Tucked away in the CARES ACT of 2021 is a new provision of the Copyright Act, that instructs the Copyright Office to establish a Copyright Claims Board. The Claims Board will be empowered to hear claims of copyright infringement of up to $30,000.  The new system, which is voluntary, provides for a much more streamlined procedure in exchange for limiting damages and attorney’s fees.

The Copyright Office has a year to implement the new tribunal.  Both copyright owners and those who are frequent targets of infringement claims should begin preparing now for what may become a popular way to resolve small claims.

Need For Small Claims Tribunal
Federal courts have exclusive jurisdiction over copyright claims.  With the explosion of social media, the number of claims of use of copyrighted content, particularly images, has similarly exploded.  Federal courts are not well equipped to deal with such claims; the typical damages are small, while federal litigation can be complex, protracted and expensive.

A typical case involves a celebrity finding a photograph of herself at an event or restaurant and posting it to her Instagram account.  Or, a business comes across a photograph of a celebrity wearing or using its product, and posts it to its website to promote the product.  In both cases, the photographer then sues for copyright infringement.  The Copyright Act allows statutory damages of up to $30,000 per work, or up to $150,000 per work if willful, plus attorney’s fees, so the photographer often can threaten significant damages.  On the other hand, federal litigation can be involved and expensive, and fees have to be paid up front, or the case taken on contingency.

So Congress enacted the Copyright Alternative in Small-Claims Enforcement Act of 2020, which directs the Copyright Office to establish the Copyright Claims Board.

Features Of The Claims Board
The Claims Board will have several limits on what it can do:

• Voluntary – no one is required to litigate before the Claims Board.  Claimants may still bring their infringement cases in federal court.  And the respondents have 60 days to opt-out and have the case reviewed in federal court instead.
• Limited damages – the limits are $15,000 per work and total damages of $30,000.
• Limited Attorney’s Fees – Only for bad faith filings, and even then limited to $5,000, other than “exceptional cases.” 
• No finding of willful infringement – that issue is beyond the Claims Board’s jurisdiction.
• Limited Discovery – no oral depositions.  Written discovery is allowed.  The Board has the discretion to hear oral testimony. 
• Limited judicial review – once a decision is rendered, either party may request reconsideration and then review by the Register of Copyrights.  After that, a party can seek review in federal court, but only on very limited grounds: “fraud, corruption, misrepresentation or misconduct.”

The new law also allows for those accused of infringement to request a declaratory judgment of non-infringement.  And, it provides for default if a responding party fails to answer or opt-out in the 60-day period.

The Claims Board does not have the power to issue an injunction, but the parties can agree that the Claims Board has the power to determine that certain infringing activities cease.

In short, the Claims Board is purely voluntary, and has much more limited powers than federal courts.  It is designed to be a much quicker and less expensive way of solving  small copyright disputes.

It is better to think of the Claims Board as a specialized arbitration panel, with arbitrators who have experience in copyright law.  In fact, Congress encouraged referrals to the Claims Board by federal courts.  Federal law requires federal courts to use alternative dispute resolution procedures for almost every case; the new law emphasizes that the Claims Board qualifies.  One should expect federal judges to encourage (read pressure) litigants to avail themselves of this option.

What Should Interested Parties Be Doing To Prepare?
For copyright owners, early registration is critical.  The Claims Board, like federal courts, may only hear claims where the work is registered (or where the Copyright Office has refused registration).  It is not enough to have an application on file. 

Furthermore, statutory damages are limited to half the permitted amount where the infringement began before registration.

So for copyright owners, registering early, and continuing to register new works, is sound policy.

​For those using others’ content, especially those regularly posting content created by others to their websites or social media accounts, good policy is to review the content and its origin to ensure that one is not posting infringing content.  The fact that something was posted somewhere on the internet does not make it free for the taking.  A bit of due diligence now can avoid heavy damages later. 

What do the Knicks, Mets and Islanders have in common with the Florida Gators?  It's not their history or their sports.  Their commonality is two things, or rather, two colors: orange and blue.  At their games, you will see orange and blue like a wave of a two-color rainbow throughout the stadium.
 
But can you copyright an orange and blue color-combo?  And if not the color duo, then perhaps each team's logo, mascot stripes, or other patterns connected with the team's uniforms?
 
The legal question at the heart of apparel copyright is "conceptual separability," which seeks to delineate whether it is possible to separate the specific team-recognized apparel design from the apparel's utilitarian functions. (Apparel is defined as clothing, accessories, baggage, blankets, etc.) If the answer is no, then the apparel copyright could be invalid.
 
