New Media Rights files comments in Copyright Office inquiry into remedies for small copyright claims

On October 27, 2011, the Copyright Office released a Notice of Inquiry soliciting commentary on how copyright holders and defendants address small copyright claims within the current legal system, the drawbacks and benefits of the current system, and potential alternative methods for handling such claims. The Copyright Office was primarily concerned that the high cost of federal copyright litigation (as much as $350,000 for claims under $1 million)  may be dissuading copyright holders from filing lawsuits where damages are relatively low, because the potential award will not justify the expense of the litigation. Unlike many other varieties of small claims, state small claims courts are not available as a venue for resolving disputes over small copyright claims, because federal courts have exclusive jurisdiction over copyright claims.  The Copyright Office suggested a number of potential solutions including creating a federal small claims court and allowing state small claims courts to hear copyright disputes.

In our January 17, 2012 comment, New Media Rights identifies a key frustration afflicting small-scale defendants, the “settling culture” that has emerged within the current system whereby defendants are intimidated into paying settlements and accepting DMCA takedown requests rather than risk the high costs of federal litigation. Copyright holders exploit the high cost of federal litigation to extract unwarranted settlements from small-scale defendants and impose improper DMCA take downs.

Similarly, New Media Rights argues the chief drawbacks for plaintiffs with small copyright claims are the high expense and time investment required to litigate any copyright claims in federal court. Although there are multiple alternative avenues of relief available to plaintiffs with small copyright claims (like pursuing related contract claims in small claims court or directly negotiating with infringers), federal litigation does remain their last line of action, and at the moment it is practically inaccessible to many of these plaintiffs.

Clearly the current legal system is in need of reform vis-a-vis small copyright claims. However, New Media Rights points out that the Copyright Office will encounter many formidable obstacles throughout the reform process such as deciding the criteria for a “small claim” (perhaps with a cutoff for monetary damages or by complexity of the case) or the possibility that any reform will simply encourage more malicious claims. New Media Rights concludes that these challenges also suggest a broader need for our entire copyright system to be revisited by the Copryight Office and Congress to ensure that it is fitting the needs of creators, small businesses, and other organizations, and meeting the promoting “Progress of Science and Useful Arts” in the twenty-first century.

Thanks to legal intern Caitline Jaye for her assistance in drafting these comments.

Read the full text of our comments in the attachment below.