USER GENERATED

CONTENT

A Dissertation submitted to Amity University in Partial

Fulfillment of the Requirement for the degree of Bachelor of
Laws.

SUBMITTED BY –
A3208305046

UNDER THE SUPERVISION OF

Prof:-

AMITY LAW SCHOOL, UTTAR PRADESH

BLOCK I-2, SEC – 125, AMITY CAMPUSES,
AMITY UNIVERSITY, NOIDA
TABLE OF CONTENTS
 AMITY LAW SCHOOL

CERTIFICATE

I have the pleasure to certify that A3208305046, a student of Amity Law

School, Uttar Pradesh has pursued his research work and prepared the
present dissertation entitled ‘User generated content’ under my
supervision and guidance. To the best of my knowledge, the dissertation is
the result of his own research.

This is being submitted to Amity University for the Degree of Bachelors

of Law in partial fulfillment of the requirements of the said Degree.

Nilendra Kumar
Director Lecturer
(Mentor)
Amity Law School,
Uttar Pradesh Amity Law School,
Uttar Pradesh
Block I-2, Sec – 125 Block I-2, Sec – 125
Amity Campuses Amity Campuses
Amity University Amity University
Noida. Noida
 ACKNOWLEDGEMENT

This Dissertation is an outcome of study by the author. Any material

written by another person that has been used in this paper has been
thoroughly acknowledged. As my research for this dissertation has
concluded, there are number of people. I would like thank for this
successful attempt.
I thank the esteemed Director of the Institution,
____________________________ for inculcating the concept of
preparing a Dissertation and allowing me to present my viewpoints in a
liberal manner. In addition to this, I would like to show my heart – felt
gratitude to _______________________, who undertook the role of a
supervisor, mentor and guide for the successful preparation of this
dissertation.
I would also like to thank the library staff of the Indian law Institute, New
Delhi and the Indian Society for International Law, New Delhi for
permitting me to use their esteemed library for my research on the topic.
I would like to thank _____________________ for guiding me during the
preparation of this Dissertation.
On a personal level, I would like to extend appreciation towards my
family and friends who supported me throughout.

A3208305046
B.A.LLB. (Final Year)
 TABLE OF CASES
S.No. Name of the Citation Page number
Case

1. Ravenscroft vs. (1980) RPC 193 31.

Herbert
2. Hogg vs. Scott (1874) LR Eq 31
Eq444
3. Musket vs. Hill (1804) 5 Bing. 32
NC 694
4. Mellor vs. (1940) 2 All ER 32
Australian 20 (PC),
Broadcasting
Commission
5. Noah vs. (1991) 2 QB 78 32
Shubha (CA),
6 Gyles v Wilcox (1740) 26 ER 34
489:
7 Harper & Row , 471 U.S. 539 35
v. Nation (1985)
Enterprises
8 Sony Corp. of 36
America v.
Universal City
Studios, Inc
9 Dellar v. 104 F.2d 661, 36
Samuel 662 (2d Cir.
Goldwyn, Inc., . 1929)

10 Eldred v. , 537 U.S. 186 36

Ashcroft
11 Folsom v. 9 F. Cas. 342 36
Marsh) (C.C.D. Mass.)
(No. 4,901
12 Campbell v. 510 U.S. 569, 36
 Acuff-Rose 571 (1994).20
Music,
13 Princeton Univ. 99 F.3d 1381 36
Press v. (6th Cir.
Michigan 1996)21
Document
Servs.,
CHAPTER ONE
Introduction
INTRODUCTION

USER GENERATED CONTENT:

User-generated content (UGC) refers to various kinds of media content

publicly available on the internet sites providing the technology/ platform
to their subscribers and users, which are produced by such users. It is also
known as:

Consumer-generated media (CGM)

User-created content (UGC)

In other words, UGC refers to the contents which are created by the users
themselves and disseminated over the internet with the intention of sharing
it with the rest of the world. UGC may and may not be original works i.e.
it can also be a work substantially involving the already available and
created works. The term ‘user generated content’ entered mainstream
usage during early years of this century substantially in web publishing
and new media content productions. It involves the online posting of
contents for sharing movies and songs, critic, problem processing, news,
gossip and research depicting the new age technologies like social
networking, digital video, blogging, podcasting, mobile phone
photography and wikis for media production by general public.

The media companies realizing the potential of this format started to

attract or allow the users themselves to create material that is interesting
and easily relatable to a broader audience. For example, there are many
ways today that newspaper/tabloid readers can contribute online by
sending in photos, movies and texts. Such as the Swedish tabloid
‘Aftonbladet’ which gives out rewards to the best material being sent in by
a reader. Many new companies in the media industry such as Service
providers like Facebook, Orkut, MySpace, etc. have realized the potential
and increasing demand of UGC hence they have introduced such services
creating a sort of playing field for the users rather than them self creating
material for users to consume. A similar development has also occurred in
the video game industry where games such as World of Warcraft, Sims
and Second Life give the players a large amount of freedom to express and
develop what they wish to and even essential parts and services of such
games are actually built by the players themselves.

Sometimes UGC constitutes only a portion of a website. For example on

Amazon.com the majority of content is prepared by administrators, but
numerous user provide their reviews of the products being sold which are
submitted by such users/visitors to the site which are available for the rest
of their users/visitors. But lately in sites like YouTube and MySpace, most
of the contents are created and posted by their users only.

Often UGC is partially or totally monitored by website administrators to

avoid offensive content or language, copyright infringement issues, or
simply to determine if the content posted is relevant to the site's general
theme.

However, there has often little or no charge for uploading user generated
content. As a result the world's data centers have begin to be regarded as a
liability, rather than an asset as often some of the contents posted on such
sites may result in copyright infringement. Some record companies are
also of the view that few of such service providers are gaining from a
business model created for facilitating piracy.

Motivation and incentives for users to generate UGC:

While the mostly financial benefit derived from user generated content is
enjoyed by the content host, sometimes these benefits are also forwarded
or shared indirectly with the users/contributors. There are various theories
behind the motivation to user for creating and contributing user-generated
content, like altruistic, social and materialistic. Due to the high value of
user-generated content lately, many sites give their users incentives to
encourage their participation in generation of contents. These incentives
can be distinguished as implicit incentives and explicit incentives-

Implicit incentives:
These incentives are not anything tangible. The most common form of
implicit incentives is social incentives. These incentives allow the user to
feel good as an active member of the community. These can include
various kinds of relationships between users, such as the case of
Facebook’s friends or fans, or Twitter’s followers. Other common social
incentives are in the form of status, badges or levels within the site,
something a user earns when they reach a certain level of participation
which may sometimes even come with additional privileges. Yahoo
Answers is an example of this type of social incentive. Social incentives
are very cost efficient because it costs the host site very little and can be
seen as a motivation for the user’s increased participation resulting in
site’s growth, however, the success of such features requires a fairly large
existing community on the site for it to function effectively.

Explicit incentives:

These incentives refer tangible benefits for the users, some kinds of these
incentives are financial payment, entry into a contest, a voucher, coupon,
frequent user redeemable points, etc. Direct explicit incentives are easily
accepted and liked by most and have immediate value notwithstanding of
the user community’s size. Sites such as shopping platform Wishabi and
Amazon Mechanical Turk both uses this type of financial incentives in
slightly different ways to encourage user participation. However, the
drawback to explicit incentives is that it may cause the user to be subject
to the over justification effect, i.e. eventually believing that the only
reason for the user’s participation is the opportunity of explicit incentives.
This reduces the influence of the other form of social or altruistic
motivations, making it increasingly costly for the content host to retain
long term contributors.

Different types of user generated content are Discussion boards, Blogs

Wikis, Social networking sites, News Sites, Trip planners, Memories,
Mobile Photos & Videos, Customer review sites, Experience or photo
sharing sites, websites offering the opportunity for the users to share their
knowledge and familiarity with a product or experience of Audio, Video
games, Maps and location systems.
Definition:

As the concept of commercial UGC is relatively new, there is no widely

accepted or legal definition of UGC and measuring its social, cultural and
economic impacts are also in its early stages. Generally, UGC may be
defined as content, created outside of professional routines and practices,
made publicly available over the Internet which reflects a certain amount
of creative effort. A number of UGC hosting sites/platforms are developed
and coming up based on this definition. While there is no effective
measurement of UGC, but the current trend shows that broadband users
produce and share content at a high rate, and it is particularly high for
younger age groups (e.g. 50% of Korean Internet users report having a
homepage and/or a blog). Given strong network effects a small number of
platforms draw large amounts of traffic, and online video sites and social
networking sites are developing to be the most popular websites
worldwide. Various studies also identified that technological drivers e.g.
more wide-spread broadband uptake, new web technologies, social drivers
e.g. demographic factors, attitudes towards privacy, economic drivers e.g.
increased commercial involvement of Internet and media firms in hosting
UGC and legal drivers e.g. the rise of more flexible licensing schemes, are
liable for the overwhelming growth of the concept of UGC.

Economic impacts of user-created content:

User-created content is already an important economic phenomenon

despite the fact that it was originally meant to be a non-commercial
concept. The spread and popularity of UGC and the amount of attention it
attracted of the users now appears to be a significant evolution of the
pattern and the manner in which the online content will be created and
consumed, which will be a major change from how traditionally content
was supplied. These changes now create opportunities and challenges for
established market corporations and their existing strategies. The more
immediate economic impacts in terms of growth, entry of new firms and
employment are currently with ICT goods and services providers and
newly forming UGC platforms. New digital content innovations are more
or less based on decentralized creativity, organizational innovation and
new value-added models, which favor new corporations entering into this
field, and less on traditional scale advantages and large start-up
investments. Search engines and portals are also experimenting with
business models that are often based on online advertisement and
marketing. On social networking sites and in virtual worlds, for example,
brands increasingly create special sub sites and new forms of advertisings
are emerging. The shift to Internet based media is now beginning to affect
content publishers and broadcasters. At the outset, UGC may have been
seen as competition as:

• Users may create and watch UGC at the expense of traditional

media, reducing advertising revenues.
• Users become more selective in their media consumption
(especially younger age groups).
• Some UGC platforms host unauthorized content from media
publishers.

However, some traditional media organizations have shifted from creating

on-line content to creating the facilities and frameworks for UGC creators
to create and publish. They have also been making their websites and
services more interactive by inviting user comments and ratings. TV
companies are also licensing their contents and extending their on-air
programs and brands to be made available on UGC platforms for the
internet public to watch, e.g. IPL has shook hands with YouTube and
licensed them to stream cast/air live matches on their site. There are also
potentially growing impacts of UGC on independent or syndicated content
producers. Since the advent of UGC professional photographers, graphic
designers, free-lance journalists and similar professional categories
providing pictures, news videos, articles or other content have started to
face competition from freely provided amateur-created content.

Social impacts of user-created content:

The creation of content by users is often perceived as having major social

implications. The Internet as a new creative outlet has altered the
economics of information production and led to the democratization of
media production and changes in the nature of communication and social
relationships by giving overwhelming content availability control in the
hands of the amateur users. Changes in the way users produce, distribute,
access and re-use information, knowledge and entertainment potentially
gives rise to increased user autonomy, participation and diversity. These
may result in falling of entry barriers, distribution costs and user costs and
greater diversity of works as digital shelf space is almost limitless. UGC
can provide citizens, consumers and students with information and
knowledge. Educational UGC content tends to be collaborative and
encourage sharing and joint production of information, ideas, opinions and
knowledge, for example building on participative web technologies to
improve the quality and extend the reach of education. Discussion for
product reviews can lead to more informed user and consumer decisions
e.g. for health-related questions and book reviews. The cultural impacts of
this social phenomenon are also far-reaching. Long tail economics allows
a substantial increase in availability and a more diverse array of cultural
content to find niche audiences. UGC can also be seen as an open platform
enriching political and social debates, diversity of opinion, free flow of
information and freedom of expression. Transparency and some watchdog
Functions may be enhanced by decentralized approaches to content
creation. Citizen journalism, for instance, allows users to correct,
influence or create news, potentially on similar terms as newspapers or
other large entities. Furthermore, blogs, social networking sites and virtual
worlds can be platforms for engaging electors, exchanging political views,
provoking debate and sharing information on social and political
questions. However, there also exists challenges related to inclusion,
cultural fragmentation, content quality and security and privacy have been
raised. Also, a greater divide between digitally literate users and others
may occur and cultural fragmentation may take place with greater
individualization of the cultural environment. Other challenges relate to
information accuracy and quality including inappropriate or illegal content
where everybody can contribute without detailed checks and balances.
Other issues relate to privacy, safety on the Internet and possibly adverse
impacts of intensive Internet use.

Challenges for users and business:

The rapid rise of UGC is raising new questions for users, business and
policy. Policy issues are grouped under following headings:

• Enhancing R&D, innovation and technology.

• Developing a competitive, non-discriminatory framework
environment.
• Enhancing the infrastructure.
 • Shaping business and regulatory environments, governments as
producers and users of content, better measurement.

Apart from standard issues such as ensuring wide-spread broadband

access and innovation, new questions emerge around whether
governments should support UGC. The maintenance of pro-competitive
markets is particularly important with increased commercial activity and
strong network effects and potential for lock-in. UGC is also putting
existing regulatory arrangements and the separation between broadcasting
and telecommunications regulations to a test. With the emergence of
increasingly advertising-based business models and unsolicited e-mail and
marketing messages, rules on advertising will play a particular role in the
UGC environment (e.g. product placements, advertising to children). In
the regulatory environment important questions relate to intellectual
property rights and UGC: how to define fair use and other copyright
exceptions, what are the effects of copyright on new sources of creativity,
and how does IPR shape the coexistence of market and non-market
creation and distribution of content. In addition, there are questions
concerning the copyright liability of UGC platforms hosting potentially
unauthorized content and the impacts of digital rights management. Other
issues include:

• How to preserve freedom of expression made possible by UGC.

• Information and content quality/accuracy tools to resolve the
question of infringement.
• Prohibition of adult, inappropriate, and illegal content and self-
regulatory.
• Dealing with new issues surrounding privacy and identity theft.
• Monitoring the impacts of intensive Internet use.
• Network security and spam.
• Regulatory questions in dealing with virtual worlds (taxation,
competition etc.).
DRIVERS OF USER-CREATED CONTENT

Technological drivers:

Starting from the 1990s, with the first availability of household broadband,
penetration grew steadily within the OECD countries and worldwide. The
global transition to broadband drastically altered the environment in which
users could create, post, and download content prior to which the
limitations of dialup connections meaning that the vast amount of user
content creation was restricted to text and simple, low quality graphics.
With the development of high speed connections, users can quickly upload
larger media files. As fiber to the home is becoming increasingly
important for broadband access, as wireless broadband is becoming more
popular and as newer-generation networks spread, this trend of UGC is
likely to grow manifolds. Furthermore, during this time period, processing
speeds, hard drive and flash memory capacities greatly increased with the
costs for the consumer electronics which are used to record and upload
UGC decreased such as higher quality digital cameras, digital video
recorders and mobile phones, all this has also promoted UGC. Moreover,
new mobile phone platforms with High-Speed Uplink Packet Access
(HSUPA) allowing for higher uplink data transmission speeds are
expected to promote mobile UGC further as users are able to send and
receive cell phone clips and pictures at higher speeds. More accessible
software tools, such as html-generating software, but also software which
enables users to edit and create audio and video without professional
knowledge are a significant driving force for the growth of UGC. While
most of the UGC is posted in various places on the Internet, the challenges
of locating, distributing, and assessing the quality of the content has
promoted various other new technologies which facilitate tagging (i.e. the
association of particular keywords with related content), pod casting,
group rating and aggregation, recommendations, content distribution (e.g.
RSS16 feeds which ensure that users automatically receive new posts and
updates and file-sharing software), technologies allowing for interactive
web applications and filtering such as Ajax, RSS, Atom, and content
management systems needed for blogs and wikis (see OECD, 2006b). The
rise of sites and services hosting UGC was like a cherry on the cake as not
every user necessarily had available server space or the technical skills to
post his or her work online and further to disseminate them. As the quality
of cameras and video capabilities on phones grows and as phone networks
are increasingly integrated with the Internet, this category of content is
spreading more widely like mobile blogging. New video platforms such as
Internet Protocol television services like transmission of TV programming
over broadband using peer-to-peer technology and technologies allowing
for high-resolution broadband video transmission on television screens,
that will feature UGC and video game consoles geared to UGC can be
expected to provide additional impetus.

Social drivers:

The increased use of broadband/internet, the desire for interactivity, the

willingness to share, to contribute, to create online communities are
changing the media consumption habits of Internet users (in particular of
younger age groups, i.e. 12-17 years old). The social factor has been and
for the future also is likely to be one of the most important drivers in the
years to come. UGC is lately starting to move mainstream with currently
only a limited number of young, male early adopters and highly skilled in
Information, Communication and Technology persons using the Internet
in this way. According to surveys, almost three-quarters of people who
publish amateur video content online are under 25, and of those, 86% are
male. At the moment, user-created video is viewed by a large number of
people but created by only a few users.

Economic drivers:

Lately, an increased desire to monetize/commercially exploit UGC has

built up. Especially media companies, the communications industry and in
particular mobile operators and other commercial players have identified
the revenue earning potential behind UGC and are investing substantial
amounts of money in developing these platforms and sites. The fear of
losing revenues due to consumer’s decreased interest in traditional media
forms had tremendously hampered the desire to cater to such a consumer
bank, this has served as an important motivation for the growth of such
UGC platforms. This financial interest is also reflected in further growing
amount of financing and venture capital available to boost UGC related
sites and services. In the United States, for instance, related participative
web Internet technologies are said to have been pumped in with huge
venture capital funding, the latter increasing by more than 40% from the
third quarter of 2005 to the third quarter of 2006. According to some
estimates, in the first half of 2006, venture capitalists pumped in USD 262
million in commercial agreements related to participative web
technologies. While significant, however, total venture capital (VC)
invested in ICT and media are still only about a quarter of the investments
at the height of the Venture Capital boom in 2000. Moreover, Lower costs
and increased availability of tools for the creation of UGC e.g. for
creating, editing, hosting content have also helped the growth of UGC.

Legal and institutional drivers:

The rise of new legal means to create and distribute content has also
contributed to the greater availability and diffusion of UGC. Flexible
licensing and copyright schemes such as the Creative Commons licenses
allow easier distribution, copying and depending on the choice of the
author for the creation of derivative works of UGC. Increasingly search
engines and UGC platforms allow for searches within Creative Commons-
licensed photos, videos or other content allowing other users to use, build
on them while creating new content. The rise of end-user licensing
agreements e.g. Second Life which grant copyright to users for their
content may also be a significant driver.

UGC platforms

Blogs
A blog is defined as a type of webpage usually displaying date specific
entries in reverse chronological order (Gill, 2004; OECD, 2006b). It is
updated at regular intervals and may consist of text, images, audio, video,
or a combination of all of these. Blogs serve several purposes out of which
an important one is the delivering and/or sharing of information. Installing
blogging software e.g. movable type, word press and nucleus CMS on a
server is necessary to blog. However, blog hosting services make it easier
by removing the technical burden of maintaining a hosting account and a
software application. Often blogs are a launch pad for sharing of other
UGC types, i.e. blogs typically refer to other blogs, music or discuss user-
created videos. Video blogging is expected to grow very significantly.
Some sources estimate that there were up to 200 million blogs in existence
in 2006 (Blog Herald); the blog tracking site Technorati tracked 55
million blogs in December 2006 and estimated that number of blogs will
be doubled approximately every 6 months. Nearly 75% of all blogs are
written in English, Japanese or Korean. Blogging is also very popular in
countries such as China, India, and Iran. The popularity of blogs in Asia is
also shown by a recent Microsoft survey which shows that nearly half of
all Asian Internet users have a blog and 56% of all bloggers are under age
of 25, while 35% are 25 to 34 years old, and 9% are 35 years old and over
and women are also very active, 55% of bloggers in Asia were found to be
females. Blogging is considered a form of expression and as a means to
maintain and build social connections.

Wikis and Other Text-Based Collaboration Formats

A wiki is a website that allows users to add, remove, and otherwise edit
and change its text content collectively. Users can instantly change the
content of the pages and format them. Original authors of articles allow
other users to edit their content. The fundamental idea behind wikis is that
a vast number of users read and edit the content, thus it results in constant
correction and updating of the contents. Various sites provide wiki
hosting. Sometimes termed wiki farms, these sites enable users and
communities to create their own wiki for various purposes. In addition,
collaborative writing have developed alongside wiki technology (e.g.
Writely, owned by Google, and Writeboard). One of the most common
example is the freely accessible online encyclopedia Wikipedia. It
comprises 4.6 million articles in over 200 languages (Wikipedia, 2006).
The vast majority of edits emerge from a small percentage of users.
Social bookmarking

This category of contents is relatively new and consists primarily of

group-based collection of links to articles and media or group based rating
of such links. It is also referred to as a new social content creator which
builds on opinions and knowledge of all web users. Users generally collect
these links, tag them, rate them, and comment on the associated article or
media. Sites such as Digg specialize in this kind of platform wherein users
post news links to the site, and other users rate them by adding their vote
to it. Del.icio.us, a social bookmarking website, gives users a service to
post links of their favorite articles, blogs, music, recipes, and more, and
access them from any computer on the web.

Podcasting

Podcasting is the combination of the of audio production with

technologies that allow for subscription and syndication. The
publish/subscribe model of podcasting is a version of push technology, in
that the information provider chooses which files to offer in a feed and the
subscriber chooses among available feed channels. A consumer uses a
type of software called a podcatcher or podcast receiver, to subscribe to
and manage feeds. Well known podcast softwares are FeedBurner,
iPodderX, WinAmp and @Podder. Mobile castingmeans receiving video
and audio podcasts on mobile phones, this is expected to develop rapidly.
Podcasting technology is also used for content which does not come
directly from users. Some surveys estimate that 6 million Americans have
listened to podcasts (Raine and Madden, 2005). Popular download sites
such as Apple iTunes hosted almost 83 000 podcasts in March 2006.

Social Networking Sites

This is the most prominent form of UGC platform. Social networking sites
(SNS) enable users to connect with friends and colleagues, to send mails
and instant messages, to blog, to meet new people and to post personal
profiles with information about them and share it with the world. Profiles
can include photos, video, images, audio, and blogs. In 2006, MySpace
had over 100 million users and is now the most popular website in the
United Sates. Other popular SNS include Friendster, Orkut and Bebo.
Facebook is a popular SNS on US college campuses with over 9 million
users. Korean Cyworld is reported to have 18 million users in the country,
or 40 percent of the population and 90% of Internet users in their twenties
(Jung-a, 2006). Mixi in Japan has more than 4 million users. Some video
sharing sites such as Grouper provide services to users to even share
videos privately. Certain SNS sites are dedicated to particular topics, the
sharing of knowledge, or even purchases of products and services. For
instance, user-created content on the Internet is transforming how users
research, search and decide on their travel plans. Yahoo’s Trip Planner,
Google’s Co-Op, Trip Advisor’s Inside, Virtual Tourist’s Trip Planner and
others are online tools that lets travelers share travel journals, itineraries
and photos. Similar social networking tools are used for real estate
purchases.

Virtual World Content

Virtual world content is created in the context of an online game-like 3D

digital environment to which users subscribe where the players have the
freedom to create their virtual world and life according to their likings.
Not all online multiplayer games allow for users to create their own
content. Yet virtual environments such as those in Second Life, Active
Worlds, Entropia Universe, Dotsoul and Cyberpark provide users with a
scripting language and integrated software which enables them to build
new objects (Mayer-Schoenberger and Crowley, 2005), and even
permitting them to keep the intellectual property rights of such creations
(see Figure 4 for an exhibition in Second Life). In January 2007, Second
Life claimed over 880 000 users in more than 90 countries. Owning land
in Second Life allows users to build, display, and store virtual creations, as
well as host events and businesses or real university courses. Further, it
has an economy with a so-called currency Linden Dollars where more
than USD 130 million per year is exchanged between players. Users make
money while selling items created and land purchased by them earlier like
clothes for avatars.
Emergence of UGC based business models:

Most user-created content activity is undertaken without the expectation of

remuneration or profit. Motivating factors include connecting with peers,
achieving a certain level of fame, notoriety or prestige, and self-
expression. Defining an economic value chain for UGC as in the other
OECD digital content studies is thus more difficult. From a creator’s point
of view, the traditional media publishing value chain depends on various
entities selecting, developing and distributing a creator’s work often at
great expense. Technical and content quality is guaranteed through the
choice of the traditional media platforms. In relation to the potential
supply, only a few works are eventually distributed, for example, via
television or other media. In the UGC value chain, content is directly
created and posted on UGC platforms using various devices such as digital
cameras and softwares for video editing, UGC platforms and an Internet
access provider. There are a large number of active creators and a large
supply of content of diverse quality and genre that can attract and engage
viewers. Users are also inspired by, and build on, existing works which are
already available in the traditional media channels. Users select what
according to them may and may not work, for example, through
recommending and rating, possibly leading to recognition of creators who
would not be selected by traditional media publishers. Most UGC sites
have been start-ups or non-commercial ventures of music and movies
enthusiasts, but now commercial firms are also playing an increasing role
in motivating, supporting, hosting, searching, filtering and diffusing UGC.
Most models are still very new and revenue generation for content creators
or commercial firms and media companies has begun lately. Different
UGC types like blogs, music and video content have different although
similar approaches to monetizing UGC. There are five basic models:

• Voluntary contributions
• Charging viewers for services - pay-per-item or subscription
models, including bundling with existing subscriptions
• Advertising-based models
• Licensing of content and technology to third parties
 • Selling goods and services to the community i.e. monetizing the
audience via online sales.

These models can also remunerate users/creators, either by sharing of

revenues by the service provider or by direct payments from other users.

Some recent acquisitions of UGC platforms:

• In September 2005, News Corp. acquired MySpace for $580

Dollars.
• In October 2005, Viacom/MTV acquired iFilm for $49 Dollars.
• In August 2006, Sony acquired Grouper Video for $65 Dollars.
• In August 2006, Viacom/MTV acquired Atom Films Games, films
and animations for $34 Dollars.
• In September 2006, Yahoo acquired Jumpcut Video editing for an
undisclosed amount.
• In October 2006, Viacom/MTV acquired Quizilla.com Text,
quizzes and images for an undisclosed amount.
• In October 2006, Google acquired YouTube Video for $1580
Dollars.
• In November 2006, Google acquired Jotspot Wiki for an
undisclosed amount.

(Source: Company information and press reports.)

These increasing sums being paid for acquiring UGC sites and the
increased venture capital flowing into these areas have also raised
concerns about the creation of a new Internet environment, as in the late
1990s, mainly, the size of the web site audience/user engagement the only
scale for drawing the investors attention. Hence, the large sums invested in
buying up UGC start-up platforms is leading to concerns of a second
Internet bubble. While this cannot be excluded, in some respects the
nature and provocation for these investments has changed with new and
rewarding possibilities associated with online advertisements, new
possibilities to deliver high-quality content through broadband/internet,
changed usage habits and increased information, communication and
technology skills, etc. Also, as mentioned before, the overall sum of
venture capital flowing into such investments in 2006 is still relatively
small, i.e. only about 40% of average investments between 1999 and 2001
in the US were in the field of UGC. With an ever increasing interest in
UGC related acquisitions, new models are developing on both the host-
based and creator-based sides of UGC. While the process and nature of the
entities and the activities to produce and disseminate the content are more
or less similar, nonetheless new models aim at the monetization of this
concept of dissemination of the content so created. At the point when
consumers access the UGC platform or a particular video, they donate,
pay fees or subscribe to access the content or they are confronted with
online advertising around the selected content. New entities are thus
involved in the provision and distribution of the content, mainly the
advertisement industry, search engines, and media firms who own UGC
platforms or who select content from them. When payments are involved,
financial service providers and the associated technologies enter the
business model. Also as increasingly there is a need for tools to find
content e.g. search engines adapted to music, video and other multimedia
content and user ratings and recommendations, the role of search engines
and content aggregator of multimedia content is growing and with this the,
also the demands for Digital Rights Management or watermarking
technologies used to prohibit illegitimate access to the content online are
also increasingly. Different UGC types e.g. blogs and video content have
different but very similar approaches to monetizing UGC. Following are
the business models to monetize UGC (see VTT Technical Research
Centre of Finland, 2007):

Voluntary donations

In a frequently utilized model, the user makes the content freely available,
like that of a musician performing on the street, but at the same time may
request donations from users. Such models are currently in place on many
sites with a donation option, often encouraging those accessing the content
to donate to the creator or the institutions usually online by credit card or
via other systems such as PayPal, etc. A large number of blogs, wikis,
online video and online music creators ask for donations from their
audience for activities such as web hosting and site maintenance, or for the
contents. A common feature of certain non-commercial UGC sites is that
they manage to run their operations with quite limited funding (often only
the time invested by volunteers and users). Wikipedia, for instance, spent
less than USD 750 000 annually to sustain its growth. Blogging and
citizen journalism sites such as Global Voices Online are supported by
bloggers who commit their time but its operating expenses are funded by
grants from foundations or even news companies such as Reuters. Such
donations of time or money have been the reason of Internet developments
in areas such as the open source movement e.g. for the support of free
Internet browsers or other user-driven innovations on the Internet. This
recent trend has resulted in proposal for new voluntary payment models
for the promotion of UGC content and platforms based peer based
reputation and recommendations. (Regner et al, 2006).

