Page 209 - 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 7 Platform Users’ Entitlement to UGCs: Human Use and Web Scraping
An Intermediary-oriented Approach

Third-party beneficiary contracts have long been the subject of controversy. Allowing
a third party who has never participated in the negotiations for a contract to enforce the
9
contract’s terms is believed to defeat the basic structure of bargain based contract law. The
Restatement (First) of Contracts published in 1932 incorporated the third-party beneficiary
10
rule but treated it as ‘an anomaly’. It merely acknowledged two categories of third-party
11
beneficiaries: donee beneficiaries, and creditor beneficiaries. Nearly half a century later,
the Restatement (Second) of Contracts treated third-party beneficiary contracts as a normal
category of contract, and extended the scope of qualified beneficiaries to those whom the
promisee intended to benefit. 12
Disputes have abounded about the distinction between an intended beneficiary and an
incidental beneficiary. Only an intended beneficiary can enforce a third-party beneficiary
13
contract. The key to the distinction between these two types of beneficiaries is that an
intended beneficiary is a third person that the contracting parties have a ‘clear intention to
14
benefit’, whereas an incidental beneficiary is a third person that the contracting parties
15
‘created by implication’.
16
I argue that UGC platform users are intended rather than incidental beneficiaries. First,
most ToUs/ToSs contain a clause explicitly requiring UGC creators to grant other platform
users a certain right to use UGCs, separate from the clause in which UGC creators grant
a licence to the UGC platform to use the UGCs. For instance, YouTube’s ToS regulate the
licence for YouTube users’ use of UGCs in Article 5 and the licence for YouTube’s use of

9 Anthony John Waters, ‘The Property in the Promise: A Study of the Third Party Beneficiary Rule’ (1985) 98 Harvard Law
Review 1109, 1113.
10 According to Samuel Williston, the reporter of Restatement First, see 5 A.L.I. Proc. 385 (1927) (remarks of Reporter
Williston).
11 Restatement (First) of Contracts Section 133.
12 Section 302 of Restatement (Second) construed two conditions to constitute a valid third-party beneficiary contract. The
first condition is that ‘recognition of a right to performance in the beneficiary is appropriate to effectuate the intention
of the parties’. The second condition is that either (a) ‘the performance of the promise will satisfy an obligation of the
promisee to pay money to the beneficiary,” namely, the contractual promise will satisfy a debt to the third party; or (b) the
circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance’. The scope
of the beneficiary described by condition (a) is roughly the same as the creditor beneficiary in the restatement (first), whereas
condition (b) provides a range of beneficiaries much broader than that of the donee beneficiary.
13 Discovery, Inc. v. D.P., No. 16CV3936 (MKB) (RER), 2018 WL 1583971, at *19 (E.D.N.Y. Mar. 31, 2018).
14 Debary v. Harrah's Operating Co., Inc., 465 F. Supp. 2d 250, 263 (S.D.N.Y.2006); Sovereign Bank v. BJ's Wholesale Club,
Inc., 395 F. Supp. 2d 183, 192 (M.D. Pa. 2005); Pennsylvania State Employees Credit Union v. Fifth Third Bank, 398 F.
Supp. 2d 317, 332 (M.D. Pa. 2005); Perotti v. Corr. Corp. of Am, 290 P.3d 403, 408 (Alaska 2012); Karo v. San Diego
Symphony Orchestra Ass'n, 762 F.2d 819, 821-22 (9th Cir. 1985) (citing Strauss v. Summerhays, 157 Cal. App. 3d 806, 816,
204 Cal. Rptr. 227 (1984)).
15 Top Rank, Inc. v. Gutierrez, 236 F. Supp. 2d 637, 656 (2001); Goldberg v. R.J. Longo Const. Co., Inc, 54 F.3d 243, 247 (5th
Cir. 1995) (quoting Foster, Henry, Henry & Thorpe, Inc. v. J.T. Construction Co., 808 S.W.2d 139, 140 (Tex. App.-El Paso
1991, writ denied); MJR Corp. v. B&B Vending Co., 760 S.W.2d 4 (Tex. App.-Dallas 1988, writ denied)).
16 Discovery, Inc. v. D.P., No. 16CV3936 (MKB) (RER), 2018 WL 1583971, at *19 (E.D.N.Y. Mar. 31, 2018).

• 195 •