Page 145 - 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

‘format shifting’ (e.g. transferring a work from a CD to an MP3 player or from a video
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tape to a DVD) as opposed to the broad purpose of ‘private use’. In a preparatory work
for the 2006 Recommendation (‘Fair Compensation for Private Copying in a Converging
Environment’; not adopted), the European Commission also indicated that levy schemes
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would be unnecessary if copyright owners found ways to individually licence. As this
Recommendation argued, the levy is ‘based on the premise that some acts of private copying
cannot be licenced for practical purposes by the relevant right holders’. 97
However, even if the benefits of easy search and enforcement outweighed the costs
brought about by burdensome bargaining, the net reduction in transaction costs would not
necessarily lead to the rejection of the levy for UGC creation. If a UGC levy were rejected
on the ground of transaction costs, the overall existing levy system (private copying levy
schemes) would be in danger because technologies also reduce the search and enforcement
cost of private copying. More crucially, this transaction-cost approach presumes that all use
is under the control of copyright owners. When transaction costs disappear or substantially
diminish, the levy should phase out, which is termed copyright maximalism or copyright
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optimism. The copyright maximalism presumption, nevertheless, has been explicitly
rejected by the Berne Convention which provides a copyright exception for a use that ‘does
not conflict with a normal exploitation of the work and does not unreasonably prejudice
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the legitimate interests of the author’ even if there are no transaction costs. The Berne
Convention draws the line for leviable UGC creation, which is explored in Section 5.4.
5.4 Non-commercial UGC Creation Levy Scheme

The proposed non-commerial UGC creation levy scheme is designed to address the use
of copyrighted works to create non-commercial UGCs, namely, UGCs that do not conflict
with the normal exploitation of the pre-existing copyrighted works on which UGCs are
based. Copyright owners cannot sue UGC creators whose UGCs are covered by the levy
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scheme, but copyright owners can sue UGC platforms and other leviable devices and

95 Gowers Review of Intellectual Property (2006), London, HM Treasury, Recommendation 8.
96 Kretschmer (n 74) 24.
97 Ibid.
98 Goldstein (n 63) 11.
99 Berne Convention, art 9(2).
100 Although some controversies have arisen over whether the levy under AHRA in the US is a blanked license or a simply
immune from copyright lawsuits, the actual effect of the levy is that users can use ADRs for personal, non-commercial home
taping and copyright owners cannot sue these users. See Jeremy F. Debeer, ‘Locks & Levies’ (2006) 84 Denver University
Law Review 143, 145 (‘This approach is similar to compulsory licensing, except that licence fees are paid not by users
of copyrighted materials, but by manufacturers or providers of certain goods or services’); Kimberlee Gai Weatherall, ‘A
Comment on the Copyright Exceptions Review and Private Copying’ (June 2005). IPRIA Working Paper No. 14/05. Available
at SSRN: <https://ssrn.com/abstract=815328> or <http://dx.doi.org/10.2139/ssrn.815328> (‘a statutory license (for example,
a levy on recording media in return for a broader right to make private copies)’); Joseph F. Baugher, ‘Issues in American
Copyright Law and Practice’ (2019) <http://www.joebaugher.com/copyright.htm> accessed 9 September 2019 (under AHRA,
‘people making digital recordings at home for noncommercial purposes were immune from copyright violation lawsuits’).

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