[Federal Register Volume 76, Number 208 (Thursday, October 27, 2011)]
[Pages 66758-66761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-27824]



Copyright Office

[Docket No. 2011-10]

Remedies for Small Copyright Claims

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of inquiry.


SUMMARY: The U.S. Copyright Office is undertaking a study at the 
request of Congress to assess whether and, if so, how the current legal 
system hinders or prevents copyright owners from pursuing copyright 
infringement claims that have a relatively small economic value 
(``small copyright claims''); and recommend potential changes in 
administrative, regulatory, and statutory authority to improve the 
adjudication of these small copyright claims. The Office

[[Page 66759]]

thus seeks comment on how copyright owners have handled small copyright 
claims and the obstacles they have encountered, as well as potential 
alternatives to the current legal system that could better accommodate 
such claims. This is a general inquiry and the Office will publish 
additional notices on this topic.

DATES: Comments are due January 16, 2012.

ADDRESSES: All comments and reply comments shall be submitted 
electronically. A comment page containing a comment form is posted on 
the Office Web site at http://www.copyright.gov/docs/smallclaims. The 
Web site interface requires submitters to complete a form specifying 
name and organization, as applicable, and to upload comments as an 
attachment via a browser button. To meet accessibility standards, 
submitters must upload comments in a single file not to exceed six 
megabytes (MB) in one of the following formats: the Adobe Portable 
Document File (PDF) format that contains searchable, accessible text 
(not an image); Microsoft Word; WordPerfect; Rich Text Format (RTF); or 
ASCII text file format (not a scanned document). The form and face of 
the comments must include both the name of the submitter and 
organization. The Office will post all comments publicly on the 
Office's Web site exactly as they are received, along with names and 
organizations. If electronic submission of comments is not feasible, 
please contact the Office at 202-707-8380 for special instructions.

FOR FURTHER INFORMATION CONTACT: Catherine Rowland, Counsel, Office of 
Policy and International Affairs, by telephone at 202-707-8350 or by 
electronic mail at [email protected].


I. Background

    The Copyright Act (the ``Act''), 17 U.S.C. 101 et seq., protects a 
wide variety of works of authorship, ranging from individual articles 
or photographs that may not have a high commercial value to motion 
pictures worth hundreds of millions of dollars in the marketplace. 
Copyright owners of all of these works may seek remedies under the 
federal Copyright Act in the event of infringement. Not all of these 
copyright owners, however, have the same resources to bring a federal 
lawsuit, which can require substantial time, money, and effort. To the 
extent an infringement results in a relatively small amount of economic 
damage, the copyright owner may be dissuaded from filing a lawsuit 
because the potential award may not justify the expense of litigation. 
Even where statutory damages and attorney fees are possible, they are 
not available until the conclusion of the litigation. Moreover, awards 
of statutory damages may be as low as $750 (or, in cases of innocent 
infringement, $200), and may not always make the copyright owner whole.
    In light of these challenges, the House of Representatives' 
Subcommittee on Courts, the Internet, and Intellectual Property held a 
hearing in March 2006 to learn more about the problems faced by small 
copyright claimants (the ``Small Claims Hearing'').\1\ The hearing 
focused on possible alternative dispute resolution systems such as a 
copyright ``small claims court'' or other mechanism. The testimony also 
addressed some of the problems that small copyright claim owners have 
with the current system, as well as concerns about defendants' rights 
in an alternative system. The Copyright Office submitted a statement to 
the Subcommittee regarding the small copyright claims issue, noting 
these difficulties, proposing to review potential alternatives, and 
welcoming the possibility of further study.\2\ The Copyright Office 
also identified some of these ``small claims'' challenges in its 2006 
Report on Orphan Works,\3\ and proposed legislation in 2006 and 2008 
addressing orphan works included provisions that specifically directed 
the Copyright Office to conduct a study addressing remedies for small 
claims, but the legislation ultimately did not become law.\4\

