Two new additions to the Copyright Act became law on December 27, 2020 as part of the Consolidated Appropriations Act, 2021. The first closes the so-called “streaming loophole” of criminal copyright infringement, setting harsher punishments to deter illegal streaming services. The second, known as the CASE Act, establishes an administrative body, the Copyright Claims Board, to resolve select small-claims copyright infringement disputes.
Increased Penalties for Unauthorized Streaming
Previously, while courts punished criminal copyright infringement of the reproduction and/or distribution rights as a felony, infringement of the public display or public performance rights were punished as misdemeanors. Now, willful, for-profit digital transmission services that publicly perform copyrighted works without authorization from the rights-owners will be considered felonies and may face a prison sentence of up to three years. Further, infringers could serve up to five years in prison if they pirate select works that they knew, or should have known, had not yet been commercially publicly performed under the copyright holder's authorization. Repeat offenders could face up to ten years in prison.
The law specifically targets digital transmission services that are “primarily designed or provided” for digital piracy, have no “commercially significant purpose or use” other than digital piracy, or are “intentionally marketed” for digital piracy. While these criteria may leave room for interpretation, they indicate the focus of this provision is purveyors and marketers of piracy services per se, and not unlawful acts by otherwise legitimate streaming services or by individual users.
A Small-Claims Alternative to Litigation
The Copyright Act was also amended to incorporate the Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2020. As its title suggests, the CASE Act establishes a small-claims administrative forum, along with rules and guidelines for its jurisdiction and operation. The forum, called the Copyright Claims Board (CCB), will be composed of a panel of three Copyright Claims officers who will sit within the Copyright Office. With narrow exceptions, the CCB will only hear an infringement claim or counterclaim if the copyrighted work at issue is registered with the Copyright Office. Further, the CCB cannot adjudicate claims or counterclaims against a federal or state government entity or a party residing outside the United States, or those already decided by or pending before a competent court (unless the court has granted a stay). The CCB can award actual or statutory damages of up to $30,000 and enter injunctions. Though the CCB need not apply formal rules of evidence, its holdings will be legally binding and subject to judicial review.
The CASE Act also discourages parties from pursuing bad faith or frivolous claims or defenses before the CCB. Like courts, the CCB will be permitted to award costs and attorney's fees in the event of bad faith conduct. In addition, parties who act in bad faith in multiple CCB proceedings within one year will be temporarily barred from initiating further claims before the CCB.
While the option of a small-claims forum may be enticing to copyright holders reluctant to engage in federal court litigation, they should note that participation in CCB proceedings is optional. A defendant may affirmatively “opt out” within 60 days of notice of the proceeding, resulting in dismissal of the claim without prejudice.
The CCB is expected to begin operating by December 27, 2021. We will provide updates on plans for the CCB's operation as the Copyright Office makes those available.
Citation: Consolidated Appropriations Act, 2021 (Public Law 116-260, Title II, Subtitle A, Sections 211, 212).
Originally Published by Finnegan, February 2021
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