mechanics---ccb

Another rationale for statutory damages is that, in many copyright cases, proving actual damages is a difficult undertaking. By contrast, statutory damages provide an alternative path for rights holders to obtain redress.180 Thus, statutory damages are highly attractive to rights holders because they spare them the cost and complexity of proving actual damages, while providing both meaningful compensation and deterrence.181

The broad discretion and little guidance given to courts regarding the award of statutory damages, and the immense consequences of awarding multiplied damages in cases of online infringement, are the focus of a fierce debate. One common objection is that statutory damages generate overdeterrence because they function primarily as a punitive mechanism, with no correlation between the actual injury to rights holders and the amount of damages awarded.182 Consider an example of unlicensed online file sharing: For the infringing use of twenty songs, the copyright owner may recover damages of up to $600,000 under the basic track.183 This award far exceeds what the owner would be entitled to recover in actual damages—even assuming the damages could be proven—which are generally calculated based on the licensing fees the owner could have charged for the use of those twenty songs.184 This framework generates a windfall for rights holders, who are awarded damages that are disproportionate to their actual losses.185 As a result, the incentive to file claims even in questionable cases has increased.186 Commentators have thus argued that the availability of statutory damages heightens the chilling effect187: the specter of a significant damages award causes users to refrain from using copyrighted works in uncertain cases, even if fair use may be claimed.188 To offset this chilling effect, Congress exempted typical risk-averse users such as librarians and educational institutions from liability for statutory damages, assuming they have reasonable grounds for believing that their infringing conduct constitutes fair use.189 Other good faith risk-averse users, however, remain exposed to statutory damages awards.

In addition, rising awards create pressure on defendants to settle claims by rights holders,190 perpetuating a “settling culture” in which defendants prefer not to contest questionable claims to avoid the risks and costs of litigation.191 Indeed, copyright plaintiffs allege willful infringement in the vast majority of copyright cases. Although most of these claims are rejected, they may strategically serve plaintiffs by exerting greater pressure on defendants to accept settlements.192 One negative result of the settlement culture is that judicial decisions that would provide users with greater certainty regarding copyright infringement are scarce.193 Another negative result is that it challenges basic principles of justice by allowing rights holders to recover—and defendants to pay—for meritless infringement claims.194 For these reasons, some commentators have argued that the availability of statutory damages undermines the public interest and the rule of law.195

Debates about the justification for statutory damages and their effects on society reflect broader conflicts in copyright law, particularly in the digital age.196 But the fact that this framework provides rights holders with a powerful tool for civil enforcement and deterrence is largely accepted.197

C. Copyright Claims Board

A significant barrier to effective civil enforcement of copyright law is the high cost and lengthy process associated with filing a claim in federal courts.198 In many cases involving online infringement, especially of rights held by individuals such as photographers and designers, the high cost of litigation prevents enforcement.199 Various initiatives have been promoted to lower the costs and delays associated with civil proceedings.200 One example is the recent launch of a tribunal for small copyright cases. In December 2020, Congress passed the Copyright Alternative in Small-Claims Enforcement Act of 2020 (“CASE Act”),201 which directed the U.S. Copyright Office to establish the Copyright Claims Board (“CCB”). The CCB, launched on June 16, 2022,202 is a three-member tribunal with expertise in copyright matters that provides an alternative to federal courts for resolving copyright claims of up to $30,000.203 Its aim is to provide an efficient and less expensive venue for resolving copyright disputes of modest value.204 An easily accessible system allows for the electronic filing of claims.205 Respondents must answer within sixty days, indicating whether they wish to participate in, or to opt out of, CCB proceedings.206 The advantages of participating in CCB proceedings are significant for both parties: the hearing is conducted online; discovery obligations are limited; the procedure is simple; and there is no need to hire attorneys. Parties who agree to participate in CCB proceedings are bound by their outcome, and opportunities for appeal are limited.207 If the respondent opts out, however, the case may be filed in federal court. The CCB also includes a “smaller claims” track for plaintiffs seeking damages of up to $5,000 with even more simplified procedures.208 The CCB is not authorized to grant injunctions.209

Controversy surrounding the launch of the CCB reflects ongoing debates about imbalances in the domain of copyright. Those in favor of the CCB argue that it serves the interests of both rights holders and users.210 Rights holders may use it as a fast and easily accessible remedy. The cost-effective framework may increase deterrence and reduce opportunistic copyright infringement, which flourishes in a low-enforcement environment.211 Rational infringers acting in good faith have a strong incentive to consent to CCB proceedings rather than risk larger sanctions in federal court.212 Users may also benefit from the new framework because it reduces the risk of using copyrighted work. Damages for small-scale use are capped at $30,000, making it easier to take the risk of uncertain use.213 Moreover, defendants’ ability to contest questionable claims in CCB proceedings may reduce opportunistic behavior on the part of plaintiffs.214 Finally, CCB decisions must be published, and while the CASE Act provides that CCB decisions may not be used as precedent in general litigation,215 it remains to be seen whether this rule will be applied in practice.216 Accordingly, the CCB framework may serve to develop and resolve uncertainties in copyright law.217

Advocates of the CCB underscore the advantages to both sides in terms of time and cost savings to resolve small copyright claims as compared to civil proceedings, possibly increasing access to justice.218 By contrast, opponents stress that because defendants may elect to opt out of the CCB, it is unlikely that there will be any significant change in the level of copyright enforcement.219 Opportunistic infringers who operate under the assumption that rights holders will not file claims in federal court are unlikely to agree to CCB proceedings.220 In addition, some commentators posit that the CCB will encourage the filing of low-value infringement claims that would not have been filed in court in the first place.221 In other words, the CCB may expand abusive copyright litigation by opportunistic plaintiffs, undermining the public good.222

In addition, some commentators have raised concerns about the lack of procedural safeguards for defendants in CCB proceedings223 and the fact that only rights holders can elect to use the CCB framework.224 For these reasons, the CCB may not significantly reduce copyright law’s chilling effect, as it offers yet another enforcement framework available to rights holders.

Because the CCB was only recently established, its effect in practice is yet unknown. However, it is another tool in rights holders’ powerful civil enforcement toolkit. The potential synergic effect of the automated notice-and-takedown regime, the statutory damages schemes, and the new CCB initiative in deterring infringement in the online environment should not be underestimated.