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Art, Entertainment & Fashion Law Blog Legal updates, news, and commentary from the attorneys of Baker Sterchi Cowden & Rice LLC

The CASE Act - A Noble but Toothless Gesture Toward Fair Copyright Enforcement

April 24, 2018 | John Patterson

The cost of litigating copyright infringement claims in federal court can be immense, taxing the resources of even a well-heeled content creator. For many authors, artists, photographers, and others, this immensity become overwhelming. And at some point, the benefit of pursuing infringement litigation is grossly outweighed by the cost. Consequently, many creators are effectively barred from asserting the full bundle of rights provided by a copyright.

Recently introduced federal legislation purports to change this state of affairs. The Copyright Alternative in Small Claims Enforcement Act of 2017, H.R. 3945 (“CASE Act”) melds elements of traditional small claims procedure, administrative law, and arbitration principles in an attempt to level the playing field. While the bill appears to have some serious deficiencies, its passage would be an interesting first-step towards putting some degree of power back in the hands of average, every-day copyright holders. Here are some key points:

Procedure

The CASE Act would establish a three person board to hear small copyright claims. Parties would be allowed to represent themselves, and in-person appearances at proceedings would not be required. Rather, proceedings would be conducted by written submissions, and by “internet-based applications and other telecommunication facilities[.]” While the CASE Act does not set a formal schedule for proceedings before the board, it seems that a claim would proceed much faster in this forum than in a traditional court of law.

As with many administrative actions, the formal rules of evidence would be relaxed in CASE Act actions. It appears written discovery would be allowed, but there is no specific provision allowing for depositions. It also appears that the three person board would have very modest subpoena power, limited to commanding service providers to divulge the identity of alleged copyright infringers.

Factual findings would be subject to the “preponderance of the evidence” standard, and all decisions would require a majority of the board. Decisions of the board could be appealed to the United States District Court of the District of Columbia, but could only be overturned on the basis of fraud, misconduct, or other very limited circumstances. In this regard, the CASE Act resembles arbitration.

Participation is Voluntary

Under the CASE Act, participation would be voluntary for all parties. A petitioner would be required to serve a respondent, and a form of default judgment could be entered upon failure to timely respond. However, a responding party could immediately opt out of a CASE Act proceeding, and instead require that the claim be pursued in any court of competent jurisdiction.

Damages Limitations

In keeping with the spirit of small claims court, damages in CASE Act claims would be limited. In the aggregate, no more than $30,000 could be recovered in any one proceeding. Furthermore, recovery of attorney fees appears to be generally prohibited under the CASE Act (except in instances of bad faith conduct). This is a departure from traditional copyright claims brought under the Copyright Act, where attorney fees are available in certain circumstances if a copyright has been properly registered.

Conclusion

The primary problem with the CASE Act appears to be the aforementioned “opt out” provision. A respondent with deep pockets could opt out of any CASE Act proceeding, requiring the claimant to resort to a traditional court to pursue her claim, thereby nullifying a low cost option for those who don’t have the means to pour six or seven figures into full throated litigation. Without a mandate for all parties to participate in the proceedings, it could be argued that the CASE Act is essentially toothless in its current form.

Nevertheless, the mere existence of the CASE Act demonstrates that the plight of the individual artist, musician or other content creator is on the radar screen. With a few very important tweaks, its passage could serve make the copyright playing field a little more level. 

Political Divisions, Copyright Law, and a Strange Green Amphibian Meme - Pepe the Frog gets his Day in a Kansas City Area Court

February 27, 2018 | John Patterson

Pepe the Frog, a cartoon character created by comic book artist Matt Furie in the mid-2000’s, started out innocently enough. According to an interview given by Furie to the Daily Dot, Pepe’s philosophy on life was simply “feels good man.”  Unfortunately for Pepe, however, he became an internet meme thanks to the notorious 4Chan message board.  While some of the memes have maintained the laid back philosophy originally espoused by Pepe, it appears that the character has been adopted as a symbol of the “alt-right.”  Consequently, many Pepe the Frog memes contain overtly political messages, which are perceived by many as highly offensive or even racist.

