Filing at the CCB

I filed my first case in the CCB last week and thought I’d share a bit about the initial process. 

TL:dr It’s designed to be non-lawyer friendly but I’d still encourage using one anyway. 

First, don’t do anything without reading the handbook beforehand. It will make a huge difference in understanding how the forms work as well as the process as a whole. It will also give you the chance to see what things you might not understand fully, so that you can ask questions (preferably of a lawyer, not some rando on social media). For example, when you enter your certificate number, there is a very specific way to do that and it’s not “VA2-222-2222” like you would expect. Many of those little questions will be answered by the handbook.

Second, you may be tempted to look at several of the other cases to see how others are approaching the process. I did that and this can be very helpful to attorneys, but I’m afraid it may only make things worse for non-lawyers, as there is some crazy out there already. If you don’t know how filings work or what the elements are to your claim, that is, what you’ll need to plead and prove, this is where you can get into trouble. For example, there is one case where the claimant (plaintiff, in regular federal court) is essentially trying to sue the US Copyright Office. That’s not what the CCB is for and those filings will send you into a rabbit hole of bad examples. So, for most of you, I’d say skip this unless you want to run something by your attorney to see if it’s a good example to follow or maybe you have litigated in the past and know how the process usually works. 

Third, gather all your evidence and plan your case. You need to know what you need to prove (the elements of infringement claim) and what you have to get you there (evidence). Do you have any holes in your evidence? Now’s the time to try and fill those gaps. For example, you should (at least) have a copy of the original work and copies of the infringing uses and a copy of your registration certificate, if you have one (in the CCB, you have to have at least applied for registration to start a claim, but it’s better to have one in hand already)—all that is your evidence. 

You should also take the time to research your opponent, if you haven’t already. You’ll need contact information of some kind, at the very least. Gather all this information and organize it into some sort of cohesive story. In regular court, we attorneys do this in the form of the complaint we draft and file; here, there is no need for a formal complaint, but a document with the same information will be helpful. 

To create the document, write a list of how and when the work was made, when it was first published (published for the purposes of copyright law—not published in the normal English sense), when it was registered, when you discovered the infringement, how you did that, and then what steps you took after your discovery of it.

And if you haven’t already tried to negotiate a settlement before filing, now might be a good time to consider that first. It will look better if you try to get the matter worked out before filing and, if it works, then you won’t have to file! In the case of the filing I just did, we’ve been trying to get the respondent (defendant) to negotiate reasonably for almost a year before my client decided to take this step.

Anyway, back to the doc… in some sort of bullet point-like list, tell the story and, in it, point to the evidence you have. Think simple, declarative sentences. For example:

Claimant created the photograph on June 1, 2020.
Claimant first published the photograph on June 15, 2020, when she offered it for licensing on her website at https://www.photographer.com/art.jpg.
Claimant registered her copyright in the photograph, with others, receiving certificate No. VA2-222-2222 with an effective date of July 1, 2020. [Exhibit A: USCO certificate]

etc.

After you have all that done, you can start to fill out the claim forms. It will be much easier with the timeline and the evidence in order, but remember that you can always stop and save your progress, then come back to the forms later. You should, at the end of the claim, upload pdfs of the timeline and the evidence you have. Also, make the file names for these things clear, like “EX A: Cert va2-222-222.pdf.” You don’t need to do all that, but it will make reviewing things easier on the CCB attorney assigned to review the claim and hopefully get you to the service process faster. 

Pay your $40 (the other $60 is due later, if the defendant doesn’t opt-out) and then, like me now, you sit back and wait for the CCB attorney to review the claim to make sure it’s appropriate for the venue and meets the standards. Once that happens, you’ll be instructed about service. 

When that happens, I’ll let you know what the next steps are like. Stay tuned…

Look At My Shoes

Today is July 1 and it is the first day I’m doing business as Burns the Attorney, Inc. The old saying about the cobbler’s kid going unshod? Yeah, that was me. I should have done this a while ago but, still, now is better than later.

Forming an entity is a state-specific thing. The legal hoops you need to jump through vary from state to state. For example, I incorporated because I had no other choice. In California, you can’t have a solo-member LLC if your business is the law. You can, however, have a solo-member creative business LLC. Or incorporate. Go fig.

