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Proposed copyright panel gets mostly good reviews

CHARLOTTE – Intellectual property attorneys in the Carolinas say a proposed federal panel that would focus exclusively on small copyright claims was, as one lawyer described it, “a step in the right direction.”

But obstacles will need to be overcome before the panel is put in place – among them deciding which law applies, due process issues and fairness in the discovery process.copyright typewriter

U. S. Rep. Lamar Smith, the Texas Republican who is chairman of the House Judiciary Committee, requested that the U.S. Copyright Office study the problems faced by authors, photographers and other copyright owners as they seek to enforce their rights in federal court. In response to the request, the copyright office released a 161-page report on Sept. 30 recommending the creation of a three-person panel in Washington, D.C., that would hear infringement cases with damages valued at no more than $30,000.

The panel, which would be comprised of two copyright attorneys and an alternative dispute resolution specialist, would only hear matters in which all parties agreed to appear before them. The panel would not require lawyers to appear in person and instead would decide cases on the basis of evidence presented during online teleconferences and written submissions.

Under the terms of the proposal, which is now expected to be addressed by Congress, written discovery would be allowed, but there would be no formal discovery or deposition practice.

Lynn Borchers, an intellectual property attorney from Myers Bigel in Raleigh, said she believes the proposal carries mixed benefits. It would lower the cost of litigating cases in front of a tribunal and the law would be uniformly applied in all disputes. But on the other hand, Borchers said, “because copyright law is not uniform, it is not clear what law the panel will apply, which leads to great uncertainty.”

Anthony Biller, an intellectual property attorney with Coats + Bennett in the Triangle, said that rather than having a single panel located in Washington, he would prefer a panel in every federal appellate circuit and would want them to be voluntary for any size copyright case. Biller’s suggestion would eliminate the concern about which circuit’s law should apply.

Several attorneys said the proposed panel could help put a cap on the cost of litigating expensive copyright disputes. Charleston-based lawyer Ed Fenno called the idea “brilliant” for that reason, saying, “I have known many individuals who hold copyrights, particularly photographers, that cannot afford to enforce their valid copyright due to the expense of the litigation.”

Those expenses add up quickly. Brent Sausser, of Sausser and Spurr in Charleston, said a report from the American Intellectual Property Law Association put the median costs of litigating a copyright infringement suit in federal court at $150,000 through discovery, and eventually hitting $300,000 by the end of the case.

Charlotte attorney Alice Richey noted that similar panels in other areas of law can be used as a template for settling copyright disputes. The Trademark Trial and Appeal Board, for instance, which handles claims involving registered trademark, has proven to be “much less costly alternative to going to federal court,” she said.

Borchers said a similar panel, established at the United States Patent and Trademark Office to hear patent validity cases, has been “enthusiastically embraced” by attorneys since its inception.

However, other matters are yet to be settled. According to Thomas Vanderbloemen of Gallivan, White & Boyd in Greenville, S.C., “there is still a lot to be said about how this process would work whether you opt in or opt out.” An opt in system requires both parties to affirmatively agree to jurisdiction, while an opt out system bestows automatic jurisdiction unless one party affirmatively rejects it.

There is also the matter of whether the proposed panel is the best forum to address constitutional issues that could arise in a copyright case.

Ned Snow, a law professor at University of South Carolina School of Law, said copyright suits can trigger questions of due process. For instance, an infringement case could result from the downloading of music from a seemingly legitimate site that had wrongfully acquired the copyrighted song. Would the panel be able to protect the due process rights of an innocent downloader named as a defendant in that situation?

In Snow’s view, federal district court judges would be more capable of making decisions that potentially invoke constitutional questions.

Highlights of new copyright panel plan

In an effort to allow parties to pursue claims with smaller damages, the U.S. Copyright Office recently issued a report which asks Congress to consider the creation of an administrative tribunal for small claims matters.

The proposal would:

Create a panel of three adjudicators, who would hear cases in the Copyright Office in Washington, D.C.;

Allow attorneys’ fees of up to $5,000 in cases in which it was shown that a party acted in bad faith;

Grant the tribunal the power to order declaratory judgments of non-infringement; and

Allow for limited review of panel decisions by the Register of Copyrights and the U.S. District Court.

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