Charging viewers for services

Sites may even charge those viewing UGC even when the posting of
content is free. This can take the form of pay-per-item or a subscription
model. This requires high popularity of the UGC as most of such UGC
based sites are free, also it has to be trust worthy.

However, one thing common in above cases is the generation of revenue

by Advertising-based models. Advertising is often seen as a more likely
source of revenue surrounding UGC and a significant driver for UGC.
Such services are often compared to free web mail where users get a free
service, and owners of the service get to serve ads to this audience.
Payments for the advertising depends on numerous factors like number of
users on UGC sites, related web site usage, or clicks on the actual
advertisement banner leading the user to the webpage of the brand being
advertised. Services that host UGC includes advertisings on their
site/platform by way of banners, embedded video ads and branded
channels or pages, to generate revenue as these advertisers pay the sites in
return. The advertisements can even be specific to one kind of audience
most likely to be attracted by certain UGC platforms or to certain content
being watched by the user. When users search or watch a particular video,
related advertising is shown around that content, i.e. banners or short
trailers start as the computer cursor moves across these ads.

Advertising may also be placed within the content, such as within a video.
Popular video podcasts also incorporate advertisements where users can
click to sites from within the video. In addition, advertisements are often
displayed on the basis of tags and keywords created by the uploaders.
These may be more or less reliable with some users not creating keywords
or using misleading ones to attract more users. In August 2006, Google
agreed to deliver at least USD 900 million in ad revenue over three and a
half years to News Corp. for the right to broker advertising that appears on
MySpace and some other sites (van Duyn and Waters, 2006).

Copyright Laws

However, such Service providers like myspace, etc have been criticized
for failing to ensure dissemination of its contents to be in accordance with
the laws of copyright. At the time of uploading a video, users are shown
the following message: “Do not upload any TV shows, music videos,
music concerts or commercials without permission unless they consist
entirely of content you created yourself.” The Copyright Tips page and the
Community Guidelines can help determine whether any content infringes
someone else's copyright. Despite these measures, there are still many
unauthorized clips from television shows, films and music videos on
Service provider, Myspace, etc. These sites allegedly do not view videos
before they are posted online, and it is left to copyright holders to issue a
takedown notice under the terms of the Digital Millennium Copyright Act.
Therefore, Organizations including Viacom, Mediaset and the English
Premier League have filed lawsuits against Service provider, Myspace,
etc. claiming that the latter have not done enough to prevent the uploading
of copyrighted material. Viacom, demanding US$1 billion in damages,
said that it had found more than 150,000 unauthorized clips of its material
on Service provider that had been viewed "almost 1.5 billion times".
Service providers generally respond by stating that it "goes far beyond its
legal obligations in assisting content owners to protect their works". Since
Viacom filed its lawsuit, Service providers have introduced a system
called Video ID, which checks uploaded videos against a database of
copyrighted content aiming of reducing copyright violations by its users.

Intellectual property rights and user-created content

Copyright law is intended to encourage the creation and dissemination of
works of authorship and thereby to promote cultural and economic
development. From an economic perspective, copyright is designed to
provide exclusive rights for a limited time to authors to recompense their
creative effort in return for enabling their works to be widely appreciated
and to encourage further creativity. This section discusses the salient
intellectual property rights (IPR) issues in the areas of UGC and points to
areas where further work may be needed. For a work to enjoy copyright
protection, it must be an original creative expression of the author.
Generally, copyrights confer to authors and/or right-holders a set of
exclusive rights, i.e. the control over reproductions, the preparation of
derivative works (i.e. adaptations), distribution to the public, public
performances and public display. In some countries copyrights are also
intended to protect the rights of integrity and attribution sometimes
identified as the moral rights of authors (i.e. ability of authors to control
the eventual fate of their works). These rights expire when the copyright
term ends and a work falls into the public domain. Moral rights may
continue even after the economic rights have expired (for example, in
France). Copyright regimes in OECD countries aim at balancing a
creator’s exclusive rights and the public interest in the creation, access to
and wide dissemination of knowledge and creative works. This is pursued
through exceptions and limitations to the creator’s rights. These
exceptions and limitations may be specific statutory exceptions and
limitations which may or not include fair use and fair dealing principles.
In addition, information in the public domain is not subject to copyright
protection. Under certain circumstances, exceptions and limitations allow
the reproduction and adaptation of copyrighted works without the
authorization of rights-holders. Both, exclusive rights and exceptions and
limitations have been clarified to apply to existing norms in the new
digital environment through the ratification of the WIPO Internet Treaties
(see WIPO, 2003; OECD, 2005b). The Recommendation of the OECD
Council on Broadband Development recommends that Member countries
should implement regulatory frameworks that balance the interests of
suppliers and users, in areas such as the protection of intellectual property
rights, and digital rights management, without disadvantaging or
hampering the new and innovative e-businesses.

Copyright issues related to UGC arise in a number of different ways. At

the outset, it may be helpful to distinguish between original works created
by users and works created by users from pre-existing works called
derivative works. Original works identified as UGC raise the same
copyright issues as original works created under other circumstances and
can be subjected to relatively familiar issues of control, commercial
exploitation, and protection in the online environment. Derivative UGC
works such as fan fiction or a blog that incorporates an already existing
and protected work highlights a difficult copyright issue, i.e. whether such
derivative works are acceptable uses permitted by the respective
jurisdiction’s exceptions and limitations i.e. fair use or it is an unlawful
infringement of the creator’s exclusive rights.

Lenz v. Universal Music Corporation:

In this case the US District Court for the Northern District of California
ruled that copyright holders must consider fair use before issuing
takedown notices for content posted on the internet. One Stephanie Lenz
posted on Service provider a home video of her children dancing to
Prince's song “Let's Go Crazy” she could not have imagined that her
action of posting the video of her son would result in someone’s copyright
infringement. Universal Music Corporation sent Service provider a
takedown notice under the Digital Millennium Copyright Act (DMCA)
claiming that Lenz's video violated their copyright in the "Let's Go Crazy"
song. In September 2007, Prince released statements that he intended to
reclaim his art on the internet. In October 2007, Universal released a
statement amounting to the fact that Prince and Universal intended to
remove all user-generated content involving Prince from the internet as a
matter of principle Based on Prince's and Universal's statements, Lenz
argued that Universal was issuing takedown notices in bad faith, as they
attempted to remove all Prince-related content rather than considering the
merits of each work. Lenz claimed fair use of the copyrighted material and
sued Universal for misrepresentation of a DMCA claim. The court ordered
that copyright holders cannot order the removal of an online file without
first determining whether the posting reflected fair use of the material. The
court held that Universal had not in good faith considered fair use when
filing a takedown notice.

Original works created by users:

A large amount of UGC consists in individuals or groups uploading their
own original content (e.g. photos, videos, art) to their personal blogs or
other platforms. The originality requirement to obtain copyright does not
necessarily imply a very high standard of quality or effort (WIPO, 2006a).
The creators of works identified as UGC are automatically granted the
same exclusive rights as creators in other circumstances are granted.
Infringement issues occurs when third parties exercise one or more of the
UGC creator’s exclusive rights without permission or when such use is not
an exception or limitation i.e. fair use. In the same light as for other forms
of content creation, copyright for UGC can be considered a motivation for
the production of original works. This holds especially true when creators
are interested in pursuing some gainful activity through the
commercialization of their works. Through the control of reproduction and
derivative work, these creators also retain control of the way their work is
used including how it is commercialized and can hence avoid unwanted
modification of their works. Alongside traditional copyright protection,
creators or UGC platforms may in addition also opt for different licensing
schemes, such as the Creative Commons license. Under these licenses
others are automatically allowed to copy and distribute a work provided
that the licensee credits the author/licensor. In addition, other rights may
be reserved or waived like the right to create derivative work on
noncommercial terms. Examples would be an attribution license, whereby
others can copy, distribute, and remix the work as long as the original
author is credited. While such licensing schemes may permit copying and
non-commercial re-use, original authors can specify certain restrictions
which have to be observed by those interested in creating derivative works
out of them.

Derivative works:

Because of copyright law, creators of UGC have to respect the exclusive

rights of other content producers, i.e. of those who choose to work within
and those who choose to work outside professional routines and practices.
Copyright infringement issues may arise whenever someone who is not
the copyright holder (or a licensee) exercises an exclusive right, such as
adapting the work to create a derivative work for commercial or
noncommercial purposes. Copyright issues may thus arise when users
create content by using in part or in full pieces of other’s work without
authorization or where the use does not fall within an exception and
limitation i.e. fair use. Examples of replicating or transforming certain
works are the use of particular characters in writing fan fiction, using
certain images and texts while blogging, using large excerpts of news
reporting video footage in one’s news commentary, creating lip-synching
videos or music with samples of existing songs, and the creation of UGC
videos while using copyrighted characters, texts or video images.
Copyright laws typically limit in one way or another copyright holder’s
ability to control derivative works. Depending on the OECD country, fair
use, and fair dealing principles and/or specific statutory exceptions allow
courts to avoid the rigid application of the copyright statute’s exclusive
rights when, on occasion, it would discourage creativity, and the public
interest in or wide dissemination of knowledge through copyrighted
works. Under these circumstances, portions of works can be used without
permission and without payment if their use is within one of the copyright
exceptions and limitations. Most copyright acts contain limitations for the
following activities such as personal use, quotation and criticism,
comment, parody, news reporting, teaching, scholarship or research,
educational purposes. In all OECD countries, the exceptions are varied
reflecting local traditions and are decided on case-by-case basis. In
general, when large portions of a work are taken over or when commercial
implications arise, fair use exemptions are less likely to apply (see Gasser
and Ernst, 2006).

Copyrights and the liability of UGC platforms:

As discussed above, the growth of UGC is accompanied by the emergence

of many sites and online intermediaries hosting the content which users
upload. In some ways their existence drives the growth and access to UGC
(and vice versa). From a copyright perspective, however, the question
emerges in which way online intermediaries are liable for copyright
matters. For example, copyright issues arise when users post unaltered
third party content on UGC platforms without authorization (e.g.
uploading parts of popular TV series without the explicit consent of the
content owner). This activity is outside the scope of UGC as defined in
this study, but it is still a key concern of right holders, who may seek to
hold the UGC platforms directly or indirectly liable for copyright
infringement. Additionally, posting UGC that is created through the
adaptation of pre-existing work may also raise copyright issues for UGC
platforms, e.g. whether the particular use is permissible under exceptions
and limitations such as fair use, and if not permissible, whether the UGC
platform is liable for direct or indirect copyright infringement as a result or
otherwise exempted from liability for the Infringement. Right holders are
beginning to engage in relevant actions against potential infringement on
UGC platforms. Associations representing content owners have sent take-
down notices and have asserted potential lawsuits against UGC
platforms.100 An example of interactions between right holders and a
UGC site is the recent legal case between YouTube and the Japanese
Society for Rights of Authors, Composers and Publishers (JASRAC)
which complains about music videos being uploaded to YouTube without
right holders permission. Major media companies have also requested
online video sites to remove their content Some UGC platforms have
defended the posting of unaltered third party and alleged infringing
derivative UGC content on their platforms by arguing that they are similar
to Internet Service Providers (ISPs) who can, under certain circumstances,
be exempt from liability for content uploaded by their users (see Litman,
2000). The essential question is whether online intermediaries be treated
as electronic publishers, and thus liable for content on their servers
(Koelman and Hugenholtz, 2003; WIPO, 2005). As shown in Box 5,
national legislatures have dealt with the liability of online intermediaries
in different ways, which raises issues for internationally operating online
intermediaries.

Copyright liability of online intermediaries

In their copyright or e-commerce laws many OECD countries have

addressed the liability of ISPs and other information intermediaries who
merely deliver content by creating liability exceptions (safe harbor under
the US Digital Millennium Copyright Act) for these entities. This is an
exemption from secondary liability but requires the online service
providers to remove infringing materials upon notice. In the U.S. Digital
Millennium Copyright Act, for instance, following the notice and take
down procedures. ISPs are responsible for taking down unauthorized
copyrighted material when a legitimate claim of a right holder is presented
to them. They are also responsible for terminating access by repeat
infringers. Similar principles on the liability of online intermediaries also
exist in Australian Copyright law, i.e. providers are not obliged to actively
self-monitor for infringing activity. The EU Electronic Commerce
Directive 2000/31/EC also establish an exemption from liability for
intermediaries where they play a passive role as a .mere conduit of
information from third parties and limits service providers liability for
other intermediary activities such as the storage of information.104 No
general monitoring obligation can be imposed on the service provider.105
Activities which involve the modification of transmitted information, for
instance, do not qualify for this exemption. This EU Directive also
encourages hosting services providers to act expeditiously to remove or to
disable access to the information concerned upon obtaining actual
knowledge or awareness of illegal activities.106 Such mechanisms are to
be developed on the basis of voluntary agreements and codes of conduct
between all parties concerned.107 In addition, in EU Member States such
as Italy and France but also on the EU level, public-private partnerships
emerged regrouping ISP, right holders and the government to promote the
development of legal online content (OECD, 2005b). Some of the
resulting codes of conduct imply that upon notice ISPs should while
respecting privacy laws - contact users uploading infringing material and
potentially terminate their accounts. Whether UGC platforms can be
treated as a mere conduit under exceptions for online intermediaries is an
ongoing question. Most of the UGC sites specify that users who post
content are responsible for it. They must own all rights to it or have
express permissions from the copyright owners to copy and use images.
They may not violate or infringe upon the rights of others. Moreover, the
terms of service of UGC sites specify that when valid notifications are
received, the service provider usually pledges to respond by taking down
the unauthorized content. Then the owner of the removed content is
contacted so that a counter-notification may be filed.

HYPOTHESYS:

USE OF CONTENT WITHOUT OWNER’S PERMISSION

AMOUNTS TO INFRINGEMENT OF HIS COPYRIGHT.

The object of the Copyright Laws is twin faced. First, copyright promotes
the production of new works by recognizing and protecting property rights
in original expressive works. Specifically, the Copyright Act grants to
content owners the exclusive right to reproduce, adapt, distribute, publicly
perform, and publicly display copyrighted works.2 The rights of owners
are formulated in clear terms and have been construed broadly by the
courts., therefore use of a copyrighted content shall not be considered as
copyright infringement if that use is proved as a ‘Fair Use’. Whether use
qualifies as a use "authorized by law" is an issue of consideration.
Moreover Courts also have held consistently that any non licensed use of a
copyright, if it is proved to be a fair use, will not be construed as
infringement of a copyright. Yet the rights of owners are not absolute. The
Second object is ensuring the optimal use of works after they have been
created. Thus, the law recognizes a privilege in the public to utilize
copyrighted works by incorporating a general fair use defense. In theory,
fair use acts as a significant limitation on the rights of authors. It sanctions
private use of copyrighted material without requiring the payment of
compensation.

In context of the Indian law, the basic provisions are a take off of the
provisions of the British Copyright Act. In both laws, the use of
someone’s copyright by a third party is eligible after a license from the
former to use his work.

In Ravenscroft vs. Herbert (1980) RPC 193, it was observed that

“copyright protects the skill and labor employed by the author in the
production of his work”. Hence, while dealing with the cases of
infringement of copyright it is important to ascertain the extent of unfair
and undue copying of the copyrighted work done by the alleged infringer.
After answering this question, the next question would be that is the
alleged work created for commercial exploitation or for fair public usage.

Hence, in Hogg vs. Scott (1874) LR Eq Eq444, it was very rightly

observed that “the defendant is not at liberty to use the labor of the
plaintiff for the purpose of producing his work, without the plaintiff’s
permission”.

Hence, almost all Copyright Laws prevalent in the world may require a
license to be acquired from the owner by the user of the work, if the latter
intends to use the said work in his own creation. In other words a license is
an authorization of a copied work, which would otherwise be unlawful
without a license.

In Musket vs. Hill (1804) 5 Bing. NC 694, it was observed that “a

dispensation or license properly passes no interest, but only makes an
action lawful, which without it would have been unlawful”.

The Indian Copyright Act provider for two types of Licenses, i.e.
Voluntary and Compulsory Licenses.
Voluntary License: Under Section 2(j) of the Indian Copyright Act,
voluntary licenses are of two types-

i). Exclusive license: which confers on the licensee, to the exclusion of

other persons, any right comprised in the copyrighted work. The grant of
such a license need not be an authorization over the whole copyright
rights, but may be for a specific right in the said work.

ii). Non-exclusive license: which the owner grants to more than one
person in respect to a particular right in the said work.

Implied License: there also exists an implied license in case in which the
owner or the creator has given an open permission to all for use of his
work.

In Mellor vs. Australian Broadcasting Commission (1940) 2 All ER 20

(PC), the record company’s statement “all our music is free for public
performance” was taken to be an implied license to the broadcasting
corporations.

In Noah vs. Shubha (1991) 2 QB 78 (CA), it was observed that “ the

existence of an implied license and its scope may be inferred from the
circumstances of each case”.

Compulsory Licenses: many countries are excepting the demands of use of

copyrighted work with the advent of new technologies in the field of
information technology which requires bulk licensing and compulsory
licensing system.

Section 31 of the Indian Copyright Act provides for compulsory licensing

on a complaint made to the Copyright Board, the board gives an
opportunity to the owner of being heard, and then if required it may direct
the Copyright Board to issue a license to perform or communicate the said
work. Under the following circumstance, compulsory licenses may be
granted-

i). The work must have been published or performed in public.

ii). The author must have refused to republish or allow republication of the
work or must have refused to allow the performance of the work in
public.

iii). By the above refusal, the work is withheld from the public.

iv). The author must have refused to allow the communication to the
public of such work by broadcast, or in the case of a sound recording the
work recorded in such record, on reasonable terms.

Fair Use:

However, in case of internet service providers, these licenses are not

required on the ground that such service providers themselves do not use
any of the copyrighted work and in case any one’s copyrighted work is
uploaded by the user then they are not liable for such an act as they did not
have knowledge of such a happening and it was not authorized by it, it
was the prerogative of the user alone.

Moreover, it is also understood that such service providers would not like
to bother to acquire such licenses on payment of charges as they
themselves do not directly use the copyrighted works, hence in case of
infringements they will not be directly held liable. However, lately the
Record Companies have pressed the charges of contributory and vicarious
liabilities against such Service Providers on the ground that they are
promoting infringement of copyrights by providing such a platform.

As most of the Service Providers do not go for licenses to use the

copyrighted work, hence the only consideration left while deciding such
cases is whether the use of such copyrighted work will construe ‘fair
Use’.

The legal concept of ‘Test copyright’ or ‘Fair Use’ was introduced by

Britain's Statute of Anne, 1709. As no scope was made for the authorized
reproduction of copyrighted content within this newly formulated statutory
right, the courts created a doctrine of "fair abridgment" in Gyles v Wilcox,
which evolved into the modern concept of "fair use", that recognized the
legality of such reproductions.

CASE: Gyles v Wilcox (1740) 26 ER 489:

It was a decision of the High Court of Chancery of Great Britain that
established the doctrine of fair abridgement, which would later evolve into
the modern idea of fair use. The case was heard and the opinion written by
Philip Yorke, 1st Earl of Hardwicke, and concerned Fletcher Gyles, a
bookseller who had published a copy of Matthew Hale's Plea to the
Crown. Soon after, the publishers Wilcox and Nutt hired a writer named
Barrow to abridge the book, and repackaged it as Modern Crown Law.
Gyles sued for a stay on the book's publishing, claiming his rights under
the Statute of Anne had been infringed.

The main issues in the case were whether or not abridgements of a work
were inherently pirated copies, or whether they could qualify as a separate,
new work. Lord Hartwicke ruled that abridgements fell under two
categories: "true abridgements" and "colored shortenings". True
abridgements presented a true effort on the part of the editor, and by this
effort, constituted a new work which did not infringe upon the copyright
of the original. Leaving it to literary and legal experts to decide, Hartwicke
ruled that Modern Crown Law was not a true abridgement, but merely a
piracy intending to circumvent the law.

The case set a legal precedent which has shaped copyright law up until the
present day. It established the common law doctrine of fair abridgement,
which was cited in other cases, ultimately building up to the idea of fair
use. The opinion also recognised the author's right to a work through the
nature of the labour it took to produce it, shifting copyright away from
publishing rights and towards the idea of serving the greater good by
interpreting the Statute of Anne liberally.

The fair use of a copyrighted work includes such use, by reproduction in

copies or phonorecords or by any other means, for purposes such as
criticism, comment, news reporting, teaching, scholarship, or research, is
not an infringement of copyright.

Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985), it was a
United States Supreme Court decision----

In this case, former President Gerald Ford had written a memoir including
an account of his decision to pardon Richard Nixon. Ford had licensed his
publication rights to Harper & Row, which had contracted for excerpts of
the memoir to be printed in TIME. Instead, The Nation magazine
published 300 to 400 words of verbatim quotes from the 500-page book
without the permission of Ford, Harper & Row, or Time Magazine. Based
on this prior publication, Time withdrew from the contract (as it was
permitted to by a clause therein), and Harper & Row filed a lawsuit
against The Nation for copyright infringement. The Nation asserted as a
defense that Ford was a public figure, and his reasons for pardoning Nixon
were of vital interest, and that appropriation in such circumstances should
qualify as a fair use.

OBSERVATION--The court applied the traditional four factor test to

determine if the use was fair, and made the following findings:

1. The purpose or character of the use was commercial (to scoop a

competitor), meaning that The Nation's use was not a good faith
use of Fair Use in simply reporting news.
2. The nature of the copyrighted work was informative.
3. The amount and substantiality of the portion used in relation to the
copyrighted work as a whole was great, as it constituted a
substantial portion of the infringer's work. The Court noted that the
infringer could not defend plagiarism by pointing to how much
else they could have plagiarized, but did not.
4. The effect of the use on the potential market for the value of the
copyrighted work was also great, because there was an actual harm
– the cancelled contract.

Fair use is not a defense to the appropriation of work by a famous

political figure simply because of the public interest in learning of
that political figure's account of an historic event.

In Sony Corp. of America v. Universal City Studios, Inc.

The claim of the record company was that VTR manufactured and
marketed by Sony was used by its consumers for recording some of
respondents' copy-righted works that had been exhibited on commercially
sponsored television and thereby infringed respondents' copyrights, and
further that petitioner was liable for such copyright infringement because
of their marketing of the VTR's. Respondents sought money damages, an
equitable accounting of profits, and an injunction against the manufacture
and marketing of such VTR's.
It was observed that "anyone who makes a fair use of the work is not an
infringer of the copyright with respect to such use”. And it was held that
“noncommercial home use of recording of material broadcast over the
public airwaves was a fair use of copyrighted works and did not constitute
copyright infringement, and that petitioners could not be held liable as
contributory infringers even if the home use of a VTR was considered an
infringing use”.

One of the most useful interpretation of the concept of Fair Use was given
in Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661, 662 (2d Cir. 1929) “Fair
use is at once the most important and the most “troublesome” doctrine in
copyright law. By legitimizing certain unauthorized uses of copyrighted
works, fair use aims to secure a delicate balance between the rights of
content owners and the interests of the public”.

Fair use allows the use of copyrighted material without the owner’s
permission in the context of criticism, comment, news reporting, or
educational settings. Fair use is a safeguard that prevents copyright law
from hindering free speech. Eldred v. Ashcroft, 537 U.S. 186. The doctrine
can be traced back to Justice Story’s opinion in Folsom v. Marsh 9 F. Cas.
342 (C.C.D. Mass.) (No. 4,901) and has since been codified.

The following four factors should be considered in determining the use of

any copyrighted work as ‘Fair Use’:

(1) The purpose and character of the use, including whether such use is of
a Commercial nature or is for nonprofit and educational purposes.

(2) The nature of the copyrighted work.

(3) The amount and substantiality of the portion used in relation to the
Copyrighted work as a whole.

(4) The effect of the use upon the potential market for or value of then
Copyrighted work.

A. Purpose and Character of the Use

The first factor as to whether a use of a work is a fair use is “the purpose
and character of the use, including whether such use is of a commercial
nature or is for nonprofit educational purposes.”19 The law in with respect
to this factor has weaved a curious path. Commercial uses have been held
fair, Campbell v. Acuff-Rose Music, 510 U.S. 569, 571 (1994).20
educational uses have not. Princeton Univ. Press v. Michigan Document
Servs., 99 F.3d 1381 (6th Cir. 1996)21 The Supreme Court’s comment
that there are no bright line rules for applying the fair use doctrine, 22
appears, if anything, to be an understatement. In 1984, the Supreme Court
majority in Sony declared that “every commercial use of copyrighted
material is presumptively an unfair exploitation” Sony Corp. of America v.
Universal City Studios, Inc., 464 U.S. 417, 451 (1984).23 in 1994, the
Court was asked to adjudicate the fairness of 2 Live Crew’s indisputably
commercial parody of an old Roy Orbison song in Campbell. In that case,
the Court held that there was no presumption that commercial use was
unfair. As the Court observed, “[any such presumption] would swallow
nearly all of the illustrative uses listed in the preamble paragraph of § 107,
including news reporting, comment, criticism, teaching, scholarship, and
research, since these activities . . . which are generally conducted for
profit.”24 The Campbell decision also marked another more subtle
departure from Sony concerning the purpose and character of the use. In
Sony, the majority categorically reversed the Ninth Circuit’s ruling that
the absence of a productive use precluded the application of fair use.
Universal City Studios v. Sony Corp. of Am., 659 F.2d 963, 971–972 (9th
Cir. 1981)25 “Productive use” in this context means that the use leads to
the creation of a new work which results “in some added benefit to the
public beyond that produced by the first author’s work.”26 According to
the Ninth Circuit decision, convenience, entertainment and increased
access were not purposes within the general scope of fair use. Universal,
659 F.2d at 970 27 In Sony, the majority of the Supreme Court held that
the productive/unproductive distinction could never be determinative of
fair use.28 Ten years later, the Supreme Court in Campbell substantially
reintroduced the productivity requirement under another name—the key
question now being whether the allegedly infringing use is
“transformative.” Justice Souter, delivering the opinion of the Court,
explained that the central purpose of the fair use investigation was to
determine:

19. 17 U.S.C. § 107(1) (date).

20. Campbell v. Acuff-Rose Music, 510 U.S. 569, 571 (1994).

21. Princeton Univ. Press v. Michigan Document Servs., 99 F.3d 1381
(6th Cir. 1996)

(unauthorized reproduction of copyrighted works in university course

packs not fair use); Basic Books, Inc.

v. Kinko’s Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991) (same).

Madey v. Duke also illustrates the

uncertain privileges of educational institutions in the context of patent

law’s experimental use doctrine; see

Madey v. Duke Univ., 307 F.3d 1351 (Fed. Cir., 2002).

22. Campbell, 510 U.S. at 577.

23. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417,
451 (1984).

