On October 27, 2011, the Copyright Office released a Notice of Inquiry soliciting commentary on how copyright holders and defendants address small copyright claims within the current legal system, the drawbacks and benefits of the current system, and potential alternative methods for handling such claims. The Copyright Office was primarily concerned that the high cost of federal copyright litigation (as much as $350,000 for claims under $1 million) may be dissuading copyright holders from filing lawsuits where damages are relatively low, because the potential award will not justify the expense of the litigation. Unlike many other varieties of small claims, state small claims courts are not available as a venue for resolving disputes over small copyright claims, because federal courts have exclusive jurisdiction over copyright claims. The Copyright Office suggested a number of potential solutions including creating a federal small claims court and allowing state small claims courts to hear copyright disputes.
In our January 17, 2012 comment, New Media Rights identifies a key frustration afflicting small-scale defendants, the “settling culture” that has emerged within the current system whereby defendants are intimidated into paying settlements and accepting DMCA takedown requests rather than risk the high costs of federal litigation. Copyright holders exploit the high cost of federal litigation to extract unwarranted settlements from small-scale defendants and impose improper DMCA takedowns. We tell that story with real life examples.