Box 4. Fair use and copyright limitations
At the international level, under Article 9(2) of the Berne Convention for the Protection of Literary and Artistic
Works and other international copyright treaties
signatories are permitted to establish limitations and exceptions on
the national level but are subject to the so-called “three-step test”: The “three-step test” requires that limitations and
exceptions must be i) confined to special cases, ii) not in conflict with a normal exploitation of the work and iii) of no
unreasonable prejudice to the legitimate interests of the author.
The agreed statement concerning the three step test
in article 10 of the WIPO Copyright Treaty also underlines that these provisions permit signatory countries to devise
new exceptions and limitations that are appropriate in the digital network environment.
National approaches to the determination of exceptions and limitations vary. Rather than specifying a closed list
of limitations, common law countries allow for a particular type of limitation on exclusive rights, i.e. fair use and/or fair
dealing exceptions (Guibault, 1998, WIPO, 2006b). Under US copyright law, for example, a use is permitted if it is
determined to be “fair use” as that term is defined by U.S. statutes and case law. US copyright law lists categories of
uses that may be fair use under the copyright law, such as criticism, comment, news reporting, teaching, scholarship,
and research. This listing is not exhaustive. To determine whether a use is fair, a US court would consider i) the
purpose and character of the use (e.g. use for non-profit educational purposes), ii) the nature of the copyrighted work,
iii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and iv) the effect of
the use upon the potential market of the copyrighted work.
The approach in other OECD countries such as Australia, member countries of the EU, Korea and Japan is
rather to define a set of closed purpose-specific exceptions to exclusive rights.
In Australia, “fair dealing” is a use of a
work specifically recognised as not violating exclusive rights. However, in order to qualify for such exceptions a use
must fall within closed purpose-specific exceptions (e.g. review or criticism, parody, satire, research or study, news-
reporting) and certain circumstances must be met (depends on the nature of the created work, effect of the use on any
commercial market for the work, etc.). In the United Kingdom, the “fair dealing” approach also specifies a list of
situations where “dealing” with a protected work is permitted.
“EU Directive 2001/29/EC on the harmonisation of
certain aspects of copyright and related rights in the information society (EUCD)” introduces an exhaustive list of
optional exceptions and limitations.
This list is amenable to the various legal traditions of the EU member states. The
EU Directive also mandates the adherence to the three-step test described above.
Finally, Korean and Japanese Copyright Acts contain categories of uses for which the exclusive rights of authors
does not hold: e.g. educational uses, quotation, news reporting, etc.
In particular, the fair use exception connected to
non-profit performance may – under certain circumstances – be relevant to UCC.
No matter whether copyright systems follow a “fair use” doctrine or whether they opt for a specific
list of exemptions, broadly speaking the application of these standards is complex and it is difficult to
predict what a court will decide when applying them.
Also, in the digital UCC environment one question
is how to adapt the parameters of certain copyright exceptions and limitations, such as fair use, when
citations and compilations are increasingly prevalent and easy. In a multi-media environment with mixes of
text, video, and graphic works, concepts such as “citation” may be blurry. As with any other use being
made of a work still under copyright protection, if no exemption can be invoked, the creator of derivative
UCC has to obtain permission from the original authors to create the UCC (e.g. for remixes, mash-ups).
There remains a degree of legal uncertainty on the side of the creator of the original work as well as with
the creator of the derivate work. While this legal uncertainty may lead to the creation of less derivative
works, it also has advantages, namely that courts maintain some degree of flexibility when deciding on
whether a use is a permissible exception.
The general question for UCC is what are the effects of copyright law on non-professional and new
sources of creativity and whether copyright law may need to be examined or does not need to be re-
examined, in order to allow coexistence of market and non-market creation and distribution of content, and
spur further innovation.
Current legal interpretation maintains that standard copyright rules and its exceptions are a necessary
condition for creativity and that the exceptions and limitations work well (e.g. Ginsburg, 2002). In
principle, copyright limitations provide ample opportunity for a use to qualify as a permissible exception or
limitation. Future case law may determine the boundaries of exceptions and limitations and produce clarity
in the UCC context. This is also the thinking pursued in recent national and international legislative
approaches (i.e. the WIPO Internet Treaties) which propose a combination of exclusive rights and
exceptions and limitations. If necessary, existing limitations can also be amended. The Gowers review in
the United Kingdom, for example, suggests amending applicable EU copyright law to allow for an
exception for creative, transformative or derivative work, within the parameters of the Berne three-step test
and to broaden the list of exceptions to copyright for the purpose of caricature, parody and pastiche (UK
Treasury, 2006). Overall, it must be clear that a sizeable share of original UCC works is not concerned by
these considerations as no derivative works are involved, and many examples of UCC qualify for the
standard limitations on copyrights.
