Page 142 - A Study on the Role of UGC Platforms in Copyright Law：An Intermediary-oriented Approach

A Study on the Role of UGC Platforms in Copyright Law: Chapter 5 Formulating a Non-commercial UGC Creation Levy Scheme
An Intermediary-oriented Approach

payment to the copyright owner to maintain a balance between promising users’ freedom to
create UGCs and securing copyright owners’ economic incentive. Consequently, a permitted-
but-paid rule will be more acceptable to the copyright industry. One major criticism for the
UGC exemption under Canadian copyright law is that copyright owners cannot get a share
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from the new revenue stream brought by UGCs. Compared to the recently passed DSM
directive which requires UGC platforms to seek authorization from copyright owners, a
permitted-but-paid scheme only requires a third-party determined amount of money, which
relieves the burden for UGC platforms and encourages innovation.
In the context of copyright law, permitted-but-paid rules mainly exist in the form of
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compulsory licensing and levies. A report commissioned by the UK Intellectual Property
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Office found no substantial difference between the compulsory licensing systems and
the levy schemes, claiming that they were just different approaches adopted by different
jurisdictions. The EU member states have preferred levy schemes and the US has preferred
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compulsory licensing. As mentioned in Chapters 2 and 3, levy schemes impose the duty of
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payment on the device or service provider (manufacturer, importer, distributor), whereas
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compulsory licensing usually requires payment directly from the user. In this regard,
compulsory licensing is akin to collective licensing. It is designed for professional users,
namely user-distributors such as player piano manufacturers, broadcast companies and
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cable TV operators. Levy schemes, in contrast, collect levies from intermediaries, namely
facilitator-distributors, such as maunfacturers of photocopiers and audio/video recorders, to

71 See note 46 in Introduction.
72 In this paper, I square the compulsory licensing scheme with the statutory licensing scheme. Peter Menell proposes to apply
compulsory license to user-generated videos. Menell (n 8); Nicholas Thomas DeLisa suggests extending the current section
115 compulsory license to the use of musical works to create UGCs. Nicholas T. Delisa, ‘You(Tube), Me, and Content ID:
Paving the Way for Compulsory Synchronization Licensing on User-Generated Content Platforms’ (2016) 81 Brook Law
Review 1275, 1295.
73 Menell (n 11) 443; Neil W. Netanel, ‘Impose a Noncommercial Use Levy to Allow Free Peer-to-Peer File Sharing’ (2003)
Harvard Journal of Law & Technology 1, 3; Glynn S. Lunney, ‘The Death of Copyright: Digital Technology, Private
Copying, and the Digital Millennium Copyright Act’ (2001) 87 VA L REV 813, 815 Lawrence Lessig, Remix: Making Art
and Commerce Thrive in the Hybrid Economy (Penguin 2008) 109 Raymond Shih Ray Ku, ‘The Creative Destruction of
Copyright: Napster and the New Economics of Digital Technology’ (2002) 69 The University of Chicago Law Review 263,
312-315; William W Fisher III, Promises to Keep: Technology, Law, and the Future of Entertainment (Stanford University
Press 2004) 199-258 Lionel S. Sobel, ‘DRM As An Enabler Of Business Models: ISPs As Digital Retailers’ (2003) 18
Berkeley Technology Law Journal 667, 684-87.
74 Martin Kretschmer, Private Copying and Fair Compensation: An Empirical Study of Copyright Levies in Europe (Intellectual
Property Office 2012) 10 (‘In some countries, the levy is constructed as a statutory’.)
75 Netanel (n 73) 6; Lunney (n 73) 916.
76 Information Society Directive, article 5(2)(b); Kretschmer (n 70) 10; P.Bernt Hugenholtz, Lucie Guibault and Sjoerd van
Geffen, The Future of Levies in A Digital Environment: Final Report (Amsterdam: Institute for Information Law 2003) 13.
77 E.g., the compulsory license for record labels to mechanically reproduce sheet musical compositions to recordings (17
U.S.C. § 115); compulsory license for cable and satellite TV operators to transmit off-air broadcasts (17 U.S.C. § 111 & 119);
compulsory license webcasters to transmit sound recordings (17 U.S.C. § 118).
78 Section 2.3.4.

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