Anyway, there are many reasons to form an entity. The most obvious ones for a solo are to protect your personal assets and for tax benefits. For the second, you should talk to a CPA. A (non-tax) lawyer can give you some general tax advice, maybe, but a CPA will know best. Talk to one before you do anything about formation.

The other one, asset protection, is where talking to me (or any good business lawyer) makes sense. See, if you don’t form an entity and your business gets sued, well, you are your business legally-speaking as well as metaphorically. That means whatever assets you have in your personal world (like your house and car and retirement accounts) are available to pay a judgment against your business. Lawyers like me know what you need to do to form the wall between your business and your personal assets.

Arguably more importantly, we know what you need to keep doing to make sure that wall stays strong. See, if you don’t “maintain the formalities” (as the law likes to say), your wall can become paper thin, making piercing the corporate veil a piece of cake. Once the veil is pierced, your personal assets are back in play. Yikes!

In the creative world, creating an entity has extra considerations: your copyrights. As a sole proprietor (i.e., not an entity) you are the author of your creative work and the copyrights are owned by you. They will last until 70 years after your death. But, if you form an entity, you become an employee of that entity and the entity becomes the legal author of your work! Suddenly, the term of the copyrights change: 95 years from the year of the work’s first publication or 120 years from the year of its creation, whichever ends first. There are also inheritance issues then. There are legal ways to hold onto your copyrights in this situation–an attorney can help you with understanding which way is best for you and then making that a legal reality.

As for me, it is a relief to have taken this step. I sleep better at night knowing that my house (that I own with my boyfriend) isn’t endangered by my business. Also, it sure doesn’t hurt to know that I’m saving some money on my taxes, too.

So, while the way I serve my clients won’t change, starting today I’ll be serving them as the President/CEO of Burns the Attorney, Inc.
That’s some fine shoes.

Small Claims and Options

The Copyright Claims Board, aka the CCB or copyright small claims, launched today. You can now file claims using that system, rather than federal court.

However, that doesn’t mean you must use that system. I’ve written about my reservations, but that’s not what I’m talking about here. Rather, I mean that just because the CCB is now available as an option doesn’t mean that you should skip the step of trying to work out an infringement matter without filing anywhere first. My legal philosophy is that one should always try first to work things out without litigation, be that in federal court or the CCB.

In the past, an infringement of an untimely or unregistered work (without a CMI removal claim) was almost assuredly going to be a “can’t take that on contingency” situation for me. Now, however, I’ll be taking a different look at those kinds of matters.

The existence of the CCB system gives those of you who have not timely registered your work a new tool to use in pre-litigation negotiations. Instead of having to prove up a license rate to an infringer (“actual damages”), now you can say “Hey, if we go through the CCB, I can be awarded up to $7500 in statutory damages for this infringement” which gives you some negotiating leverage. Of course, you shouldn’t ask for the full $7500 to settle–that is rather defeating the purpose of pre-litigation settlement (i.e., to save everyone time, effort, and money), but it lets the other side know what they might be facing if you don’t work it out.

Also, remember that you will have to register the work before you can get a judgment from the CCB; that is, you need to have applied for registration prior to filing the claim and you need your certificate before the process is completed (there are ways to expedite registration, if needed). If you haven’t applied for a registration of an infringed work yet, you might be able to use that to help convince the other side to settle because you can settle for less money now. I mean, if you have to register and pay the filing fees, etc., you’ll have to get more to settle–that’s basic business math.

Sadly, however, a well informed opponent will know that they can opt out of any CCB proceeding brought against them, reducing you to actual damages again, but lots of infringers are not going to be so informed. And you don’t need to inform them.

Note, I am NOT suggesting you lie to any opposing party–you shouldn’t say they’ll “have no option but fight the claim in the CCB” or similar, but you can say, “If I bring this claim in the CCB, I can be awarded up to $7500 in statutory damages.” There is no lie there. What I’m saying is that you don’t have an obligation to tell them how the CCB works for defendants and that they have an out, not until you actually file with the CCB. If you end up filing in the CCB, then you have a duty to inform the opposing party about the claim and their options. Until you file, though, nope.

