Felony Streaming and CASE Act Pass: What You Need to Know

Congress has passed two new copyright laws: the Felony Streaming Act and the CASE Act. Here's what you need to know.
Louis Velazquez / Unsplash

Whether you’re a content creator or content user, here’s everything you need to know about the nation’s newest copyright laws.

On Monday night, Congress approved a $900 billion COVID relief package paired with must-pass government spending legislation. Included within the 5,593-page bill—by far the longest ever passed—are thousands of pages of other laws on a host of issues impacting federal housing, environmental issues—there’s even a program for eradicating murder hornets. I’m going to let Murder Hornet Lately tackle that one, while I focus on two significant pieces of copyright legislation that are about to become law.

UPDATE—December 27, 2020—President Trump has signed the stimulus bill (of which these two copyright provisions are but a very small part).

The Felony Streaming Act

The Felony Streaming Act makes unauthorized commercial streaming punishable with prison time. It’s a more narrowly-tailored version of a proposal introduced a few years back that people said could land Justin Bieber in jail. While I figured that might actually be a hook everyone could rally around, I turned out to be wrong, as the bill died amidst criticism that it would encompass individual streamers.

The new version of the law is explicitly geared toward commercial operators as opposed to solo users. Contrary to some news reports that I’ve read, the law only appears to apply to websites or, in the language of the Act, a “digital transmission service.” Operators are on the hook if their site operates “willfully, and for purposes of commercial advantage or private financial gain” and (1) is “primarily” designed to publicly perform unlicensed works; (2) has “no commercially significant purpose” other than to do so, or (3) is “intentionally marketed” so as to promote its use of unlawful public performances.

The law imposes fines and potential prison sentences of up to three years, increasing to five years in connection with works that haven’t yet been made available for public streaming or home viewing. Second or subsequent offenses carry up to a ten year prison term.

The CASE Act

The much lengthier—and much more controversial—new law is the Copyright Alternative in Small-Claims Enforcement Act of 2020 (CASE Act for short). The CASE Act creates an entirely new tribunal within the Copyright Office comprised of “claims officers” who have the power to adjudicate infringement claims and issue damages awards of up to $30,000 per case.

There’s been a lot of ink spilled about whether or not the CASE Act is net positive from a policy perspective, and public interest groups have weighed in on both sides. User-advocacy groups like the Electronic Frontier Foundation and Public Knowledge strongly opposed the bill, arguing it would create an unaccountable tribunal “that would be exempt from the regulations and procedures of the judicial branch” and which would award damages that could “bankrupt individual artists and creators while letting corporations and sophisticated mass infringers off the hook entirely.”

On the other end of the spectrum, groups like the Copyright Alliance, which represents the interests of content creators, asserted that the CASE Act would enable creators to pursue claims that would be too expensive to bring in court, and that the Act simply provides a voluntary, alternative action for resolving disputes that “takes nothing away from the status quo.” However, judging from the heated discussion on Twitter in the hours before the bill passed, a lot of folks aren’t convinced.

Here’s a breakdown of the important provisions of the CASE Act:

The CASE Act provides for a new alternative forum within the Copyright Office called the Copyright Claims Board (CCB). The CCB will consist of three Copyright Claims Officers appointed by the Librarian of Congress to renewable six year terms in consultation with the Register of Copyrights. Each of these officers will be an attorney with at least seven years of legal experience.

Two of the officers will have “substantial experience in the evaluation, litigation or adjudication of copyright infringement claims” and will have “represented or presided over a diversity of copyright interests, including those of both owners and users of copyrighted works.” The third officer will have substantial familiarity with copyright law and experience in the field of alternative dispute resolution.

It’s going to be important to the credibility and integrity of the system for the Librarian of Congress and Register of Copyrights to choose claims officers who won’t simply rubber stamp requests for maximum damages or default judgments, which has been one of the principal criticisms of the CASE Act.

Opt-Out Provision

Participation in CCB proceedings is on a voluntary basis. Either the claimant (the party initiating the proceeding) or the respondent (the party opposing) can opt out within 60 days from the date of service. If this happens, the claimant (plaintiff) would be able to file a copyright infringement lawsuit against the respondent (defendant) in federal court.

Another major criticism of the bill has been the concern that notices from the claimants or the CCB will be ignored by respondents, leading to a slew of default judgments. Under the version of the CASE Act as passed, alleged infringers will receive a notice from the CCB letting them know that a claim has been initiated—and informing them of their right to opt out of the proceeding. The CCB will will need to make sure the notice looks official (without appearing spammy) so that recipients will pay attention to it.

Types of Claims

The CCB is empowered to hear both claims for infringement as well as claims for a declaration of noninfringement. Interestingly, the Board can also hear claims for misrepresentation in connection with a notification of claimed infringement or a counter-notification under the Digital Millennium Copyright Act. There’s a three year statute of limitations to bring a claim.

Discovery and Motion Practice

Discovery in CASE Act proceedings will consist of written document requests, interrogatories and requests for admission. No depositions are permitted. There’s no formal motion practice in CASE Act proceedings, although the claims officers may request or permit parties to “make submissions addressing relevant questions of fact or law.” It’s remains to be seen how all of this will operate in practice.