24. Campbell, 510 U.S. at 584.

25. Universal City Studios v. Sony Corp. of Am., 659 F.2d 963, 971–972
(9th Cir. 1981).

26. Sony, 464 U.S. at 478 (Blackmun dissent).

27. Universal, 659 F.2d at 970.

28. Sony, 464 U.S. at 455.

whether the new work merely supersedes the objects of the original . . . or
instead adds something new, with a further purpose or different character,
altering the first with new expression, meaning, or message; it asks, in
other words, whether and to what extent the new work is
transformative.29 For Justice Souter, transformative works “lie at the heart
of the fair use doctrine’s guarantee of breathing space within the confines
of copyright.”30 Accordingly, while unproductive or un transformative
uses are not to be presumptively denied fair use protection, the heart of the
doctrine is reserved for “transformative” uses. The dominance of the
transformative ness test makes the actual statutory language regarding
noncommercial and educational uses largely irrelevant.31
Also, the extent to which a use is “transformative” is clearly a meta-factor:
the extent to which a use transforms the work cannot be determined
without reference to the other factors, such as the nature of the original
work, the quantitative and qualitative similarity between the works and the
effect of the use on the value of the original work.

The merits and limitations of transformativeness are discussed in Part IV

below. Thepurpose of the defendant’s use is still important, it is just as
clearly a subjective determination. Bright-line distinctions, such as
commercial/non-commercial and educational/non-educational, have been
superceded by a much more ambiguous notion, transformativeness.

B. Nature of the Copyrighted Work

The second factor considered by the courts in applying the fair use
standard is “the nature of the copyrighted work.”32 Two aspects of the
nature of the work are important to consider: whether the work is factual
as opposed to creative; and whether the work is published or unpublished.
In principle, the more creative the original work is, the more justification
is required to establish a fair use in relation to it.33 Anecdotally, this
aspect of the nature of the work tends not to be regarded as significant.34
The Supreme Court did not consider the creative nature of television
programs or musical compositions to be an obstacle to afinding of fair use
in Sony or Campbell. At the other end of the spectrum, the Second Circuit
has held that the copying of one factual work by a rival was not protected
by fair use.35 The second factor is especially unhelpful in cases involving
parody, because parody is predicated on the existence of an antecedent
creative work. As the Supreme29. Campbell, 510 U.S. at 579 (internal
quotes and citations omitted); see also, Pierre Leval,

Towards A Fair Use Standard, 103 Harv. L. Rev. 1105, 1111 (1990).

30. Campbell, 510 U.S. at 579.

31. Princeton Univ. Press v. Michigan Document Servs., 99 F.3d 1381,

1395 (6th Cir. 1996)

(Circuit Judge Merritt, dissenting).

32. 17 U.S.C. § 107(2) (date).

33. Campbell, 510 U.S. at 586.

34. According to Nimmer’s analysis, it actually has a negative correlation

with the outcome.

Nimmer, Fairest Of Them All, supra note 13, at 280.

35. Financial Information, Inc v. Moody’s Investors Service, Inc., 751

F.2d 501 (2d Cir.

1984).

Court noted in Campbell, in the context of parody, the second factor “is
not much help . . . in separating the fair use sheep from the infringing
goats.”36 After the Supreme Court’s majority decision in Harper & Row
v. Nation Enterprises,37 it briefly appeared that use of an unpublished
work could almost never qualify as fair use.38 The Nation had published a
300 to 400-word extract of the soon-to be published memoirs of President
Gerald Ford dealing with the Nixon pardon, preempting an article that was
scheduled to appear in Time magazine. Time had agreed to purchase the
exclusive right to print pre-publication excerpts of President Ford’s
memoir; but as a result of the defendant’s article, Time canceled its
agreement. The majority held that “[u]nder ordinary circumstances, the
author’s right to control the first public

appearance of his undisseminated expression will outweigh a claim of fair

use.”39 Two cases from the Second Circuit followed and enlarged this
ruling. In Salinger v Random House,40 the Second Circuit held that a
literary biographer of reclusive author J.D. Salinger was not permitted to
quote from a selection of Salinger’s unpublished letters and drafts. In New
Era v Holt,41 the same court held that the quotation of unpublished
material to establish a variety of critical assertions with respect to L. Ron
Hubbard, the founder of Scientology, was equally unavailing on fair use
grounds.42 Inboth cases the court held that unpublished works normally
enjoy “complete protection against copying any protected expression.”43
In 1992 Congress revised Section 107 and made it clear that “[t]he fact
that a work is unpublished shall not itself bar a finding of fair use if such
finding is made upon consideration of all the above factors.”44 In light of
Congress’ clarification of Section 107, the Supreme Court’s decision in
Harper & Row is easier to reconcile as deriving from the fact that the work
in question was soon-to-be published, not that it was unpublished.45 In
any event, the nature of the copyrighted work remains unhelpful in
assessing whether an activity is protected by fair use or not.

C. Amount And Substantiality of the Portion Used

The third factor to be considered in adjudicating fair use is “the amount

and substantiality of the portion used in relation to the copyrighted work
as a whole.”46 The need for both a quantitative and a qualitative inquiry
harks back to Justice Story’s original

36. Campbell, 510 U.S. at 586.

37. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539
(1985).

38. Id. at 555.

39. Id. at 555.

40. Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir. 1987).

41. New Era Publications v. Henry Holt & Co., 873 F.2d 576 (2d Cir.
1989).

42. Id.

43. Salinger, 811 F.2d 90; New Era Publications, 873 F.2d at 583; see also
Leval, supra note

29, at 1113.

44. Amended 10/24/92 by Pub. L. No. 102-492.

45. Leval, supra note 29, at 1120. Note that Judge Leval authored both the
Salinger and New
Era opinions overturned by the Second Circuit: Salinger v. Random
House, 650 F. Supp. 413, (S.D.N.Y.

1986) rev’d & rem’d 811 F.2d 90, (2d Cir. 1987) and New Era
Publications International, ApS v. Henry

Holt & Co., 695 F. Supp. 1493 ([S]D.N.Y., 1988) aff’d on other grounds
873 F.2d 576 (2d Cir. 1989).

46. 17 U.S.C. § 107 (3) ([date]).

formulation of the fair use doctrine in Folsom v. Marsh.47 In that case,

Justice Story was concerned to protect the “chief value of the original
work” against the extraction of its “essential parts” through the mere
“facile use of scissors” or its intellectual equivalent.48 In theory, the
greater the portion of a work that is copied, the less inclined a court will be
to find in favor of fair use. In practice, several cases confound this basic
proposition, relying instead on subjective qualitative impressions or
suppositions as to the value of the work.

In Harper & Row, the defendant copied a mere 300 words from a 200,000-
word manuscript, yet the Supreme Court held that this constituted a
substantial taking under the third factor.49 This extraordinary conclusion
only makes sense in context of the Court’s manifest disapproval of the
conduct of the defendant, particularly the manner in which it obtained
access to an advance copy of the biography and its scoop of the Time
magazine story. In Sony, the majority of the Supreme Court found that
home videotaping entire programs for later viewing was fair use.50 In
Campbell, the Supreme Court held that even though rap musicians 2 Live
Crew had copied the heart of the original Roy Orbison song

– the first line of lyrics and characteristic opening bass riff – nonetheless,
the defendant’s appropriation could be protected by fair use.51 The Court
reasoned that copying the heart of the song was excusable because it is the
heart which most readily conjures up the song for parody, and also
because it is the heart at which parody generally takes aim.52 The point to
be understood is not that the amount of the work used is never significant;
but rather that while the third factor provides a convenient platform for
bolstering existing conclusions, it provides little ex ante guidance. The
question of qualitative significance is inextricably tied with the fourth
factor because each requires the court to assess the “value” of the original
work. The third factor does not rely on mechanical quantification of the
amount of the original work used, it asks courts to asses how much of the
value of the original work is present in the later use. Similarly, the fourth
factor asks what the effect the later use will have on the value of the
original work. Thus both the third and forth factors require the
determination of the antecedent question – the value of the work. In each
case, the value of the original can only be determined with reference to
scope of the copyright owner’s rights of exclusion; treating the statutory
factors as outcome-determinative, as opposed to question-framing, ask us
to believe the opposite is true.

D. Market Effect

The fourth statutory factor in fair use analysis is “the effect of the use
upon the potential market for or value of the copyrighted work.”53 In
short, the fourth factor asks “what is the market effect of the unauthorized
use?” It is worth exploring this factor in

47. 9 F. Cas. 342 (No. 4,901) (C.C.D. Mass. 1841).

48. Id. at 345.

49. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539,
565 (1985). The words were not even entirely sequential, see Edward
Samuels, The Illustrated Story Of Copyright 155

(2000).

50. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417,
449–50 (1984).

51. Campbell v. Acuff-Rose Music, 510 U.S. 569, 588 (1994).

52. Id.

53. 17 U.S.C. § 107(4) ([date]).

some detail, first because it is sometimes said to be the most important

factor,54 and second because questions of market effect dominate
academic literature. Assessing the market effect of an unauthorized use
confronts judges with a potential circularity: while their ultimate ruling
defines the scope of the market, they are supposed to examine the market
effect in making that ruling. In other words, they must make a ruling based
on a finding that is contingent on their ruling. This theoretical circularity is
mitigated by the reality that judges begin with a view as to the proper
scope of the copyright owner’s rights and then apply the statutory factors
in a manner that transforms those priors into conclusions.

As a preliminary matter, it is clear that analysis of market effect must

include the effect on the copyright owner’s continued exploitation of
existing markets and her potential exploitation of markets she is yet to
enter.55 If unexploited markets were left to fair users by default, copyright
owners would find themselves in a race to exploit their works in as many
markets as possible to preserve their future rights. The author of a novel
would rush to make some token exploitation in every context imaginable;
from the plausible (sequels, screen-plays, and television series) to the
unlikely (soft toys, action figures, and private-label credit cards).

Although considering potential and derivative markets is clearly

necessary, it raises the problem that copyright owners can claim that
almost any new use of their work is part of an unexplored derivative
market. For example, although it had shown no interest in licensing a
derivative of “Pretty Woman” in the rap genre before its lawsuit against 2
Live Crew, Acuff Rose (Roy Orbison’s publisher) argued that 2 Live
Crew’s parody diminished its potential to do so. The Supreme Court lent
credence to these kinds

of argument by remanding the case in Campbell to the district court to

determine whether the 2 Live Crew parody had dampened the potential
demand for non-parody derivatives of the original song in the rap genre, a
market hitherto unexplored by the copyright owner.56 The uncertainty of
the original work’s potential market necessitates defining the limits of that
market in order to ascertain whether the allegedly infringing use has any
effect on it. This encourages a kind of circular reasoning: findings of fair
use are premised on narrow market definitions; while denials of fair use
are premised on expansive market definitions. The reasoning is circular
because although the fair use question determines the extent of the market,
the extent of the market also determines the outcome of the fair use
question.
Two cases concerning photocopying illustrate the potential circularity of
examining the effect of the use upon the potential market for the
copyrighted work. In 54. The Supreme Court’s most recent decision on
fair use warns that the statutory factors are not to be treated in isolation,
rather “[a]ll are to be explored, and the results weighed together, in light
of the purposes of copyright.” Campbell, 510 U.S. at 578; but see Harper
& Row, 471 U.S. at 566 (fourth factor undoubtedly single most important
element of fair use); Princeton Univ. Press v. Michigan Document Servs.,
99 F.3d 1381 (6th Cir. 1996) (factors not created equal, fourth factor at
least primus inter pares).

55. Campbell, 510 U.S. at 593–594.

56. Id. The Court remanded the case back to the district court to hear
evidence as to the likely effect on the market for a non-parody, rap version
of original song.

It is puzzling to consider what evidence the Court thought would be

produced. See 4–13 Nimmer on Copyright § 13.05.

both Williams & Wilkins Co. v. United States,57 and American

Geophysical Union v. Texaco,58 academic journal publishers alleged that
their copyrights were infringed by defendants making unauthorized
photocopies of journal articles for medical and scientific research. The two
cases, decided almost 20 years apart, are barely distinguishable on their
core facts, and yet reach entirely opposite conclusions. The difference
between the cases lies in the latter court’s willingness to find that the
publisher suffered an adverse market effect. The Court of Claims in
Williams & Wilkins held that the evidence on the record failed to show
that the defendant’s photocopying practices caused a significant detriment
to the plaintiff. In American Geophysical, the Second Circuit also
concluded that, based on potential sales of additional journal
subscriptions, back issues, and back volumes alone, the evidence of an
adverse market effect was weak.59 However, the majority of the Second
Circuit concluded that the plaintiff prevailed on the fourth factor because
of the availability of licensing facilitated through the Copyright Clearance
Center (“CCC”).60 The majority found that through this collection
organization, the publishers had created “a workable market for
institutional users to obtain licenses for the right to produce their own
copies of individual articles via photocopying.”61 In the opinion of the
majority, the potential licensing revenues that would be forgone by
publishers if a finding of fair use was made itself constituted an adverse
market effect under the fourth factor. Any copyright owner who loses an
infringement action because of a finding of fair use has also lost at least
one potential licensee, although in some cases the prospects of a license
are more theoretical than real.62 The majority in American Geophysical
argued its reliance on potential licensing revenues was not circular
because: “[o]nly an impact on potential licensing revenues for traditional,
reasonable, or likely to be developed markets should be legally cognizable
when evaluating a secondary use’s effect upon the potential market for or
value of the copyrighted work.”63

However, the addition of the “traditional, reasonable, or

likely” requirement does not entirely mitigate the problem of circular
reasoning. Determining whether a market is “traditional, reasonable, or
likely” is indistinguishable from determining the scope of the copyright
holder’s rights: both require courts to make an a priori assumption and
then compare that assumption to the conduct of the defendant.

CASE: Lenz v. Universal Music Corporation:

In this case the US District Court for the Northern District of California ruled that copyrigh
holders must consider fair use before issuing takedown notices for content posted on the internet
Stephanie Lenz posted on Service provider a home video of her children dancing to Prince's song
“Let's Go Crazy”. Universal Music Corporation sent Service provider a takedown notice under the
Digital Millennium Copyright Act (DMCA) claiming that Lenz's video violated their copyright in
the "Let's Go Crazy" song. In September 2007, Prince released statements that he intended to
reclaim his art on the internet. In October 2007, Universal released a statement amounting to the
fact that Prince and Universal intended to remove all user-generated content involving Prince
from the internet as a matter of principle Based on Prince's and Universal's statements, Lenz
argued that Universal was issuing takedown notices in bad faith, as they attempted to remove al
Prince-related content rather than considering the merits of each work. Lenz claimed fair use of
the copyrighted material and sued Universal for misrepresentation of a DMCA claim. The cour
ordered that copyright holders cannot order the removal of an online file without first determining
whether the posting reflected fair use of the material. The court held that Universal had not in
good faith considered fair use when filing a takedown notice.
SERVICE PROVIDER IS CONTRIBUTORY TO THE
INFRINGEMENT:

With the advent of platforms promoting user participation in the

development of the contents online, the question of infringement of
copyright by such platforms i.e. service providers also crops up.

As UGC is majorly of two types-

1. Content developed by the user himself consisting of his own

expression, in other words, an original work of the user.

2. content uploaded by the user which consists of copyrighted work

of any other person, in respect of these works also a distinction is
required that whether the said work is uploaded for fair use or for
commercial exploitation.

The argument by the copyright owners in respect of these service

providers’s liability in dissemination of their work online is that it results
in falling of revenue earning possibilities of the owners from such
uploading and sharing of their contents on these platforms as the prime
object of the copyright is to commercially exploit such works by control
over the dissemination of such works and these service providers are
coming in the way of the copyright owners by providing such platforms to
the users where their work can be easily and freely displayed for the rest
of the public and this thus hampers the owner’s opportunity in making
some money out of dissemination of such works to the public in lieu of
some charges.
Hence, the owners very frequently voice against such platforms by
holding them as infringers of their copyright as the latter by providing
such platform to the public are in a way abating and promoting
infringement of the latter’s copyrights.

Largely the Music and Film Industry is hit by such services available
widely on the internet and lately most of the big corporations in this
business is entering into Legal Battles throughout the world against
distribution and display of their copyrighted material for free on such
platforms. However, the Courts are in a difficult position due to non
availability of statutory provisions for dealing with such situations hence
there are different ways in which the Courts may pursue such cases-

i). the courts may feel that such uploading of contents online on such
platforms are mere expression of user’s thoughts and this action is
generally devoid of any intention of infringement of someone’s copyright,
and the service providers are merely providing a platform of expression of
their thoughts.

ii). On the other hand, courts may feel that by availability of such services
the whole purpose of Copyright laws may be defeated as the owners may
not be left in a position to control the distribution and display of their
copyrighted work and hence owner may not be able to benefit
commercially out of such works, which are created after investing quality
time and money in developing them.

iii). The courts may also go into the aspect of control of the service
provider in such dissemination of works on their platforms, i.e. whether
the service provider really control the posting and uploading of such
material by his users or he only provides the platform to the public which
are free to control the manner of using such platforms.
The peer to peer business model was the first one to promote UGC by way
of providing a platform to their users to load files onto their own
computers and by connecting to the Napster system, allow any other user
in any location to retrieve that file on demand. Users can make works
available at their own choosing, and can locate and obtain electronic
copies of materials that any other person may have chosen to enter into the
system. These business models may avoid maintain a central computer
system that stores and delivers content files. Instead, individual users
employ Napster’s software to find and locate files that are stored on the
computers owned by other individuals who connect voluntarily to such
platforms. This was done by the service providers with a view to get away
with the liability of surveillance and supervision over the actions of the
users, if in future the question of contributory infringement arises.

Technologically, the sUGCess of such a system depends on sophisticated

software and wide availability of the Internet for connecting users
throughout the world. The music files are duplicated, stored, and
transferred by means of the “MP3” technology a computer-readable
format. On such platforms the users can easily upload and download large
quantities of files and these actions reproductions and distributions give
rise to the potential copyright violations as mostly the owners of the
copyrighted contents do not given permission for such dissemination of
the works. This was the claim from many members of the music industry,
who held the copyrights of many of the compositions and sound
recordings, and who argued that the sharing of files on such platforms
would replace potential sales of compact disks and other forms of sale of
such works and on the other hand these service providers are gaining
commercially by expanding their user base or even by earning from
advertisement revenues.

However, these platforms were majorly attacked by the record companies

with compensatory and infringement suits. Grokster was even made to $50
dollars to the record companies as damages.

The court rulings have shown that file sharing by individual users was not
a “fair use” of the copyrighted sound recordings. The court also ruled that
such platforms role in facilitating the dissemination of recordings was not
within the various “safe harbors” provided under the Digital Millennium
Copyright Act of America, which came into effect to specifically deal with
such conflicts.
CASE: A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (Ninth
Circuit, 2001):

It was the first major case relating to the application of copyright laws to
platforms such as peer-to-peer file-sharing where users can upload and
share songs and movies with other users without the consent of the
original owners of such works. It was held that UGC platforms such as
peer-to-peer file-sharing service could be held liable for contributory
infringement and vicarious infringement of the someone’s copyrights.

Napster provided a platform to its users to access and download digital

music files in the form of MP3s, from other users' machines. Whenever a
use connected to this software on his computer, his computer used to get
connected to other usere’s computer also, such connected user’s
computers were controlled by a central server which maintained an index
of users and their contents and files available on their machines, resulting
in list of music available across Napster's network. Napster quickly
became popular service for music enthusiasts due to the ease which they
could find and download digital song files for free.

It was argued by the record companies that its use is likely to result in
reduction of CD purchases by the listeners. Furthermore, downloading on
Napster may also hamper plaintiffs' promotional efforts because it does
not involve any of the restrictions on timing, amount, or selection that
plaintiffs impose when they offer free music files.

CASE: MGM Studios, Inc. v. Grokster, Ltd. 545 U.S. 913 (2005):

In this case, the question was whether P2P file sharing companies
Grokster and Streamcast (maker of Morpheus) be sued for inducing
copyright infringement for acts taken in the course of marketing file
sharing software.

"We hold that one who distributes a device with the object of promoting
its use to infringe copyright, as shown by clear expression or other
affirmative steps taken to foster infringement, is liable for the resulting
acts of infringement by third parties."

Copying copyrighted motion picture and music files using unauthorized

peer-to-peer services was held illegal. Further Grokster was forced to pay
$50 million to the music and recording industries. As of May 1, 2009,
Grokster website displays this message: "Your IP address is (your ip) and
has been logged. Don't think you can't get caught. You are not
anonymous."

In such cases, the service providers may raise the following defense:

Sampling: where users make temporary copies of a work to sample it

before purchase. However, Sampling will not be deemed to not be a fair
use, if the "samples" were in fact permanent and complete copies of the
desired media.

Space-shifting: where users access a sound recording through the service

provider’s system that they already own in audio CD format; here the
Court has to take in view the shifting analyses used in the Sony or RIAA v.
Diamond Multimedia.

Permissive distribution: of recordings by both new and established artists

who have authorized their music to be disseminated in the service
provider’s system, which may not be an infringing use.

Moreover, prior to fixing if liabilities, there are two things to be

considered i.e. a copyright holder's legitimate demand for effective
protection of the statutory monopoly copyrights, and the rights of others
freely to use such contents and work for fair and non profitable use.
Accordingly, the sale of copying equipment, like the sale of other articles
of commerce, does not constitute contributory infringement if the product
is widely used for legitimate, unobjectionable purposes.

The following causes of action of copyright infringement lies against the

service providers:

Causes of action under the doctrine of primary or direct copyright

infringement.
These claims include:

1. Public performance – the service providers without permission of the

copyright owner, publicly performed and authorized the public
performance of the infringing uploaded content by streamlining of such
contents which can be played on these platforms free of cost.

2. Public display – the service providers have, without permission of the

copyright owner, publicly displayed and authorized the public display of
the infringing uploaded contents because they display the contents on their
platforms which were originally uploaded by the users. Every time the
content is shared amongst the users of such platforms, illegal reproduction
of such contents is resulted.

3. Reproduction – the service providers have, without permission of the

copyright owner, reproduced and authorized the reproduction of the
infringing uploaded contents through their website.

In such cases, the courts also sees that whether the business model is a
profit making one, in respect of which the trend may be seen from the
following cases in which the Courts have held the service provider liable
even if they aren’t directly earning revenue.

The court also sees whether the business model is developed in a manner
so as to remain ignorant, i.e. intentionally not to keep a track of the details
of its users and their activities, in which case courts will not be prevented
in holding that such business models facilitate the unauthorized exchange
of copyrighted contents.

Major Bob Music v. Stubbs, 851 F. Supp. 475 (S. D. Ga. 1994)
A bar derived direct financial benefit from infringing musical
performances on its premises. The court noted that "an enterprise is
considered to be 'profit-making' even if it never actually yields a profit."

Walden Music, Inc. v. C. H. W., Inc., 1996 WL 254654, at *5 (D. Kan.

1996)

The fact that defendant' entrepreneurial enterprise is not profiting is not a

defense to the plaintiffs' copyright infringement claims.

Broadcast Music, Inc. v. Hobi, Inc., 1993 WL 404152, at *3 (M. D. La.

1993)

Holding defendant vicariously liable because it operated with goal of

making a profit, even though it did not actually make one.

Causes of action under the doctrine of secondary or indirect copyright

infringement.

These claims include:

4. Inducement of copyright infringement – the service providers are liable

for inducing the infringing acts of Service provider’s users, by providing
them a free platform of sharing and enjoying copyrighted work, who
infringe the plaintiff’s copyright by uploading infringing content to the
Service provider website.

5. Contributory copyright infringement – In order to prove contributory

infringement, a plaintiff must show that a defendant had knowledge of
infringement. The service providers are liable for contributing to the
infringing acts of service provider’s users, who infringe the plaintiff’s
copyright by uploading infringing videos to the website. If the service
provider has general knowledge that third parties performed copyrighted
works, then it satisfies element of contributory infringement. The service
provider will also be held liable if the future business model was by
expanding the number of users, it stood to benefit financially from the
infringing activity.

In Sony Corp. of America v. Universal City Studios, Inc., "the Betamax

case," the court refused to hold Sony liable for contributory infringement
simply because the technology could be used for infringing activity.
However that case related to a product over which no supervision could be
exercised by the developer after its sale to the customer. Hence, this case
is distinguished from cases of internet service providers which can devise
measures to keep regular surveillance over the acts of its users.

In Gershwin Publ'g Corp. v. Columbia Artists Management, Inc., 443 F.

2d 1159, 1162 (2d Cir. 1971), it was observed that a contributory infringer
is "one who, with knowledge of the infringing activity, induces causes or
materially contributes to the infringing conduct of another”.

Also, in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F. 3d 259, 264 (9th Cir.
1996), it was observed that “Courts do not require actual knowledge;
rather, a defendant incurs contributory copyright liability if he has reason
to know of the third party's direct infringement”.

6. Vicarious copyright infringement – the service providers are vicariously

liable for the infringing acts of its users, who infringe the plaintiff’s
copyright by uploading infringing videos to the service provider website.
For holding a service provider liable for infringement, it has to be
seen whether the necessary element of volition is present in service
provider’s operations. In order to establish an action for primary or direct
copyright infringement under copyright laws, it has to be proved whether
service provider benefited financially from the infringement and whether
they were capable of supervising and controlling infringing conduct,
hence, there must first be a volitional act committed by the defendant in
regard to the infringement. Generally, the courts dealing with such issues
have held that the automated copying by machines, occasioned by others,
is insufficient to establish a volitional act.]

In Fonovisa, 76 F. 3d at 262 (, 443 F. 2d at 1162), it was observed that a

defendant incurs liability for vicarious copyright infringement even in the
absence of an employment relationship, if he "has the right and ability to
supervise the infringing activity and also has a direct financial interest in
such activities”. In this case the element of vicarious liability was satisfied
because the service provider had the right to terminate vendors at will; it
also controlled customers' access and promoted its services.

By proving a reasonable likelihood of contributory and vicarious

copyright infringement claims, copyright owners are entitled to a
presumption of irreparable harm.-Micro Star, 154 F. 3d at 1109. Even if
the decision leads to practically put the infringer out of business, The court
cannot give much weight to defendant's argument that the requested relief
will put it out of business.-Sun Microsystems, Inc. v. Microsoft Corp., 188
F. 3d 1115, 1119 (9th Cir. 1999).

Also, for holding a service provider liable of indirect infringement, the

court has to ascertain whether the act of the users would constitute ‘Fair
Use’. The factors which ought to be considered while analyzing Fair Use
are-

(1)The purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes;

(2)The nature of the copyrighted work;

(3)The amount and substantiality of the portion used in relation to the

copyrighted work as a whole.

(4)The effect of the use upon the potential market for or value of the
copyrighted work.
An argument may be raised to hold them liable, i.e. is the service provider
not trying to influence the user’s decision to view the infringing material
available on such services by providing the facility of:

(1) Rating the contents by users;

(2) Classifying certain contents as ‘top rated’, top-ten, most reviewed,

most viewed, etc.

Is he not influencing the viewers to view a particular content which may

even be an infringing content and while doing so, is he not indirectly
controlling the viewer ship of such contents. Is he not marketing such
contents.

Importantly, in Religious Technology Center v Netcom On-Line

Communications Service Inc, 907 F Supp 1361, 1368-1370 (ND Cal
1995), the Court held that “although copyright is a strict liability statute,
there still should be some element of volition or causation which is lacking
where a service provider’s system is merely used to create a copy by a
third party.” This issue of volition was more recently examined in Parker
v Google Inc, 422 F Supp 2d 492, 497 (ED Pa, 2006), where the Court
held “when an ISP automatically and temporarily stores data without
human intervention so that the system can operate and transmit data to its
users, the necessary element of volition is missing.” The question will be
whether the manner in which the uploaded videos are performed,
displayed and created is sufficiently automated enough, so as to negate
any active volitional involvement by service provider in each act. This
issue is likely to come down to a technical analysis of service provider’s
involvement in the uploaded content, for example whether transcoding the
uploaded videos into Flash format – so that they can be viewed on the
service provider’s website – constitutes a volitional act, or is simply an
automated process without any active volitional involvement. However, it
should be noted that most of the decisions whilst under the American
Copyright Act (US) a person need not intentionally infringe copyright, it
does require conduct by a person, who causes in some meaningful way an
infringement, this was observed in Costar Group Inc v LoopNet Inc, 373
F3d 544, 549 (4th Cir 2004).
Copyright challenges involving a ‘volitional act’ have concerned the
caching and archiving of data by an Internet service provider. In this
regard, the Court may well apply the same reasoning applied in Playboy
Enterprises Inc v Frena, 839 F Supp 1552 (MD Fla 1993), where the
defendant was found liable for hosting images uploaded by others, despite
the defendant claiming there was no active, volitional involvement. In
Perfect 10 Inc v Cybernet Ventures Inc, 213 F Supp 2d 1146, 1174 (CD
Cal 2002). It was observed that another issue which the service provider
may raise is the application of the ‘safe harbor’ provisions under the
Digital Millennium Copyright Act 1998 (US) 9. These provisions provide
exceptions for service providers from action for direct, vicarious and
contributory copyright infringement. The relevant safe harbor in question
is Section 512(c) (1) which provides:

“A service provider shall not be liable for monetary relief, or, except as
provided in subsection (j), for injunctive or other equitable relief, for
infringement of copyright by reason of the storage at the direction of a
user of material that resides on a system or network controlled or operated
by or for the service provider, if the service provider:

(A)(i) Does not have actual knowledge that the material or an activity
using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or

circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to

remove, or disable access t, the material;

(B) does not receive a financial benefit directly attributable to the

infringing activity, in a case in which the service provider has the right and
ability to control such activity; and

(C) upon notification of claimed infringement as described in paragraph

(3), responds expeditiously to remove, or disable access to, the material
that is claimed to be infringing or to be the subject of infringing activity”.