Anyway, as I said, if you have an infringement of a non/untimely registered work, now I may be able to help you on contingency or a hybrid fee. You can submit the information for my review using the form, here, and I’ll let you know what your options are, including what fee arrangements are available. As I mentioned in my previous post, I am limited annually to the number of claims I can file for my clients, so I will have to pick and choose a bit if we get to that point. But, we might work together to try to get you a reasonable settlement before taking that CCB filing step.

On Being Reasonable

Whenever I take an infringement matter on contingency, I ask my client to think about what settlement amount would make them content, that is, what amount they could live with, not the amount they really would love to get. This is the bottom-line number. More is good, but every client should have an idea of their floor for settlement.

This number should be reasonable, of course, not greedy. For example, saying “I won’t take less than $20K!” for a photo used in a tweet by a regular ol’ individual is not reasonable. Nor, however, should it be a too small number (unless, for some reason, the circumstances really warrant that). Nope, the lowest reasonable settlement amount number should be something that, if you ended up with that amount, you’d say to yourself something like “I can live with this, without seething.” Besides, the other side isn’t going to get that number–it’s an internal one so we all know what we are working to achieve, at a minimum.

Once we have that number, the first offer will be significantly more–to give us room to negotiate. I won’t, however, suggest that we start at $30K or $150K, the maximum statutory damages amounts (speaking of an infringement only, here). Why? Because it’s not a sign of willingness to compromise if you start by asking for the maximum available. Yes, the law says you are entitled to something between $750 and $30K/$150K (assuming a timely registration), but the maximum damages are not often awarded and you’ll just appear greedy if you start there.

Starting off appearing greedy is not conducive to working with the other side to a settlement. If the starting number is irrationally high, it won’t increase the end number but it likely will impede settlement negotiations. Instead, starting off with a high-ish but rational number will let the other side know we’re serious and yet also willing to compromise. It opens the door to working together to a settlement.

If, despite this, the negotiations don’t work out and litigation is required, being reasonable pre-litigation will also help you in litigation. Courts do not like plaintiffs who simply demand the maximum damages, particularly when the facts don’t reasonably support that kind of award. In fact, in a recent case, the court refused to award attorneys’ fees to a winning plaintiff for that reason (pdf of the opinion, here).

While infringements are a pain and take up far too much of an artist’s time and effort, one shouldn’t look at them as a windfall. A court will suss that motivation out and it will not end well. But, if you are reasonable about your demands and your expectations, and rational in your negotiations, you can end up with enough money to make up for all the hassle.

USCO Fees Increasing

Starting March 20, 2022, the fees for registrations and other services from the US Copyright Office are going up. You can get the whole story in the Federal Register, here, but it’s a long slog of a read. Here’s the skinny:

There are more changes, but the screenshots above show the ones you are most likely to face.

The good news for photographers is that the fees for group registrations have not changed. The bad news for stock photo agencies is that the database registration for photos has jumped quite a bit ($250!).

Still, no matter how you slice it, registration is still the cheapest “insurance” you can buy.

Long Time No See

You may have noticed that I haven’t posted in a while; in almost a year, to be more accurate. I have no excuse other than this: I’m human and it’s been a hell of a year, or two. 

We all have had a hell of a year, or two. 

Professionally, during this time, the most important thing has been my clients. That is, I have been putting all my work energies into taking care of their business, their cases, their needs. My clients will always be my priority when it comes to my professional life; and 2021 ended up being a successful year for many of their matters, happily. But, when they were taken care of, I found I had to devote my energy to taking care of myself and my loved ones. Things like blogging about the law took a lower position. 

Life in the pandemic made everything quotidian much more difficult, turning things like the previous quick runs to the grocery into a bigger, rarer shopping trip, with masks and (at first) gloves and long lines. Everyone had to deal with that, of course. We added in the rearing a Blue Heeler puppy, which is joyful and frustrating in ping-ponging measures, and a general time suck, and totally worth it. 

