Page 146 - 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

services discussed in Section 5.5.1 if they do not pay levy to copyright owners. A UGC
should meet the following requirements to qualify for the levy scheme: (i) the revenues the
UGC creator captured should not exceed a predetermined threshold; (ii) the traffic the UGC
attracted should not exceed a predetermined upper limit; and (iii) if the revenues or the traffic
generated by the UGC exceeded the threshold, the content of UGC identical to the content of
a pre-existing work should be lower than a predetermined percentage. The threshold for the
revenue, traffic and overlapping rate would be predetermined by an authoritative third-party.
The reasons for using the above criteria to delineate non-commercial UGC are provided in
Section 5.4.2, after Section 5.4.1’s discussion of the reasons for extending levy schemes
from private copying to UGC creation. Section 5.4.3 focuses on the remuneration aspect of
the levy scheme, and Section 5.4.4 explores the social and cultural benefits of the scheme.
Section 5.4.5 discusses the possible criticism of the levy scheme and my response, to provide
a comprehensive view of the proposed levy as a permitted-but-paid rule.

5.4.1 Tailored to the democratisation of re-creating content and making
content available to the public

The proposed levy scheme covers a wider scope of leviable use than the existing levy
scheme, which merely covers private reproduction. The current levy scheme under US law is
strictly restricted to any ‘digital audio recording device…which is designed or marketed for
the primary purpose of, and that is capable of, making a digital audio copied recording for
101
private use’. Canada has adopted a much broader levy scheme that applies to any ‘audio
recording medium’…‘onto which a sound recording may be reproduced and that is of a
102
kind ordinarily used by individual consumers’. The levy scheme has a far more extensive
application in the EU, where it is applied to photocopiers, printers, a range of recording
devices, computers and other devices whose value substantially increase with their use.
103
104
When the US Congress rejected the levy scheme on videocassette recording devices, its
101 AHRA§1001 (3).
102 Copyright Act, R.S.C. 1985, ch. C-42, § 79.
103 Netanel (n 73) 33; Kretschmer (n 74) 7.
104 The levy scheme in the US was firstly proposed by the movie industry, not the record labels. In the early 1980s, movie
companies were bothered by the videocassette recorders (VCR) that shifts the capability of reproducing movies from
copyright owners to end users. After the Ninth Circuit Court's decision that sided with the movie companies, VCR
manufacturers appealed to the Supreme Court while the film companies submitted a levy-based compromise to Congress that
agrees to give up injunctive relief upon the acquirement of a statutorily fixed royalty on every VCR and blank videocassette
sold (Senator Charles Mathias introduced a Senate bill adopting this royalty approach, which was called the Mathias
amendment, Bill Holland, ‘Audio Exemption and Fee Are Added to Betamax Bill’ Billboard (NY, 13 March 1982)). However,
th
Congress rejected this scheme (H.R. 1030, 98th Cong. (1983). (introduced 1/27/83), and S. 31, 98 Cong., 1st Sess. (1983)
(introduced 1/26/83)). Several months later, the Supreme Court delivered its final decision that regards home taping as fair
use, which encouraged Congress to leave aside the levy scheme proposal. Nevertheless, approximately 10 years later, the levy
scheme was introduced by record labels. In the late 1980s it’s common for a family to have a digital audio cassette recorder
(DAR) which allows users to make perfect copies of sound recordings. Lobbied by the record labels who complained that the
home copying will supersede CD sales, paired with the claim of consumer right and piracy by the newly developing DAR
industry, the Congress proved the levy proposal that requires DAR manufacturers to make a royalty payment to the copyright
holders as an exchange to exempt non-commercial, private copying of sound recordings from liability, which means the
manufacturing and trafficking of the recording devices will not be regarded unlawful (Bill Holland, ‘Seek ‘Betamax’ Audio
Tee Tie’ Billboard (NY, 31 July 1982) 54; Russell Sanjek, ‘Is Copyright Infringement a Strict Liability Tort?’ (2014) 30
Berkeley Technology Law Review 305, 306.

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