Korea Music Copyright Association (Law Firm Doll, Attorneys Yoon Gyeong-hwan et al., Counsel for defendant-appellant)

CCB Co., Ltd. (Law Firm Sejong, Attorneys Cho Yong-ho et al., Counsel for the plaintiff-appellant)

March 28, 2013

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant shall pay to the plaintiff 2,897,558,91 won and the amount equivalent to 5% per annum from March 15, 2012 to the service date of a duplicate of the complaint of this case, and 20% per annum from the next day to the day of complete payment.

1. Basic facts

A. Status of the parties

The Plaintiff is a nonprofit incorporated association that allows users who need musical works with the permission of copyright trust management business from the Minister of Culture, Sports and Tourism pursuant to Article 105 of the Copyright Act and Article 32 of the Civil Act to use musical works on behalf of copyright holders, collects user fees from users and distributes them to the relevant copyright holders. The Defendant is a company that shows movies while operating multiple movie theaters.

B. Agreement between the Plaintiff and the film producer to permit the use of copyrighted works

1) A person who intends to use a musical work managed by the Plaintiff under a trust shall apply for the approval of use by stating matters concerning the method and conditions of use of the musical work in accordance with the Plaintiff’s application for use. In this regard, the Plaintiff permits the use by issuing a written approval based on the contents of the said application for use.

2) In the form of the application for use previously used by the Plaintiff, the applicant, film producer, and distributor stated information on film festivals, film title, name of author, film name, use area, film distribution area, type of use, opening date, opening date, screen, time of use, etc., and on the basis of Article 34 of the Copyright Fee Collection Regulation, the Plaintiff stated that “the reproduction fee of video works for screening in film tubes, etc. shall be determined in consultation with the employer,” and in the column of conditions of use, the Plaintiff stated that “The application for use shall be concluded at the time of payment of the user’s copyright fee, and shall be held liable for criminal charges pursuant to Article 136(Infringement of Rights) of the Copyright Act at the time of default of the user fee.”

3) After that, the Plaintiff had film producers use the new form of application for use from October 2010, and the contents of the new form were almost the same as that of the previous form. However, in the context of the terms of use, the Plaintiff added the phrase “the first reproduction for the purpose of screening (broadcasting) first and second use.” The right of performance, the right of reproduction (such as DVD) and the right of public transmission, etc. should be dealt with in accordance with separate regulations (the partial application form is referred to as the Copyright Act instead of the separate regulations).”

(c) Amendment to regulations on collection of copyright royalties;

1) At the time, the Plaintiff, with the approval of the Minister of Culture, Sports and Tourism under Article 105(5) of the Copyright Act, set the rate or amount of royalty for the use of copyrighted works by the users of copyrighted works (see, e.g., Supreme Court Decision 200Da1548, Apr. 1, 20

2) The provision on the collection of royalties for copyright was amended as of March 15, 2012 (hereinafter “former collection provision” and the amended provision on the collection of royalties for copyright prior to the amendment as of March 15, 2012, and the current collection provision amended Article 34 as follows.

(2) If it is otherwise stipulated that the reproduction, public performance, etc. should be separately permitted in using musical works on a motion picture, the user fee for each television screen shall be determined in consultation with an employer. (1) The usage fee for each television screen shall be as follows: The usage fee for a television screen shall be at least 50,000 won independent budget (less than 400,000 won for net production) for at least 2 million won, and at least 1,50,000 won shall be at least 40,000 won for each music film, which is 40,000 won for each music film, and at least 1,200 won for each movie theater, which is 50,000 won for each movie theater, separately from the usage fee for reproduction; Presidential Decree No. 12506, Feb. 2, 2008>

D. Plaintiff’s request for payment of performance fees to film producers;

On May 12, 2011, the Plaintiff requested the Defendant and the company running a domestic complex theater including a lot shopping company to pay the performance fee for musical works used in the film, but the Defendant did not comply with the request.

E. Defendant’s use of musical works

Meanwhile, from October 2010 to March 14, 2012, the Defendant screened the motion pictures listed in the separate film list in the movie theater. The motion pictures listed in the separate film list shown by the Defendant were used for each musical work listed in the separate film music list as shown in the separate film list.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4 through 14, Eul evidence Nos. 1 through 3, 6 through 8, the purport of the whole pleadings

2. The parties' assertion

A. The plaintiff's assertion

The screening of a motion picture in a movie theater, or the screening of a part of a motion picture inserted in a motion picture in its ancillary facilities constitutes a performance under the Copyright Act. As such, the Defendant is obliged to obtain permission from the Plaintiff to use the above musical work under Article 46(1) of the Copyright Act with respect to the performance of the musical work from October 2010 to March 14, 2012, to screen a motion picture (part of a motion picture) or reproduce a sound inserted in a motion picture in a film theater or its ancillary facilities without obtaining any permission for use from the Plaintiff to the date of March 14, 2012. This is an infringement of the musical copyright holder’s right of performance. Accordingly, the Defendant is obliged to pay the Plaintiff the Plaintiff the amount of damages for damages incurred by the infringement of the author’s property right and the delay damages therefrom.