On the other hand, proponents of UCC have voiced concerns which are largely based on the idea that
non-commercial users have different incentives to create, use, and to share than established professional
content holders and that these incentives should be preserved due to their social and cultural impact (see,
for example, OECD 2006a, for related discussions and follow-up discussions of the World Summit on the
). These concerns centre on how the copyright law on derivative works could stifle
some of the creativity that digital technology enables (Lessig, 2004; Fisher, 2004, 2006). It has been
argued that some would-be users are deterred from engaging in conduct that could fall within the ambit of
fair use (and hence be legal), due in part to concerns over incurring legal fees and also to the uncertainty
and unpredictability of the fair use approach itself (Cotter, 2006). The idea that the IPR system may not
have kept pace with progress in this sense and that content production based on the reuse of existing
materials – such as sampling or mash-ups – should not be penalised per se has been echoed at the policy
Facilitating UCC creation: More flexible and efficient licensing processes for copyrights (including
for non-UCC areas) have been suggested in the digital context (EU, 2006; OECD, 2006c). Current
licensing regimes have been seen by some to be unduly burdensome because of the costs involved or the
inability to identify and locate the author of the original work. In some cases the original author of a work
will not be identifiable and cannot be contacted, and hence no legal use of the material can be made.
Solutions such as new ways to license copyright or new technologies to facilitate licensing could be
explored and have – in some cases – been implemented. This could, for example, involve the creation of
clearing houses/centres for the attribution of rights to UCC and other creators. From the point of view of
commercial copyright interests, any such changes should not be solely to benefit creators of UCC and to
the detriment of their commercial interests.
Furthermore, the expansion of fair use-type provisions to derivative works that are more than just
copying (i.e. that have real transformative and creative value) and that are non-commercial, have also been
proposed (Litman, 2006, Fisher, 2004) – often based on the argument that remixing of others’ work can
also serve to benefit original creators by providing increased exposure. Commercial use of such derivative
works would continue to be regulated by the regular statutory rights and limitations.
These suggestions may imply changes to copyright laws, and they rely on a clear dividing line
between commercial and non-commercial content, which may be difficult to establish taking into account
the diversity of UCC services and related business models. Moreover, the suggested benefits from such
new approaches would have to be weighed very carefully against their costs, including, for example, to the
established commercial content industry which produces significant economic value. Beyond suggestions,
more study is needed of the extent to which UCC creates proven, valuable creative works and associated
private and public benefits, as well as what the potential economic damage is, if any, to the established
commercial content industry. So far the available statistics seem to demonstrate rapid growth of UCC
within current frameworks. One question is to what extent could this growth be even more rapid, whether it
comes at the expense of the commercial content industry and other creators, and whether there is a
likelihood of constraints on further growth due to difficulties encountered under copyright law.
To date, the attention of rightholders is mostly focussed on UCC platforms which host unmodified
snippets or entire reproductions of their original works without authorisation (see section below). So far
there seem to be relatively few legal cases directly aimed at the creation of non-commercial derivative
works by individuals. However, there are increasing legal actions in the form of take-down notices and
“cease and desist” letters which are sent to UCC platforms and individuals asking them to take down
certain potentially unauthorised content and which may not reach courts.
Finally, experimentation with new models for the economic use and creation of new digital content is
ongoing which does not rely on changes of statutory rights and exceptions of copyright regimes, i.e.
flexible licensing regimes such as the Creative Commons.
The idea is to facilitate the release of creative
works under liberal licence terms that would make works available for sharing and reuse. These may
address the particularities of content created by amateurs and allow for a parallel coexistence between
traditional commercial content and free UCC. But their impacts are not clear and merit further study,
including positive or negative effects on the creation process (OECD, 2006a). Introducing further diversity
in access and licensing regimes to copyrighted works may also have disadvantages (Elkin-Koren, 2006). In
sum, the legal meaningfulness of such licences has not yet been fully assessed by research and courts.
Copyrights and the terms of services of UCC sites
As shown by the analysis of the terms of service (Table 8), most UCC sites specify that they retain
IPRs in their respective content (e.g. text, software, graphics, layout, design – especially in cases such as
Second Life or social networking sites with their own software and content).
UCC platforms usually grant users who upload content the right to retain copyright in their work. This
right is enforceable and applicable both online and offline, both for non-profit and commercial ventures.
According to the terms of services of the sample of UCC platforms, users agree that they have given the
site a licence to use the content, mostly without payment.