8 839 F Supp 1552 (MD Fla 1993).

9 17 USC § 512.

10 Perfect 10 Inc v Cybernet Ventures Inc, 213 F Supp 2d 1146, 1174 (CD
Cal 2002).

11 17 USC.

Red flag provision:

However, under Section 512(c)(1)(A), a service provider will be

disqualified from the safe harbors, if they had actual or ‘red flag’
knowledge of the infringing material. Under this provision, a service
provider is not under a positive obligation to remove material, which
infringes copyright. However, they will lose their safe harbor in cases
where they become aware of ‘red flags’, that is facts or circumstances
from which infringing activity is apparent, and if subsequently they fail to
act This aspect raises a question as to just how much actual or constructive
knowledge Service provider should have in regard to the infringing
videos, including the technology which Service provider currently uses. It
should also be noted, that the comments made by Service provider that
service provider will use filtering technology to identify and remove
infringing videos for copyright owners who have entered into agreements
with service provider, is likely to count in copyright owner’s favor.

The ‘financial benefit’ provision:

Moreover, another provision which is likely to be heavily litigated, is the

financial benefit provision i.e. 17 USC § 512(c)(1)(B). Under this
provision, a service provider will be disqualified from the safe harbor,
where they receive a financial benefit, which is directly attributable to the
infringing activity, where they have right and ability to control that
activity. Generally, a service provider conducting a legitimate business
will not be considered to have received a ‘financial benefit directly related
to the infringing activity’. For example, if the service provider receives a
one-time set-up fee or periodic payments from their customers, whether
they engage in infringing activities or not, would not constitute a ‘financial
benefit’. However, the situation in YouTube’s case is quite different, as
their main form of revenue is through advertisements which feature on
search pages, licensed videos and sometimes above the videos themselves,
including infringing videos.

This provision was considered in the following cases-

Perfect 10 Inc v CCBill, 481 F 3d 751 (9th Cir, 2007)

Where the United States Court of Appeals held that the relevant enquiry to
make when considering whether a service provider has received a ‘direct
financial benefit’.

Ellison v Robertson, 357 F 3d 1072, 1079 (9th Cir 2004). 21

“Whether the infringing activity constitutes a draw for subscribers, not just
an added benefit”

Tur v YouTube Inc, cv-06-04436 (CD Cal, filed 14/7/2006). 22

The Court held that “a provider’s receipt of a financial benefit is only

implicated where the provider has the right and ability to control the
infringing activity”.

18 17 USC § 512(c)(1)(B).

19 17 USC § 512(c)(1)(B).

20 481 F 3d 751 (9th Cir, 2007).

21 Ellison v Robertson, 357 F 3d 1072, 1079 (9th Cir 2004).

22 cv-06-04436 (CD Cal, filed 14/7/2006).

23 Perfect 10 Inc v CCBill, 481 F 3d 751 (9th Cir. 2007).

24 Hendrickson v Ebay Inc, 165 F Supp 2d 1082, 1093 (CD Cal, 2001);
Perfect 10 Inc v Cybernet

Ventures Inc, 213 F Supp 2d 1146, 1183 (CD Cal 2002); Corbis Corp v
Amazon.com Inc, 351 F

Supp 2d 1090 (WD Wash, 2004).

MGM Inc v Grokster, 545 US 913, 926. 25

In copyright owner’s view, service providers are entertainment

destinations. ‘The public at large are not attracted to their storage facility
or technical functionality – people are attracted to the entertainment value
of what’s on the site’. In this regard, copyright owner’s claim that service
providers will lose their safe harbor, as they are receiving a direct financial
benefit from infringing videos, where they have the right and ability to
control the activity, through the sale of advertisements.

Authorization by the service provider:

Under the Australian Copyright Laws to hold a service provider liable for
infringement of copyright by uploading of copyrighted work on their
platform (site), the Courts get down to ascertain that whether the Service
Provider ‘authorized’ the uploading and sharing of the said content, for
that, the matters that must be taken into account while fixing the liability if
the service providers include the following:

(a) The extent (if any) of the person's power to prevent the doing of the
act concerned;
(b) The nature of any relationship existing between the person and the
person who did the act concerned;

(c) Whether the person took any other reasonable steps to prevent or avoid
the doing of the act, including whether the person complied with any
relevant industry codes of practice. (Section 101 (1A) copyright acts)

In the Australian Copyright Act, Section 112E, which was also inserted
into the Act by the Digital Agenda Act, provides:

“A person (including a carrier or carriage service provider) who provides

facilities for making, or facilitating the making of, a communication is not
taken to have authorized any infringement of copyright in an audio-visual
item merely because another person uses the facilities so provided to do
something the right to do which is included in the copyright.”

Under this heading the courts also have to ascertain whether the service
provider had any supervision and control over the contents which its users
upload, this can be done by subjecting their platform to new technologies
which help them finding out if their users are uploading infringing works.

This scenario has led to a widespread view that the UGC sites should use
copyright filtering technology. This technology compares uploaded
material against samples of copyrighted material provided by copyright
owners. If uploaded material matches any Reference Material, then the
uploaded material must either be blocked before it is ever uploaded, or
licensed from the copyright owner. The initiative seeks to have copyright
owners and UGC sites cooperate to implement filtering technology “in a
manner that effectively balances legitimate interests in

(1) Blocking infringing user-uploaded content

(2) Allowing wholly original and authorized uploads

(3) Accommodating fair use.

Filters Incorporated for protections for Fair Use

Many service providers are experimenting with automated content
identification technologies ("filters") to monitor their systems for potential
copyright infringements.

Three Strikes before Blocking:

The use of "filtering" technology should not be used to automatically

remove, prevent the uploading of, or block access to content unless there
are "three strikes" against it:

1. The video track matches the video track of a copyrighted work

submitted by a content owner;
2. the audio track matches the audio track of that same copyrighted
work
3. Nearly the entirety (90% or more) of the challenged content
comprises of the copyrighted work.

If filtering technologies are not reliably able to establish these "three

strikes," further human review by the content owner should be required
before content is taken down or blocked.

Human review:

Creators should be afforded the opportunity to reply to the conclusions of

automated filters. If a user's video is "matched" by an automatic filter, the
user should be as soon as possible notified by the service provider of the
consequences of the match and given the opportunity to dispute the
conclusions of the filtering process.

If the user disputes a "match" pursuant to the above dispute mechanism

provided by the service provider, the provider should promptly notify the
relevant content owner in order to afford content owner an opportunity to
issue a DMCA takedown notice after human review of the disputed
content.

Minimization:

In applying automated filtering procedures, service providers should take

steps to minimize the impact on other expressive activities related to the
blocked content. For example, automated blocks should not result in the
removal of other videos posted by the same user.

Parker v Google Inc, 422 F Supp 2d 492, 497 (ED Pa, 2006)

The Court held “when an ISP automatically and temporarily stores data
without human intervention so that the system can operate and transmit
data to its users, the necessary element of volition is missing.”

Perfect 10 Inc v CCBill, 481 F 3d 751 (9th Cir. 2007).

The Court held that “the ‘right and ability to control’ the activity refers to
something more than just the ability of a service provider to remove or
block access to material posted on its website or stored in its system.”

COOPER v UNIVERSAL MUSIC AUSTRALIA PTY LTD 2006

FCAFC 187

The issue was whether service provider authorized internet users in

Australia to copy, and operators of remote websites to communicate to the
public, music files constituting sound recordings in which the Record
Companies hold copyright.

The point of prime consideration was whether the service provider had
power to prevent the unauthorized uploading and sharing of the content.

The court held that providing a website with hypertext links (hyperlinks),
the appellant authorized the making of copies of the whole or a substantial
part of the alleged sound recordings without the license of the owners or
exclusive licensees of those sound recordings. a person's power to prevent
the doing of an act comprised in a copyright includes the person's power
not to facilitate the doing of that act by, for example, making available to
the public a technical capacity calculated to lead to the doing of that act.
The evidence leads to the inexorable inference that it was the deliberate
choice of Mr. Cooper to establish and maintain his website in a form
which did not give him the power immediately to prevent, or immediately
to restrict, internet users from using links on his website to access remote
websites for the purpose of copying sound recordings in which copyright
subsisted.

Hence, while deciding upon the issue of infringement by the service

provider, the business model of such platforms has to be distinguished in
the following manner-

i). it merely facilitates the expressions of the ideas of the users and while
doing so their intention is not to use or enjoy the copyrighted work from
which they are inspired.

ii). It results in increasing piracy and illegal reproduction of copyrighted

works.

In the former case the courts may be lenient enough to not hold the service
provider liable for the infringement e.g. Sony vs. Universal battle.
However, in the latter case the courts ought to fix the liability of such
service providers such as has happened in cases like Napster, Grokster,
etc.
AIMS AND OBJECTIVES

I HAVE OPTED FOR THIS VERY YOUNG AND DYNAMIC TOPIC

SO AS TO CREATE SOME AWARENESS AMOUNG THE GENERAL
PUBLIC IN RESPECT OF THE COPYRIGHT LIABILITIES
POSSIBLY ATTACTED BY ADOPTING THIS FORM OF
EXPRESSION ON THE INTERNET. I AM ALSO CHOSING THIS
TOPIC TO ANALYSE THE NEED OF LEGISLATION IN INDIA ON
THIS PHENOMENA WHICH IS WIDELY USED BY THE INTERNET
USERS WORLDWIDE WHEREBY THEY SOMETIMES
KNOWINGLY/UNKNOWINGLY END UP INFRINGING UPON
OTHER’S RIGHTS WHICH CAN ATTRACT PUNITIVE LIABILITIES
RAKING INTO MILLIONS OF DOLLARS. THE AIM OF MY STUDY
IS ALSO TO ASSESS THE CONTRIBUTORY NATURE OF THE
LIABILITIES OF THE SERVICE PROVIDER AND THEIR USERS
WHO UPLOADS THESE UGCs.

EVERY CONCEPT HAS ITS NEGATIVE AND POSITIVE POINTS,

SAME APPLIES TO USER GENERATED CONTENT (UGC) AS
WELL. AS IT IS MENTIONED BY ITS NAME CONTENT
GENERATED BY USERS ON DIFFERENT WEBSITES THROUGH
INTERNET IS KNOWN AS UGC, IN THIS SYNOPSIS I AM
REFERRING TO STOPPAGE OF MISUSE OF UGC LEADING TO
VIOLATION OF COPYRIGHT LAWS.
 CHAPTERISATION:

CHAPTER ONE: INTRODUCTION AND BRIEF HISTORY:

“Though shall not steal”

--LORD ATKINSON IN Macmillan vs. Cooper (1924) 40 TLR 186.

Within the last few years “User Generated Content” has become the
dominating change in social communication patterns on internet
facilitating the formation of social networks which tends to enhance
political and cultural participation. From a historical perspective the
question is whether this change of social communication is rather unique
or whether phenomena like “User Generated Content” is continuity in
public communication. Letters to the editor, the publications of social
movements and Samizdat literature are only a few and very different
examples how the audience tried to participate into public discussions –
also in former times.

Especially in times of media change, when new media is integrated into

everyday life, the question is to what extent new media and new
opportunities of participation lead to social integration of the audience or
whether the creation of multiple platforms of articulation primarily leads
to a fragmentation of public discourse.

Nowadays accessibility to media – at least to the WWW – is given, but the

impact of user generated content on public discourse can be regarded as
limited: The public sphere seems to be highly fragmented and usually
rather personally than socially relevant content is produced by the users.
When mass media like the popular press or TV developed, accessibility
was extremely limited. However, TV provides relevant social content for
large parts of society and therefore facilitates processes of social
integration.
Summing up, the implementation of new media can have manifold impact
on society. It can include or exclude audiences and it can strengthen and
weaken public discourse.

The conference aims to analyze and discuss the forms and the relevance of
the audience’s integration in different times, cultures and political
systems. Taking these perspective different types of media can be
analyzed referring their potential to enhance traditional forms of
participation and to create a platform for new audiences and forms of
participation. How did new media affect the formation of new publics and
affect traditional publics? Moreover, in a comparative perspective it is
intended to take a look not only at long-term developments but also at
differences and similarities between cultures, countries and regions: What
kind of public discourse was enhanced by the Enlightenment? How did
users articulate their interests and connect with each other within social
movements like for example the worker’s, the women’s and the peace
movement? What role played “User Generated Content” in different
political systems? How is it used to support or to oppose democratic but
also totalitarian systems? And finally it can be discussed how “the
public” and “the private” was conceptualized or has to be rearranged with
regard to the historical development of content produced by audiences?

(Use the below mentioned material also)

Statistics showing the growth of ugc:

US user-generated content creators and consumers will represent a

gradually rising percentage of the US Internet population over the next
five years. User-generated content creators are defined as individuals who
create and share online, any of the following media at least once per
month: video, audio, photos, personal blogs, personal Web sites, online
bulletin board postings, customer reviews or personal profiles in social
networks or virtual worlds. By the same token, user-generated content
consumers are those who consume any of those media types in the same
time frame.

The number of user-generated content consumers will exceed the number

of creators, but by a much smaller margin than for traditional, less
interactive media.
Despite the projected growth in the numbers of content creators and
consumers in the US, the monetization of user-generated media has yet to
materialize. Retail models have not caught on and advertisers have shown
reluctance to attach their brands to content that is, by its nature,
unpredictable.

As a result, advertising revenues around user-generated content will not

approach the proportions that one might expect, given the size and level of
engagement of the audience. eMarketer anticipates US user-generated
content advertising revenue will reach $824 million in 2012, up from $162
million in 2007. By 2012, this total will represent 1.62% of US online
advertising spending, up from 0.77% in 2007. User-generated content
advertising includes only promotions placed around the content itself.

The user-generated content movement started out on dedicated social

media sites but has since fanned out to Web properties that include online
retailers, major media destinations and portals. Still, the sites that defined
the social media revolution—YouTube, MySpace, Wikipedia, Facebook—
continue to grab most of the traffic on the Web. eMarketer’s estimates of
advertising spending against user-generated content are calculated as
percentages of ad spending on online video and social networking sites.

Although social networking gets mixed reviews from media and

marketing executives, ad spending on sites like MySpace and Facebook is
one of the bright spots of the emerging economy around social media. US
online social network advertising spending will rise from $920 million in
2007 to $2.7 billion in 2012.

To be clear, the $920 million spent on social network advertising was only
4.3% of US online ad spending in 2007. Furthermore, only about 10% of
the social network ads spend is against user-generated content.
Nevertheless, the active participation of brand marketers in Web sites that
are built around user-generated content is an encouraging sign of the
monetization potential of this content.

US online video advertising spending will rise from $775 million in 2007
to $4.3 billion in 2012. Because the bulk of the advertising activity around
user-generated content occurs on video-sharing sites like YouTube and
social networking destinations like MySpace and Facebook, eMarketer’s
ad spending outlook is limited to these types of online venues.

US Internet users are creating and consuming user-generated content in

record numbers. Their level of engagement is deep and broad, with
participation rates of up to 62% in categories like customer reviews and
involvement in an ever-expanding range of online content that includes
video, audio, personal profiles, avatars, photo sharing, encyclopedia
entries and reviews.

US Internet users will seek out content created by their peers, in part
because such content is seen as more credible and relevant than
professional and often promotional content.

User-generated content (UGC) refers to various kinds of media content

publicly available on the internet sites providing the technology/ platform
to their subscribers and users, which are produced by such users. It is also
known as:

Consumer-generated media (CGM)

User-created content (UGC)

The term ‘user generated content’ entered mainstream usage during 2005
having arisen in web publishing and new media content productions. Its
use in online posting of contents for problem processing, news, gossip and
research depicts the new age technologies like question-answer databases,
digital video, blogging, podcasting, mobile phone photography and wikis
for media production by general public.

The media companies realizing the potential of this format started to

attract or allow the users themselves to create material that is interesting to
a broader audience. For instance there are many ways today that
newspaper/tabloid readers can contribute online by sending in photos,
movies and texts. An example of this movement is the Swedish tabloid
‘Aftonbladet’ which gives out rewards to the best material being sent in by
a reader. Many new companies in the media industry such as Service
provider and Facebook have foreseen the increasing demand of UGC
hence creating a “playing field” for the users rather than them self creating
material for users to consume. A similar development can be seen in the
video game industry where games such as World of Warcraft, Sims and
Second Life give the player a large amount of freedom and essential parts
of the games are actually built by the players themselves.

Sometimes UGC can constitute only a portion of a website. For example

on Amazon.com the majority of content is prepared by administrators, but
numerous user reviews of the products being sold are submitted by regular
visitors to the site. But in sites like Service provider, most of the contents
are posted by their users.

Often UGC is partially or totally monitored by website administrators to

avoid offensive content or language, copyright infringement issues, or
simply to determine if the content posted is relevant to the site's general
theme.

However, there has often been little or no charge for uploading user
generated content. As a result the world's data centers may begin to be
regarded as a liability, rather than an asset as often some of the contents
posted on such sites may construe copyright infringement.

Motivation and incentives for users to generate UGC:

While the benefit derived from user generated content for the content host
is clear, the benefit to the contributor is less direct. There are various
theories behind the motivation for contributing user generated content,
ranging from altruistic, to social, to materialistic. Due to the high value of
user generated content, many sites user incentives to encourage their
generation. These incentives are implicit incentives and explicit
incentives-

Implicit incentives:
These incentives are not based to anything tangible. The most common
form of implicit incentives is social incentives. These incentives allow the
user to feel good as an active member of the community. These can
include relationship between users, such as Facebook’s friends, or
Twitter’s followers. Another common social incentive are status, badges
or levels within the site, something a user earns when they reach a certain
level of participation which may or may not come with additional
privileges. Yahoo Answers is a good example of this type of social
incentive. Social incentives are great in the way it cost the host site very
little and can catalyzes viral growth, however, their very nature requires a
sizable existing community before it can function.

Explicit incentives:

These incentives refer to something tangible, examples include financial

payment, entry into a contest, a voucher, coupon, frequent traveler miles.
Direct explicit incentives are easily understandable by most and have
immediate value regardless of the community size; sites such as the
Canadian shopping platform Wishabi and Amazon Mechanical Turk both
uses this type of financial incentive in slightly different ways to encourage
user participation. The drawback to explicit incentives is that it may cause
the user to be subject to the over justification effect, eventually believing
the only reason for the participating is for the explicit incentive. This
reduces the influence the other form of social or altruistic motivations,
making it increasingly costly for the content host to retain long term
contributors.

Different types of user generated content are Discussion boards Blogs

Wikis, Social networking sites ,News Sites, Trip planners ,Memories
Mobile Photos & Videos, Customer review sites Experience or photo
sharing sites, Any other website that offers the opportunity for the user to
share their knowledge and familiarity with a product or experience Audio,
Video games, Maps and location systems

SEE WHAT CAN BE USED FROM THIS (FOR LINK-WIKIPEDIA-

OECD PAPER)
Definition, measurement and drivers of user-created content

There is no widely accepted definition of UGC and measuring its social,

cultural and economic impacts are in the early stages. In this study UGC is
defined as: i) content made publicly available over the Internet, ii) which
reflects a .certain amount of creative effort., and iii) which is .created
outside of professional routines and practices.. Based on this definition a
number of UGC hosting platforms are presented. While the measurement
of UGC is in its infancy, available data show that broadband users produce
and share content at a high rate, and this is particularly high for younger
age groups (e.g. 50% of Korean Internet users report having a homepage
and/or a blog). Given strong network effects a small number of platforms
draw large amounts of traffic, and online video sites and social networking
sites are developing to be the most popular websites worldwide. The study
also identifies: technological drivers (e.g. more wide-spread broadband
uptake, new web technologies), social drivers (e.g. demographic factors,
attitudes towards privacy), economic drivers (e.g. increased commercial
involvement of Internet and media firms in hosting UGC) and legal
drivers (e.g. the rise of more flexible licensing schemes).

Emergence of UGC based business models:

Most user-created content activity is undertaken without the expectation of

remuneration or profit. Motivating factors include connecting with peers,
achieving a certain level of fame, notoriety or prestige, and self-
expression. Defining an economic value chain for UGC as in the other
OECD digital content studies is thus more difficult. From a creator’s point
of view, the traditional media publishing value chain depends on various
entities selecting, developing and distributing a creator’s work often at
great expense. Technical and content quality is guaranteed through the
choice of the traditional media .gatekeepers. Relative to the potential
supply, only a few works are eventually distributed, for example, via
television or other media. In the UGC value chain, content is directly
created and posted for or on UGC platforms using devices (e.g. digital
cameras), software (video editing tools), UGC platforms and an Internet
access provider. There are many active creators and a large supply of
content that can engage viewers, although of potentially lower or more
diverse quality. Users are also inspired by, and build on, existing works as
in the traditional media chain. Users select what does and does not work,
for example, through recommending and rating, possibly leading to
recognition of creators who would not be selected by traditional media
publishers. Most UGC sites have been start-ups or non-commercial
ventures of enthusiasts, but commercial firms are now playing an
increasing role in supporting, hosting, searching, aggregating, filtering and
diffusing UGC. Most models are still in flux and revenue generation for
content creators or commercial firms (e.g. media companies) are only now
beginning. Different UGC types (e.g., blogs, video content) have different
although similar approaches to monetizing UGC. There are five basic
models: i) voluntary contributions, ii) charging viewers for services - pay-
per-item or subscription models, including bundling with existing
subscriptions, iii) advertising-based models, iv) licensing of content and
technology to third parties, and v) selling goods and services to the
community (.monetizing the audience via online sales.).These models can
also remunerate creators, either by sharing revenues or by direct payments
from other users.

Economic impacts of user-created content

User-created content is already an important economic phenomenon

despite its originally noncommercial context. The spread of UGC and the
amount of attention devoted to it by users appears to be a significant
disruptive force for how content is created and consumed and for
traditional content suppliers. This disruption creates opportunities and
challenges for established market participants and their strategies. The
more immediate economic impacts in terms of growth, entry of new firms
and employment are currently with ICT goods and services providers and
newly forming UGC platforms. New digital content innovations seem to
be more based on decentralized creativity, organizational innovation and
new value-added models, which favor new entrants, and less on traditional
scale advantages and large start-up investments. Search engines, portals
and aggregators are also experimenting with business models that are
often based on online advertisement and marketing. On social networking
sites and in virtual worlds, for example, brands increasingly create special
sub-sites and new forms of advertising are emerging. The shift to Internet-
based media is only beginning to affect content publishers and
broadcasters. At the outset, UGC may have been seen as competition as: i)
users may create and watch UGC at the expense of traditional media,
reducing advertising revenues, ii) users become more selective in their
media consumption (especially younger age groups), iii) some UGC
platforms host unauthorized content from media publishers. However,
some traditional media organizations have shifted from creating on-line
content to creating the facilities and frameworks for UGC creators to
publish. They have also been making their websites and services more
interactive through user comment and ratings and content diffusion. TV
companies are also licensing content and extending on-air programs and
brands to UGC platforms. There are also potentially growing impacts of
UGC on independent or syndicated content producers. Professional
photographers, graphic designers, free-lance journalists and similar
professional categories providing pictures, news videos, articles or other
content have started to face competition from freely provided amateur-
created content.

Social impacts of user-created content

The creation of content by users is often perceived as having major social

implications. The Internet as a new creative outlet has altered the
economics of information production and led to the democratization of
media production and changes in the nature of communication and social
relationships (sometimes referred to as the .rise - or return - of the
amateurs.). Changes in the way users produce, distribute, access and re-
use information, knowledge and entertainment potentially gives rise to
increased user autonomy, increased participation and increased diversity.
These may result in lower entry barriers, distribution costs and user costs
and greater diversity of works as digital shelf space is almost limitless.
UGC can provide citizens, consumers and students with information and
knowledge. Educational UGC content tends to be collaborative and
encourage sharing and joint production of information, ideas, opinions and
knowledge, for example building on participative web technologies to
improve the quality and extend the reach of education. Discussion fora and
product reviews can lead to more informed user and consumer decisions
(e.g. fora on health-related questions, book reviews). The cultural impacts
of this social phenomenon are also far-reaching. "Long tail" economics
allows a substantial increase in availability and a more diverse array of
cultural content to find niche audiences. UGC can also be seen as an open
platform enriching political and societal debates, diversity of opinion, free
flow of information and freedom of expression. Transparency and some
watchdog functions may be enhanced by decentralized approaches to
content creation. Citizen journalism, for instance, allows users to correct,
influence or create news, potentially on similar terms as newspapers or
other large entities. Furthermore, blogs, social networking sites and virtual
worlds can be platforms for engaging electors, exchanging political views,
provoking debate and sharing information on societal and political
questions. Challenges related to inclusion, cultural fragmentation, content
quality and security and privacy have been raised. A greater divide
between digitally literate users and others may occur and cultural
fragmentation may take place with greater individualization of the cultural
environment. Other challenges relate to information accuracy and quality
(including inappropriate or illegal content) where everybody can
contribute without detailed checks and balances. Other issues relate to
privacy, safety on the Internet and possibly adverse impacts of intensive
Internet use.

Opportunities and challenges for users, business and policy

The rapid rise of UGC is raising new questions for users, business and
policy. Policy issues are grouped under six headings: i) enhancing R&D,
innovation and technology, ii) developing a competitive, non-
discriminatory framework environment, iii) enhancing the infrastructure,
iv) shaping business and regulatory environments, v) governments as
producers and users of content, and vi) better measurement. Apart from
standard issues such as ensuring wide-spread broadband access and
innovation, new questions emerge around whether and how governments
should support UGC. The maintenance of pro-competitive markets is
particularly important with increased commercial activity and strong
network effects and potential for lock-in. UGC is also putting existing
regulatory arrangements and the separation between broadcasting and
telecommunications regulations to a test. With the emergence of
increasingly advertising-based business models and unsolicited e-mail and
marketing messages, rules on advertising will play a particular role in the
UGC environment (e.g. product placements, advertising to children). In
the regulatory environment important questions relate to intellectual
property rights and UGC: how to define fair use and other copyright
exceptions, what are the effects of copyright on new sources of creativity,
and how does IPR shape the coexistence of market and non-market
creation and distribution of content. In addition, there are questions
concerning the copyright liability of UGC platforms hosting potentially
unauthorized content and the impacts of digital rights management. Other
issues include:

• how to preserve freedom of expression made possible

by UGC,
• information and content quality/accuracy and tools to
resolve these,
• adult, inappropriate, and illegal content and self-
regulatory (e.g. community standards) or technical
solutions (e.g. filtering software),
• Safety on the .anonymous. Internet,
• dealing with new issues surrounding privacy and
identity theft,
• monitoring the impacts of intensive Internet use,
• network security and spam, and
• Regulatory questions in dealing with virtual worlds
(taxation, competition etc.). Finally, new statistics and
indicators are urgently needed to inform policy.