B. Defendant’s assertion

According to Article 99(1)2 of the Copyright Act, in a case where the holder of author’s property right permits the filming of a copyrighted work to others, it is presumed that the author has permitted the filming of a copyrighted work including the right to disclose the copyrighted work, unless otherwise expressly stipulated, and the Plaintiff and the film producer did not have any special agreement on the contents different from the aforementioned provision. Therefore, the permission granted by the film producer for the use of the copyrighted musical work by the Plaintiff includes not only the reproduction of the musical work but also the performance of the copyrighted work. Therefore, the

3. Determination

(a) Provisions of the Copyright Act concerning the filmation of works;

1) Copyright Act provisions

Article 99(1) of the Copyright Act provides, “In cases where an author of author’s property right permits the cinematographicization of a work to another person, it shall be presumed that the cinematographic work has been permitted including the following rights, unless otherwise expressly stipulated.” 2. The said provision provides, “In the event that the cinematographic work for the purpose of public presentation has been permitted by the author’s property right holder to cinematographic the cinematographic work, barring any special agreement, it shall be deemed that the cinematographic work is publicly

2) Whether Article 99(1) of the Copyright Act applies to musical works

A) As to this, the Plaintiff asserts that the term “cinematographicization of a work” as referred to in the above provision refers to the creation of a copyrighted work into visual image, and that there must be a certain story in order to do so. Therefore, the above provision only applies to a copyrighted work with a certain story, but does not apply to a copyrighted work without a certain story.

Article 2 Subparag. 1 of the Copyright Act provides, “A creative production that expresses human thoughts or emotions.” According to the above provision, only a copyrighted work under Article 99(1) of the Copyright Act is interpreted as a copyrighted work, without any grounds. ② Article 100(1) of the Copyright Act provides, “If a producer of a copyrighted work and a person who has agreed to cooperate in the production of a copyrighted work acquire the copyright of the copyrighted work, the right necessary for the use of the copyrighted work shall be presumed to have been transferred to the cinematographic producer unless otherwise expressly stipulated.” Article 2(2) of the Copyright Act provides, “The author’s property right of the copyrighted work, such as a novel, reproduction, art, or musical work, used for the production of a copyrighted work, shall not be affected by the provisions of paragraph (1) of the same Article.” Article 99(1) of the Copyright Act provides, “The author’s assertion that the copyrighted work is subject to the creation of a copyrighted work, as well as each copyrighted work, is subject to the overall exploitation of the copyrighted work.”

B) In other words, the Plaintiff asserts that even if a musical work includes a musical work in a copyrighted work under Article 99(1) of the Copyright Act, it constitutes a "cinematographicization of a copyrighted work" only when the image of the musical work is produced in a image, and that a copyrighted work cannot be seen as a cinematographicization of a copyrighted work when it

In light of the Plaintiff’s assertion, the above assertion that, in cases where a musical work is used only for theme or background music of a film, it cannot be viewed as a cinematographic work, in light of the following: (a) there is no legal basis to interpret that the “cinematographicization of a musical work,” as alleged by the Plaintiff, has the same meaning as “making a derivative work,” a creative work, which is an original musical work, by arrangement, image production, or by other means; and (b) the musical work, in the form used for a film, is much more than the case where the musical work is used for theme or background music without any special transformation; and (c) such a case is excluded from the “cinematographic of a copyrighted work,” as seen above, if the legislative intent of Article 99(1) of the Copyright Act is invalidated, it cannot be accepted.

C) Therefore, Article 99(1) of the Copyright Act should be deemed to apply to a case where a musical work is filmed in either theme, background, music, or any other form of a film.

(b) the existence of the right to claim performance fees;

1) The plaintiff's assertion

The Plaintiff, even if Article 99(1) of the Copyright Act applies to musical works used in this film, the film producer applied for the use of the musical work by using the application form changed from October 2010, and the Plaintiff applied for the use of the musical work on the basis of the above application form. The Plaintiff approves only the first reproduction for the purpose of screening (broadcasting) and the second use. The performance right, the right of reproduction (DVD) and the right of public transmission should be treated in accordance with separate regulations (or the Copyright Act) in the column of the use condition of the above application. This is deemed as a special agreement on performance fee, and the Plaintiff asserts that the Plaintiff has the right to receive performance fee, notwithstanding Article 99(1) of the Copyright Act.

2) Determination

A) The following circumstances can be acknowledged in full view of each of the aforementioned facts admitted as seen earlier, Gap evidence Nos. 18, Eul evidence Nos. 4 and 5, and the purport of the entire pleadings.

(1) The current application for use as amended on October 2010 and the approval for use issued by the Plaintiff upon its application do not explicitly mention Article 99(1) of the Copyright Act, which is a special case of cinematographic works, or do not explicitly express contrary to its content.

