COPYRIGHT LAW CASE:
[A Korean cinema company successfully defends against copyright claims of music association.]
(Korean Supreme Court rendered January 14, 2016; Case No. 2014 DA 202110)
CJ CGV Company Limited (the Defendant) was operating 36 cinemas in Korea from June 2011 to March 2012. Through its cinema producer, the Defendant contracted with an independent music director (the Music Director) to produce scores of music to be used as background or theme music in 28 of its cinemas. The Defendant understood that the Music Director would either produce the music on his own, or contract musicians to compose the music. Regardless of who composed the music, the Defendant took the position that once delivered; the Defendant was permitted to use the music as intended and that the Music Director had obtained all necessary authorizations from the composers.
The Korean Music Copyright Association (the Plaintiff) alleged that it had signed a trust agreement (the Trust Agreement) with the musicians that composed the music for the Defendant’s 28 cinemas. According to the Plaintiff, the Trust Agreement transferred ownership of the copyrighted music from the musicians to the Plaintiff.
For the remaining 8 cinemas, the Defendant entered into a contract with the Plaintiff. Under this agreement, the Plaintiff claimed it provided music to the Defendant for “reproduction” purposes only. According to the Plaintiff, the Defendant did not use the music for reproduction purposes, but instead played the music as background or theme music in the remaining 8 theatres.
2. Seoul Central District Court Case No. 2012 GAHAP 512054
The Plaintiff filed a claim against the Defendant with the Seoul Central District Court on April 27, 2012. The Plaintiff argued that the Defendant owed royalties to the Plaintiff for the music played in 28 of the Defendant’s cinemas. The Plaintiff cited Article 46(1) of the Korean Copyright Act that states: “The owner of author’s property rights may grant another person authorization to exploit the work.” The Plaintiff alleged that the Trust Agreement that it entered into with the musicians granted it the “authorization to exploit the work” and, as a result, all royalties for the music should be paid to the Plaintiff and not to the Music Director or the composers.
Further, the Plaintiff argued that with respect to the music it provided to the Defendant to be used in the remaining 8 cinemas, the Plaintiff claimed it had not given the Defendant permission to play the music as background or theme music in the theatres, only to reproduce the music.
The Plaintiff sought damages in the amount of approximately US$260,000, an amount equal to one percent (1%) of the Defendant’s total profits from the 36 theatres throughout the relevant time period.
b) Response of Defendant
The Defendant argued that, pursuant to Article 99(1)(ii) of the Korean Copyright Act, it did not owe the Plaintiff any royalties for the music played in its cinemas. Article 99(1)(ii) states that: “If the owner of author’s property rights authorizes a person to cinematize his work, it shall be presumed that such authorization includes each of the following rights, unless otherwise stipulated: (ii) To publicly present a cinematographic work for the purpose of public presentation.”
The Defendant asserted that pursuant to their contract, the Plaintiff had authorized the Defendant to “cinematize” the music provided by the Plaintiff. And since the contract did not “otherwise stipulate”, the Defendant was permitted to play the music for “the purpose of public presentation”, in other words, as background and theme music in the theatre.
c) Seoul Central District Court’s Decision
In a written decision dated May 23, 2013, the Seoul Central District Court rejected the Plaintiff’s argument. Citing Article 99(1)(ii), the Court stated that without a special agreement, once the Plaintiff granted the Defendant permission to cinematize the music, the Defendant had the right to play the music as background and theme music within its theatres.
The Court held that the Defendant did not have to pay any additional fees or royalties to the Plaintiff.
3. Appeal by the Plaintiff to Seoul High Court
The Plaintiff abandoned its claim to the royalties relating to the 8 cinemas and instead focused its appeal on the music played in the 28 cinemas. Accordingly, the Plaintiff reduced its damage claim from US$260,000 to approximately US$140,000.
In its appeal, the Plaintiff reiterated that it had entered into a Trust Agreement with the composers of the music, transferring ownership of the copyrighted music to the Plaintiff. Therefore, according to the Plaintiff, all royalties owing should not be paid to the Music Director or the composers, but rather to the Plaintiff.
B. Seoul High Court’s Decision
On December 19, 2013 the Seoul High Court rejected the Plaintiff’s appeal (Case No. 2013 NA 2010916) and upheld the decision of the First Instance Court.
4. Appeal by the Plaintiff to the Supreme Court
The Supreme Court rejected the Plaintiff’s appeal in a decision dated January 14, 2016 (Case No. 2014 DA 202110). The issues addressed by the Supreme Court and their decisions are as follows:
Whether the composers of the music played in the 28 cinemas (copyright owners) authorized the use of their music by the Defendant.
The composers created the music pursuant to an agreement with the Defendant’s cinema producer and the Music Director and received compensation for their work. In the Supreme Court’s view, this arrangement meant that the composers had in fact provided authorization to the Defendant to use the music.
Whether the copyright for the music played in the 28 cinemas was assigned to the Plaintiff by the composers pursuant to a Trust Agreement.
The Supreme Court stated that even though the Plaintiff entered into a Trust Agreement with the composers, the Plaintiff failed to register the agreement on the Copyright Register. Without registration, the Plaintiff cannot claim that it is the copyright holder of the music.
Whether the Plaintiff authorized the Defendant to play the music in the 8 cinemas (cinemization).
In its decision, the Supreme Court referred to Article 99(1)(ii) noting that the purpose of the clause is to regulate parties involved in producing cinema and to promote the distribution of cinema copyright. It concluded that “cinemization” includes the use of copyrighted music (as long as the music is not altered) for theme music or background music for any cinema.
Regarding the 8 cinemas, the Plaintiff authorized the Defendant to play the music in the cinema (cinemization).
Two reasons that the Plaintiff lost the case:
1. When the Plaintiff contracted with the Defendant it did not clearly set out the special agreement required pursuant to Article 99, “unless otherwise expressly stipulated.”
2. Although the Plaintiff made a trust agreement with the composers, it did not register it.
In this case, the lesson that we can draw from is that when any copyright owner makes an agreement with a copyright user get legal assistance to make a clear agreement. In case of the creation of a trust agreement, it must be registered inorder to enforce it.
Copyright ⓒ BOOK CHON, 2016