Competitors with profit-sharing strategies and
arrangements have also emerged. At times the sites reserve the right to prepare derivative works of the
content posted by users and the terms of service require the uploader to waive their moral rights. Some
sites reserve the right to commercially exploit the works posted by users or to license the content to third
parties. Some sites require the user to agree that the content will be subject to the Creative Commons
licence. In some cases, unclear terms and conditions or a failure of users to read the latter may lead the user
to agree to granting additional rights (even after the user has taken down the content and even for
commercial purposes). Often, however, the licence agreed to by the user terminates at the time the user
removes such content from the Internet platform site, hence terminating the licence granted to the UCC
A further issue is that some sites reserve the right to modify or terminate the service for any reason
without notice at any time, and that this may have consequences on content stored or acquired by users. If,
for instance, a UCC site terminates or modifies the service a user may lose his/her uploaded content, the
way it was tagged and organised, potentially his/her avatar, and with it many hours of labour and/or money
invested to create the content.
Table 9. Intellectual property provisions in terms of service of UCC sites
created by site
Most sites specify that they retain IPRs in their respective content (e.g. text, software, graphics,
layout, design) under copyright.
- Most sites specify that users who post content retain ultimate ownership, but that that they have
given the site a licence to use content without payment. In other words, by posting the content the
sites receives a limited irrevocable, perpetual, non-exclusive, transferable, fully paid-up, worldwide
licence (with the right to sublicense) to use, modify, publicly perform, publicly display, reproduce, and
distribute such content.
- Most sites specify that this licence does not grant the site the right to sell the content, nor to
distribute it outside of the respective service.
- Most sites pledge to mention the identity of the user, the author of the work, and also the title of the
work, in so far as technical conditions make this possible.
- Most sites specify that the licence terminates at the time the user removes his/her content.
- Yet some sites reserve the right to prepare derivative works (modify, edit content posted by users)
or the right to adapt. At times, it is specified that the site may commercially exploit the works posted
- Some sites however specify that users lose their IPRs and forfeit payment in perpetuity (even when
the content is removed). Sometimes the sites also ask the user to admit “moral rights” (meaning that
the site does not have to give the author credit).
- Some sites require the user to agree that the content will be subject to the Creative Commons
- Some sites reserve the right of reproduction, i.e. the right to reproduce, without limitation, on any
known or unknown medium, current or future, especially optical, digital, paper, disc, network,
diskette, electronic, DVD, etc.
- Some sites reserve the right to distribute the work or to sublicense rights to third parties. Mostly, it
is proposed that revenue from these activities be shared between the user and the site.
- Some sites reserve the right to use the name and content of users for advertising and promotional
purposes (promotional licence)
Most sites reserve the right to modify or terminate the service for any reason, without notice, at any
time, which may have consequences on content stored or acquired by users.
Source: OECD based on review of the terms of service of a sample of 15 widely-used English-speaking UCC sites.
Copyrights and the liability of UCC platforms
As discussed above, the growth of UCC 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 UCC (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 UCC platforms
without authorisation (e.g. uploading parts of popular TV series without the explicit consent of the content
owner). This activity is outside the scope of UCC as defined in this study, but it is still a key concern of
rightholders, who may seek to hold the UCC platforms directly or indirectly liable for copyright
infringement. Additionally, posting UCC that is created through the adaptation of pre-existing work may
also raise copyright issues for UCC platforms, e.g. whether the particular use is permissible under
exceptions and limitations such as fair use, and if not permissible, whether the UCC platform is liable for
direct or indirect copyright infringement as a result or otherwise exempted from liability for the
Rightholders are beginning to engage in relevant actions against potential infringement on UCC
platforms. Associations representing content owners have sent take-down notices and have asserted
potential lawsuits against UCC platforms.
An example of interactions between rightholders and a UCC
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
rightholders’ permission. Major media companies have also requested online video sites to remove their
Some UCC platforms have defended the posting of unaltered third party and alleged infringing
derivative UCC 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.
Box 5. 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 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 unauthorised
copyrighted material when a legitimate claim of a rights 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
, 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.
No general monitoring
obligation can be imposed on the service provider.
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.
Such mechanisms are to be developed on the basis of voluntary
agreements and codes of conduct between all parties concerned.
In addition, in EU Member States such as Italy
and France but also on the EU level, public-private partnerships emerged regrouping ISP, rightholders 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 UCC platforms can be treated as a “mere conduit” under exceptions for online intermediaries
is an ongoing question. As depicted in Table 9, most UCC 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 UCC sites specify that when valid notifications are received, the service provider usually
pledges to respond by taking down the unauthorised content.
Then the owner of the removed content is
contacted so that a counter-notification may be filed.
Table 10. Intellectual property provisions in terms of service of UCC sites
Most sites specify that users who post content are responsible for it. Uploaders 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 copyrights of others.
When valid notifications are received, the service provider usually pledges to respond by taking
down the offending content. Under some legal regimes, it is specified that the owner of the removed
content is contacted allowing him/her to file a counter-notification.
Source: OECD based on review of the terms of service of a sample of 15 widely-used English-speaking UCC sites.
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