(2) Unlike the existing ones, the application for new use and the approval for use added the phrase “only the first reproduction for the purpose of screening (broadcasting) and the second reproduction for the second use.” However, in light of the phrase “the right of public performance, reproduction (DVD, etc.) and the right of public transmission, etc.,” the meaning of the above phrase should be interpreted to mean that the scope of reproduction shall not be limited to the prohibition of public screening of the user applicant, but it shall not be permitted for the purpose of producing and screening a film, and it shall not be permitted to reproduce for other purposes, such as the production and sale of the film inserted as a separate phonogram. Furthermore, since both the existing application for use and the current application for use describe the distribution area, opening date, screen, etc. of the film, it is reasonable to view that the subject matter of the application for use as well as the subject matter of the application for use is included in the public screening of the film.

(3) The existing application for use and the approval for use did not contain the above phrases, and if the Plaintiff’s assertion, the above phrase is that the film producer or the film producer bears additional usage fees. At the time of the addition of the above phrase, the Plaintiff’s notification that the film producer or the film producer should pay performance fees in addition to the future reproduction fees, or furthermore, it does not seem that there was a substantial consultation on performance usage fees between the Plaintiff and the film producer or the Plaintiff and the film screenr. Even if the Plaintiff added the above phrase as a plan to collect performance fees in the first place, it is difficult to view that the meaning of the phrase was clearly clarified and there was a special agreement under Article 99(1) of the Copyright Act as long as the film producer or the film screener did not consent thereto.

(4) The purpose of producing a film is to screen it, and the motive for a film producer to enter into an agreement to permit the use of a musical work from the Plaintiff is to produce a film and supply it to the movie theaters such as the complex theater operated by the Defendant, and such purpose and motive was sufficiently recognized by both the contracting parties at the time of entering into the agreement to permit the use of a musical work

(5) In light of the fact that the Ministry of Culture, Sports and Tourism, with respect to the press report that the modification of the collection regulation leads to the existence of an additional amount of royalties for musical works, the current collection regulation is merely a system that allows film producers to choose whether to comprehensively permit the use of reproduction and performance or to separately select whether to separately permit the use of reproduction and performance, the Ministry of Culture, Sports and Tourism, which has approved the current collection regulation, interpreted as not changing the size of the total payment received for the use of musical works between the film producer and the Plaintiff.

(6) According to Article 109(1)2 of the Copyright Act, the Minister of Culture, Sports and Tourism may suspend copyright management service providers’ services where a copyright management service provider receives user fees other than the amount or rate of performance fees determined with the approval of the Minister of Culture, Sports and Tourism pursuant to Article 105(5) of the same Act. The former collection provision does not have any separate provision for the payment of performance fees (Article 2 of the former collection provision, but does not include movie theaters in the subject of collection), and it is difficult to view that the Plaintiff entered into a special agreement for the payment of performance fees to a film producer, while taking charge of the suspension of services, until the Plaintiff’s performance is suspended.

B) Considering the above circumstances, a special agreement on the content different from that of Article 99(1) of the Copyright Act is difficult to deem that there exists between the Plaintiff and the film producers, and eventually, the Plaintiff’s permission for the use of a sound recording work that the film producer caused is deemed to include not only the reproduction of the musical work but also the performance of the musical work pursuant to Article 99(1) of the Copyright Act

C) On the ground that the Plaintiff permitted the act of reproducing and using musical works at the stage of producing a film on the ground that the Plaintiff’s permission to use the musical work to a singing machine producer does not extend to a singing machine business operator who sells the device and does not permit the reproduction of the musical work in the form of a computer chip, and that it cannot be deemed that the Plaintiff consented to the reproduction of the musical work in the form of a computer chip, thereby allowing the Plaintiff to do so.

In the case of singing rooms, both of the Plaintiff’s singing rooms do not apply to the exception of Article 99(1) of the Copyright Act to cinematographic works. Thus, the Plaintiff’s assertion also does not have any reason without any further review (in addition, the former collection provision, unlike the absence of any separate provision, regulates the user fee for performing musical instruments or Mela CHIP in Article 32 and, at the same time, separately regulates the user fee for performing musical instruments or Mela CHIP in Article 7(5).

D) In other words, the Plaintiff asserts that Article 99(1) of the Copyright Act recognizes the purpose of legislation only for the purpose of allowing the comprehensive use of copyrighted works for the convenience of production, and that the provision does not restrict the right of copyright holders to receive royalties according to each stage and method of use of copyrighted works, so even if the right of performance is recognized to the Defendant pursuant to the above provision, the Plaintiff is entitled to claim the royalty against the Defendant.

As seen earlier, the Plaintiff permitted the use of a musical work for a film on the condition that a certain fee is paid from a film producer, and the said permit includes not only the reproduction of a musical work but also the performance of a musical work. If the Plaintiff grants a public performance of a musical work under Article 99(1) of the Copyright Act but also pays a separate fee again, it may not be possible to screen a film (public performance of a musical work) according to the amount of the fee. This is not acceptable as it goes against the purpose of legislation under Article 99(1) of the Copyright Act. Accordingly, the Plaintiff’s assertion is without merit.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment sheet, etc. omitted]

A judge who franks the mobilization of force (Presiding Judge)