Page 154 - 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

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standard has been very controversial and has required a case-by-case analysis. Further,
transforming the distribution model has usually involved the deployment of new distributing
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technology, such as Google book, and thus has been more likely to be conducted by
professional intermediaries rather than by individual users. Because most user-copied content
is subject to piracy, it is more effective to exclude the entire category of user-copied content.
After all, user-copied content that qualifies for the recontextualisation standard can still seek
a remedy under the fair use rule.
In summary, to be covered by the proposed levy scheme, the UGC should meet the
following requirements: (i) the revenues the UGC creator captured should not exceed
a certain threshold, (ii) the traffic the UGC attracted should not exceed a certain upper
limit, and (iii) if the threshold for revenues or the traffic was exceeded, the content of
UGC identical to the content of a pre-existing work should be lower than a predetermined
percentage. The criteria for the revenues, traffic and overlapping rate could be decided by
a third-party authority, such as the copyright royalty judges discussed in Section 5.5. The
revenue condition and the traffic condition ensure that the UGC does not engender economic
significance. The condition on substantial reproduction ensures that even if the UGC has
gained significant revenues or popularity, the revenues or popularity does not directly
come from the use of the copyrighted works. The three conditions draw a clear line for
leviable UGCs to maintain a balance between encouraging UGC creation and protecting the
copyright owners’ exploitation of copyrighted works.

5.4.3 Fair remuneration to copyright owners

The remuneration scheme is also another advantage of the levy system. According to the
Berne Convention, even if a use does not conflict with the normal exploitation of copyrighted
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work, it should not unreasonably prejudice the legal interests of the copyright owner. The
‘unreasonable prejudice’ requirement calls for a remuneration scheme when the consequence
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generated by the permitted use exceeds a certain level of prejudice that can be justified.
For example, a small number of uses could be entirely exempted by fair use/dealing. In
contrast, a large-scale of UGC creation should be accompanied by levies. Consequently,
although each UGC would not interfere with the normal exploitation of copyrighted works, a
vast quantity of UGCs could lead to a loss of revenue for the copyright owner. 158

154 See supra notes 20-31. See also Gervais, ‘The Tangled Web of UGC’ (n 10) 862.
155 Authors Guild v. HathiTrust, 755 F.3d 87 (2d Cir. 2014); Authors Guild v. Google, Inc. 804 F.3d 202 (2d Cir. 2015).
156 The WTO panel conflated the second and third steps by concluding that ‘prejudice to the legitimate interests of right holders
reaches an unreasonable level if an exception or limitation causes or has the potential to cause an unreasonable loss of
income to the copyright owner’. However, this point is rejected by Daniel Gervais who argued that a use satisfying with the
second step does not necessarily lead to the reasonableness of the prejudice it causes to the copyright owners. Gervais, ‘Making
Copyright Whole’ (n 125) 29.
157 United States-Section 110(5) Panel Report (n 132) at para 6.181.
158 Andrew F. Christie, ‘Private Copying Licence and Levy Schemes: Resolving the Paradox of Civilian and Commonwealth
Approaches’ in David Vaver (ed), Intellectual property in the New Millenium: Essays in honour of William R Cornish (2010)
250.
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