DRIVERS OF USER-CREATED CONTENT

Technological drivers:

Starting from the mid-to-late 1990s, with the first availability of household
broadband, penetration grew steadily within the OECD countries and
worldwide. The global transition to broadband drastically altered the
environment in which users could create, post, and download content.
Before the limitations of dialup connections meant that the vast amount of
user content creation was restricted to text and simple, low quality
graphics. With high speed connections, users can quickly upload larger
media files. As fiber to the home is becoming increasingly important for
broadband access15, as wireless broadband is becoming more popular and
as newer-generation ubiquitous networks spread, this trend is likely to
amplify. Furthermore, during this time frame, processing speeds, and hard
drive and flash memory capacities greatly increased while costs for the
latter and consumer electronics needed to record UGC decreased (such as
higher quality digital cameras, digital video recorders and mobile phones).
New mobile phone platforms with High-Speed Uplink Packet Access
(HSUPA) allowing for higher uplink data transmission speeds are
expected to drive mobile UGC further as users are able to send and receive
cell phone clips and pictures at higher speeds. More accessible software
tools, such as html-generating software, but also software which enables
users to edit and create audio and video without professional knowledge
are a significant driving force. While most UGC is posted in various
places on the Internet, the challenges of locating, distributing, and
assessing the quality of the content has spurred on various other new
technologies which facilitate tagging (i.e. the association of particular
keywords with related content), pod casting, group rating and aggregation,
recommendations, content distribution (e.g. RSS16 feeds which ensure
that users automatically receive new posts and updates and file-sharing
software), technologies allowing for interactive web applications and
filtering such as Ajax, RSS, Atom, and content management systems
needed for blogs and wikis (see Annex Box 6 and OECD, 2006b). The rise
of sites and services hosting UGC was an additional necessary driver as
not every user necessarily had available server space or the technical skills
to post his or her work. As the quality of cameras and video capabilities on
phones grows and as phone networks are increasingly integrated with the
Internet, this category of content is spreading more widely (e.g. mobile
blogging). New video platforms such as Internet Protocol television
services (e.g. transmission of TV programming over broadband using
peer-to-peer technology and technologies allowing for high-resolution
broadband video transmission on television screens) that will feature UGC
and video game consoles geared to UGC can be expected to provide
additional impetus.

Social drivers:

The increased use of broadband, the desire for interactivity, the

willingness to share, to contribute, to create online communities are
changing the media consumption habits of Internet users (in particular of
younger age groups, i.e. 12-17 years old). The social factor is likely to be
one of the most important drivers in the years to come. UGC is only
starting to move mainstream with currently only a limited number of
young, male early adopters and highly ICT-skilled persons using the
Internet in this way. According to surveys, almost three-quarters of people
who publish amateur video content online are under 25, and of those, 86%
are male.17 At the moment, user-created video is viewed by a large
number of people but created by only a few users.

Box 1. Examples of drivers of user-created content

Technological Drivers

Increased broadband availability Increased hard drive capacity and

processing speeds coupled with lower costs Rise of technologies to create,
distribute, and share content Provision of simpler software tools for
creating, editing, and remixing Decrease in cost and increase in quality of
consumer technology devices for audio, photo, and video Rise of non-
professional and professional UGC sites as outlets

Social Drivers

Shift to younger age groups (.digital natives.) with substantial ICT skills,
willingness to engage online (i.e. sharing content, recommending and
rating content, etc.) and with less hesitation to reveal personal information
online Desire to create and express oneself and need for more interactivity
than on traditional media platforms such as TV Development of
communities and collaborative projects Spread of these social drivers
throughout older age groups and to fulfil certain societal functions (social
engagement, politics and education)

Economic Drivers

Lower costs and increased availability of tools for the creation of UGC
(e.g. for creating, editing, hosting content) and lower entry barriers
Increased possibilities to finance related ventures and UGC sites through
venture capital and other investment possibilities Lower cost of broadband
Internet connections Increased interest of commercial entities to cater to
the desire for user-created content and the long tail economics (including
mobile operators, telecommunication service providers, traditional media
publishers and search engines) Greater availability of money related to
advertising and new business models to monetize content

Institutional and Legal Drivers

Rise of schemes which provide more flexible access to creative works and
the right to create derivative works (e.g. flexible licensing and copyright
schemes such as the Creative Commons license) 18 Rise of end-user
licensing agreements which grant copyright to users for their content

Economic drivers:

In the last months, an increased desire to monetize UGC has built up.
Especially media companies, the communications industry (in particular
mobile operators), and other commercial players have identified the
revenue potential behind UGC and are investing substantial amounts of
money. The fear of losing revenues due to decreased interest in traditional
media forms and the desire to cater to the so-called .long tail. has served as
important motivation.19 This financial interest is also reflected in a further
driver: the growing amount of financing and venture capital available to
boost UGC related sites and services. In the United States, for instance,
related participative web Internet technologies are said to have contributed
to venture capital funding, the latter increasing by more than 40% from the
third quarter of 2005 to the third quarter of 2006. According to some
estimates, in the first half of 2006, venture capitalists put USD 262 million
in commercial agreements related to participative web technologies.20
While significant, however, total venture capital (VC) invested in ICT and
media are still only about a quarter of the investments at the height of the
VC boom in 2000.

Legal and institutional drivers: The rise of new legal means to create
and distribute content has also contributed to the greater availability and
diffusion of UGC. Flexible licensing and copyright schemes such as the
Creative Commons licenses allow easier distribution, copying and
depending on the choice of the author. the creation of derivative works of
UGC.21 Increasingly search engines and UGC platforms allow for
searches within Creative Commons-licensed photos, videos or other
content allowing other users to use, build on them while creating new
content. The rise of end-user licensing agreements (e.g., Second Life)
which grant copyright to users for their content may also be a significant
driver. scope of this study.

UGC platforms

Blogs

A blog is defined as a type of webpage usually displaying date-stamped

entries in reverse chronological order (Gill, 2004; OECD, 2006b). It is
updated at regular intervals and may consist of text, images, audio, video,
or a combination. Blogs serve several purposes: an important one is
delivering and/or sharing information. Installing blogging software. e.g.
Movable Type, WordPress and Nucleus CMS . on a server is necessary to
blog. However, blog hosting services (e.g. Blogger) make it easier by
removing the technical burden of maintaining a hosting account and a
software application. Often blogs are a launch pad for sharing of other
UGC types, i.e. blogs typically refer to other blogs, music or discuss user-
created videos. In 2007, video blogging is expected to grow very
significantly. Some sources estimate that there were up to 200 million
blogs in existence in 2006 (Blog Herald); the blog tracking site Technorati
tracked 55 million blogs in December 2006 and estimates that number of
blogs has doubled approximately every 6 months over the last two
years.31 An approximation of the language distribution shows that nearly
75% of all blogs are written in English, Japanese or Korean.32 Blogging is
also very popular in countries such as China, India, and Iran. The
popularity of blogs in Asia is also buttressed by a recent Microsoft survey
which shows that nearly half of all Asian Internet users have a blog, that
young users are most prevalent (56% of all bloggers are under 25, while
35% are 25 to 34 years old, and 9% are 35 years old and over) and that
women are very active (55% of bloggers in Asia were found to be female).
Blogging is considered a form of expression and as a means to maintain
and build social connections (74% find blogs by friends and family to be
most interesting).
Wikis and Other Text-Based Collaboration Formats

A wiki is a website that allows users to add, remove, and otherwise edit
and change content (usually text) collectively. Users can instantly change
the content of the pages and format them with a very simple tagging
language. Initial authors of articles allow other users to edit .their. content.
The fundamental idea behind wikis is that a vast number of users read and
edit the content, thus potentially correcting mistakes. Various sites provide
wiki hosting. Sometimes termed .wiki farms., these sites enable users and
communities to create their own wiki for various purposes. In addition,
forms of collaborative writing have developed alongside wiki technology
(e.g. Writely, owned by Google, and Writeboard).34 One frequently cited
example is the freely accessible online encyclopaedia Wikipedia. It
comprises 4.6 million articles in over 200 languages (Wikipedia, 2006).
Fifteen of these languages had over 50000 articles, with the highest being
1.3 million articles in English. The vast majority of edits emerge from a
small percentage of users

Group-Based Aggregation and social bookmarking

This category of content is relatively new and consists primarily of group-

based collection of links to articles and media and/or group based rating of
such links, also referred to as new social content aggregators which build
on opinions and knowledge of all web users. Users generally collect these
links, tag them, rate them, and often times comment on the associated
article or media. Sites such as Digg specialise in the use of this model,
whereby users post news links to the site, and other users rate them by
adding their vote to it.35 Del.icio.us, a social bookmarking website, allows
users to post links to their favourite articles, blogs, music, recipes, and
more, and access them from any computer on the web.

Podcasting

Podcasting is a phenomenon that has emerged out of the combination of

the ease of audio production with technologies that allow for subscription
and syndication. The publish/subscribe model of podcasting is a version of
push technology, in that the information provider chooses which files to
offer in a feed and the subscriber chooses among available feed channels.
A consumer uses a type of software known as an aggregator, sometimes
called a podcatcher or podcast receiver, to subscribe to and manage feeds.
Wellknown podcast softwares are FeedBurner, iPodderX, WinAmp and
@Podder. Mobilcasting, i.e. receiving video and audio podcasts on mobile
phones, is expected to develop rapidly. Podcasting technology is also used
for content which does not come directly from users. Some surveys
estimate that 6 million Americans have listened to podcasts (Raine and
Madden, 2005). Popular download sites such as Apple iTunes hosted
almost 83 000 podcasts in March 2006 (up from 8000 one year ago. see
Annex Table 15 for the top categories).

Social Networking Sites

Social networking sites (SNS) enable users to connect to friends and

colleagues, to send mails and instant messages, to blog, to meet new
people and to post personal profiles with information about them.

Profiles can include photos, video, images, audio, and blogs. In 2006,
MySpace had over 100 million users (although not all are active) and is
now the most popular website in the United Sates according to Hitwise
Other popular SNS include Friendster, Orkut and Bebo. Facebook is a
popular SNS on US college campuses with over 9 million users. Korean
Cyworld is reported to have 18 million users in the country, or 40 percent
of the population and 90% of Internet users in their twenties (Jung-a,
2006). Mixi, a SNS in Japan, has more than 4 million users.36 Some video
sharing sites such as Grouper are allowing users to share videos privately,
furthering the social network dimension of video sharing sites. Certain
SNS sites are dedicated to particular topics, the sharing of knowledge, or
even purchases of products and services. For instance, user-created
content on the Internet is transforming how users research, search and
decide on their travel plans. Yahoo.s Trip Planner, Google.s Co-Op,
TripAdvisor.s Inside, VirtualTourist.s Trip Planner and others are online
tools that lets vacationers share travel journals, itineraries and photos.
Similar social networking tools are used for real estate purchases

Virtual World Content

Virtual world content is created in the context of an online game-like 3D
digital environment to which users subscribe. Not all online multiplayer
games allow for users to create their own content. Yet virtual
environments such as those in Second Life, Active Worlds, Entropia
Universe, and Dotsoul Cyberpark provide users with a scripting language
and integrated development environment which enables them to build new
objects (Mayer-Schoenberger and Crowley, 2005), often permitting them
to keep the associated intellectual property rights (see Figure 4 for an
exhibition in Second Life)37. In January 2007, Second Life claimed over
880 000 users in more than 90 countries who logged on in the last 60 days
(and 2.5 million total residents).38 Owning land in Second Life allows
users to build, display, and store virtual creations, as well as host events
and businesses or real university courses. Further, it has an economy based
on so-called Linden Dollars where more than USD 130 million per year is
contracted between players. Users make money while selling items created
and land purchased earlier (e.g. clothes for avatars).

Monetization of user-created content and new business models

Commercial entities, including media companies, are playing an

increasing role in supporting, searching, aggregating, filtering, hosting,
and diffusing UGC. Direct revenue generation from this phenomenon for
the creators of the content or for established commercial entities (e.g.
media companies, platforms hosting UGC) are only starting to emerge.
Until recently, sites hosting UGC were essentially non-commercial
ventures of enthusiasts or start-ups with little or no revenues but with
increasing finance from venture capitalists. These sites often did not have
business plans showing how revenues or profits would be produced, some
losing significant money day-on-day due to the high bandwidth costs.
Rather their objective was to increase the user-base by appealing to ever-
greater audiences and users, potentially with an eye to selling their
business or starting to implement business models at a later stage. Yet
when projects reach a certain size considerable financial resources are
necessary for the technology, bandwidth and organisation to keep it going.
Also, given that many UGC platforms host unauthorised content from
third parties, they face challenges with respect to remunerating the content
originators UGC sites are also increasingly subject to business and
investor interests. Mixi, the Japanese SNS site, for instance, and Open
BC/Xing, a German business SNS site, have been listed on stock
exchanges. Moreover, established media conglomerates but also Internet-
based companies have been increasingly interested in deriving revenues
from UGC sites. Firms such as News Corp, Google, Sony and Yahoo have
invested significant amounts of money to buy UGC sites (see Table 5).39

Table 6. Selected, recent acquisitions of UGC platforms

Date Acquirer Acquired Type Price in USD millions

Sept. 2005 News Corp MySpace SNS 580

Oct. 2005 Viacom/MTV iFilm Video 49

Aug. 2006 Sony Grouper Video 65

Aug. 2006 Viacom/MTV Atom Films Games, films, animations

Sept. 2006 Yahoo Jumpcut Video editing Undisclosed

Oct. 2006 Viacom/MTV Quizilla.com Text, quizzes, images Undisclosed

Oct. 2006 Google YouTube Video 1580

Nov. 2006 Google Jotspot Wiki Undisclosed

Source: Company information and press reports.

These increasing sums being paid for acquiring UGC sites and the
increased venture capital flowing into these areas have triggered renewed
concerns about the build-up of a new Internet bubble. As in the late 90s,
mainly, the size of the web site audience / .user engagement. (eyeballs.,
traffic and page views and click-throughs) are drawing the investors
attention. Again, earnings and revenues do not seem to be the prime
concern. The large sums invested in buying up UGC start-ups is leading to
concerns of a second Internet bubble. While this cannot be excluded, in
some respects the environment for these investments has changed with
new possibilities associated with online advertising, new possibilities to
deliver high-quality content through broadband, changed usage habits and
increased ICT skills, etc. Furthermore, as mentioned before, the overall
sum of venture capital flowing into such investments in 2006 is still
relatively small, i.e. only about 40% of average investments between 1999
and 2001 in the US. Spurred by an increased interest in monetizing UGC
and related acquisitions, new models are developing on both the host- and
creator-side of UGC. While the value chain (i.e. the entities and the
activities to produce and diffuse the content) are largely unchanged
compared to Figure 6, new models aim at the monetisation of this content.
At the point when consumers access the UGC platform or a particular
video, they donate, pay fees or subscribe to access the content or they are
confronted with online advertising. New interactions between the UGC
and the established media value chain are emerging as UGC platforms are
screened for promising talent and content which are later aired or
integrated in the traditional media publishing value chain (e.g. sometimes
in existing cable or TV subscriptions that users may already subscribe to).
New entities are thus involved in the provision and distribution of the
content, mainly the advertisement industry, search engines, and media
firms who own UGC platforms or who select content from them. When
payments are involved, financial service providers and the associated
technologies enter the value chain. As increasingly there is a need for tools
to find content (e.g. search engines adapted to music, video and other
multimedia content and user ratings and recommendations), the role of
search portals and content aggregator of multimedia content is growing.
Digital rights management or watermarking technologies may increasingly
be used to assure that content is not accessed illegitimately. Different
UGC types (e.g. blogs versus video content) have different albeit very
similar approaches to monetizing UGC. These models can be paired with
approaches that remunerate the creators of content (discussed later in the
section on economic impacts). Whereas the interest in monetizing UGC is
growing, most models are still in flux and few providers generate
substantial revenues or profits. At this stage there are essentially five
approaches to monetize UGC, a combination of which are illustrated by
three concrete cases in Table 6 (see also VTT Technical Research Centre
of Finland, 2007).

Voluntary donations
In a frequently utilised model, the user makes the content freely available,
like that of a musician performing on the street, but would solicit
donations from users. Such models are currently in place on many sites
with a .donate.-button, often encouraging those accessing the content to
donate to the creator or the institutions (usually online by credit card or via
PayPal). A significant number of blogs, wikis, online video and online
music creators ask for donations from their audience for activities such as
web hosting and site maintenance, or for the content as such. A common
feature of certain non-commercial UGC sites is that they manage to run
their operations with quite limited funding (often only the time invested by
volunteers and users). Wikipedia, for instance, spent less than USD 750
000 in 2005 to sustain its growth and it frequently draws on donations to
finance these costs (beyond the donation of time and expertise which are
also donated by its users).40 Blogging and citizen journalism sites such as
Global Voices Online are supported by bloggers who commit their time
but its operating expenses are funded by grants from foundations or even
news companies (such as Reuters in the case of Global Voices Online).
Such donations of time or money have been the cornerstone of Internet
developments in areas such as the open source movement (e.g. for the
support of free Internet browsers) or other user-driven innovations on the
Internet. New voluntary payment models for the promotion of UGC
content and platforms based on reciprocity, peer-based reputation and
recommendations have been proposed (Regner et al, 2006).

Charging viewers for services

Sites may charge those viewing UGC, whereas the posting of content is
free. This can take the form of pay-per-item or a subscription model. The
popularity of the UGC has to be high to be able to charge as competing
sites are free and as making small online payments and entering credit
card information may be too burdensome or impracticable.

Pay-per-item model: In that scenario, users make per-item (micro)-

payments to UGC platforms or to the creators themselves to access
individual pieces of content. iSTockphot, for instance, offers photographs,
illustrations and stock video from its user-generated stock for USD 5 each.
Platforms exclusively hosting UGC or established digital content sale
points (such as online music stores, video-on DSTI/ demand platforms, or
online retailers), for instance, could offer UGC as part of their repertoire
on pay-per item terms. The fact that no shelf space is needed to stock a
variety of content facilitates this model.

Subscription model: This model would entail consumers paying to

subscribe to services offering UGC. Yet paying a subscription to access
other’s content is rarely used as a model. Rather users pay a subscription
for enhanced hosting and other services for one’s own content and access
to other’s content. One of these models involves two-tiered subscription
services, whereby a user may opt for a basic account free of charge that
provides a set amount of services or for a pro account that users pay a
subscription or other fee for. The pro accounts provide enhanced features,
more (or even unlimited) hosting space, and other options that are
attractive to the user.41 A new approach involves a hosting-based model
with a cooperative element, such as Lulu.TV. Users pay for the service
provided by the site, but are also remunerated on the basis of the
popularity of their content (see later discussion on this point). The
bundling of UGC into existing subscriptions and associated payments may
be an easier option. Cable TV operators, Internet Service Providers (ISPs),
digital radio services and other media outlets derive most of their revenue
through monthly subscription fees paid by the users (e.g. EUR 29.99 for a
monthly Internet triple play offer in France). To remain attractive to users,
such operators could opt to carry UGC, either by creating special channels
exclusively devoted to UGC (such as the case with FreeTV in France) or
by airing a selection of UGC on the regular programs. In both cases, users
pay for the UGC content via their usual ISP or cable subscription.

Table 7. Three business model cases: Blogs, photos and video

Citizen journalism:

AgoraVox (France)
AgoraVox is a European site supporting .citizen journalism. which is
currently based on voluntary in-kind contributions. On voluntary basis
users submit information and news articles. The submitted content is
moderated through the small AgoraVox staff and volunteers. Readers also
feedback on the reliability of the information. Despite its low-cost model,
AgoraVox is aiming to generate revenues through online-advertising in
the near future. Similar citizen journalism sites such as OhmyNews in
Korea are remunerating their writers. OhmyNews redistributes advertising
revenues to writers for very good articles. On OhmyNews readers also
directly remunerate citizen journalists by giving them tips through a
micro-payment system. Photo: Flickr (US) Flickr derives its revenues
from advertising and subscriptions. A free account provides the possibility
to host a certain number of photos. While searching or viewing photos,
advertising are being displayed. This revenue is not being shared with
users. A pro account for USD 24.95 can be subscribed to offering
unlimited storage, upload, bandwidth, permanent archiving and an ad-free
service. As Flickr is part of Yahoo! it also enhances membership and
traffic to other Yahoo! sites. Similar photo sites such as KodakGallery are
owned by firms in the photography business. Users can create free
accounts. Revenues are being generated through the sales of value-added
photo services (e.g. purchasing of prints).

Video: MyVideo

(Germany)

The online video sharing site MyVideo derives its revenues mostly from
advertising and from licensing its content to third parties. Recently,
ProSiebenSat1 Media, Germany.s largest commercial TV Company, has
bought a 30% stake in MyVideo. The objective is to secure a share of
Internet advertising, to cross-promote content (UGC content on TV, and
TV content on UGC platforms) and to identify interesting content for
traditional media publishing (e.g. Hit talent search show). Video sites such
as YouTube have also started licensing content to telecommunication
service providers.

Source: OECD based on company information and press reports.

Advertising-based models (.Monetizing the audience via advertising.)

Advertising is often seen as a more likely source of revenue surrounding
UGC and a significant driver for UGC. Models based on advertising
enable users and hosts to preserve access that is free of charge to the
content while bringing in revenue. The economics of such a service are
often compared to free web mail where users get a free service, and
owners of the service get to serve ads to this audience. Payment for the
advertising depends on numerous factors: number of users on UGC sites,
related web site usage (dwell time on site, depth of visit / page views per
session / share of repeat visits), or clicks on the actual advertisement
banner leading the user to the webpage of the brand being advertised.
Viable sustainable business models are only likely to work with a large
enough user bases to attract enough advertisers and actions by users
generating revenue flows for the site. Services that host UGC make use of
advertising on the site (including banners, embedded video ads and
branded channels or pages) to generate revenue. The advertisements can
be specific to an audience most likely to be attracted by certain UGC
platforms (often popular, young target groups) or to certain content being
watched by the user. When users search or watch a particular video,
related advertising is shown on the side bar, i.e. banners or short trailers
start as the computer cursor moves across a banner.

Many UGC platforms such as Fanfiction.Net are relying on services to

drive advertisement revenues (e.g. Google AdSense, Microsoft, or the
service provided by the UGC hosting site itself such as FeedBurner Ad
Network for blogs). Google AdSense automatically delivers text and
image ads that are targeted to the UGC site, the requested UGC content,
the user’s geographic location and other factors (for example, travel ads
for China when searching for the keyword .China. on a video site).42
When users click on the ad, that advertisement service receives per-click
revenues from the company being advertised. In turn, it then pays the
UGC site hosting its ads. Some UGC sites are also redistributing part of
this advertising money with those creating or owning the content. These
models provide independent UGC sites (some owned by individuals) with
access to a large base of advertisers.

Advertising may also be placed within the content, such as within a video.
Popular video podcasts also incorporate advertisements where users can
click to sites from within the video. Increasingly, .branded channels have
been launched on UGC platforms where users can view content from a
special brand or media publisher. Virtual worlds like Calypso allow firms
to create and display advertisements.43 It is expected that sophisticated
targeting techniques will increasingly enable advertisers to create targeted
ad messages, rather than the interruptive spots used by most sites. The
quality of the targeted nature of the advertisement will depend on how
well videos or UGC is paired with relevant advertisements.

Currently, advertisements are often displayed on the basis of tags and

keywords which uploaders create. These may be more or less reliable with
some users not creating keywords or using misleading ones to attract more
traffic. UGC platforms have already received substantial up-front revenues
from third players wanting to

advertise to this community. In August 2006, Google agreed to deliver at

least USD 900 million in ad revenue over three and a half years to News
Corp. for the right to broker advertising that appears on MySpace and
some other sites (van Duyn and Waters, 2006). Microsoft Corp. also
recently agreed to be the exclusive provider of advertising to Facebook
(Sandoval, 2006a). Although most of the hopes to monetize UGC are
currently being placed on purely advertising-related business models, it
will take time to show whether these models will work (c.f. also VTT
Technical Research Centre of Finland, 2007 which argues that social
media cannot fully flourish on ad-based models). Advertisers are
concerned that the user audience may have grown accustomed to free
content and will migrate to ad-free sites. Also some advertisers are
concerned to be randomly associated with UGC they cannot control or
foresee (e.g. a car advertisement being shown before a UGC video about a
car accident or other inappropriate content).

Licensing of content and technology to third parties:

Increasingly UGC is being considered for airing on other channels and this
act of licensing content to third parties (e.g. television stations) may be a
source of revenue. As elaborated later, according to most terms of services
of UGC sites, users agree that they have given the site a licence to use the
content without payment, sometimes reserving the right to commercially
exploit the work.44 Sometimes this may include the right of the UGC site
to licence the content to third parties but a revenue sharing model between
content creators and UGC site may apply. Increasingly deals to licence
content to third parties or to cooperate with third parties to share the
content involve mobile carriers (e.g. the recent Verizon and YouTube
.Watch on Mobile. service).

Finally, UGC platforms can enter into commercial agreements with third
parties to provide their technology to the latter (e.g. DailyMotion entering
a commercial agreement with the French ISP Neuf Telecom to provide its
video sharing service technology). Some UGC platforms (e.g. On2 Flix)
are more back-end service providers to facilitate the process of UGC video
services of third parties.

Selling goods and services to community (Monetizing the audience via

online sales)

Another option is to capitalize on the large, captive user base and market
own or third party products to users. Due to the network effects,
sUGCessful UGC sites are likely to have a large user base. This large
audience can be monetized with UGC sites selling items or services
directly to their users. Similarly to the above examples in the pay-per-item
or the subscription section, blogging, photo sharing and other sites may
sell particular one-off or continued services to their users. But UGC
platforms such as virtual worlds or social networking services also allow
them to sell the use of online games, avatars, virtual accessories or even
virtual land to their users. Korean social networking site CyWorld, for
instance, receives considerable revenues from the sale of digital items
such as decorations for a user profile or furniture for one.s virtual
.miniroom..45 Users use Acorns as currency in the CyWorld Shop
purchased via credit card. UGC sites can also cooperate with third parties
to monetize their audience via allowing the latter to sell directly to their
users while taking a share of the revenue. For instance, the My purchase
service of MySpace will provide the interface for creators to sell their
music, taking a portion of sales revenues in exchange. The popular
Japanese social networking site Mixi has several approaches, one of which
is to allow users to rate and review books CDs, DVDs, games, electronics
and other items and linking users directly to Amazon Japan with one click
to purchase those items (calling this .social commerce.) or to listen to
music which can later be bought over iTunes. UGC platforms could also
allow for transactions amongst its users while taking a share of the
revenue. Depending on the terms of service, other business models may
involve the selling of anonymous information about users and their tastes
and behavior to market research and other

Copyright Laws

However such companies like Service provider, myspace, etc have been
criticized for failing to ensure its contents to be in consonance with the
laws of copyright. At the time of uploading a video, users are shown the
following message: “Do not upload any TV shows, music videos, music
concerts or commercials without permission unless they consist entirely of
content you created yourself.” The Copyright Tips page and the
Community Guidelines can help determine whether any content infringes
someone else's copyright. Despite this advice, there are still many
unauthorized clips from television shows, films and music videos on
Service provider, Myspace, etc. These sites allegedly do not view videos
before they are posted online, and it is left to copyright holders to issue a
takedown notice under the terms of the Digital Millennium Copyright Act.
Therefore, Organizations including Viacom, Mediaset and the English
Premier League have filed lawsuits against Service provider, Myspace,
etc. claiming that it has not done enough to prevent the uploading of
copyrighted material. Viacom, demanding US$1 billion in damages, said
that it had found more than 150,000 unauthorized clips of its material on
Service provider that had been viewed "an astounding 1.5 billion times".
Service provider responded by stating that it "goes far beyond its legal
obligations in assisting content owners to protect their works". Since
Viacom filed its lawsuit, Service provider has introduced a system called
Video ID, which checks uploaded videos against a database of
copyrighted content aiming of reducing copyright violations by its users.
Intellectual property rights and user-created content

Copyright law is intended to encourage the creation and dissemination of

works of authorship and thereby to promote cultural and economic
development. From an economic perspective, copyright is designed to
provide exclusive rights for a limited time to authors to recompense their
creative effort in return for enabling their works to be widely appreciated
and to encourage further creativity. This section discusses the salient
intellectual property rights (IPR) issues in the areas of UGC and points to
areas where further work may be needed. For a work to enjoy copyright
protection, it must be an original creative expression of the author.
Generally, copyrights confer to authors and/or right-holders a set of
exclusive rights, i.e. the control over reproductions, the preparation of
derivative works (i.e. adaptations), distribution to the public, public
performances and public display. In some countries copyrights are also
intended to protect the rights of integrity and attribution sometimes
identified as the moral rights of authors (i.e. ability of authors to control
the eventual fate of their works). These rights expire when the copyright
term ends and a work falls into the public domain. Moral rights may
continue even after the economic rights have expired (for example, in
France). Copyright regimes in OECD countries aim at balancing a
creator’s exclusive rights and the public interest in the creation, access to
and wide dissemination of knowledge and creative works. This is pursued
through exceptions and limitations to the creator’s rights. These
exceptions and limitations may be specific statutory exceptions and
limitations which may or not include fair use and fair dealing principles.
In addition, information in the public domain is not subject to copyright
protection. Under certain circumstances, exceptions and limitations allow
the reproduction and adaptation of copyrighted works without the
authorization of rights-holders. Both exclusive rights and exceptions and
limitations have been clarified to apply to existing norms in the new
digital environment, notably through the ratification of the WIPO Internet
Treaties78 (see WIPO, 2003; OECD, 2005b). The Recommendation of the
OECD Council on Broadband Development recommends that Member
countries should implement regulatory frameworks that balance the
interests of suppliers and users, in areas such as the protection of
intellectual property rights, and digital rights management, without
disadvantaging innovative e-business models.79
Copyrights in the context of user-created content

Copyright issues related to UGC arise in a number of different ways. At

the outset, it may be helpful to distinguish between original works created
by users and works created by users from pre-existing works (commonly
called derivative works). Original works identified as UGC raise the same
copyright issues as original works created under other circumstances and
can present relatively familiar issues of control, commercial exploitation,
and protection in the online environment. Derivative UGC works (such as
fan fiction or a blog that incorporates some or all of a protected work)
highlights a difficult copyright issue, i.e. whether such derivative works
are acceptable uses permitted by the respective jurisdiction’s exceptions
and limitations (sometimes referred to as .fair use.) or an unlawful
infringement of the creator’s exclusive rights.

