liable for with no right to appeal the default judgment. And in order to fully understand their legal rights, they will have the cost of hiring an attorney, an expense they will face with or without actually having done something wrong. Enterprising plaintiffs attorneys will realize this, and take advantage of it. Ironically, most creators will not be the ones enforcing their rights, as they will likely assign their rights for a percentage of the recovery to the equivalent of debt collectors, who will seek to enforce them widely and with impunity.
We have seen massive bad behavior by attorneys with the history of patent trolling and the current rise of copyright trolling. We have seen individuals during the file-sharing days face copyright lawsuits that are a public relations nightmare because of the power of statutory damages in copyright and excessive damages threat they place on so many of us. The CASE Act would create an expedited, non-appealable procedure that would combine the worst elements of both these worlds. No one should support this legislation.