    \1\ Remedies for Small Copyright Claims, Before the Subcomm. on 
Courts, the Internet, and Intellectual Property of the H. Comm. on 
the Judiciary, 109th Cong. (2006), available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_house_hearings&docid=f:26767.pdf.
    \2\ Remedies for Small Copyright Claims, Before the Subcomm. on 
Courts, the Internet, and Intellectual Property of the H. Comm. on 
the Judiciary, 109th Cong. (2006) (statement of the United States 
Copyright Office), available at http://www.copyright.gov/docs/regstat032906.html.
    \3\ United States Copyright Office, Report on Orphan Works 1 
(2006), available at http://www.copyright.gov/orphan/orphan-report-full.pdf.
    \4\ Proposed bills include the Shawn Bentley Orphan Works Act of 
2008, S. 2913, 110th Cong. (2008), which was passed by the Senate; 
the Orphan Works Act of 2008, H.R. 5889, 110th Cong. (2008); and the 
Orphan Works Act of 2006, H.R. 5439, 109th Cong. (2006).

    The Chairman of the House Judiciary Committee has recently asked 
the U.S. Copyright Office to study the obstacles facing small copyright 
claims disputes, as well as possible alternatives. In a letter dated 
October 11, 2011, Chairman Lamar Smith requested that the Office 
``undertake a study to assess: (1) The extent to which authors and 
other copyright owners are effectively prevented from seeking relief 
from infringements due to constraints in the current system; and (2) 
furnish specific recommendations, as appropriate, for changes in 
administrative, regulatory and statutory authority that will improve 
the adjudication of small copyright claims and thereby enable all 
copyright owners to more fully realize the promise of exclusive rights 
enshrined in our Constitution.''
    The Office therefore seeks comments on how parties--both copyright 
owners and those alleged to have infringed--view the current system, 
what their experiences with the current system have been, and what 
types of alternatives would be helpful and viable.

A. Challenges of the Current Legal System

    Currently, copyright owners interested in bringing a lawsuit to 
enforce their copyrights must do so in federal district courts, which 
have exclusive jurisdiction over copyright claims. 28 U.S.C. 1338. This 
is true regardless of the monetary value of the copyright claim. 
Vesting exclusive jurisdiction in federal courts is generally 
beneficial because copyright law is federal law, and federal courts 
have become familiar with copyright analysis and thus should bring a 
level of consistency to copyright cases. Additionally, the Act aids 
some copyright claimants by permitting awards of reasonable attorney's 
fees and statutory damages to the prevailing party, but a plaintiff may 
recover statutory damages and attorney's fees only if the work was 
timely registered. 17 U.S.C. 412, 504, 505.
    Despite the benefits of the current system, there are some 
drawbacks to requiring copyright owners and defendants to engage in 
potentially extensive federal litigation for all copyright disputes. 
One of the major impediments to federal lawsuits is the cost of 
litigation. Although copyright owners could proceed pro se in federal 
court, they often need the assistance of a lawyer to understand and 
handle federal procedures and substantive law. This is especially true 
because, unlike in the state court system, there is no streamlined 
``small claims'' process for claims with a lower monetary value. If a 
copyright owner hires a lawyer, the expenses can add up quickly. 
Contingency fee arrangements are relatively rare in copyright lawsuits; 
thus most copyright owners will have to pay an hourly fee for 
representation. Lawyers charge hundreds of dollars per hour, which 
could reach a total of tens

[[Page 66760]]

