The New Copyright Small Claims Bill: A Ray of Hope for Independent Photographers

By Adelaide Dunn*

screen-shot-2016-10-18-at-4-11-35-amThe U.S. Copyright Act’s single regulatory system fails to accommodate the diversity of production methods, output speeds and business models of today’s creative entrepreneurs. In the eyes of independent and freelance artists, one of copyright’s greatest flaws is its requirement that an infringement claim be litigated in a federal court – an endeavor accruing costs that often far surpass the value of the work at issue. Since 2006, the United States Copyright Office has been questioning creators, holding panel discussions and conducting research pertaining to a new model for resolving small claims. The Copyright Alternative in Small-Claims Enforcement Act of 2016 (“CASE Bill”), introduced in July this year, would create a new Copyright Small Claims Board (“Board”) facilitating the resolution of claims valued below $30,000 in actual damages. The aim is to overcome two of the most common criticisms of copyright law: that its systems favor large corporations over independent and freelance creators, and that it is an abstract set of rules that the general public chooses to ignore. The CASE Bill sketches out an ambitious yet promising new system that has the potential to facilitate settlements, dissuade infringing activity (particularly online), and ensure remedies for copyright infringement are available to low-income creators.

The proposed Board is a streamlined, inexpensive, Internet-based dispute resolution system to be administered by the Copyright Office. Three Officers are to act as adjudicators – two having had significant experience representing or presiding over a diversity of copyright interests, and the third having expertise in alternative dispute resolution. Decisions are primarily made on the papers filed with the administration. Hearings or discussions towards settlement can take place over teleconferencing facilities where needed. The system is designed without the need for attorneys, such that rules of procedure are relaxed, discovery is minimal, and costs are only awarded for cases brought in bad faith. All copyright defenses, including fair use, are available. Because of constitutional limitations, participation with the Board is voluntary, and its decisions do not create precedent.

Creative associations such as The Professional Photographers of America (“PPA”) and the Authors’ Guild are seeing their long-term lobbying efforts come to fruition. The type of creator in need of the new system is what the PPA describes as “low value, high volume” – individuals such as designers, illustrators and photographers – who spend time creating many copyrightable works that are individually of low commercial value. The business of photographers is profoundly affected by online copyright infringement, such that photographers are the prime candidates for the new system (and the example used in this article).

The copyright woes of the independent photographer

Photographers differ from “low volume, high value creators” – such as film directors – who channel their creative efforts into one high value work at a time. A photographer may take hundreds of copyrightable photographs in a day, while also conducting the day-to-day administrative tasks of running a small business. It is easy – and habitual – for Internet users to share photographs without permission, often with watermarks and rights information scrubbed from images or metadata. Exacerbating the issue is the common belief that works of creative expression that appear online – particularly images – are free for the taking. According to a survey by the PPA, 70% of professional photographers have had their work infringed over the past three years.

It is unsurprising that photographers have long protested our “one size fits all” copyright system. Although photographers and filmmakers both depend financially on the licensing of copyright in their works, filmmakers are often better placed to pursue infringement claims. With a stable, financed project overseen by numerous stakeholders, a filmmaker and her studio receive comprehensive legal advice. Attorneys maintain the film’s “IP-hygiene”, including ensuring that copyright in the film (as well as in its posters, soundtrack and other components) is registered with the Copyright Office. Though a creator attains copyright automatically on the creation of the work, the Copyright Act requires that a plaintiff possess a registration certificate before bringing suit for infringement. Registering works in a timely way means that the plaintiff can recover attorney fees from the defendant (17 U.S.C. § 505). It also enables the plaintiff to recover statutory damages, which do not require proof of actual damage, and can be significant (up to $150,000 if the infringing activity is found to be willful) (§ 504(c)).

Softer registration requirements

The registration requirement has been criticized for benefiting the deep-pocketed and well advised over the low-income creators that statutory damages and attorney fees are designed to benefit (Ciolli, 1007). A photographer often lacks the time and money to register his works, given that the Copyright Office’s fees average between $35 – $55 per work, and differ for “published” and “unpublished” works – a distinction many photographers see as burdensome and outdated due to the digital sharing ecosystem. The new small claims system bypasses these difficulties and caters to the reality that most creators do not learn of the legal benefits of a registration certificate until a dispute has arisen that necessitates one. To file a claim, a complainant needs only to have submitted an application for a registration, and can still recover statutory damages if successful. The Board can also award actual damages and profits, but because these are complex calculations in copyright disputes, the combination of statutory damages and soft registration rules will be a boon to photographers.