CASE: Lenz v. Universal Music Corporation:

In this case the US District Court for the Northern District of California
ruled that copyright holders must consider fair use before issuing
takedown notices for content posted on the internet. Stephanie Lenz
posted on Service provider a home video of her children dancing to
Prince's song “Let's Go Crazy” she could not have imagined her that
action of posting the video of her son would result in someone’s copyright
infringement . Universal Music Corporation sent Service provider a
takedown notice under the Digital Millennium Copyright Act (DMCA)
claiming that Lenz's video violated their copyright in the "Let's Go Crazy"
song. In September 2007, Prince released statements that he intended to
reclaim his art on the internet. In October 2007, Universal released a
statement amounting to the fact that Prince and Universal intended to
remove all user-generated content involving Prince from the internet as a
matter of principle Based on Prince's and Universal's statements, Lenz
argued that Universal was issuing takedown notices in bad faith, as they
attempted to remove all Prince-related content rather than considering the
merits of each work. Lenz claimed fair use of the copyrighted material and
sued Universal for misrepresentation of a DMCA claim. The court ordered
that copyright holders cannot order the removal of an online file without
first determining whether the posting reflected fair use of the material. The
court held that Universal had not in good faith considered fair use when
filing a takedown notice.
Original works created by users

A large amount of UGC consists in individuals or groups uploading their

own original content (e.g. photos, videos, art) to their personal blogs or
other platforms. The originality requirement to obtain copyright does not
necessarily imply an elevated standard of quality or effort (WIPO, 2006a).
The creators of works identified as UGC are automatically granted the
same exclusive rights as creators in other circumstances are granted.
Infringement issues surface when third parties exercise one or more of the
UGC creator’s exclusive rights without permission or the use is not an
exception or limitation (sometimes referred to as .fair use.). In the same
vein as for other forms of content creation, copyright for UGC can be
considered a catalyst to the production of original works. This holds
especially true when creators are interested in pursuing some gainful
activity through the commercialization of their works. Through the control
of reproduction and derivative work, these creators also retain control of
the way their work is used (including how it is commercialized) and can
hence avoid, for example, unwanted modification of their works.
Alongside traditional copyright protection, creators or UGC platforms
may . in parallel or in addition also opt for different licensing schemes,
such as the Creative Commons license. Under these licenses others are
automatically allowed to copy and distribute a work provided that the
licensee credits the author/licensor. In addition, other rights may be
reserved or waived (e.g. right to create derivatives on noncommercial
terms). Examples would be an attribution license, whereby others can
copy, distribute, and remix the work as long as the original author is
attributed. While such licensing schemes may permit copying and non-
commercial re-use, original authors can specify certain restrictions which
have to be observed by those interested in creating derivative works.

Derivative works:
 Because of copyright law, creators of content, identified as UGC, have to
respect the exclusive rights of other content producers, i.e. of those who
choose to work within and those who choose to work outside professional
routines and practices (or some combination thereof). Copyright
infringement issues may arise whenever someone who is not the copyright
holder (or a licensee) exercises an exclusive right, such as adapting the
work to create a derivative work, be it for commercial or noncommercial
purposes. Copyright issues may thus arise when users create content by
using in part or in full pieces of others work without authorization or
where the use does not fall within an exception and limitation. Examples
which entail replicating or transforming certain works are the use of
particular characters (e.g. from Lord of the Rings) in writing fan fiction,
using certain images and texts while blogging (e.g. using press agency
pictures when blogging, using large excerpts of news reporting video
footage in one’s news commentary), creating lip-synching videos or music
mash-ups with samples of existing songs, and the creation of UGC videos
while using copyrighted characters, texts or video images. Copyright laws
typically limit in one way or another the copyright holder’s ability to
control derivative works.80 Depending on the OECD country, .fair use.-
and .fair dealing.-principles and/or specific statutory exceptions allow
courts to avoid the rigid application of the copyright statute’s exclusive
rights when, on occasion, it would discourage creativity, and the public
interest in or wide dissemination of knowledge through copyrighted
works. Under these circumstances, portions of works can be used without
permission and without payment if their use is within one of the copyright
exceptions and limitations. Most copyright acts contain limitations for the
following activities: personal use, quotation and criticism, comment,
parody, news reporting, teaching, scholarship or research, educational and
library activities, and. depending on the country in question other forms of
use. In all OECD countries, the latter exceptions are varied reflecting local
traditions and are decided on case-by-case basis. These differences
between fair use and copyright limitations are described in Box 4.81 In
general, when large portions of a work are taken over or when commercial
implications arise, fair use exemptions are less likely to apply (see Gasser
and Ernst, 2006).

Copyrights and the liability of UGC platforms:

As discussed above, the growth of UGC is accompanied by the emergence
of many sites and online intermediaries hosting the content which users
upload. In some ways their existence drives the growth and access to UGC
(and vice versa). From a copyright perspective, however, the question
emerges in which way online intermediaries are liable for copyright
matters. For example, copyright issues arise when users post unaltered
third party content on UGC platforms without authorization (e.g.
uploading parts of popular TV series without the explicit consent of the
content owner). This activity is outside the scope of UGC as defined in
this study, but it is still a key concern of right holders, who may seek to
hold the UGC platforms directly or indirectly liable for copyright
infringement. Additionally, posting UGC that is created through the
adaptation of pre-existing work may also raise copyright issues for UGC
platforms, e.g. whether the particular use is permissible under exceptions
and limitations such as fair use, and if not permissible, whether the UGC
platform is liable for direct or indirect copyright infringement as a result or
otherwise exempted from liability for the Infringement. Right holders are
beginning to engage in relevant actions against potential infringement on
UGC platforms. Associations representing content owners have sent take-
down notices and have asserted potential lawsuits against UGC
platforms.100 An example of interactions between right holders and a
UGC site is the recent legal case between YouTube and the Japanese
Society for Rights of Authors, Composers and Publishers (JASRAC)
which complains about music videos being uploaded to YouTube without
right holders permission. Major media companies have also requested
online video sites to remove their content Some UGC platforms have
defended the posting of unaltered third party and alleged infringing
derivative UGC content on their platforms by arguing that they are similar
to Internet Service Providers (ISPs) who can, under certain circumstances,
be exempt from liability for content uploaded by their users (see Litman,
2000). The essential question is whether online intermediaries be treated
as electronic publishers, and thus liable for content on their servers
(Koelman and Hugenholtz, 2003; WIPO, 2005). As shown in Box 5,
national legislatures have dealt with the liability of online intermediaries
in different ways, which raises issues for internationally operating online
intermediaries.

Copyright liability of online intermediaries

In their copyright or e-commerce laws many OECD countries have
addressed the liability of ISPs and other information intermediaries who
merely deliver content by creating liability exceptions (.safe harbour.
under the US Digital Millennium Copyright Act101) for these entities.
This is an exemption from secondary liability but requires the online
service providers to remove infringing materials upon notice. In the U.S.
Digital Millennium Copyright Act, for instance, following the .notice and
take down procedures. ISPs are responsible for taking down unauthorized
copyrighted material when a legitimate claim of a right holder is presented
to them.102 They are also responsible for terminating access by repeat
infringers. Similar principles on the liability of online intermediaries also
exist in Australian Copyright law, i.e. providers are not obliged to actively
self-monitor for infringing activity. The EU Electronic Commerce
Directive 2000/31/EC also establishes an exemption from liability for
intermediaries where they play a passive role as a .mere conduit. of
information from third parties and limits service providers. liability for
other .intermediary. activities such as the storage of information.104 No
general monitoring obligation can be imposed on the service provider.105
Activities which involve the modification of transmitted information, for
instance, do not qualify for this exemption. This EU Directive also
encourages hosting services providers to act expeditiously to remove or to
disable access to the information concerned upon obtaining actual
knowledge or awareness of illegal activities.106 Such mechanisms are to
be developed on the basis of voluntary agreements and codes of conduct
between all parties concerned.107 In addition, in EU Member States such
as Italy and France but also on the EU level, public-private partnerships
emerged regrouping ISP, right holders and the government to promote the
development of legal online content (OECD, 2005b). Some of the
resulting codes of conduct imply that upon notice ISPs should . while
respecting privacy laws - contact users uploading infringing material and
potentially terminate their accounts. Whether UGC platforms can be
treated as a .mere conduit. under exceptions for online intermediaries is an
ongoing question. As depicted in Table 9, most UGC sites specify that
users who post content are responsible for it. They must own all rights to it
or have express permissions from the copyright owners to copy and use
images. They may not violate or infringe upon the rights of others.
Moreover, the terms of service of UGC sites specify that when valid
notifications are received, the service provider usually pledges to respond
by taking down the unauthorized content.109 Then the owner of the
removed content is contacted so that a counter-notification may be filed.
 CHAPTER TWO

LAWS RELATING TO UGC (copyright):

“An artistic, literary or musical work is the brain child of the author, the
fruit of his labour and so, considered to be his property. So highly is it
prized by all civilized nations that it is thought worthy of protection by
national laws and international conventions.

-------JUSTICE CHINNAPPA REDDY IN Gramophone Co. vs.

Birendra Bahadur Pandey AIR 1984 SC 667.

In the modern world the law of copyright provides the legal frame work
not only for the protection of the legal beneficiaries of copyright, the
individual author, composer or artist, but also for the investment required
for the creation of works by the major cultural industries, publishing,
films, broadcasting, and the recording industries and also the computer
and software industries. The law of copyright is not only important for the
industries depending upon it for their livelihood, but also for the general
public which has to bear in mind that their acts may be within the preview
of the law. Every business has to keep in mind the implications of
copyright in its functions.

The term copyright derives from the expression “copy of words”, first
used in 1586. The Oxford English Dictionary defines copyright as the
“exclusive right given for a certain term of years to an author, composer
and artists which entitles them to print, publish and sell copies of the said
original work”.

In India, under the Copyright Act, 1957 the term copyright means-----

the exclusive right, subject to the provisions of this Act, to do or authorize

the doing of any of the following acts in respect of a work or any
substantial part thereof, namely:-

(a) in the case of a literary, dramatic or musical work, not being a

computer programme, -

(i) to reproduce the work in any material form including the storing of it in
any medium by electronic

(ii) to issue copies of the work to the public not being copies already in
circulation;

(iii) to perform the work in public, or communicate it to the public;

(iv) to make any cinematograph film or sound recording in respect of the

work;

(v) to make any translation of the work;

(vi) to make any adaptation of the work;

(vii) to do, in relation to a translation or an adaptation of the work, any of

the acts specified in relation

to the work in sub-clauses (i) to (vi);

(b) in the case of a computer programme,-

(i) to do any of the acts specified in clause (a);

(ii) to sell or give on commercial rental or offer for sale or for commercial
rental any copy of the Provided that such commercial rental does not apply
in respect of computer programmes where the programme itself is not the
essential object of the rental.”

(c) in the case of an artistic work,-

(i) to reproduce the work in any material form including depiction in three
dimensions of a two dimensional work or in two dimensions of a three
dimensional work;

(ii) to communicate the work to the public;

(iii) to issue copies of the work to the public not being copies already in
circulation;

(iv) to include the work in any cinematograph film;

(v) to make any adaptation of the work;

(vi) to do in relation to an adaptation of the work any of the acts specified

in relation to the work in

(d) In the case of cinematograph film, -

(i) to make a copy of the film, including a photograph of any image

forming part thereof;

(ii) to sell or give on hire, or offer for sale or hire, any copy of the film,
regardless of whether such copy has been sold or given on hire on earlier
occasions;

(iii) to communicate the film to the public;

(e) In the case of sound recording, -

(i) to make any other sound recording embodying it;

(ii) to sell or give on hire, or offer for sale or hire, any copy of the sound
recording regardless of whether such copy has been sold or given on hire
on earlier occasions;

(iii) to communicate the sound recording to the public.

Since the concept of U.G.C being a new and highly technical, not much
countries have come up with legislations for protection of copyright in
light of it.

Copyright problems in some respect are international problems. As

copyright as an intellectual property travels to other countries also easily
than other kinds of the intellectual property due to the technological
advancement, due to such rapid growth of technology, the field of
copyright has also opened up manifolds and in today’s generation of
internet addiction and easy availability, unauthorized copying of
copyrighted contents has also increased by way of downloading and in
some cases people try to exploit such contents by their unwarranted
distribution. This to some extent tends to beat the object of copyright laws,
which is to encourage authors, composers and artists to create original
works by rewarding them with the exclusive rights to commercially
exploit the work for a certain period of time. In other words object of
copyright is a monopoly restraining the public from unfairly making
available the original creation of any other person. Hence, the object of
copyright laws is to prevent the commercial exploitation of some one’s
original work by any other third party, however while dealing with the
cases of copyright infringement, it should also be borne in mind that said
is not allowed to be made instruments of oppression.( Lindley LJ. in
Hanfstaengl vs. Empire Palace (1894) 3 Ch 109 )

Future of copyright laws in India:

Since the development of information and communication technologies,

the arena of copyright has completely opened up, this requires the
Copyright Laws of the world to evolve and rely on the principles as ‘Fair
Use’ to deal with the un-enumerated possibilities and manner of copyright
violation through out the globe. These unavoidable requirements were
noticed by the World Trade Organization which enumerated two treaties
to deal with information technology and copyright violations.

Taking in view the recent developments in the electronic field, WIPO

proposed two treaties in 1996, The WIPO Copyright Treaty and the WIPO
Performances and Phonograms Treaty which entered into force on March
6, 2002, and May 20, 2002, respectively. Each treaty was required to be
ratified or acceded to by 30 countries, before it entered into force. Both
developing and developed countries have adhered to the treaties. The
object of these treaties is to accord right to the original creator that their
intellectual rights will be protected when their works are disseminated
through new technologies and communications systems such as the
Internet.

The treaties thus clarify,

i. That the traditional owner’s right of reproduction

continues to apply in the digital environment, including to
the storage of material in digital form in an electronic
medium.
ii. That the owners of rights can control whether and how
their creations are made available online to individual
consumers at a time and a place chosen by the consumer,
e.g., at home via the Internet.
The WCT protects literary and artistic works such as books, computer
programs, music, photography, paintings, sculpture and films. The WPPT
protects the rights of the producers of phonograms or sound recordings
(e.g., records, cassettes, CDs), as well as the rights of performers whose
performances are fixed in sound recordings.

However the provisions of these treaties need not be followed in stricto

senso and their application depends upon conditions and laws prevalent in
respective countries. To maintain a fair balance of interests between the
owners of rights and the consuming public, the treaties further clarify that
countries have reasonable flexibility in establishing exceptions or
limitations to rights in the digital environment. Countries may, in
appropriate circumstances, grant exceptions for uses deemed to be in the
public interest, such as for non-profit educational and research purposes.

Hence, the purpose of the two new WIPO treaties is to update and improve
the protection of the already existing copyright and related rights treaties
most of which date back more are more than 30 years old, when the
phenomena of computers and internet did not exist. The WCT and WPPT
contain a number of new standards and their purpose is to clarify the older
treaties, majorly Berne Convention and the Paris Act. The WCT and
WPPT provide responses to the challenges of the new digital technologies.
For this reason they have come to be known as the “Internet treaties.”

(For Indian perspective, refer to t-series case)

(This is the Indian perspective)

India’s entertainment industries have always had a major national

presence, and are now increasingly having a global presence as well. Ever
since Independence, their concerns have influenced the development of
the law of copyright. The legislature has responded to their concerns,
while the judiciary has developed the law. Our leading case in the law of
copyright—the Supreme Court’s decision in R. G. Anand vs. Delux Films
& Ors. (AIR 1978 SC 1614)—arose in connection with the entertainment
business exploring the fundamental copyright concept of reproduction in
the context of alleged non-literal reproduction of a play into a film. The
law continues to evolve, as new modes of exploitation become current,
giving rise to new situations.

With Indian’s ever increasing dependability on computers and the internet,

the scope of copyright infringement also is enlarging as it did in other
developed countries, which resulted in Grockster, Aimster, Viacom and
many other cases. However, Indian parliament has not enacted any such
specified law nor has it made any amendments in the current Copyright
Laws. But, the concept of infringement by UGC has reached the Indian
Territory also, which is evident in the recent sub-judice (pending) cases of
Super Cassettes vs. Youtube and Super Cassettes vs. Myspace in the Delhi
High Court in which the court has to refer to the principles laid down in
those foreign judgments, which might not always be effective in Indian
conditions and society. (Can be used in conclusion also)

Copyright Legislation in respect of entertainment industries:

The Copyright Bill, 1956, as introduced into Parliament would have

curtailed the rights of copyright owners to the point of obviating continued
membership of the Berne Convention. But the intervention of the film and
music industries, more than anything else, ensured the retention of Berne
standards in the statute and same was eventually enacted.

The amending Act of 1984 addressed a major concern of the 1980s, which
was the new ease with which copies made of films could be disseminated
on videotape, by extending the definition of “cinematograph film” to
cover analogous technologies.

The insertion of section 52A in the Copyright Act, requiring the statement
of copyright particulars on copies of films and sound recordings, and of a
corresponding penal provision in section 68A, were further measures
aimed at strengthening the hands of the film and music industries to cope
with the increase in production of pirated copies facilitated by new
technologies.

The amendments introduced by the Copyright (Amendment) Act of 1994

substantially concerned the entertainment industries. Nor is it true, as often
supposed, that they were driven entirely by the need to conform to the
TRIPS Agreement.
One group of amendments reflected the concern expressed by Justice
Krishna Iyer in his concurring judgment in Indian Performing Rights
Society vs. Eastern Indian Motion Pictures Association & Ors. (AIR 1977
SC 1443). Since the Copyright Act 1957 as then in force, retained an
orthodox definition of “musical work” as the mere written notation of
music, Indian musicians had no effective rights, either as composers or as
performers. The Act, as it then stood, did not take into account the fact
that notation in the Western style is not universal in Indian music, nor that
in Indian classical music every performance is simultaneously a
composition. The Act as amended, simplifies the definition of a “musical
work” to mean simply what the term is commonly understood to connote:
a “work consisting of music”; no statutory definition of “music” per se
being considered necessary. Additionally, the insertion of a performer’s
right in section 38, giving the performer the exclusive right to authorize
recordings of his live performances, provided additional protection to such
classical musicians.

Another major improvement in the law introduced by the 1994 amending

Act was the creation of a “rental right” for copies of films and sound
recordings (and also computer software). These amendments were very
relevant and welcome to the film industry in particular, since there existed
a widespread video-rental business (using videocassettes, at the time)
which was often based on creating multiple unauthorized copies for rental,
and which had seriously impacted the industry. Now, with new
provisions, it was no longer necessary for the copyright owner to prove
that a particular copy was illegally produced, and by whom. The mere
presence of videocassettes on display for the purpose of hire was now
sufficient to establish infringement. While the introduction of rental rights
was an obligation under the TRIPS Agreement, the rights as introduced by
the 1994 amendments abridged the normal exhaustion principle beyond
the strict requirements of TRIPS.

These are only some instances showing the responsiveness of the

legislature. There still remains a gap. Amendments to enable India to
accede to the WIPO Copyright Treaty (WCT) and the WIPO
Performances and Phonograms Treaty (WPPT), the “Internet treaties”, are
yet to be enacted.
Decisions of Indian courts vis-à-vis development of copyright
principles:

The courts have been responsive in granting injunctions against

infringements of copyrights. The Supreme Court has accepted the
necessity of injunctive relief for copyright infringement because
infringement of such rights, inherently, causes irreparable damage (Midas
Hygiene Industries P. Ltd & Anr.Vs. Sudhir Bhatia & Ors; 2004 (28) PTC
121(SC)).

In the Ten Sports Channel case (Taj Television Ltd. Vs. Rajan Mandan &
Ors; 2003 F.S.R. 22), the Delhi High Court granted a “John Doe” order of
injunction against unknown persons in elation to broadcasts of the World
Football Cup. In this landmark ecision, which was reported
internationally, the court recognized the exigency in which no other
remedies could provide effective relief to a TV channel to protect its
investment in a valuable live broadcast.

In recent years, as some films have become more topical and hyper
specific in relation to a particular topic than being general and random, the
courts have, for the first time in India, addressed issues of privacy and
defamation in relation to films in the Phoolan Devi case (Kaleidoscope
(India) P. Ltd. Vs.. Phoolan Devi & Ors.; FAO 305 of 1994, Delhi High
Court), the Delhi High Court applied the law of privacy to a biographical
film, in favour of the subject of the film. The case was widely reported in
Indian and international press.

In the Mangal Pandey case, the Delhi High Court held in favor of the film
makers in a defamation suit against the historical film The Rising,
upholding the producer’s right to make a fictional depiction of a historical
character. This will be of great importance in the context of the artistic,
technical and commercial compulsions of the cinematographic medium.

Another concern of creative individuals is their moral rights. While we

have no landmark precedents regarding this as yet in relation to the
entertainment industries, the Delhi High Court’s decision in the Amarnath
Sehgal case (Amarnath Sehgal Vs. Union of India; 2005 (30) PTC Del)
will be of great value.

A further concern for creative individuals who acquire celebrity rights is

the commercial potential of publicity rights. These have been recognized
in the Dalermehndi.com case. (DM Entertainment Pvt Ltd. Vs.. Mr.
Hemant Kumar; WIPO Decision, Case No: D2001-1267).

In a landmark decision in the “Swayamvar” case (Anil Gupta Vs. Kunal

Dasgupta & Ors; 2002 (25) PTC 1 (Del)), the Delhi High Court protected
the author’s rights in a TV format, on two grounds. On the facts of the
particular case, the court found breach of confidentiality; but it also
simultaneously found an infringement of copyright. This and other
decisions put the Indian courts ahead in their willingness to protect TV
formats, a relatively new but commercially important form of dramatic
work, which the industry itself, globally, has recognized through its
licensing practices.

In India, as the bullock cart and the automobile coexist on our roads,
analog audio cassettes coexist with the Internet. This situation, of living
simultaneously in different genre, complicates the management of any
particular field. India has not yet enacted legislation (on protecting
technological measures and Digital Rights Management information) to
conform to the Internet treaties. Indian entertainment industries have,
however, been confronted with the phenomenon of the Internet and the
necessity to take stock both of its negative implications for the sale of
legitimate copies and of its positive commercial potential. However, the
courts have not been slow to respond to the new concerns of the
entertainment industries. In the pending case of Super Cassettes Vs.
YouTube LLC and Ors, involving essentially the same issues (concerning
“file sharing” of video files) as in the pending Viacom case in the U.S., the
plaintiff was sUGCessful in obtaining an ex parte ad interim injunction,
though the outcome of the case will emerge in the course of time.

Broadcasting, both on television and FM broadcasting, have given rise to

new issues. The advent and multiplication of commercial FM channels
dependent on music have given rise to litigation on compulsory licensing,
leading to the decision of the Supreme Court in the Entertainment
Network case (Entertainment Network (India) Ltd. Vs.. Super Cassette
Industries Ltd; 2008(37) PTC 353(SC)). Whilst deciding in favor of the
broadcasters, that more than one compulsory license may be granted in
favor of broadcasters, the apex court also acknowledged the role of
copyright societies in administering their members’ rights. Citing this
decision, an appellate division of the Delhi High Court in the Hotel
Regency case (Phonographic Performance Ltd. Vs. Hotel Gold Regency
& Ors.; 2008(37)PTC 587(Del)) rejected the contention that a copyright
society’s role is limited to licensing and confirmed the society’s right and
duty to enforce the rights it administers.

The question of fair dealing with copyrighted materials in telegraph

channels is under consideration of the Delhi High Court in two pending
cases, filed by Super Cassettes and Yash Raj Films against India TV. On
the whole, it may fairly be said that the courts have been very effective in
granting injunctive relief against the unauthorized broadcast of
copyrighted material.

Finally, one fundamental issue awaits more conclusive and satisfactory

adjudication. This is the distinction between rights in the underlying
literary, dramatic and musical works (referred to in section 14(a) of the
Copyright Act) and films and sound recordings made from or
incorporating such underlying works (referred to respectively in sections
14(d) and 14(e)). The Supreme Court’s decision in IPRS vs. Eastern India
Motion Pictures Association & Ors. (Cited above) has often been
misunderstood in this regard. The possible merger of ownership of rights
referred to in that judgment (pertaining to the particular case only) does
not entail merger of the rights themselves, which the decision makes clear,
continue to subsist simultaneously and independently. For all the creative
participants in the entertainment industries to obtain their due under the
law, in accordance with India’s treaty obligations quite apart from the
clear provisions of the statute, it is necessary for all participants to
unambiguously acknowledge the simultaneous existence of rights in
underlying and derivative works.

(This is the American perspective)

Only the American Digital Millennium Copyright Act (DMCA) under

Section 512 provides for Limitations on liability relating to material
online, in which the copyright owner can serve a notice on the service
provider to remove the content from the site by provide the following
information in a takedown notice:

(i) A physical or electronic signature of a person authorized to act on

behalf of the Owner of an exclusive right that is allegedly infringed.

(ii) Identification of the copyrighted work claimed to have been infringed,

or, if Multiple copyrighted works at a single online site are covered by a
single Notification, a representative list of such works at that site.

(iii) Identification of the material that is claimed to be infringing or to be

the subject of infringing activity and that is to be removed or access to
which is to be disabled, and information reasonably sufficient to permit
the service provider to locate the material.

(iv) Information reasonably sufficient to permit the service provider to

contact the complaining party, such as an address, telephone number, and,
if available, an electronic mail address at which the complaining party
may be contacted.

(v) A statement that the complaining party has a good faith belief that use
of the material in the manner complained of is not authorized by the
copyright owner, its agent, or the law.

(vi) A statement that the information in the notification is accurate, and

under penalty of perjury that the complaining party is authorized to act on
behalf of the owner of an exclusive right that is allegedly infringed.
 CHAPTER THREE

FAIR USE AND COPYRIGHT:

Online video hosting services like Youtube and Myspace are resulting in a
new era of free expression by their users on internet. By providing a
platform for "user-generated content" (UGC) on the Internet, these
services enable creators to reach a global audience without having to
depend on traditional intermediaries like television networks and movie
studios. The result has been a tremendous increase of creativity by
ordinary people, who have grabbed the opportunities created by these new
technologies to express themselves in variety of ways and share contents
which they like with their friends online. While expressing themselves,
they may use a copyrighted work of some other person without due
permission and paste it on the internet. Hence, Copyright owners are
legitimately concerned that a substantial number of works posted to some
UGC video sites are simply unauthorized, i.e. copies of their works. Some
of these rights holders have sued service providers.

