New Small-Claims Copyright Court Tucked in Latest COVID-19 Stimulus Bill

On December 27, 2020, President Trump signed into law the latest Covid-19 stimulus bill. While the $600 checks dominated the news, tucked away in the over 5000-page bill is a new small-claims court for copyright-infringement claims.

This court will be useful for businesses having claims that aren’t worth the expense of federal-court litigation. The primary users will probably be photographers, architects, YouTube content creators, social-media entrepreneurs, and other people who own and publish text, photos, or graphics online, such as website designers and owners.

Before explaining the benefits of the new court, let’s review some copyright basics.

A copyright protects a creative work, such as a photograph, article, drawing, or fanciful part of a computer program.

The author of the expressive work owns the copyright unless it assigns ownership to someone else. Employers usually own the copyrights to what their employees produce.

Copyright infringement occurs when someone makes a copy of a work without permission from the owner unless the copying qualifies as fair use, such as some uses for education or criticism.

The court will be an administrative small-claims court in the federal Copyright Office. The court should open for business by the end of 2021. It can handle cases with damages claims up to $30,000.

It should be much cheaper and quicker than copyright-infringement litigation in federal court. You can litigate cases remotely. In theory, you can litigate cases without an attorney, although, practically speaking, that probably won’t work.

The downside to this court is a defendant can opt out of participation. That would force the plaintiff either to file the case in federal court or to let the matter go. Congress had to allow opting out because litigants have a constitutional right to a jury trial, which won’t be available in this court. Perhaps defendants will rarely opt out for fear of being sued in more-expensive federal court, where there is no ceiling on a damages claim.

The new court provides two intriguing benefits for infringement plaintiffs not available in federal court.

The first concerns copyright registration. You must register your copyright with the federal Copyright Office to sue for infringement of it.
You don’t have to finish registering your copyright before you can file suit in the small-claims court. That’s different from federal court, where you can’t sue until you complete copyright registration.

Second, sometimes you could recover more in damages in small-claims court than federal court.

In copyright-infringement cases, as an alternative to proving your damages, a winning plaintiff can receive what are called “statutory damages.” These can be up to $30,000 per work infringed, or up to $150,000 per work in the case of willful infringement. In federal court, you may recover statutory damages only if you registered your copyright either before the infringement began or within three months after you publish your work.

Unfortunately, most content owners fail to register their copyrights early enough to qualify for statutory damages. In the new small-claims court, a copyright owner can recover up to $7500 in statutory damages per work infringed even if the owner failed to register its copyright early enough to get statutory damages in federal court.

There’s still an advantage to registering proactively. If you register early enough, in small-claims court you would be eligible for up to $15,000 in statutory damages per work infringed.

If you are a content creator or owner, what should you do about this?

First, register your copyright as soon as you publish your stuff. The process is quick and inexpensive compared to other legal services. Do this so you will have the hammer of full statutory damages available if you must confront an infringer.

Make certain you own the copyrights to your stuff. If an independent contractor, such as an ad agency, created the material for you, generally you don’t own the copyright unless you get a written ownership assignment from the creator.

Finally, use the small-claims court when it comes online. Your first time through the process might be more expensive than you’d like in terms of attorney’s fees. Yet, if you expect to make claims occasionally, you can piggyback off what you created in your first trip to small-claims court to make subsequent trips cheaper.

Written on January 20, 2021

by John B. Farmer

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