The Copyright Office will need to create a user-friendly digital platform that allows for e-registrations to be made contemporaneously with the filing of claims. Because many photographers will participate pro se, the platform will be critical in communicating instructions and providing downloadable forms and templates to aid the drafting of briefs. But such a system is probably outside of the Copyright Office’s current IT capacities. Register Maria Pallante has testified to the U.S. House of Representatives that the Copyright Office’s resources are inadequate to support the current digital economy, and that allowing the Copyright Office to establish itself as an autonomous body (independent of the Library of Congress) will give it the authority to make IT investments in furtherance of its own modernization goals (Pallante, 7). Whether these recommendations will eventuate remains to be seen.

Lower costs and streamlined proceedings

It is neither time nor cost effective for a photographer to pursue an infringement claim in a federal court. The PPA has surveyed its members and found that – however numerous – most infringements of single photographs cost below $3,000 (PPA). At the same time, the American Intellectual Property Law Association’s 2015 Report of the Economic Survey indicates that the median cost for a claimant to litigate a copyright infringement suit with less than $1 million at stake through appeal is $250,000 (AIPLA). Even mediating that dispute would cost a median of $40,000 (Ibid.). In addition, according to the 2015 Federal Judicial Caseload Statistics, civil trials take approximately twenty-five months to conclude (Administrative Office of the US Courts). The length is due in part to delaying tactics aimed at draining the other side’s resources and inducing an unequal settlement, such as delaying discovery and filing unnecessary pre-trial motions. Wealthy defendants have strong incentives to behave this way towards low-income adversaries, to ensure that lawyers working pro bono or on contingency bases cannot bear the burden of the full trial.

Indeed, while most content creators are private, most content users – and infringers – are corporate (Wild). The photographer Alex Wild, who left the professional photography business due to frustrations with copyright, writes that his signature extreme close-up insect photographs have been used without permission on venues as diverse as billboards, newspaper articles, video game graphics, company logos, board games, pest-control trucks and iPhone cases (Wild). The corporate disregard for copyright is doubly frustrating to photographers who rely on licenses issued to corporations in those exact sectors.

Key procedures of the Board are aimed at leveling the playing field. To prevent unnecessary delays, rules of civil procedure are simplified, and procedural and discovery-related counterclaims are not accommodated for. Discovery is limited to the production of relevant information, documents and written interrogatories, in order to allow the parties to obtain material facts, establish proof of actual damages, and rebut evidence. The Board also substitutes a formal appeal process with narrow administrative review procedures. This would prevent losing parties with substantial resources from re-litigating a dispute in a federal court.

Potential for collaborative approaches to dispute resolution

Perhaps the Board’s most promising function is to facilitate settlements. The abbreviated and inexpensive trial would give the parties an idea of the merits of their cases, leading to productive discussions, overseen by the Officers. The Board’s utilization of mediation techniques – aided by the Officer with expertise in alternative dispute resolution – could lead to a holistic approach to problem solving. This would give artists an outlet for airing their grievances while also bypassing the power struggles of adversarial trials. Resolutions could lead to innovative and therapeutic business arrangements, such as ongoing royalty fees, partnerships and other agreements.

Criticisms

The CASE Bill is not without its detractors. The foremost worry is that the ease of filing claims will open the Board to abuse by copyright trolls. However, the CASE Bill provides that a Copyright Claims Attorney review each claim to ensure that it complies with copyright law (including, presumably, that it establishes a prima facie case of copyright infringement), before the adversary can be served. In aid of pro se claimants, there are then two opportunities to improve a deficient claim. Though the parties must bear their own costs, the Board may award attorney fees and costs up to $5000 to a party adversely affected by a harassing or improper claim, creating a monetary disincentive against meritless or frivolous claims.