Mongo Santamaria with Ruth Bader Catzburg

At home, we had the unexpected COVID-related death of my boyfriend’s father and trying to help plan his military burial months later when COVID restrictions permitted. Sadly, he left virtually no specific instructions as to his wishes, despite having a decent estate plan otherwise. I mention the last not to speak ill of the dead but rather, wearing my lawyer’s hat, to ask you to not be like that—please leave instructions in your estate plan for what you want/don’t want for your funeral/memorial—your family will be greatly relieved. On the other side, when someone you love dies, please follow the instructions of the executor (or a lawyer, especially if there is no trust/will) rather than going off on your own and trying to, say, sell their car before the title has been correctly transferred or giving away the deceased’s personal items, even if you think it would be helpful. Yes, we had to deal with that happening, too.

Anyway, whether it was general life stuff or the dog or family or the estate stuff or work, the mental load was more arduous than the physical. Again, this is true for everyone. Also, the political situation here in the USA has added to general stress, and now we’re facing an aggressive Russia, invading Ukraine, for extra yikes. 

So, while I wish I had been better about blogging here, I will say I’m not beating myself up too much about it. I learned shortly after I started law school that taking a step back to make sure that you are taking care of yourself is important. That can mean saying “no” to more things than you expect to or changing your priorities as your life changes. It’s okay to not do everything, in fact, it’s likely better to do less to do it well.

I hope you each take the time to look at what really matters in your life now and set your priories based on that. Be proud of what you have accomplished, especially if you have managed to stay in business during the pandemic, but don’t let your business be the only thing that matters. Be there for your loved ones rather than pushing for that extra buck, too. 

All that being said, I hope to step up and be more active here in the coming days and months. Since my mentor Carolyn Wright shut down her PhotoAttorney blog (to enjoy a well-earned retirement), I feel the need to step into the gap as much as I can.

More Tax Stuff

The IRS announced yesterday that the filing (and payment) date for 2020 taxes has been bumped from the usual April 15 to May 17, 2021. See the IRS’ own post, here.

Importantly, the delay does NOT apply to estimated tax payments. As of this writing, you still have to make your estimated payment on April 15, 2021. Now, that may change, but don’t rely on that possibility: be prepared to pay on the usual date.

Also, it doesn’t apply to state taxes. Check on your own state to see if it has made changes.

Tax Reporting (1099) Changes

While we’ve all been distracted by things like the attempted coup, it seems that there was an important change in tax reporting that you need to be aware of. Many of you have hired independent contractors and have issued 1099MISC forms to report those payments; this year, it’s different.

If you had payments to independent contractors in 2020, more than $600 to anyone, you need to report those on a new form, called 1099-NEC. Here is the IRS flyer with the full information (pdf), but the short answer is that the 1099-NEC must be provided to your vendors by January 31, 2021 and reported to the government by that same date!

If you have been hired as an independent contractor, you should received your 1099-NEC from your client(s) by January 31, 2021 as well.

It gets a bit more squirrel-y when it comes to payments to attorneys: we can get both forms for the money we receive. It just depends on what kind of payment we get–settlement or payment for our fees.

If you paid a settlement, for example, to an attorney on behalf of a claimant, then you need to report that whole amount (“gross proceeds to an attorney”) on the revised 1099MISC in BOX 10 (it used to be box 14). You must also report that whole amount on a 1099-NEC in BOX 3 sent to the claimant! See the bottom of page 2 and top of page 3 of the pdf I linked to above for examples.

However, if you hired an attorney (like me) directly and paid more than $600 in attorney’s fees to that attorney (or firm–even attorney corporations must have their payments reported), you need to report that on the new 1099-NEC in Box 1.

Leave it to the IRS to make an already complicated system even more so. 😉

Oh, and in some states, these changes mean you need to send information to states differently. You should check your own situation, to be sure. The vendor track1099.com has a tool to check, but best to check with the tax authorities in the states involved.

If you have questions about these new processes, you should contact your CPA for best advice.

Ah, the Case Act

Assuming that Trump actually signs the huge bill that includes the CASE Act, something that has not yet happened as I post this (and, knowing how crazy he is, it’s not a for-sure thing he will), the much-touted bill will become law. **UPDATE 12.28.20: he signed**
What does it change in copyright law and what does it mean for the average creator? Here’s my take…

First, the CASE Act changes nothing in existing law except that, before, you absolutely had to have a timely registration to get any statutory damages but you can get some without it under CASE; also, you can file a claim without having your certificate as long as you have filed an application for registration. For statutory damages, if you choose to use the small claims system without a timely registration, you can get very limited ones—up to $7500 per infringement but with a maximum per case of $15,000. That maximum limit means, for example, if one infringer used 3 of your photos, you can’t get more than $15K total, even though 3 x $7500 is more than that. As for the application/registration issue, you can file a small claim as long as you have applied for a registration and that application has not been refused. Under existing law, you must have a certificate in hand (or a refusal) to file suit. Under the CASE Act, if the registration application is later refused, the claim is dismissed but can be re-filed later (for example, if the registration is later fixed and then approved, file again). 