Varsity Brands, Inc. v. Star Athletica, LLC, a Sixth Circuit case, provides an example of a real-world dispute on this issue.  Plaintiff Varsity Brands is the world’s largest designer, manufacturer and seller of cheerleading apparel, with five of its many copyrighted cheerleading uniform designs at issue in the suit. Varsity sued Star Athletica for copyright infringement based on the latter’s similarly-designed uniforms.  Here, the question was whether the stripes, patterns and colors that are incorporated into the design of a cheerleading uniform can be identified separately and are capable of existing independently of the uniform’s utilitarian aspect.  In other words, absent stripes, chevrons, patterns, and color blocks, is a cheerleading uniform still a cheerleading uniform, and its branding is standalone?  The Court of Appeals for the Sixth Circuit said yes, thus finding Varsity’s copyrights valid. But the Supreme Court has agreed to review the matter.
 
The question remains as to how the Supreme Court will define “utility” versus “brand,” a question still open in the fashion industry despite years of lobbying to protect against so-called copyright "knock-offs."  By the time you next attend a Knicks, Mets, Islanders or Gators game, the Supreme Court may have already defined what is actually the uniform, and what’s just orange and blue.

Believe it or not, many of the characteristics stereotypically associated with Sherlock Holmes were not actually significant elements in most—or even any—of the 60 stories written by Sir Arthur Conan Doyle about the now-iconic fictional detective.  Holmes’ magnifying glass, for example, appeared occasionally in the novels and short stories, while the distinctive, curved calabash pipe did not feature at all, but became a part of the Holmes persona over time, as people interpreted the character on stage, in films, and in illustrations.  The instantly-recognizable double-brimmed deerstalker hat, while not mentioned by name in the Sherlock Holmes canon, was represented in the original commissioned illustrations that accompanied the first publications of Conan Doyle’s stories in The Strand Magazine in the late 19th century.  Since then, there have been numerous adaptations and reinterpretations of the famous sleuth and his adventures with trusted sidekick, Dr. Watson.  Many of these adaptations, however, were produced only with the blessing of (and payment of licensing fees to) the late British author’s estate, even though only a handful of the stories from the Sherlock Holmes catalog of work were still under copyright. 

California-based lawyer and author Leslie Klinger—who, according to his website, is “one of the world's foremost authorities on Sherlock Holmes”—agreed to the Conan Doyle estate’s demand of purchasing a $5,000 copyright license before publishing his 2011 anthology entitled “Study in Sherlock: Stories Inspired by the Sherlock Holmes Canon.”  When the estate learned that Klinger was working on a sequel a few years later, they demanded his publisher halt publication until he would agree to obtain another license.  Instead of capitulating, Klinger sued the estate on the grounds that his work was only drawing from stories that were already in the public domain under copyright law, and thus, did not require a license for use.  Under US law, works published before 1923 are now considered to be in the public domain; this includes the 50 Sherlock Holmes stories published between 1887 and 1922.  But the 10 most recently-published stories are still under copyright protection, since they were published after 1923.  The Conan Doyle estate argued that the dynamic development of the two main characters was not fully complete until those final 10 stories were published, and hence, Holmes and Watson should not yet be freely used in the public domain, as elements of the characters themselves were still copyrighted.

A federal appeals court in Chicago disagreed with the Conan Doyle estate and the Conan Doyle estate has petitioned the Supreme Court to review this case.  If this court decision stands, the enigmatic residents of the fictitious 221B Baker Street will finally enter the public domain in their entirety and may be used freely in new creative works without having to seek permission from the author’s descendants.

LinkedIn Corporation may not have a face (or name) for the individuals responsible for circumventing many of their security measures to mine a significant amount of user data since last May, but they certainly have a case against them.  The professional social network noticed suspicious patterns of activity and discovered that thousands of fake profiles had been created by automated software programs, somehow avoiding the various safeguards (e.g. CAPTCHA, daily activity limits, etc.) meant to weed out such “bots.”  These artificial accounts were being used to copy, or “scrape” information from hundreds of thousands of bona fide member profiles, presumably for less-than-noble purposes such as identity theft, phishing, or other spammy practices.  The bogus profiles were traced back to a mass of accounts on Amazon’s cloud-computing platform, and as part of its suit filed against these Doe Defendants last week, LinkedIn “intends to file motions to expedite…discovery requests” that it will be serving on Amazon Web Services, in hopes that they will fork over the names of the offending accountholders.  (Amazon.com, itself, is not being charged.)Interestingly, the fact that no specific defendants are named here does not put a damper on such a lawsuit.  It’s been done (and won) before, and continuing with the investigation and legal proceedings—even with as-yet-unidentified defendants—serves numerous purposes.  It disrupts a botnet’s activities, since its operators are probably running scared, knowing that the authorities are on to them.  At the same time, the lawsuit intimidates future cybercriminals from targeting the plaintiff’s sites, since they see that these digital crimes are being taken seriously.  Legal action also incentivizes third parties to cooperate with the investigation, since it involves actual subpoenas, and not just (oft-ignored) letters and voicemails to a company’s in-house counsel.  Finally, if and when the perpetrators are identified, a strong case has already been built up against them, ready to wallop the defendants as soon as they hit the courtroom.

