Page 190 - 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 6 UGC Platforms’ Entitlement to UGCs
An Intermediary-oriented Approach

However, this presumption has been given less weight in the context of UGC considering
the marginal value of individual UGCs and the minimal costs of creating, distributing and
producing UGCs. Thus, electronic contracts and online contracts have been increasingly
148
accepted by the courts as evidence.
6.4 The Substantive Conscionability of ToUs/ToSs

6.4.1 The copyright licence of UGCs

1) Justification for proportionality of the consideration: Implied licence
Under classical contract law, the courts will not conduct substantive examinations of
whether the consideration exchanged is commensurately proportionate, provided that the
149
consideration has some value, even if it is minimal. A pivotal reason for this is that the
courts are not in the best position to judge the subjective value of a specific promise or item.
What is worth a lot to one person may be worth very little to another. As the UK House
of Lords found in the case of Chappell & Co Ltd v. Nestle Co Ltd ‘[a] contracting party
150
can stipulate for what consideration he chooses’. If the offeree is unsatisfied with the
consideration, s/he can negotiate or refuse to sign. The law should not intervene in a contact
based on the disproportionality of the objective value of the consideration exchanged.
However, ToUs/ToSs between UGC platforms and users should be subject to substantive
examination because UGC platforms’ oligopolistic power has deprived users of the
opportunity to choose other platforms. Due to the significant fixed costs of establishing UGC
platforms and the small marginal costs of hosting one more UGC, large UGC platforms
gain competitive advantages due to economies of scale. The large scale of UGC platforms
becomes self-reinforcing because the number of platform users grows with improvements
to the quantity and quality of the existing content generated by existing platform users. The
high cost of switching UGC service providers further raises the cost of entry and contributes
151
to the highly concentrated market of UGC platforms with similar ToUs/ToSs. Users have
no choice but to accept the unfair terms of ToUs/ToSs, which calls for court intervention
when adhesion contracts are substantively unconscionable.
The gist of substantive conscionability is the proportionality of the consideration.
Namely, the scope of the licence to use UGCs granted to the UGC platform by UGC creators
should correspond to the service the UGC platform provides to UGC creators. This chapter
advances a criterion to examine the proportionality of consideration: the scope of the licence
to use UGCs cannot exceed the scope that is necessary for the UGC platform to store, share

148 Ryan J. Casamiquela, ‘Contractual Assent and Enforceability: Cyberspace’ (2002) 17 Berkeley Technology Law Journal 475,
494.
149 Beale (n 55), Part 1, Chapter 1, Section 1(a).
150 Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1, [1960] AC 87, para 19.
151 Yahong Li and Weijie Huang, ‘Taking users’ rights seriously: proposed UGCs solutions for spurring creativity in the Internet
age’ (2019) 9 Queen Mary Journal of Intellectual Property 61, 77-78.

• 176 •