Conduct of the Proceedings

The CCB may conduct hearings on issues of law and fact, including receiving oral testimony from parties and witnesses. The types of evidence that may be considered by the CCB include documentary evidence, and written testimony from parties and nonexpert witnesses. In “exceptional cases,” expert witness testimony may be permitted.

Remedies

Similar to federal district courts, the CCB may award either actual damages and profits (in accordance with section 504(b) of the Copyright Act), or statutory damages. In a departure from district court copyright practice, copyright owners are eligible for statutory damages even if they have not timely registered their works under section 412.

Statutory damages for unregistered works are limited to $7,500 per work infringed, or a total of $15,000 in any one proceeding. If a work has been timely registered, the maximum statutory damages award is increased to $15,000 per work infringed. The CCB may not make any finding or consider whether the infringement was committed willfully.

Contrast these awards with court proceedings. There, statutory damages are only available to copyright owners who have registered their copyrights prior to infringement (or within a three month grace period following publication), but awards may be as high as $30,000 per work infringed (and up to $150,000 if an infringement has been committed willfully).

Regardless of whether the claimant seeks actual damages/profits or statutory damages, there’s a limit on the total monetary recovery in any single CCB proceeding of $30,000.

Attorneys’ Fees

Unlike court proceedings, the CCB may not award attorneys’ fees to the prevailing party, except in the case of “bad faith conduct” by one of the parties (pursuing a claim or defense for a “harassing or other improper purpose or without a reasonable basis in law or fact”). Fees and cost awards in such situations are limited to $5,000 (or up to $2,500 against pro se litigants). In “extraordinary circumstances, such as where a party has demonstrated a pattern or practice of bad faith conduct,” the CCB may award costs and fees in a higher amount. In most proceedings, the parties to CCB proceedings are expected to bear their own attorneys’ fees and costs.

No Appeals

Decisions by the CCB are not appealable to a higher court. They are subject to certain judicial review procedures on the basis of fraud, corruption, misrepresentation or other misconduct. Default judgments may be reviewed by a district court, which has the power to vacate them upon a showing of excusable neglect.

Other Noteworthy Provisions

Potential Limits on “Repeat Players”

A couple of other random items that I think are interesting: the Register of Copyrights may establish regulations relating to the permitted number of proceedings under the CCB that may be filed by the same claimant. Given the number of “repeat players” when it comes to copyright litigation, it remains to be seen whether the Register will actually use her power to limit the number of cases filed by any particular copyright owner.

Law Student Representation of Parties

Another notable aspect of the CASE Act is that law students are expressly permitted to represent parties (either claimants or respondents) on a pro bono basis under the supervision of an attorney or law clinic. I expect to see these types of clinics formed at law schools around the country, giving aspiring copyright lawyers an opportunity to hone their skills.

Registration Need Not Be In-Hand to Commence Proceedings

Finally, while applying for copyright registration is a prerequisite to bringing a claim before the CCB, the copyright owner doesn’t need to actually receive the registration before commencing a proceeding (so long as it hasn’t been refused). This is a departure from the rule established by the Supreme Court earlier this year in Fourth Estate v. Wall-Street.com, which held that an in-hand registration is required in order to proceed with a copyright claim in court. A registration will need to have been issued before the CCB may render an award.

The Copyright Office still needs to establish regulations to carry out the CASE Act, but is required to begin operations no later than one year from now. In the meantime, as you begin to think about whether you’d utilize this process as a claimant, or opt-out as a respondent, here are some pros and cons:

  • Cost of proceeding before CCB should be less expensive and faster than court, allowing owners with fewer resources to pursue their rights, or to bring cases which court costs couldn’t justify
  • Attorney representation is not required for individuals or companies
  • CCB Officers are subject matter experts in copyright law, unlike district court judges
  • A registration certificate need not be in hand to commence proceeding, so long as its been applied-for
  • Statutory damages are available for works not timely registered (although in a lesser amount).
  • Limited discovery (e.g., no depositions, no third party subpoenas)
  • Lower damages awards than district court
  • No ability to recover attorneys’ fees or costs, unless bad faith conduct
  • No ability to appeal
  • Well-heeled respondents likely to opt-out

Pros for Alleged Infringers (Respondents)

  • Less costly proceeding than district court
  • Limited discovery
  • Proceedings subject to lower damages awards than district court (although remains to be seen whether damages will actually be lower than district judges have awarded)
  • Not subject to attorneys’ fees unless bad faith conduct

Cons for Alleged Infringers (Respondents)

  • Loss of Seventh Amendment right to jury trial
  • Subject to damages award of up to $30,000 for cases that copyright owners might not have otherwise have incentive to file
  • Claimant who has not timely registered can still recover statutory damages (although in a lesser amount)
  • Damages may be higher than in court, especially for works not registered prior to infringement, which may result in statutory damages awards higher than actual damages
  • Affirmative opt-out required—opt out notices may be missed or ignored, subjecting content users to default judgments and debt collection efforts
  • Questions remain about separation of powers and constitutionality of copyright claims being adjudicated by Article I tribunal (legislative courts), as opposed to Article III (judicial branch)

Are there others I’ve missed? Do you have questions or comments about the Felony Streaming Act or the CASE Act? Let me know below or on one of the Copyright Lately social media accounts!

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