The individuals ultimately responsible for the illegal data extraction used so many different tactics to evade LinkedIn’s security measures, that the company believes they must have been aware of the various restriction levels built into the site’s technology.  Not only do these practices violate LinkedIn’s User Agreement, they also break state and federal laws relating to cyber-fraud (and possibly copyright laws, as well), making this infraction a pretty big deal.  However, the botnet behind this case may very well be a “zombie army” made up of unsuspecting individuals’ computers, which have been infected by a virus or otherwise compromised.  So, even if the physical infrastructure is taken out, unless the actual hackers are caught, they could, theoretically, pull off such a scheme again.  LinkedIn has already disabled the fake profiles and implemented additional security measures on its site.  Given the extensive usage of its networking tools amongst today’s professionals and recruiters, though, LinkedIn’s engineers (and those of other companies like it) certainly have their work cut out for them in terms of making their systems more secure; after all, malicious technology advances right along with the more honorable kind.

Back in 2004, Google launched "Google Print" and the "Library Project," the early stage iterations of what would eventually become its Google Books program.  It began as partnerships between the company and rights holders who wanted select information relevant to their materials to be "hosted" online, as well as a number of major libraries wishing to digitize their book collections.  Since its inception, Google Books has scanned and converted over 20 million books and periodicals into digital, searchable files.  Almost immediately after the program began, the company came under fire from the Authors Guild, who argued that Google's digitization of copyrighted works without the owners' permission constituted copyright infringement.  (Google settled a similar case last year with a group of publishers who took issue with the company's book-scanning practices.)On November 14th of this year, a judge finally brought the long-running Authors Guild case to rest, deciding in favor of Google.  New York federal court Judge Denny Chin assessed the multiple factors involved in determining whether or not something was to be considered "fair use," and ruled that the Google Books program and its methods did, indeed, fall within those guidelines.  Furthermore, he emphasized that the project served to benefit society as a whole.  Not only does it assist in preserving old or rare volumes that might be in danger of disappearing from shelves altogether; on a more basic level, readers, researchers and librarians use Google Books as an educational tool, and not as a replacement for buying books, he explained.

At face value, it is reasonable to be concerned that the existence of exact digital copies of books might present a risk that the actual books would no longer be purchased, or even "necessary."  However, per the judge's opinion, there are multiple reasons why there is no real danger of that fear coming to fruition.  Firstly, the security measures employed by Google prevent anyone from being able to piece together the search tool's "snippet" results into a complete book; certain sections are "blacklisted," ensuring that even the most determined researcher could not access an entire work via strategic querying.  Secondly, many feel that these snippets actually serve as free advertising for the books they represent, functioning similarly to the "sneak peak" feature that often appears in Amazon.com's book-selling section, for example.  Potential readers (aka buyers) can use Google Books to search for a specific passage or particular topic in which they are interested, and be directed to precisely the volume that they need, at which point they can go ahead and buy the actual book.

Even in instances where Google scans and makes available an entire work for a particular library, the Court found that this still falls under the category of "fair use," as the library already owns the book itself, and merely makes use of the digital copies for purposes that "advance the progress of the arts and sciences" and aid in accessibility for the visually-impaired and other underserved populations.    To be sure, Google's ultimate goal (as with any other company) is to make money.  But since they are not selling the actual images of the books they are digitizing—even though they neither request authorization from nor offer compensation to the copyright holders of those works—there is no issue of their unlawfully profiting from material that they neither create nor own.

The Authors Guild plans to appeal the judge's ruling, no doubt concerned that such a precedent might encourage abuse of the "fair use" statute by other companies.  Meanwhile, Google Books hopes for a similar judgment in their favor in a complaint currently being brought against them by a photographers' trade group.