Second Level Agreements
64 Pages Posted: 19 Aug 2012
Date Written: January 1, 2012
User-Generated Content (‘UGC’) websites, in which users upload various kinds of content, are highly successful in cyberspace. Surprisingly, although many of these uploads constitute copyright infringement, thus exposing platforms and users to infringement suits, in practice, there are very few lawsuits and the vast majority of these works remain online. To date, the only explanation that has been advanced by academics as a possible key for this puzzle is the theory of “tolerated use,” which maintains that copyright owners know about the infringement, yet choose to tolerate it and not to act.
In this Article, I argue, contrary to the conventional wisdom, that tolerated use alone cannot explain the presence of vast amounts of infringing content on UGC platforms. Instead, the explanation lies in what I term ‘Second Level Agreements,’ one of the most fascinating – yet, least explored – developments in the online world. Second Level Agreements are essentially contracts between content owners and operators of UGC platforms to ratify the mass usage of copyrighted content by users. Importantly, users are not a party to those agreements – the license is granted to the platform operator. Thus, formally, users are bound by the platforms’ terms of service and cannot avail themselves of the privileges specified in Second Level Agreements. In reality, however, Second Level Agreements have a profound impact on the rights and privileges of users. In fact, they are responsible for the continuous growth of User-Generated Content. This unique phenomenon marks the first time in copyright history that users’ privileges have been dramatically expanded pursuant to a license, which was not granted to them.
In this Article I aspire to make a descriptive and normative contribution. Descriptively, I offer the first in-depth study of Second Level Agreements. I describe their evolution, explain their effect and explore the mechanism by which Second Level Agreements changed preexisting law, norms and industry practices, which have regulated the creation and distribution of User-Generated Content. Normatively, I assess the vices and virtues of Second Level Agreements. I submit that the study of Second Level Agreements and their effects holds the key for understanding the future of copyrights in the online world.
Keywords: Contracts, Copyright, YouTube, UGC, Web 2.0, Secondary Liability, Tolerated Use
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