or hundreds of thousands of dollars when a case does not immediately 
settle and instead requires discovery, motion practice, and trial. In 
fact, one recent survey found that, as of 2011, the median cost for 
litigating a copyright infringement lawsuit with less than $1 million 
at risk was $350,000. Am. Intellectual Prop. Law Ass'n (``AIPLA''), 
Report of the Economic Survey 2011 35 (2011). Even if a copyright owner 
proceeds pro se, litigation itself includes court costs and fees, which 
can add up to a not insignificant sum. Many individual copyright owners 
simply do not have the resources to fund expensive litigation. 
Moreover, even though the Act allows some awards of attorney's fees, 
other costs, and statutory damages, these awards are not guaranteed--
and may not be available at all depending on the timeliness of 
copyright registration--and are only awarded at the end of litigation, 
likely after a copyright owner has made significant out of pocket 
payment to cover legal fees and court costs. Additionally, an award of 
attorney's fees--assuming that it is collectible--will not necessarily 
reimburse the copyright owner for all fees expended in prosecuting a 
    In federal litigation, the period of time between the filing of a 
case and the final determination can be lengthy. The Federal Rules of 
Civil Procedure allow parties to engage in extensive discovery and 
motion practice, which often take far more than a year to complete. In 
fact, the median time for all cases that went to trial--not just 
copyright suits--was twenty-three months in 2009-2010.\5\ This lengthy 
time frame requires litigants to expend energy and effort throughout a 
relatively long period of time. This investment of time, not to mention 
the associated expenses, may not be feasible for individual authors, 
who may not be able to dedicate sufficient time to handle all of the 
litigation burdens.

    \5\ Federal Judicial Caseload Statistics, March 31, 2010, Office 
of Judges Programs, Statistics Division, Administrative Office of 
the United States Courts, Table C-5, available at http://www.uscourts.gov/Viewer.aspx?doc=/uscourts/Statistics/FederalJudicialCaseloadStatistics/2010/tables/C05Mar10.pdf. The time 
frame differs significantly between districts--from 11.1 months in 
the U.S. District Court for the Eastern District of Virginia to 41.2 
months in the U.S. District Court for the District of Columbia.

B. Potential Alternatives for Small Copyright Claims

    The Office is interested in learning about alternatives to the 
current legal system that might help alleviate some of the burdens 
associated with pursuing small copyright claims. Some alternatives were 
identified at the Small Claims Hearing, including: (1) Using the 
current Copyright Royalty Board (a panel of administrative law judges 
established under Chapter 8 of Title 17 that sets rates and terms for 
statutory licenses and decides how to distribute certain statutory 
license royalties); (2) creating a federal ``small claims court'' or 
otherwise streamlining federal procedures; (3) developing a staff of 
dedicated administrative law judges to specialize in small copyright 
claims; (4) amending the Act to allow state courts (including small 
claims courts) to hear small copyright claims; and (5) allowing trade 
associations or other group representatives to bring a single, large 
filing on behalf of a sizeable group of small copyright owners. While 
these alternatives deserve balanced discussion, there may be other 
potentially suitable options that were not discussed at the Small 
Claims Hearing.
    There are, of course, a variety of issues that require further 
consideration. These include:
    Degree of Difficulty Litigating Small Copyright Claims in the 
Current System: Before analyzing various alternatives to the current 
system, it is important to further explore the obstacles that the 
district court process presents in small copyright claim cases. This 
would help focus future analysis and any potential alternative legal 
    State Court Involvement: State courts do not have expertise in 
copyright jurisprudence. As noted above, Section 1338 of Title 28 of 
the U.S. Code vests federal courts with exclusive jurisdiction over 
copyright claims. Moreover, Section 301 of the Act explicitly preempts 
state claims ``that are equivalent to any of the exclusive rights 
within the general scope of copyright as specified by section 106 in 
works of authorship that are fixed in a tangible medium of expression 
and come within the subject matter of copyright as specified by 
sections 102 and 103.'' Thus, state courts are not experienced in the 
nuances of copyright law and may not have sufficient resources to 
devote to a claim's intricacies, especially when limited in a small 
claims court context. Nevertheless, state courts commonly handle small 
disputes, and thus they likely have the structure to handle the 
logistics of such claims. State court involvement, however, is only one 
possible avenue to explore and there are also several federal options 
that should be considered in the discussion.
    Location of Federal Court/Tribunal: Creating a federal ``small 
claims court'' or administrative judge panel would create logistical 
rather than jurisdictional challenges, including where the court(s) and 
panel(s) would be located. If there are several courts or panels 
located throughout the country, it may provide more convenience to the 
parties, but it may also reduce consistency and add to administrative 
costs. Alternatively, if there is only one court or panel, the guiding 
rules could allow for liberal use of telephone conferences and 
videoconferences, and the procedures could focus more on a paper 
practice with fewer (if any) hearings. The court or tribunal could also 
limit the types and amount of discovery in the interest of expediency.
    Affiliation With the Copyright Office or Copyright Royalty Board: 
The Copyright Office administers the Copyright Act, is a substantive 
expert on provisions of copyright law, and has statutory 
responsibilities in both litigation and administrative law. It may thus 
be appropriate for the Office to be associated with a new process. 
Similarly, the Copyright Royalty Board is already proficient in 
handling administrative procedures under the Act, and it may have the 
capability of expanding its scope to handle additional claims.
    Determination of ``Small'' Copyright Claims: Although many 
copyright owners are concerned about the cost of litigating ``small'' 
copyright claims in federal court, the definition of ``small'' is 
unclear. Any changes in legal process must take a balanced approach to 
determine which claims are deemed ``small'' enough to fit into the new 
    Voluntary or Mandatory: A major question is whether a new small 
copyright claim process would be voluntary or mandatory. Copyright 
owners may want the option of choosing which type of court hears a 
claim, and defendants might similarly wish to remove a claim filed in a 
new court or panel to federal district court. Additionally, the 
question arises about how to appeal an adverse decision--and to what 
court or other body.
    Fair Use: The affirmative defense of fair use defense is extremely 
fact-specific and typically requires courts to examine decades of 
judicial precedent. The ability to present and have heard a fair use 
defense is therefore a concern.
    Defendants' Appearance: It has been suggested that defendants 
should not be required to appear at a small copyright claim proceeding 
until the copyright owner provides a prima facie case of infringement. 
This ostensibly would prevent a copyright owner from dragging a 
defendant into a legal proceeding without cause. It is unclear