A related worry is that large corporations hiring attorneys will have a significant advantage over pro se parties in terms of the quality of pleadings and submissions. Indeed, organizations such as New Media Rights, California Lawyers for the Arts, and Volunteer Lawyers for the Arts will presumably be vital in helping artists file claims. Interestingly, the CASE Bill also permits qualified law students to represent complainants. Law schools might take this opportunity to set up clinics and internship programs, benefiting both the students taking part and parties in need of representation.

Critics also question whether the Officers should be empowered to make fair use determinations, which are notoriously uncertain and complex. However, as Register Pallante has noted, fair use is a critical safeguard of the Copyright Act (Pallante, 29), which is particularly true with regard to the creation of contemporary art. The availability of the defense will also give respondents an incentive to engage with the Board, and ensure that copyright law continues to align with legitimate consumer expectations. The Officers’ expertise in copyright law will help with the streamlining of fair use decisions. They may develop simpler proxies with which to apply fair use concepts such as transformative use, given that small claims do not have the same cultural and economic ramifications as federal fair use cases (such as the Second Circuit’s recent holding that Google Books amounts to fair use: Authors Guild, Inc. v. Google, Inc.).

Further, the Board does not have a mechanism with which to identify anonymous online infringers. However, its issuance of subpoenas might give further burdensome enforcement duties to Internet Service Providers. Notably, the Copyright Royalty Board has the authority to issue subpoenas but has never exercised this (Copyright Office, 124). The Board also cannot grant injunctions. Though some argue that this might render its determinations toothless, a contrary opinion is that copyright owners can gain unfair leverage through threats of injunctions, and awarding licensing fees in the alternative might lead owners and users to bargain more effectively (Pamela Samuelson et al). Indeed, the Supreme Court in Campbell v. Acuff-Rose noted that a system relying on monetary relief rather than restrictions on commercial behavior might better serve the purposes of copyright and facilitate the lawful use of copyright protected works (at 578 n. 10). The Board can, however, require the respondent to cease the infringing conduct, which appears to be a kind of soft injunction. Because of the voluntary nature of the proceedings, this remedy might function like a contractual promise.

Conclusion

The time is ripe for a new dispute resolution system catering to more diverse range of creators. Currently, the CASE Bill has been referred to the Subcommittee on Courts, Intellectual Property, and the Internet, and has not yet passed the House. Whether it will pass before the next Congressional session begins in January is unclear. But as it incorporates years of research and comments from the Copyright Office, scholars and creative associations, it or a similar law’s incorporation into the Copyright Act seems likely. Indeed, it would align the U.S. with other jurisdictions instigating similar systems, such as the United Kingdom, which in 2012 began to allow informal hearings in its Intellectual Property Enterprise Court regarding claims for infringement of copyright, trademark or unregistered design rights (valued below £10,000). For the U.S., the new system has potential to transform copyright law into an everyday business reality, to give a voice to artists who are currently silenced by the federal system, and to lead to more collaborative and innovative solutions to copyright infringement.

 

Sources:

  • Copyright Alternative in Small-Claims Enforcement Act of 2016, H.R. 5757, 114th Cong. (2016).
  • Copyright Act (17 U.S.C.).
  • Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 n. 10 (1994).
  • Jeffrey Bils, David’s Sling: How to Give Copyright Owners a Practical Way to Pursue Small Claims, 62 U.C.L.A. L. Rev. 464 (2015).
  • Anthony Ciolli, Lowering the Stakes: Toward a Model of Effective Copyright Dispute Resolution 110 W. Va. L. Rev. 1000 (2007).
  • Her Majesty’s Courts & Tribunal Services (United Kingdom), Guide to the Intellectual Property Enterprise Court and Small Claims Track (July, 2014).
  • Virginia Knapp Dorell, Picturing a Remedy for Small Claims of Copyright Infringement, 65 Admin. L. Rev. 449 (2013).
  • Jessica Litman, Real Copyright Reform, 96 Iowa L. Rev. 1 (2010).
  • David Nimmer, A Modest Proposal to Streamline Fair Use Determinations, 24 Cardozo Arts & Ent. L. J. 11 (2006).
  • Register Maria Pallante, The Register’s Perspective on Copyright Review, Statement Before the Committee on the Judiciary, House of Representatives (April 29, 2015).
  • Joel Reidenberg, The Rule of Intellectual Property Law in the Internet Economy, 44 Hous. L. Rev. 1073 (2008).
  • Pamela Samuelson et al., The Copyright Principles Project: Directions for Reform, 25 Berkeley Tech. L. J. 1175 (2010).
  • United States Copyright Office, Copyright Small Claims – A Report of the Register of Copyrights (September 2013).