Besides those changes, the existing copyright law is left pretty much as it was, only added to with the small claims system regulations. For example, you can still get actual damages and the infringer’s profits attributable to the infringement in the small claims system, you still own the copyright from the moment of creation, the exclusive rights are still the same, the statute of limitations doesn’t change, etc.

What do you give up if you use the small claims system? Besides procedural things like the number of witnesses, discovery limits, etc., which are all lawyer stuff, really, here are the things people need to know they are giving up if they choose to use the new system:

  • The constitutional right to a jury trial
  • Increased damages for willful infringements
  • Appeal in the regular courts (there are appeal-ish procedures, in the small claims system, but no appeals or re-litigation in regular court)
  • Attorney’s fees, except for bad faith situations (notoriously hard to prove up) and then generally limited to $5000.

Also, you can’t bring claims for CMI removal or false assertion (§1202 claims), in the small claims system. That is a big deal, in my opinion, since you’d be giving up a minimum of $2500 (and up to $25K) per violation, and attorney’s fees, if you chose to use the small claims system. While this may change down the road (the bill requires study of issues in three years, including probably the §1202 one), for now, you have to let go of those claims. That is walking away from money.

Here’s the other thing: any party can opt-out, so you could be throwing away at least $100 (filing fee) and likely more (service costs, etc.) often, as your infringers say, “Nope, I won’t do the small claims court—sue me in regular court if you want to bring a claim!” and there is nothing you can do about it. 

But let’s say the opposing party doesn’t opt-out, and it’s a big enough company that it has in-house counsel or is willing to pay an outside attorney to represent it. If you were planning on going without an attorney, you’re going to get your ass kicked, more often than not. No matter how much the powers-that-be try to simplify the system, copyright lawyers simply know more than you and know how to use that knowledge to make the right kinds of arguments to other legal pros (those making the determinations in the small claims system). That means you’ll have to find counsel. If you can only get a maximum of $7500 and probably no attorney’s fees, it’s going to be much harder to find an attorney to take your matter on contingency or your going to have to pay an hourly rate that’ll eat up your award quickly.

I wrote a lot about how I didn’t like the CASE Act, as a litigator and counsel to copyright plaintiffs, in a post more than 3 years ago. My reasons still hold in regards to its final form, today. But if this is the new reality, I will, of course, work within it. As will we all. 

So, here’s what I still recommend for all creatives: apply for copyright registrations as soon as possible after the creation of your works. Just like before, this is still the best thing to do. Post-CASE, it is even more so. If you have a timely registration (effective date is either before the infringement started or the registration is made within 3 calendar months of the first publication of the work infringed—see here for more), and you choose to use the small claims system, the maximums increase to $15,000 per infringement and $30,000 total per claim. That’s double the amount available if the registration is untimely. 

Most importantly, a timely registration gives you much greater leverage to negotiate a settlement without filing a claim at all because your opponent knows you can file in regular federal court where the maximums are as they have been ($30K non-willful, $150K willful, per infringement and no maximum overall total, possible attorney’s fees). Also, you don’t have to give up your CMI-related claims (which, by the way, are not dependent on timely registration, see more here). When it comes to settlement negotiations, those timely registered factors and the CMI-related ones give a creative a much stronger starting position, which will generally result in more settlements, less litigation, and lower attorney’s fees (contingency fees often go up when any sort of litigation starts). More money in your pockets.

Now I know lots of creatives see the CASE Act as a good thing, and I get where they are coming from. It sounds great and it does open a door to getting some money that didn’t exist before. But I still think the downsides are significant. I also know that when I talk to other copyright lawyers who actually litigate, their positions have been much like my own.

As in all things legal, talk with your own attorney to learn what may be the best for you.