However, to maintain a balance between economic exploitation of

someone’s work and using someone’s work as a tool to express
themselves without any vested interest, the concept of fair use was
developed under western laws.

The question would then be whether the new creativity is fair use, the
copyright doctrine that permits unauthorized uses of copyrighted material
for transformative purposes. Creators very often quote from and build
upon the works available, yielding new works that comment on, parody,
satirize, criticize, and pay tribute to the expressive works that have come
before. These are protected by the fair use doctrine.

Hence content owners and service providers have indicated their mutual
intention to protect fair use in the UGC context, while addressing
copyright concerns by the principle of ‘Transformative, Creative Uses’
whereby Copyright owners are within their rights to pursue non-
transformative i.e. copying of their copyrighted materials online unless
those copyrighted materials are employed for purposes of comment,
criticism, reporting, parody, satire, or scholarship, or as the raw material
for other kinds of creative and transformative works.
The legal concept of ‘Test copyright’ or ‘Fair Use’ was introduced by
Britain's Statute of Anne, 1709. As no scope was made for the authorized
reproduction of copyrighted content within this newly formulated statutory
right, the courts created a doctrine of "fair abridgment" in Gyles v Wilcox,
which evolved into the modern concept of "fair use", that recognized the
legality of such reproductions.

CASE: Gyles v Wilcox (1740) 26 ER 489:

It was a decision of the High Court of Chancery of Great Britain that

established the doctrine of fair abridgement, which would later evolve into
the modern idea of fair use. The case was heard and the opinion written by
Philip Yorke, 1st Earl of Hardwicke, and concerned Fletcher Gyles, a
bookseller who had published a copy of Matthew Hale's Plea to the
Crown. Soon after, the publishers Wilcox and Nutt hired a writer named
Barrow to abridge the book, and repackaged it as Modern Crown Law.
Gyles sued for a stay on the book's publishing, claiming his rights under
the Statute of Anne had been infringed.

The main issues in the case were whether or not abridgements of a work
were inherently pirated copies, or whether they could qualify as a separate,
new work. Lord Hartwicke ruled that abridgements fell under two
categories: "true abridgements" and "coloured shortenings". True
abridgements presented a true effort on the part of the editor, and by this
effort, constituted a new work which did not infringe upon the copyright
of the original. Leaving it to literary and legal experts to decide, Hartwicke
ruled that Modern Crown Law was not a true abridgement, but merely a
piracy intending to circumvent the law.

The case set a legal precedent which has shaped copyright law up until the
present day. It established the common law doctrine of fair abridgement,
which was cited in other cases, ultimately building up to the idea of fair
use. The opinion also recognised the author's right to a work through the
nature of the labour it took to produce it, shifting copyright away from
publishing rights and towards the idea of serving the greater good by
interpreting the Statute of Anne liberally.
 The fair use of a copyrighted work includes such use, by reproduction in
copies or phonorecords or by any other means, for purposes such as
criticism, comment, news reporting, teaching, scholarship, or research, is
not an infringement of copyright.

In determining whether the use made of a work in any particular case is a

fair use the following factors should be considered shall include:

i the purpose and character of the use, including whether such use is of
a commercial nature or is for nonprofit educational purposes;

ii the nature of the copyrighted work;

iii the amount and substantiality of the portion used in relation to the
copyrighted work

iv the effect of the use upon the potential market for or value of the
copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of fair use
if such finding is made upon consideration of all the above factors.

The question would be whether the use in question, helps fulfill the
intention of copyright law to stimulate creativity for the enrichment of the
general public, or whether it aims to only exploit the original copyrighted
work for making personal profit. To justify the use as fair, it has to be
ascertained how it either advances knowledge or the progress of the arts
through the addition of something new.

Further, the court shall assess the quantity or percentage of the original
copyrighted work that has been imported into the new work. In general,
the less that is used in relation to the whole, e.g., a few sentences of a text
for a book review, the more likely that the sample will be considered fair
use, i.e. if the secondary user only copies as much as is necessary for his
or her intended use. In Harper & Row, Publishers, Inc. v. Nation Enters,
the use of fewer than 400 words from President Ford's memoir by a
political opinion magazine was considered infringement because those few
words represented "the heart of the book" and were, as such, substantial.

CASE: Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985)[1], was
a United States Supreme Court decision----

FACTS-In this case, former President Gerald Ford had written a memoir
including an account of his decision to pardon Richard Nixon. Ford had
licensed his publication rights to Harper & Row, which had contracted for
excerpts of the memoir to be printed in TIME. Instead, The Nation
magazine published 300 to 400 words of verbatim quotes from the 500-
page book without the permission of Ford, Harper & Row, or Time
Magazine. Based on this prior publication, Time withdrew from the
contract (as it was permitted to by a clause therein), and Harper & Row
filed a lawsuit against The Nation for copyright infringement. The Nation
asserted as a defense that Ford was a public figure, and his reasons for
pardoning Nixon were of vital interest, and that appropriation in such
circumstances should qualify as a fair use.

OBSERVATION--The court applied the traditional four factor test to

determine if the use was fair, and made the following findings:

5. The purpose or character of the use was commercial (to scoop a

competitor), meaning that The Nation's use was not a good faith
use of Fair Use in simply reporting news.
6. The nature of the copyrighted work was informative.
7. The amount and substantiality of the portion used in relation to the
copyrighted work as a whole was great, as it constituted a
substantial portion of the infringer's work. The Court noted that the
infringer could not defend plagiarism by pointing to how much
else they could have plagiarized, but did not.
8. The effect of the use on the potential market for the value of the
copyrighted work was also great, because there was an actual harm
– the cancelled contract.
 DECISION--fair use is not a defense to the appropriation of work
by a famous political figure simply because of the public interest in
learning of that political figure's account of an historic event.

Section 107 of the Copyright Act of the USA contains a list of the various
purposes for which the reproduction of a particular work may be
considered fair, such as criticism, comment, news reporting, teaching,
scholarship, and research. Section 107 also sets out four factors to be
considered in determining whether or not a particular use is fair:

1. The purpose and character of the use, including

whether such use is of commercial nature or is for
nonprofit educational purposes
2. The nature of the copyrighted work
3. The amount and substantiality of the portion used in
relation to the copyrighted work as a whole
4. The effect of the use upon the potential market for,
or value of, the copyrighted work

A. Purpose and Character of the Use

The first factor as to whether a use of a work is a fair use is “the purpose
and character of the use, including whether such use is of a commercial
nature or is for nonprofit educational purposes.”19 The law in with respect
to this factor has weaved a curious path. Commercial uses have been held
fair, Campbell v. Acuff-Rose Music, 510 U.S. 569, 571 (1994).20
educational uses have not. Princeton Univ. Press v. Michigan Document
Servs., 99 F.3d 1381 (6th Cir. 1996)21 The Supreme Court’s comment
that there are no bright line rules for applying the fair use doctrine, 22
appears, if anything, to be an understatement. In 1984, the Supreme Court
majority in Sony declared that “every commercial use of copyrighted
material is presumptively an unfair exploitation” Sony Corp. of America v.
Universal City Studios, Inc., 464 U.S. 417, 451 (1984).23 in 1994, the
Court was asked to adjudicate the fairness of 2 Live Crew’s indisputably
commercial parody of an old Roy Orbison song in Campbell. In that case,
the Court held that there was no presumption that commercial use was
unfair. As the Court observed, “[any such presumption] would swallow
nearly all of the illustrative uses listed in the preamble paragraph of § 107,
including news reporting, comment, criticism, teaching, scholarship, and
research, since these activities . . . which are generally conducted for
profit.”24 The Campbell decision also marked another more subtle
departure from Sony concerning the purpose and character of the use. In
Sony, the majority categorically reversed the Ninth Circuit’s ruling that
the absence of a productive use precluded the application of fair use.
Universal City Studios v. Sony Corp. of Am., 659 F.2d 963, 971–972 (9th
Cir. 1981)25 “Productive use” in this context means that the use leads to
the creation of a new work which results “in some added benefit to the
public beyond that produced by the first author’s work.”26 According to
the Ninth Circuit decision, convenience, entertainment and increased
access were not purposes within the general scope of fair use. Universal,
659 F.2d at 970 27 In Sony, the majority of the Supreme Court held that
the productive/unproductive distinction could never be determinative of
fair use.28 Ten years later, the Supreme Court in Campbell substantially
reintroduced the productivity requirement under another name—the key
question now being whether the allegedly infringing use is
“transformative.” Justice Souter, delivering the opinion of the Court,
explained that the central purpose of the fair use investigation was to
determine:

19. 17 U.S.C. § 107(1) (date).

20. Campbell v. Acuff-Rose Music, 510 U.S. 569, 571 (1994).

21. Princeton Univ. Press v. Michigan Document Servs., 99 F.3d 1381

(6th Cir. 1996)

(unauthorized reproduction of copyrighted works in university course

packs not fair use); Basic Books, Inc.

v. Kinko’s Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991) (same).

Madey v. Duke also illustrates the

uncertain privileges of educational institutions in the context of patent

law’s experimental use doctrine; see

Madey v. Duke Univ., 307 F.3d 1351 (Fed. Cir., 2002).

22. Campbell, 510 U.S. at 577.

23. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417,
451 (1984).

24. Campbell, 510 U.S. at 584.

25. Universal City Studios v. Sony Corp. of Am., 659 F.2d 963, 971–972
(9th Cir. 1981).

26. Sony, 464 U.S. at 478 (Blackmun dissent).

27. Universal, 659 F.2d at 970.

28. Sony, 464 U.S. at 455.

whether the new work merely supersedes the objects of the original . . . or
instead adds something new, with a further purpose or different character,
altering the first with new expression, meaning, or message; it asks, in
other words, whether and to what extent the new work is
transformative.29 For Justice Souter, transformative works “lie at the heart
of the fair use doctrine’s guarantee of breathing space within the confines
of copyright.”30 Accordingly, while unproductive or un transformative
uses are not to be presumptively denied fair use protection, the heart of the
doctrine is reserved for “transformative” uses. The dominance of the
transformative ness test makes the actual statutory language regarding
noncommercial and educational uses largely irrelevant.31

Also, the extent to which a use is “transformative” is clearly a meta-factor:

the extent to which a use transforms the work cannot be determined
without reference to the other factors, such as the nature of the original
work, the quantitative and qualitative similarity between the works and the
effect of the use on the value of the original work.

The merits and limitations of transformativeness are discussed in Part IV

below. Thepurpose of the defendant’s use is still important, it is just as
clearly a subjective determination. Bright-line distinctions, such as
commercial/non-commercial and educational/non-educational, have been
superceded by a much more ambiguous notion, transformativeness.

B. Nature of the Copyrighted Work

The second factor considered by the courts in applying the fair use
standard is “the nature of the copyrighted work.”32 Two aspects of the
nature of the work are important to consider: whether the work is factual
as opposed to creative; and whether the work is published or unpublished.
In principle, the more creative the original work is, the more justification
is required to establish a fair use in relation to it.33 Anecdotally, this
aspect of the nature of the work tends not to be regarded as significant.34
The Supreme Court did not consider the creative nature of television
programs or musical compositions to be an obstacle to afinding of fair use
in Sony or Campbell. At the other end of the spectrum, the Second Circuit
has held that the copying of one factual work by a rival was not protected
by fair use.35 The second factor is especially unhelpful in cases involving
parody, because parody is predicated on the existence of an antecedent
creative work. As the Supreme29. Campbell, 510 U.S. at 579 (internal
quotes and citations omitted); see also, Pierre Leval,

Towards A Fair Use Standard, 103 Harv. L. Rev. 1105, 1111 (1990).

30. Campbell, 510 U.S. at 579.

31. Princeton Univ. Press v. Michigan Document Servs., 99 F.3d 1381,

1395 (6th Cir. 1996)

(Circuit Judge Merritt, dissenting).

32. 17 U.S.C. § 107(2) (date).

33. Campbell, 510 U.S. at 586.

34. According to Nimmer’s analysis, it actually has a negative correlation

with the outcome.

Nimmer, Fairest Of Them All, supra note 13, at 280.

35. Financial Information, Inc v. Moody’s Investors Service, Inc., 751

F.2d 501 (2d Cir.

1984).

Court noted in Campbell, in the context of parody, the second factor “is
not much help . . . in separating the fair use sheep from the infringing
goats.”36 After the Supreme Court’s majority decision in Harper & Row
v. Nation Enterprises,37 it briefly appeared that use of an unpublished
work could almost never qualify as fair use.38 The Nation had published a
300 to 400-word extract of the soon-to be published memoirs of President
Gerald Ford dealing with the Nixon pardon, preempting an article that was
scheduled to appear in Time magazine. Time had agreed to purchase the
exclusive right to print pre-publication excerpts of President Ford’s
memoir; but as a result of the defendant’s article, Time canceled its
agreement. The majority held that “[u]nder ordinary circumstances, the
author’s right to control the first public

appearance of his un-disseminated expression will outweigh a claim of fair

use.”39 Two cases from the Second Circuit followed and enlarged this
ruling. In Salinger v Random House,40 the Second Circuit held that a
literary biographer of reclusive author J.D. Salinger was not permitted to
quote from a selection of Salinger’s unpublished letters and drafts. In New
Era v Holt,41 the same court held that the quotation of unpublished
material to establish a variety of critical assertions with respect to L. Ron
Hubbard, the founder of Scientology, was equally unavailing on fair use
grounds.42 Inboth cases the court held that unpublished works normally
enjoy “complete protection against copying any protected expression.”43
In 1992 Congress revised Section 107 and made it clear that “[t]he fact
that a work is unpublished shall not itself bar a finding of fair use if such
finding is made upon consideration of all the above factors.”44 In light of
Congress’ clarification of Section 107, the Supreme Court’s decision in
Harper & Row is easier to reconcile as deriving from the fact that the work
in question was soon-to-be published, not that it was unpublished.45 In
any event, the nature of the copyrighted work remains unhelpful in
assessing whether an activity is protected by fair use or not.

C. Amount And Substantiality of the Portion Used

The third factor to be considered in adjudicating fair use is “the amount

and substantiality of the portion used in relation to the copyrighted work
as a whole.”46 The need for both a quantitative and a qualitative inquiry
harks back to Justice Story’s original

36. Campbell, 510 U.S. at 586.

37. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539
(1985).

38. Id. at 555.

39. Id. at 555.

40. Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir. 1987).

41. New Era Publications v. Henry Holt & Co., 873 F.2d 576 (2d Cir.
1989).

42. Id.

43. Salinger, 811 F.2d 90; New Era Publications, 873 F.2d at 583; see also
Leval, supra note

29, at 1113.

44. Amended 10/24/92 by Pub. L. No. 102-492.

45. Leval, supra note 29, at 1120. Note that Judge Leval authored both the
Salinger and New

Era opinions overturned by the Second Circuit: Salinger v. Random

House, 650 F. Supp. 413, (S.D.N.Y.

1986) rev’d & rem’d 811 F.2d 90, (2d Cir. 1987) and New Era
Publications International, ApS v. Henry

Holt & Co., 695 F. Supp. 1493 ([S]D.N.Y., 1988) aff’d on other grounds
873 F.2d 576 (2d Cir. 1989).

46. 17 U.S.C. § 107 (3) ([date]).

formulation of the fair use doctrine in Folsom v. Marsh.47 In that case,

Justice Story was concerned to protect the “chief value of the original
work” against the extraction of its “essential parts” through the mere
“facile use of scissors” or its intellectual equivalent.48 In theory, the
greater the portion of a work that is copied, the less inclined a court will be
to find in favor of fair use. In practice, several cases confound this basic
proposition, relying instead on subjective qualitative impressions or
suppositions as to the value of the work.

In Harper & Row, the defendant copied a mere 300 words from a 200,000-
word manuscript, yet the Supreme Court held that this constituted a
substantial taking under the third factor.49 This extraordinary conclusion
only makes sense in context of the Court’s manifest disapproval of the
conduct of the defendant, particularly the manner in which it obtained
access to an advance copy of the biography and its scoop of the Time
magazine story. In Sony, the majority of the Supreme Court found that
home videotaping entire programs for later viewing was fair use.50 In
Campbell, the Supreme Court held that even though rap musicians 2 Live
Crew had copied the heart of the original Roy Orbison song

– the first line of lyrics and characteristic opening bass riff – nonetheless,
the defendant’s appropriation could be protected by fair use.51 The Court
reasoned that copying the heart of the song was excusable because it is the
heart which most readily conjures up the song for parody, and also
because it is the heart at which parody generally takes aim.52 The point to
be understood is not that the amount of the work used is never significant;
but rather that while the third factor provides a convenient platform for
bolstering existing conclusions, it provides little ex ante guidance. The
question of qualitative significance is inextricably tied with the fourth
factor because each requires the court to assess the “value” of the original
work. The third factor does not rely on mechanical quantification of the
amount of the original work used, it asks courts to asses how much of the
value of the original work is present in the later use. Similarly, the fourth
factor asks what the effect the later use will have on the value of the
original work. Thus both the third and forth factors require the
determination of the antecedent question – the value of the work. In each
case, the value of the original can only be determined with reference to
scope of the copyright owner’s rights of exclusion; treating the statutory
factors as outcome-determinative, as opposed to question-framing, ask us
to believe the opposite is true.

D. Market Effect

The fourth statutory factor in fair use analysis is “the effect of the use
upon the potential market for or value of the copyrighted work.”53 In
short, the fourth factor asks “what is the market effect of the unauthorized
use?” It is worth exploring this factor in

47. 9 F. Cas. 342 (No. 4,901) (C.C.D. Mass. 1841).

48. Id. at 345.

49. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539,
565 (1985). The

words were not even entirely sequential, see Edward Samuels, The
Illustrated Story Of Copyright 155

(2000).

50. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417,
449–50 (1984).

51. Campbell v. Acuff-Rose Music, 510 U.S. 569, 588 (1994).

52. Id.

53. 17 U.S.C. § 107(4) ([date]).

some detail, first because it is sometimes said to be the most important

factor,54 and second because questions of market effect dominate
academic literature. Assessing the market effect of an unauthorized use
confronts judges with a potential circularity: while their ultimate ruling
defines the scope of the market, they are supposed to examine the market
effect in making that ruling. In other words, they must make a ruling based
on a finding that is contingent on their ruling. This theoretical circularity is
mitigated by the reality that judges begin with a view as to the proper
scope of the copyright owner’s rights and then apply the statutory factors
in a manner that transforms those priors into conclusions.

As a preliminary matter, it is clear that analysis of market effect must

include the effect on the copyright owner’s continued exploitation of
existing markets and her potential exploitation of markets she is yet to
enter.55 If unexploited markets were left to fair users by default, copyright
owners would find themselves in a race to exploit their works in as many
markets as possible to preserve their future rights. The author of a novel
would rush to make some token exploitation in every context imaginable;
from the plausible (sequels, screen-plays, and television series) to the
unlikely (soft toys, action figures, and private-label credit cards).

Although considering potential and derivative markets is clearly

necessary, it raises the problem that copyright owners can claim that
almost any new use of their work is part of an unexplored derivative
market. For example, although it had shown no interest in licensing a
derivative of “Pretty Woman” in the rap genre before its lawsuit against 2
Live Crew, Acuff Rose (Roy Orbison’s publisher) argued that 2 Live
Crew’s parody diminished its potential to do so. The Supreme Court lent
credence to these kinds

of argument by remanding the case in Campbell to the district court to

determine whether the 2 Live Crew parody had dampened the potential
demand for non-parody derivatives of the original song in the rap genre, a
market hitherto unexplored by the copyright owner.56 The uncertainty of
the original work’s potential market necessitates defining the limits of that
market in order to ascertain whether the allegedly infringing use has any
effect on it. This encourages a kind of circular reasoning: findings of fair
use are premised on narrow market definitions; while denials of fair use
are premised on expansive market definitions. The reasoning is circular
because although the fair use question determines the extent of the market,
the extent of the market also determines the outcome of the fair use
question.

Two cases concerning photocopying illustrate the potential circularity of

examining the effect of the use upon the potential market for the
copyrighted work. In 54. The Supreme Court’s most recent decision on
fair use warns that the statutory factors are not to be treated in isolation,
rather “[a]ll are to be explored, and the results weighed together, in light
of the purposes of copyright.” Campbell, 510 U.S. at 578; but see Harper
& Row, 471 U.S. at 566 (fourth factor undoubtedly single most important
element of fair use); Princeton Univ. Press v. Michigan Document Servs.,
99 F.3d 1381 (6th Cir. 1996) (factors not created equal, fourth factor at
least primus inter pares).

55. Campbell, 510 U.S. at 593–594.

56. Id. The Court remanded the case back to the district court to hear
evidence as to the likely effect on the market for a non-parody, rap version
of original song.

It is puzzling to consider what evidence the Court thought would be

produced. See 4–13 Nimmer on Copyright § 13.05.

both Williams & Wilkins Co. v. United States,57 and American

Geophysical Union v. Texaco,58 academic journal publishers alleged that
their copyrights were infringed by defendants making unauthorized
photocopies of journal articles for medical and scientific research. The two
cases, decided almost 20 years apart, are barely distinguishable on their
core facts, and yet reach entirely opposite conclusions. The difference
between the cases lies in the latter court’s willingness to find that the
publisher suffered an adverse market effect. The Court of Claims in
Williams & Wilkins held that the evidence on the record failed to show
that the defendant’s photocopying practices caused a significant detriment
to the plaintiff. In American Geophysical, the Second Circuit also
concluded that, based on potential sales of additional journal
subscriptions, back issues, and back volumes alone, the evidence of an
adverse market effect was weak.59 However, the majority of the Second
Circuit concluded that the plaintiff prevailed on the fourth factor because
of the availability of licensing facilitated through the Copyright Clearance
Center (“CCC”).60 The majority found that through this collection
organization, the publishers had created “a workable market for
institutional users to obtain licenses for the right to produce their own
copies of individual articles via photocopying.”61 In the opinion of the
majority, the potential licensing revenues that would be forgone by
publishers if a finding of fair use was made itself constituted an adverse
market effect under the fourth factor. Any copyright owner who loses an
infringement action because of a finding of fair use has also lost at least
one potential licensee, although in some cases the prospects of a license
are more theoretical than real.62 The majority in American Geophysical
argued its reliance on potential licensing revenues was not circular
because: “[o]nly an impact on potential licensing revenues for traditional,
reasonable, or likely to be developed markets should be legally cognizable
when evaluating a secondary use’s effect upon the potential market for or
value of the copyrighted work.”63
However, the addition of the “traditional, reasonable, or
likely” requirement does not entirely mitigate the problem of circular
reasoning. Determining whether a market is “traditional, reasonable, or
likely” is indistinguishable from determining the scope of the copyright
holder’s rights: both require courts to make an a priori assumption and
then compare that assumption to the conduct of the defendant. The Second
Circuit comes close to transparency in American Geophysical by at least
identifying the assumption that it is making— that journal photocopying
falls within the traditional, reasonable, and

57. 203 Ct. Cl. 74 (1973) aff’d by equally divided Court, 420 U.S. 376
(1975).

58. 60 F.3d 913 (2d Cir. 1994).

59. Id. at 928.

60. Id. at 929.

61. Id. at 930.

62. In several prominent cases it appears that the plaintiffs were unwilling
to license at any

price, whereas, after the Supreme Court’s decision in Campbell a

settlement including an ongoing license

was in fact negotiated. See, e.g., Worldwide Church of God v.

Philadelphia Church of God, Inc., 227 F.3d

1110 (9th Cir. 2000); New Era Publications v. Henry Holt & Co., 873 F.2d
576, 583 (2d Cir. 1989);

Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir. 1987); and
Rosemont Enterprises, Inc. v. Random

House, Inc., 366 F.2d 303 (2d Cir. 1966).

63. American Geophysical Union, 60 F.3d at 930 (2d Cir. 1994) (emphasis
added).

likely to be developed market of the copyright owner—but it does little to

actually justify this assumption. Such assumptions should be carefully
considered, especially in the context of market effect, because of the
danger that courts will reason backwards from the fact of marketability to
the construct of property.64 The CCC was established in 1977 to license
photocopying after the decision in Williams & Wilkins.65 This begs the
question: if a centralized clearinghouse was established to license parody,
review or reference to a class of works, would it establish the existence of
a “traditional,” “reasonable,” or “likely” market for such activities?66 In
Campbell, the Court held that there is no protectable derivative market for
criticism, including parody because: [t]he market for potential derivative
uses includes only those that creators of original works would in general
develop or license others to develop. Yet the unlikelihood that creators of
imaginative works will license critical reviews or lampoons of their own
productions removes such uses from the very notion of a potential
licensing market.67 If the members of the MPAA established a rights
clearing center for reviews and parodies of, and references to their movies,
would unauthorized review, reference and parody suddenly cease to be
fair use? There may be good reasons to not give copyright owners to
expand control over certain uses of their works, even if they are offering to
license those uses. As with the third factor, the fourth factor is
conceptually important but incomplete. In order to determine market
effect, a court must first form some idea as to what the market is, as
emphasized by the Second Circuit’s holding that the market in question
must be traditional, reasonable or likely to develop. The problem with the
fourth factor, and with all the factors to some extent, is that they focus on
second order questions and invite courts to gloss over the real basis for
their rulings – how they came to define the boundaries of the copyright
owner’s rights in the first place.68 To answer this 64. Julie Cohen makes
this criticism in relation to the INS case in which the Supreme Court found
a quasi-property right in news based on a misappropriation theory. Julie E.
Cohen, Lochner In Cyberspace: The New Economic Orthodoxy Of
“Rights Management,” 97 Mich. L. Rev. 462, 507–508; see

also Int’l News Serv. v. AP, 248 U.S. 215 (1918).

65. It is tempting to speculate that had the CCC existed earlier, the
decision in Williams &
Wilkins would have been the same as American Geophysical. However,
this seems unlikely. The Court of

Claims considered and rejected the possibility of licensing schemes. In his

dissenting opinion in American

Geophysical, Justice Jacobs argued that the CCC scheme was “neither
traditional nor reasonable; and its

development into a real market is subject to substantial

impediments.” American Geophysical Union, 60

F.3d at 937 (Jacobs J. dissent).

66. American Geophysical Union, 60 F.3d at 937 (Jacobs J. dissent); see

also Lydia Pallas

Loren, Redefining the Market Failure Approach to Fair Use in an Era of

Copyright Permission Systems, 5

J. Intell. Prop. L. 1, 38–39 (1997).

67. Campbell v. Acuff-Rose Music, 510 U.S. 569, 592 (1994) (emphasis
added).

68. Lloyd Weinreb argues that although the Supreme Court cast its
analysis in Sony and

Harper & Row almost entirely in terms of the statutory factors, “the
application, not to say the

interpretation, of the factors is so tailored to the circumstances of the

cases, that one is impelled to look

beneath the surface of the opinions for the true ground of decision.” Lloyd
L. Weinreb, The 1998 Donald C.

Brace Memorial Lecture, Fair Use, 4 Fordham L. Rev. 1291, 1299-

(1999).
antecedent question, courts must look beyond the statutory guidance in
Section 107 and

confront theoretical questions about the nature of copyright.

Hence, the distinction between fair use and infringement may be unclear
and not easily defined. There is no specific number of words, lines, or
notes that may safely be taken without permission.

fair use is “one of the most troublesome [doctrines] in

the whole law of copyright.”11 One of the central difficulties of fair use
jurisprudence is

the indeterminacy of the statutory factors. The statutory codification of the

fair use

doctrine requires courts to consider four factors in determining whether a

use is fair:

(1) the purpose and character of the use; (2) the nature of the copyrighted
work; (3) the

amount and substantiality of the portion taken; and (4) the effect of the use
upon the

potential market for, or value of, the copyrighted work. The statutory
factors provide a useful framework for analysis.