 

*About the Author: Adelaide Dunn recently graduated with a Master of Laws in Competition, Innovation and Information Law from the New York University School of Law. Before that, she completed a Bachelor of Arts in Art History and a Bachelor of Laws with Honors from The University of Auckland in New Zealand. Adelaide is particularly interested in the intersections of copyright, moral rights and the visual arts. She is currently doing intellectual property, entertainment and commercial law work as a law clerk for a solo practitioner in New York City. Adelaide can be reached at adelaide1dunn@gmail.com.

Pragmatic not Sympathetic US rejects ADR forum for Nazi looted art

Three special envoys for Holocaust issues later and 14 years after the adoption of the Washington Principles on Nazi Confiscated Art, the promise of a U.S. COMMISSION ON ART DISPLACED DURING 1933-1945 is no more. On November 27, 2012, at the International Symposium on Alternatives to Litigation in Nazi-Looted Art Disputes (the “Symposium”), Douglas Davidson, the current US Special Envoy for Holocaust Issues (the “Special Envoy”) delivered a somber verdict, U.S. cannot afford to resolve World War II related art claims by means of alternative dispute resolution (ADR).

The Symposium was hosted by the Dutch Restitution Committee, known as The Advisory Committee on the Assessment of Restitution Applications for Items of Cultural Value and the Second World War. Many European countries, not only the Netherlands, rely on advice issued by national commissions tasked with processing claims and recommending to the cultural ministries whether particular contested property should be returned to the claimants or retained by the museums as good title owners. In his role as the Special Envoy, Davidson is “responsible for developing and implementing U.S. policy pertaining to the return of Holocaust-era assets to their rightful owners, compensation for wrongs committed during the Holocaust, and Holocaust remembrance.”

What did prompt the United States to consider having an ADR forum for resolving World War II art claims in the first place? In 2009, galvanized by the Prague conference and in response to the growing number of Nazi era art-related claims brought in the United States (Museum of Fine Arts v. Serger-Thomschits, 2009 U.S. Dist. LEXIS 58826 (D. Mass. Filed Jan. 22 2008); Detroit Inst. Of Arts v. Ullin, 2007 U.S. Dist. LEXIS 28364 (E.D. Mich. March 31, 2007); Toledo Museum of Art v. Ullin, 477 F. Supp. 2d 208 (N.D. Ohio 2006)), domestic attorneys, politicians and academics began in earnest discussing the dispute resolution models adopted in Europe in hopes of finding an alternative forum to resolve domestic Holocaust-era related disputes.

In the fall of 2009, U.S. Department of State hosted a series of town hall meetings in Washington, DC to discuss the viability of creating an advisory commission in the United States. In November of 2009, Ambassador J. Christian Kennedy, then the United States Special Envoy for Holocaust Issues, circulated the first draft of a proposal for forming such a panel. He solicited and received  comments from the trial attorneys, academics and museum counsel. The comments were mixed, for example, during the second annual Art Litigation and Dispute Resolution Institute, held in New York on November 20, 2009, a group of panelists debated the merits of the proposal. The panelists included Ambassador Kennedy, Charles A. Goldstein, of counsel for Herrick Feinstein and Director of the Commission for Art Recovery, Prof. Jennifer Kreder, NKU Salmon B. Chase College of Law, and Prof. Edward Gaffney, Valparaiso Law School. Goldstein argued that the European models, such as the U.K. Spoliation Advisory Panel and the Dutch Commission are not adoptable to the American legal landscape, because most European museums are almost exclusively government-owned, their the restitution or compensation decisions require government action, where is in the United States, most museums are private non-profit organizations and a federal or state decision to deaccessioning something would be unconstitutional as seizure of property. Kreder and Gaffney were more optimistic about benefits of a U.S. Advisory Panel.

There was little talk about the Panel/Commission since 2009. Three years later, Davidson was asked to comment on the U.S. progress in creating an advisory entity “to deal with ownership disputes over Nazi-confiscated art in the United States.” Polite and circumspect (“Like many things that involve the large and disparate and in many ways unique country I come from, this is not so simple a subject. I doubt I can do this topic justice in the brief time allotted to me today, either”), Davidson tried to paint a picture of the “current thinking within the United States Government in regard to this controversial topic.”