Kansas City artist Jessica Logsdon appears to have capitalized on the Pepe phenomenon, and began creating, and selling on-line, politically charged artwork featuring a green frog with a striking resemblance to Pepe.  Furie, the original creator of Pepe, has sued in the United States District Court for the Western District of Missouri, alleging copyright infringement and seeking damages and injunctive relief against Logsdon.  The Complaint alleges that Pepe was originally a “peaceful frog dude,” but that:

“[I]ndividuals like Logsdon have misused Furie’s Pepe character and copied Pepe’s images for use in dozens of images sold online to promote violent and hateful messages espoused by alt-right fringe groups.  In doing so, Logsdon not only copies Furie’s original creation, but also freeloaded off Pepe’s popularity and Furie’s labor.” 

Logsdon has answered the Complaint, admitting that she is a “political artist,” and that she has used “Pepe” in the title of some of her artwork.  But she denies that she has copied the image created by Furie, while simultaneously claiming that her use of the image constitutes “fair use.”  Logsdon also claims that Furie lacks any registered copyright in the image of Pepe the Frog. 

Beyond its obvious socio-political angles, the case has wider legal ramifications as well, and we will observe with interest how Pepe the Frog’s meme status plays into the claims and defenses asserted by the parties.  We will continue to monitor the case and provide updates in this space.

Paying the Piper (and the Copyright Owner) - The Music Modernization Act of 2017

February 2, 2018 | John Patterson

The rise of streaming music services has changed the landscape in ways that most would not have imagined even a decade ago. Among these changes are the ways in which performers, songwriters, and other copyright owners are compensated when their works are streamed on various devices.  Simply put, the laws which pertain to such compensation have not kept up with the state of technology.  The Music Modernization Act of 2017 (HR 4706 – 115th Congress), a piece of proposed legislation currently being considered in Congress, seeks to address some of these issues.  This article touches on some of the more salient aspects of the proposed law.

Doing Away with Bulk Notices of Intention

In order to distribute a sound recording, any would-be distributor must first obtain a license from the owner of the copyright.  This is often accomplished by providing a Notice of Intention (“NOI”) to the owner, either directly or by filing a copy of the NOI with the United States Copyright Office when information regarding the owner cannot be easily accessed.   Presently, large music streaming services such as Spotify employ a process of filing NOIs in bulk with the Copyright Office, after which time such services simply start streaming the sound recordings.  Many copyright owners believe that this bulk filing process gives them short shrift, depriving them of rightful compensation when their works are digitally streamed without their knowledge.

The MMA proposes to rectify this situation by creating the Musical Licensing Collective (“MLC”), a body that would be funded in part by the various large music streaming services.   The MLC would collect accurate data regarding the identities of appropriate copyright owners.  It would also grant blanket licenses to the streaming services.  Presumably, this would allow the streaming services to more accurately identify copyright owners, while simultaneously lessening the legal risk which streaming services court by streaming songs without the knowledge of the copyright owner.

Royalty Rates for Compulsory Licenses

Even if copyright owners can be accurately identified after acquisition of compulsory licenses, they must still be compensated.  Presently, this compensation, in the form of a royalty rate, is determined by the Copyright Royalty Board.  This rate is set by statute, and employs a mechanical standard which is indexed to inflation.  The MMA seeks to alter this formula, basing the calculation upon supply and demand.  One of the Act’s sponsors refers to this new standard as the “willing buyer/willing seller” standard.

Procedural Changes

The MMA also proposes a number of procedural changes to the royalty process.  Chief among these, it would do away with a fixed panel of rate dispute judges.  Instead, a rotating panel of federal judges would hear rate disputes, presumably allowing for a fresh set of eyes upon disagreements between parties who had previously battled over royalty rights.

Unlike most federal legislation, the Musical Modernization Act has bi-partisan support.  In addition, the streaming sites, which wield ever-increasing power in the industry, also appear to be supportive of the proposed law.  We will continue to track the progress of the proposed legislation, and will provide updates as it winds its way through Congress.

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About Art, Entertainment & Fashion Law Blog

The BSCR Art, Entertainment & Fashion Law Blog examines developments in all aspects of the law affecting those in the creative community, including artists, designers, musicians, and venue owners. Learn more about the editor, John Patterson, and our Art, Entertainment & Fashion Law practice.

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