[[Page 66761]]

whether this would be necessary, or whether an alternative small 
copyright claims proceeding might instead rely upon a rule akin to 
Federal Rule of Civil Procedure 11, which requires plaintiffs to 
certify the veracity of the claim.
    Available Remedies: Because a small copyright claim process likely 
would be limited to reduce costs and time, it is unclear what types of 
remedies should be offered. The Act itself offers a number of 
infringement remedies, including injunctions, monetary relief 
(including statutory damages), impounding of infringing copies and of 
the articles by means of which infringing copies may be reproduced, 
costs and attorney's fees. Consideration should be given to whether an 
alternative small claims process could or should provide this whole 
panoply of remedies, and whether the new system would also allow 
preliminary relief to prevent impending or continuing infringement, 
similar to a temporary restraining order or preliminary injunction 
under Federal Rule of Civil Procedure 65.
    These are but a few of the factors to analyze before deciding 
whether to move forward with a new small copyright claim system, and, 
if so, what that new process might be.

II. Subjects of Inquiry

    The Office seeks comment on how copyright owners and defendants use 
the current legal system for small copyright claims, including 
information on the obstacles and benefits of using federal district 
courts. Additionally, the Office requests comment on potential 
alternatives for handling copyright claims that have a relatively small 
economic value. The Office is interested in comment on the logistics of 
potential alternatives, as well as the benefits and risks presented by 
different types of processes.

III. Conclusion

    The Office hereby seeks comment from the public on factual and 
policy matters related to the treatment of small copyright claims. If 
there are any additional pertinent issues not discussed above, the 
Office encourages interested parties to raise those matters in their 
comments. In addition, the Office is considering having one or more 
roundtables or formal hearings on the matters raised above in the 
coming months. It is also likely that, following receipt of the 
comments in response to this Notice, the Office will publish a further 
Notice of Inquiry posing specific questions and possibly exploring 
additional alternatives.

    Dated: October 24, 2011.
Maria A. Pallante,
Register of Copyrights.
[FR Doc. 2011-27824 Filed 10-26-11; 8:45 am]