He admitted that in 2009 there was a basic agreement that a U.S. Commission would provide an ADR forum to allow claims for lesser value objects be brought against the current possessors without claimants incurring high litigation costs. “We have not yet, however, come up with a model of a commission – what qualifications commissioners should have, how they would be appointed, where in the federal government structure the commission would fit, what its exact responsibilities would be, how it would be funded.”

Davidson came short of admitting that the idea of forming a U.S. Commission was rejected permanently. He listed many impediments both financial and institutional that all but make a U.S. Commission impossible to create and operate. He identified the following impediments:

  • the unique nature of the American system of government, aka the “Federal Government,” without a  Ministry of Culture. “Given our history, traditions, and inclinations, it also strikes me as highly unlikely that we will create such a cabinet department any time soon.”
  • privately owned museums; “As the website of the American Alliance of Museums laments, “Only a small (and shrinking) percentage of America’s 17,500+ museums receive federal funding of any kind.”  Whereby European museums are government owned and sponsored, they are more likely to follow orders from their proper governments. There is less direct control over the American museums.
  • location of the displaced art, “the amount of art displaced between 1933 and 1945 and still in Europe is also considerably larger than the amount of displaced art now in the United States. 
  • inability to locate the commission in the United States Department of State (despite the fact that there is a Cultural Property Advisory Committee under the Department of State already).

In his presentation, Davidson was frequently and at length quoting Ambassadors Kenned and Stuart E. Eizenstat. For example:

“As Ambassador Kennedy pointed out in a speech in Potsdam in 2007 entitled “The Role of the U.S. Government in Art Restitution”: [A]rt restitution in my country has generally involved a private citizen who discovers that an artwork once held by his or her family is now hanging in a museum or private collection. A claimant new to the art field may need to hire experts who can help with this process. On the other side of these cases, we find the holder of the art, usually a museum or collection. This holder may have done some provenance research on its holdings but has sometimes been unaware of the complete history of the individual works. Usually working through their respective attorneys, the two parties attempt to establish and agree on the facts of the case, and then to work out a settlement. Agreements between parties without resort to judicial channels have been frequent. If the talks break down, or if they fail to get started at all, the claimant has the option of turning to the courts. Many museums, as I am reminded from time to time by museum officials, do in fact voluntarily return works of art to those they deem the rightful owners. Our larger art galleries, like our larger art auction houses, even employ officials to research the provenance of their holdings or of the art they wish to sell.” 
Davidson’s address seemed to cover all the basis, he said things that were for the ADR forum (“One could envision a litigant with a claim that is time-barred attempting to pursue that claim before an art commission, if such a thing existed in the United States, with no statute of limitations.”) and against it (“…we need to keep these words in mind as we examine the current state of efforts to create an art spoliation commission in the United States of America, if only because, as I pointed out earlier, our national laws, procedures, and practices are perhaps another example of what we like to call “American exceptionalism.”). He quoted articles stating that litigation is not the best avenue for resolving disputes regarding art works looted during the Nazi era, and yet he posited as to why the US should re-invent the wheel if there are organizations and laws in place already that handle such disputes, namely the HCPO/Holocaust Claims Processing Office, the Federal Bureau of Investigation, The Immigration and Customs Enforcement of the Department of Homeland Security (“I sometimes think these are actually our most effective alternate dispute resolution mechanisms for cases of Nazi-confiscated art.”) 
Many quotes and digressions later, Davidson concluded “To put it briefly, no one within the United States Government has given up on the idea of the commission that Ambassadors Eizenstat and Kennedy outlined two to three years ago. …  it remains United States policy that alternatives to litigation are preferable in dealing with Holocaust-era claims. So, in the end, we have begun to turn our attention outwards. We have begun, in other words, to explore an alternate means of creating an alternate dispute resolution mechanism for art displaced before and during the Second World War.” Does not two negatives make a positive, would not an alternative to an alternative to litigation be litigation?! RIP U.S. Art Spoliation Commission.

For the full text of Davidson’s presentation, visit U.S. Department of State.
Additional comments about the Symposium.