New Copyright Legislation Aimed to Give Startups Cost-Effective Way to Enforce Their Rights

Startups in California need to be aware of the issue of copyright reform, as Members of Congress Hakeem Jeffries (D-NY) and Tom Marino (R-PA) recently introduced federal legislation that’s designed to give creators a cost-effective way to enforce their rights.

The Copyright Alternative in Small-Claims Enforcement (CASE) Act was introduced in the House of Representatives this past summer and has been referred to the Subcommittee on Courts, Intellectual Property, and the Internet.

Establishes a Small Claims Board

This bill establishes a small claims board in the U.S. Copyright Office to serve as an alternative forum for parties to voluntarily seek to resolve certain copyright claims if the total monetary recovery sought by a party doesn’t exceed $30,000. This small claims board would be authorized to:

  1. conduct hearings and conferences to facilitate parties’ settlement of claims and counterclaims;
  2. render independent determinations based on copyright laws and regulations;
  3. award monetary relief; and
  4. require cessation or mitigation of infringing activity, including the takedown or destruction of infringing materials, where the parties agree.

For many years, the notion of a copyright small-claims court has been bandied about Washington D.C. Even if passed, this legislation wouldn’t have a significant impact on major labels or publishers, but it could make it easier for small companies and startups to enforce their rights.

The damages in this new tribunal would be capped at $15,000 for each work infringed, up to $30,000 in total. It would be staffed by “Copyright Claims Officers” appointed by the Copyright Office and would follow federal law.

This new system would function as a court in practice, but technically, it wouldn’t be considered a court because the Copyright Office operates under the authority of Congress rather than the judicial branch.

Aimed at Curbing Costs

The cost of bringing federal litigation to enforce copyrights from pre-trial proceedings through an appeals process is roughly $278,000, according to a report by the American Intellectual Property Law Association (AIPLA). For a startup, that could mean it may not be economically feasible to bring a case to protect a copyright, with the potential penalties in copyright lawsuits as high as $150,000 for willful infringement under federal statute.

Voluntary Participation

Participation in the small claims board system would be voluntary on both sides (because the Sixth Amendment guarantees the right to a trial by jury).

With the high cost of federal litigation, potential defendants would have some incentive to try it. And a startup that’s threatened with a copyright lawsuit—such as in a cease and desist letter—could use the small claims board to file for declaratory judgment that the use of the work at issue was either not infringing or qualified as fair use.

The CASE Act has been in committee for several months, so it won’t be effective any time soon.

Summary

Copyright protection is critical to every organization, including your startup. Work with an experienced intellectual property attorney to understand the defenses to trade secret violations and to educate your startup employees.

Attorney Michael Ahmadshahi focuses on patents, intellectual property, copyright, and trade secrets in Irvine, California. The Michael Ahmadshahi, PhD, Law Offices are also located in Beverly Hills and Sherman Oaks. Call us toll free at (800) 747-6081 or direct at (949) 260-4997 or email mahmadshahi@mmaiplaw.com and let us help you with your copyright questions and the IP strategy for your startup.