Therefore, before taking the cognizance of cases for infringement of

copyright caused by user generated contents, prima facie the Court has to
ascertain whether the use of the copyrighted material was made in good
faith and for fair use.

CHAPTER FOUR
INFRINGEMENT BY ISPs:

Online music and video hosting Service providers like Youtube and
Myspace are creating a new era of free expression by their users on
internet. By providing a platform for "user-generated content" (UGC) on
the Internet, these services enable creators to reach a global audience
without having to depend on traditional intermediaries like television
networks and movies. This has resulted in a tremendous increase of
creativity by ordinary people, who have grabbed the opportunities created
by these new technologies to express themselves in variety of ways and
share contents that they like with the rest of the world online. This had
changed the earlier scenario wherein the information and the contents
provided by the service providers were the only supply of entertainment
and exposure to the internet users, this resulted a hunger of new and
creative and more relatable channels of entertainment. The concept of user
generated contents and services caught the nerve of internet consumers as
it accorded them an open sky of expressing them and to share with the
world what they like, this somewhat satisfied the consumer’s ego by
letting him control the dissemination of material.

Some service providers realized the sort of demand which the new age
consumer is urging and started to let them interfere and provide them a
field where they could do whatever they wanted to and however they
wanted to. These services grew many folds and led to the sudden outburst
of such services.

UGC is majorly of two types-

1. Content developed by the user himself consisting of his own

expression, in other words, an original work of the user.

2. content uploaded by the user which consists of copyrighted work

of any other person, in respect of these works also a distinction is
 required that whether the said work is uploaded for fair use or for
commercial exploitation.

However, wit these services and platforms emerged some problems also,
which with time grew as faster as this concept of UGC. This problem was
the trespassing and violation of some other person’s right of copyright.
The users while expressing themselves, occasionally end up using an
already existing content or original work, which is a copyrighted work of
some other person, without due permission of its owner and paste it on the
internet to share it with their work. Hence, Copyright owners have become
legitimately concerned that a substantial number of works posted to some
UGC sites are simply unauthorized, i.e. copies of their works. Some of
these rights holders have even sued service providers for damages and
injunctions.

This situation leads to a question that whether the new creativity is fair
use, the copyright doctrine that permits uses of copyrighted material for
transformative purposes. Creators or users very often quote from and build
upon the works available, resulting in allegedly new works that comment
on, parody, satirize, criticize, and pay tribute to the expressive works that
have come before. These are protected by the fair use doctrine.

The argument by the copyright owners in respect of these service

providers’s liability in dissemination of their work online is that it results
in falling of revenue earning possibilities of the owners from such
uploading and sharing of their contents on these platforms as the prime
object of the copyright is to commercially exploit such works by control
over the dissemination of such works and these service providers are
coming in the way of the copyright owners by providing such platforms to
the users where their work can be easily and freely displayed for the rest
of the public and this thus hampers the owner’s opportunity in making
some money out of dissemination of such works to the public in lieu of
some charges.

Hence, the owners very frequently voice against such platforms by

holding them as infringers of their copyright as the latter by providing
such platform to the public are in a way abating and promoting
infringement of the latter’s copyrights.
Largely the Music and Film Industry is hit by such services available
widely on the internet and lately most of the big corporations in this
business is entering into Legal Battles throughout the world against
distribution and display of their copyrighted material for free on such
platforms. However, the Courts are in a difficult position due to non
availability of statutory provisions for dealing with such situations hence
there are different ways in which the Courts may pursue such cases-

i). the courts may feel that such uploading of contents online on such
platforms are mere expression of user’s thoughts and this action is
generally devoid of any intention of infringement of someone’s copyright,
and the service providers are merely providing a platform of expression of
their thoughts.

ii). On the other hand, courts may feel that by availability of such services
the whole purpose of Copyright laws may be defeated as the owners may
not be left in a position to control the distribution and display of their
copyrighted work and hence owner may not be able to benefit
commercially out of such works, which are created after investing quality
time and money in developing them.

iii). The courts may also go into the aspect of control of the service
provider in such dissemination of works on their platforms, i.e. whether
the service provider really control the posting and uploading of such
material by his users or he only provides the platform to the public which
are free to control the manner of using such platforms.

The peer to peer business model was the first one to promote UGC by way
of providing a platform to their users to load files onto their own
computers and by connecting to the Napster system, allow any other user
in any location to retrieve that file on demand. Users can make works
available at their own choosing, and can locate and obtain electronic
copies of materials that any other person may have chosen to enter into the
system. These business models may avoid maintain a central computer
system that stores and delivers content files. Instead, individual users
employ Napster’s software to find and locate files that are stored on the
computers owned by other individuals who connect voluntarily to such
platforms. This was done by the service providers with a view to get away
with the liability of surveillance and supervision over the actions of the
users, if in future the question of contributory infringement arises.

Technologically, the sUGCess of such a system depends on sophisticated

software and wide availability of the Internet for connecting users
throughout the world. The music files are duplicated, stored, and
transferred by means of the “MP3” technology a computer-readable
format. On such platforms the users can easily upload and download large
quantities of files and these actions reproductions and distributions give
rise to the potential copyright violations as mostly the owners of the
copyrighted contents do not given permission for such dissemination of
the works. This was the claim from many members of the music industry,
who held the copyrights of many of the compositions and sound
recordings, and who argued that the sharing of files on such platforms
would replace potential sales of compact disks and other forms of sale of
such works and on the other hand these service providers are gaining
commercially by expanding their user base or even by earning from
advertisement revenues.

However, these platforms were majorly attacked by the record companies

with compensatory and infringement suits. Grokster was even made to $50
dollars to the record companies as damages.

The court rulings have shown that file sharing by individual users was not
a “fair use” of the copyrighted sound recordings. The court also ruled that
such platforms role in facilitating the dissemination of recordings was not
within the various “safe harbors” provided under the Digital Millennium
Copyright Act of America, which came into effect to specifically deal with
such conflicts.

CASE: A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 ( Ninth
Circuit, 2001):
It was the first major case relating to the application of copyright laws to
paltforms such as peer-to-peer file-sharing where users can upload and
share songs and movies with other users without the consent of the
original owners of such works. It was held that UGC platforms such as
peer-to-peer file-sharing service could be held liable for contributory
infringement and vicarious infringement of the someone’s copyrights.

Napster provided a platform to its users to access and download digital

music files in the form of MP3s, from other users' machines. Whenever a
use connected to this software on his computer, his computer used to get
connected to other usere’s computer also, such connected user’s
computers were controlled by a central server which maintained an index
of users and their contents and files available on their machines, resulting
in list of music available across Napster's network. Napster quickly
became popular service for music enthusiasts due to the ease which they
could find and download digital song files for free.

It was argued by the record companies that its use is likely to result in
reduction of CD purchases by the listners. Furthermore, downloading on
Napster may also hamper plaintiffs' promotional efforts because it does
not involve any of the restrictions on timing, amount, or selection that
plaintiffs impose when they offer free music files.

CASE: MGM Studios, Inc. v. Grokster, Ltd. 545 U.S. 913 (2005):

In this case, the question was whether P2P file sharing companies
Grokster and Streamcast (maker of Morpheus) be sued for inducing
copyright infringement for acts taken in the course of marketing file
sharing software.

"We hold that one who distributes a device with the object of promoting
its use to infringe copyright, as shown by clear expression or other
affirmative steps taken to foster infringement, is liable for the resulting
acts of infringement by third parties."
Copying copyrighted motion picture and music files using unauthorized
peer-to-peer services was held illegal. Further Grokster was forced to pay
$50 million to the music and recording industries. As of May 1, 2009,
Grokster website displays this message: "Your IP address is (your ip) and
has been logged. Don't think you can't get caught. You are not
anonymous."

In such cases, the service providers may raise the following defence:

The court then turned to the three uses Napster identified as fair use in the
conduct of its users:

sampling: where users make temporary copies of a work to sample it

before purchase. However, Sampling will not be deemed to not be a fair
use, if the "samples" were in fact permanent and complete copies of the
desired media.

space-shifting: where users access a sound recording through the service

provider’s system that they already own in audio CD format; here the
Court has to take in view the shifting analyses used in the Sony or RIAA v.
Diamond Multimedia.

permissive distribution: of recordings by both new and established artists

who have authorized their music to be disseminated in the service
provider’s system, which may not be an infringing use.

Moreover, prior to fixing if liabilities, there are two things to be

considered i.e. a copyright holder's legitimate demand for effective
protection of the statutory monopoly copyrights, and the rights of others
freely to use such contents and work for fair and non profitable use.
Accordingly, the sale of copying equipment, like the sale of other articles
of commerce, does not constitute contributory infringement if the product
is widely used for legitimate, unobjectionable purposes.

The following causes of action of copyright infringement lies against the

service providers:

Causes of action under the doctrine of primary or direct copyright

infringement.

These claims include:

1. Public performance – the service providers without permission of the

copyright owner, publicly performed and authorized the public
performance of the infringing uploaded content by streamlining of such
contents which can be played on these platforms free of cost.

2. Public display – the service providers have, without permission of the

copyright owner, publicly displayed and authorized the public display of
the infringing uploaded contents because they display the contents on their
platforms which were originally uploaded by the users. Every time the
content is shared amongst the users of such platforms, illegal reproduction
of such contents is resulted.

3. Reproduction – the service providers have, without permission of the

copyright owner, reproduced and authorized the reproduction of the
infringing uploaded contents through their website.
In such cases, the courts also sees that whether the business model is a
profit making one, in respect of which the trend may be seen from the
following cases in which the Courts have held the service provider liable
even if they aren’t directly earning revenue.

The court also sees whether the business model is developed in a manner
so as to remain ignorant, i.e. intentionally not to keep a track of the details
of its users and their activities, in which case courts will not be prevented
in holding that such business models facilitate the unauthorized exchange
of copyrighted contents.

Major Bob Music v. Stubbs, 851 F. Supp. 475 (S. D. Ga. 1994)

A bar derived direct financial benefit from infringing musical

performances on its premises. The court noted that "an enterprise is
considered to be 'profit-making' even if it never actually yields a profit."

Walden Music, Inc. v. C. H. W., Inc., 1996 WL 254654, at *5 (D. Kan.

1996)

The fact that defendant' entrepreneurial enterprise is not profiting is not a

defense to the plaintiffs' copyright infringement claims.

Broadcast Music, Inc. v. Hobi, Inc., 1993 WL 404152, at *3 (M. D. La.

1993)

Holding defendant vicariously liable because it operated with goal of

making a profit, even though it did not actually make one.

Causes of action under the doctrine of secondary or indirect copyright

infringement.
These claims include:

4. Inducement of copyright infringement – the service providers are liable

for inducing the infringing acts of Service provider’s users, by providing
them a free platform of sharing and enjoying copyrighted work, who
infringe the plaintiff’s copyright by uploading infringing content to the
Service provider website.

5. Contributory copyright infringement – In order to prove contributory

infringement, a plaintiff must show that a defendant had knowledge of
infringement. The service providers are liable for contributing to the
infringing acts of service provider’s users, who infringe the plaintiff’s
copyright by uploading infringing videos to the website. If the service
provider has general knowledge that third parties performed copyrighted
works, then it satisfies element of contributory infringement. The service
provider will also be held liable if the future business model was by
expanding the number of users, it stood to benefit financially from the
infringing activity.

In Sony Corp. of America v. Universal City Studios, Inc., "the Betamax

case," the court refused to hold Sony liable for contributory infringement
simply because the technology could be used for infringing activity.
However that case related to a product over which no supervision could be
exercised by the developer after its sale to the customer. Hence, this case
is distinguished from cases of internet service providers which can devise
measures to keep regular survailance over the acts of its users.

In Gershwin Publ'g Corp. v. Columbia Artists Management, Inc., 443 F.

2d 1159, 1162 (2d Cir. 1971), it was observed that a contributory infringer
is "one who, with knowledge of the infringing activity, induces causes or
materially contributes to the infringing conduct of another”.

Also, in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F. 3d 259, 264 (9th Cir.
1996), it was observed that “Courts do not require actual knowledge;
rather, a defendant incurs contributory copyright liability if he has reason
to know of the third party's direct infringement”.

6. Vicarious copyright infringement – the service providers are vicariously

liable for the infringing acts of its users, who infringe the plaintiff’s
copyright by uploading infringing videos to the service provider website.
For holding a service provider liable for infringement, it has to be
seen whether the necessary element of volition is present in service
provider’s operations. In order to establish an action for primary or direct
copyright infringement under copyright laws, it has to be proved whether
service provider benefited financially from the infringement and whether
they were capable of supervising and controlling infringing conduct,
hence, there must first be a volitional act committed by the defendant in
regard to the infringement. Generally, the courts dealing with such issues
have held that the automated copying by machines, occasioned by others,
is insufficient to establish a volitional act.

In Fonovisa, 76 F. 3d at 262 (, 443 F. 2d at 1162), it was observed that a

defendant incurs liability for vicarious copyright infringement even in the
absence of an employment relationship, if he "has the right and ability to
supervise the infringing activity and also has a direct financial interest in
such activities”. In this case the element of vicarious liability was satisfied
because the service provider had the right to terminate vendors at will; it
also controlled customers' access and promoted its services.

By proving a reasonable likelihood of contributory and vicarious

copyright infringement claims, copyright owners are entitled to a
presumption of irreparable harm.-Micro Star, 154 F. 3d at 1109. Even if
the decision leads to practically put the infringer out of business, The court
cannot give much weight to defendant's argument that the requested relief
will put it out of business.-Sun Microsystems, Inc. v. Microsoft Corp., 188
F. 3d 1115, 1119 (9th Cir. 1999).

Also, for holding a service provider liable of indirect infringement, the

court has to ascertain whether the act of the users would constitute ‘Fair
Use’. The factors which ought to be considered while analyzing Fair Use
are-

(1) the purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the
copyrighted work as a whole.

(4) the effect of the use upon the potential market for or value of the
copyrighted work.

An argument may be raised to hold them liable, i.e. is the service provider
not trying to influence the user’s decision to view the infringing material
available on such services by providing the facility of:
(1) Rating the contents by users;

(2) Classifying certain contents as ‘top rated’, top-ten, most reviewed,

most viewed, etc.

Is he not influencing the viewers to view a particular content which may

even be an infringing content and while doing so, is he not indirectly
controlling the viewer ship of such contents. Is he not marketing such
contents.

Importantly, in Religious Technology Center v Netcom On-Line

Communications Service Inc, 907 F Supp 1361, 1368-1370 (ND Cal
1995), the Court held that “although copyright is a strict liability statute,
there still should be some element of volition or causation which is lacking
where a service provider’s system is merely used to create a copy by a
third party.” This issue of volition was more recently examined in Parker
v Google Inc, 422 F Supp 2d 492, 497 (ED Pa, 2006), where the Court
held “when an ISP automatically and temporarily stores data without
human intervention so that the system can operate and transmit data to its
users, the necessary element of volition is missing.” The question will be
whether the manner in which the uploaded videos are performed,
displayed and created is sufficiently automated enough, so as to negate
any active volitional involvement by service provider in each act. This
issue is likely to come down to a technical analysis of service provider’s
involvement in the uploaded content, for example whether transcoding the
uploaded videos into Flash format – so that they can be viewed on the
service provider’s website – constitutes a volitional act, or is simply an
automated process without any active volitional involvement. However, it
should be noted that most of the decisions whilst under the American
Copyright Act (US) a person need not intentionally infringe copyright, it
does require conduct by a person, who causes in some meaningful way an
infringement, this was observed in Costar Group Inc v LoopNet Inc, 373
F3d 544, 549 (4th Cir 2004).
Copyright challenges involving a ‘volitional act’ have concerned the
caching and archiving of data by an Internet service provider. In this
regard, the Court may well apply the same reasoning applied in Playboy
Enterprises Inc v Frena, 839 F Supp 1552 (MD Fla 1993), where the
defendant was found liable for hosting images uploaded by others, despite
the defendant claiming there was no active, volitional involvement. In
Perfect 10 Inc v Cybernet Ventures Inc, 213 F Supp 2d 1146, 1174 (CD
Cal 2002). It was observed that another issue which the service provider
may raise is the application of the ‘safe harbor’ provisions under the
Digital Millennium Copyright Act 1998 (US) 9. These provisions provide
exceptions for service providers from action for direct, vicarious and
contributory copyright infringement. The relevant safe harbor in question
is Section 512(c) (1) which provides:

“A service provider shall not be liable for monetary relief, or, except as
provided in subsection (j), for injunctive or other equitable relief, for
infringement of copyright by reason of the storage at the direction of a
user of material that resides on a system or network controlled or operated
by or for the service provider, if the service provider:

(A)(i) Does not have actual knowledge that the material or an activity
using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or

circumstances from which infringing activity is apparent; or

(iii)upon obtaining such knowledge or awareness, acts expeditiously to

remove, or disable access t, the material;

(B) does not receive a financial benefit directly attributable to the

infringing activity, in a case in which the service provider has the right and
ability to control such activity; and
(C) upon notification of claimed infringement as described in paragraph
(3), responds expeditiously to remove, or disable access to, the material
that is claimed to be infringing or to be the subject of infringing activity”.

8 839 F Supp 1552 (MD Fla 1993).

9 17 USC § 512.

10 Perfect 10 Inc v Cybernet Ventures Inc, 213 F Supp 2d 1146, 1174 (CD
Cal 2002).

11 17 USC.

Red flag provision:

However, under Section 512(c)(1)(A), a service provider will be

disqualified from the safe harbors, if they had actual or ‘red flag’
knowledge of the infringing material. Under this provision, a service
provider is not under a positive obligation to remove material, which
infringes copyright. However, they will lose their safe harbor in cases
where they become aware of ‘red flags’, that is facts or circumstances
from which infringing activity is apparent, and if subsequently they fail to
act This aspect raises a question as to just how much actual or constructive
knowledge Service provider should have in regard to the infringing
videos, including the technology which Service provider currently uses. It
should also be noted, that the comments made by Service provider that
service provider will use filtering technology to identify and remove
infringing videos for copyright owners who have entered into agreements
with service provider, is likely to count in copyright owner’s favor.

The ‘financial benefit’ provision:

Moreover, another provision which is likely to be heavily litigated, is the
financial benefit provision i.e. 17 USC § 512(c)(1)(B). Under this
provision, a service provider will be disqualified from the safe harbor,
where they receive a financial benefit, which is directly attributable to the
infringing activity, where they have right and ability to control that
activity. Generally, a service provider conducting a legitimate business
will not be considered to have received a ‘financial benefit directly related
to the infringing activity’. For example, if the service provider receives a
one-time set-up fee or periodic payments from their customers, whether
they engage in infringing activities or not, would not constitute a ‘financial
benefit’. However, the situation in YouTube’s case is quite different, as
their main form of revenue is through advertisements which feature on
search pages, licensed videos and sometimes above the videos themselves,
including infringing videos.

This provision was considered in the following cases-

Perfect 10 Inc v CCBill, 481 F 3d 751 (9th Cir, 2007). Where the United
States Court of Appeals held that the relevant enquiry to make when
considering whether a service provider has received a ‘direct financial
benefit’,

Ellison v Robertson, 357 F 3d 1072, 1079 (9th Cir 2004). 21

“Whether the infringing activity constitutes a draw for subscribers, not just
an added benefit”

Tur v YouTube Inc, cv-06-04436 (CD Cal, filed 14/7/2006). 22 the Court
held that “a provider’s receipt of a financial benefit is only implicated
where the provider has the right and ability to control the infringing
activity”.

18 17 USC § 512(c)(1)(B).

19 17 USC § 512(c)(1)(B).
20 481 F 3d 751 (9th Cir, 2007).

21 Ellison v Robertson, 357 F 3d 1072, 1079 (9th Cir 2004).

22 cv-06-04436 (CD Cal, filed 14/7/2006).

23 Perfect 10 Inc v CCBill, 481 F 3d 751 (9th Cir. 2007).

24 Hendrickson v Ebay Inc, 165 F Supp 2d 1082, 1093 (CD Cal, 2001);
Perfect 10 Inc v Cybernet

Ventures Inc, 213 F Supp 2d 1146, 1183 (CD Cal 2002); Corbis Corp v
Amazon.com Inc, 351 F

Supp 2d 1090 (WD Wash, 2004).

MGM Inc v Grokster, 545 US 913, 926. 25

In copyright owner’s view, service providers are entertainment

destinations. ‘The public at large are not attracted to their storage facility
or technical functionality – people are attracted to the entertainment value
of what’s on the site’. In this regard, copyright owner’s claim that service
providers will lose their safe harbor, as they are receiving a direct financial
benefit from infringing videos, where they have the right and ability to
control the activity, through the sale of advertisements.

Authorization by the service provider:

Under the Australian Copyright Laws to hold a service provider liable for
infringement of copyright by uploading of copyrighted work on their
platform (site), the Courts get down to ascertain that whether the Service
Provider ‘authorized’ the uploading and sharing of the said content, for
that, the matters that must be taken into account while fixing the liability if
the service providers include the following:

(a) The extent (if any) of the person's power to prevent the doing of the
act concerned;
(b) The nature of any relationship existing between the person and the
person who did the act concerned;

Whether the person took any other reasonable steps to prevent or avoid
the doing of the act, including whether the person complied with any
relevant industry codes of practice. (section 101(1A) copyright act)

In the Australian Copyright Act, Section 112E, which was also inserted
into the Act by the Digital Agenda Act, provides:

“A person (including a carrier or carriage service provider) who provides

facilities for making, or facilitating the making of, a communication is not
taken to have authorized any infringement of copyright in an audio-visual
item merely because another person uses the facilities so provided to do
something the right to do which is included in the copyright.”

Under this heading the courts also have to ascertain whether the service
provider had any supervision and control over the contents which its users
upload, this can be done by subjecting their platform to new technologies
which help them finding out if their users are uploading infringing works.

This scenario has led to a widespread view that the UGC sites should use
copyright filtering technology. This technology compares uploaded
material against samples of copyrighted material provided by copyright
owners. If uploaded material matches any Reference Material, then the
uploaded material must either be blocked before it is ever uploaded, or
licensed from the copyright owner. The initiative seeks to have copyright
owners and UGC sites cooperate to implement filtering technology “in a
manner that effectively balances legitimate interests in

(1) Blocking infringing user-uploaded content

(2) Allowing wholly original and authorized uploads

(3) Accommodating fair use.

Filters Incorporated for protections for Fair Use. Many service

providers are experimenting with automated content identification
technologies ("filters") to monitor their systems for potential copyright
infringements.

Three Strikes before Blocking: The use of "filtering" technology should

not be used to automatically remove, prevent the uploading of, or block
access to content unless there are "three strikes" against it:

4. The video track matches the video track of a copyrighted work

submitted by a content owner;
5. the audio track matches the audio track of that same copyrighted
work
6. Nearly the entirety (90% or more) of the challenged content
comprises of the copyrighted work.

If filtering technologies are not reliably able to establish these "three

strikes," further human review by the content owner should be required
before content is taken down or blocked.

Human review: creators should be afforded the opportunity to reply to

the conclusions of automated filters. If a user's video is "matched" by an
automatic filter, the user should be as soon as possible notified by the
service provider of the consequences of the match and given the
opportunity to dispute the conclusions of the filtering process.

If the user disputes a "match" pursuant to the above dispute mechanism

provided by the service provider, the provider should promptly notify the
relevant content owner in order to afford content owner an opportunity to
issue a DMCA takedown notice after human review of the disputed
content.

Minimization: In applying automated filtering procedures, service

providers should take steps to minimize the impact on other expressive
activities related to the blocked content. For example, automated blocks
should not result in the removal of other videos posted by the same user.

Parker v Google Inc, 422 F Supp 2d 492, 497 (ED Pa, 2006)

The Court held “when an ISP automatically and temporarily stores data
without human intervention so that the system can operate and transmit
data to its users, the necessary element of volition is missing.”
Perfect 10 Inc v CCBill, 481 F 3d 751 (9th Cir. 2007).

The Court held that ”the ‘right and ability to control’ the activity refers to
something more than just the ability of a service provider to remove or
block access to material posted on its website or stored in its system.”

CASE: COOPER v UNIVERSAL MUSIC AUSTRALIA PTY LTD 2006

FCAFC 187

The issue was whether service provider authorized internet users in

Australia to copy, and operators of remote websites to communicate to the
public, music files constituting sound recordings in which the Record
Companies hold copyright.

The point of prime consideration was whether the service provider had
power to prevent the unauthorized uploading and sharing of the content.

The court held that providing a website with hypertext links (hyperlinks),
the appellant authorized the making of copies of the whole or a substantial
part of the alleged sound recordings without the license of the owners or
exclusive licensees of those sound recordings. a person's power to prevent
the doing of an act comprised in a copyright includes the person's power
not to facilitate the doing of that act by, for example, making available to
the public a technical capacity calculated to lead to the doing of that act.
The evidence leads to the inexorable inference that it was the deliberate
choice of Mr. Cooper to establish and maintain his website in a form
which did not give him the power immediately to prevent, or immediately
to restrict, internet users from using links on his website to access remote
websites for the purpose of copying sound recordings in which copyright
subsisted.

Hence, while deciding upon the issue of infringement by the service

provider, the business model of such platforms has to be distinguished in
the following manner-
i). it merely facilitates the expressions of the ideas of the users and while
doing so their intention is not to use or enjoy the copyrighted work from
which they are inspired.
ii). It results in increasing piracy and illegal reproduction of copyrighted
works.
In the former case the courts may be lenient enough to not hold the service
provider liable for the infringement e.g. Sony vs. Universal battle.
However, in the latter case the courts ought to fix the liability of such
service providers such as has happened in cases like Napster, Grokster,
etc.
 CHAPTER FIVE

CONCLUSION AND SUGGESTIONS:

For protecting the copyright infringement by way of U.G.C, the service

provider should encourage uploading of wholly original and authorized
user-generated audio and video content and on the other hand the
copyright owners, before acting, should ascertain the liabilities on the lines
of ‘fair use’ of copyrighted content on UGC Services. I believe that by
adopting the above, this phenomenon can be used for the better expression
and interaction by people.

My suggestions are:

. UGC Service provider should provide in conspicuous places on their services,

information that promotes respect for intellectual property rights and
discourages users from uploading infringing content.

During uploading by user, Service Provider should inform users that, by

uploading content, they affirm that such uploading complies with the Service
provider’s terms of use prohibiting infringing uploads.

. Service providers should use effective content identification technology to

eliminating from their services all infringing user-uploaded audio and video
contents.

Copyright Owners should provide: (1) the reference data for content required
to establish a match with user-uploaded content, (2) instructions regarding
how matches should be treated, and (3) representations, in good faith that it
possesses the appropriate rights regarding the content.

The Identification Technology should use Reference Material to identify user-

uploaded audio and video contents.
SURVEY OF LITERATURE

en.wikipedia.org/wiki/

User-generated_content

www.ugcprinciples.com/

www.intranetjournal.com/articles/200603/ij_03_07_06a.html

doien.blogspot.com

www.watblog.com/.../user-generated-content-will-the-real-spielberg-
stand-up-please

www.indiaprwire.com/pressrelease/.../200701111553.htm

contentsutra.com/.../the-ecosystem-for-

user-generated-content-on-tv-will-evolve-by-q4-of-2007

www.manuprasad.com/2009/12/non-user-generated-content/

www.iab.net/media/file/2008_ugc_platform.pdf

publishing2.com/2007/10/.../the-

user-generated-content-myth

(van Duyn and Waters, 2006)

copyright Act, 1994.

 BIBLIOGRAPHY
PRIMARY SOURCES

LEGISLATIONS
 The Constitution of India , 1950

SECONDARY SOURCES
BOOKS
ARTICLES

REPORTS

INTERNATIONAL TREATIES, LEGISLATION AND

CONVENTION.

OTHER SOURCES
INTERNET
 http://www.wisegeek.com/what-is-euthanasia.htm

 http://www.qrtl.org.au/Euth%20Meaning.htm

 www.medterms.com/script/main/art.asp?articlekey=7365

 www.encyclo.co.uk/define/euthanasia

 http://mindprod.com/humanrights/euthanasia.html

 Euthanasia and Assisted Suicide - Conclusion

 http://law.jrank.org/pages/1102/Euthanasia-Assisted-
Suicide-Conclusion.html#ixzz0j1FHWqCO


