Potential Pitfalls of the CASE Act
On Thursday, the Senate Judiciary Committee will consider the Copyright Alternative in Small-Claims Enforcement Act of 2019, otherwise known as the CASE Act.
In short, the CASE Act would create an alternative forum outside of the federal courts to resolve certain copyright claims. The forum would consist of a three-member Copyright Claims Board within the U.S. Copyright Office. If a claim is filed with the Board, respondents would have 60 days to “opt out” of the proceeding. Damages in these proceedings would be capped at $30,000. And the opportunity to appeal is limited—according to the bill’s text, a party may generally only challenge the Board’s determination in federal court if its conclusion “was issued as a result of fraud, corruption, misrepresentation or other misconduct.”
On the surface, the bill has many attributes. It strives to help creators and copyright-holders protect their intellectual property. It intends to bypass the complexity and expense of federal court litigation. And it has bipartisan support in both chambers.
But the CASE Act suffers from too many potential pitfalls—both legal and pragmatic. Others have addressed the pragmatic, including the fact that the Act would encourage even more copyright troll lawsuits and that a statutory damages cap of $30,000 is well above any reasonable view of “small claims” (and well above the cap in most—if not all—state small claims courts).
There are also legitimate constitutional questions surrounding the bill. The first is whether the CASE Act violates Article III of the Constitution. Recently, in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the Supreme Court discussed Congress’ power to create adjudicative bodies outside of Article III courts. As Justice Clarence Thomas explained:
Article III vests the judicial power of the United States in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. Consequently, Congress cannot confer the Government’s judicial Power on entities outside Article III. When determining whether a proceeding involves an exercise of Article III judicial power, this Court’s precedents have distinguished between public rights and private rights. Those precedents have given Congress significant latitude to assign adjudication of public rights to entities other than Article III courts.
The distinction between public and private rights, according to Justice Thomas, has not been “definitively explained.” Nevertheless, he notes that precedent supports the conclusion that “public-rights doctrine applies to matters arising between the government and others, which from their nature do not require judicial determination and yet are susceptible of it.”
Given this description, there is a real question of whether the CASE Act improperly takes the adjudication of private rights away from Article III courts. After all, as two scholars have noted, “Adjudicating infringement claims is exactly what Article III courts are supposed to do.” Justice Stephen Breyer’s concurrence in Oil States may have warned that “the Court’s opinion should not be read to say that matters involving private rights may never be adjudicated other than by Article III courts,” but given the Court’s recent ideological shift, Justice Breyer’s concurrence could soon be part of a dissent.
Beyond Article III worries, the chance for a respondent to “opt out” of proceedings before the Copyright Claims Board may not be enough to satisfy due process concerns. According to the Copyright Office’s own 2013 report, “From a due process perspective, the opt-out model may be somewhat more ambitious than an opt-in model because consent would be premised not on a written agreement or affirmative conduct, but instead on the failure to respond to a properly served notice.”
Scholars have also raised other qualms concerning the CASE Act. They note, for example, that the opt-out model would result in a large number of “default judgements and damage awards.” These defaults could later be enforced by a federal court and “would be difficult to overturn given the restrictions that the Office would place on grounds for appeal and overturning default judgments.”
The CASE Act is well intended, and Congress is right to seek legislation to help creators protect their intellectual property. But the current bill is rife with legitimate legal and pragmatic concerns that lawmakers should take into account.
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