The Korea Music Copyright Association ("KMCA") has long been charging royalty fees to movie production companies for the right to use musical compositions in theatrically released films. However, in around October, 2010, KMCA abruptly and unilaterally changed the wording in the application/permission forms for the use of music compositions, and then filed a lawsuit against major multiplex theater operators, including CJ CGV Co., Ltd. ("CGV") and Megabox Co., Ltd. ("Megabox"), seeking separate performance royalties from such theater operators. In the lawsuit, KMCA claimed that "we only permitted movie production companies to reproduce music compositions in their movies, but never permitted theaters to do so during movie screenings, so separate performance royalties should be paid."
Prior to October, 2010, KMCA had been collecting royalty fees in accordance with the copyright fee collection rules (the "Royalty Collection Rules") approved by the Minister of Culture, Sports and Tourism pursuant to Article 105(5) of the Copyright Act, which were amended on March 15, 2012. Prior to the amendment, the Royalty Collection Rules contained provisions relating to reproduction royalty fees only, and the provisions relating to performance royalty fees were newly added at the time of the amendment.
Shin & Kim represented CGV, Megabox and other theater operators. In the lawsuit, KMCA and the defendant theater operators agreed to proceed with the lawsuit solely against CGV, as a representative lawsuit; KMCA dropped its claims against the other defendants, including Megabox, with the understanding that the judgment of the Copyright Court on the issue of performance royalty fees would apply to all other theater operators.
With the entire movie industry’s attention fixed on the CGV case, Shin & Kim argued that (i) as the special provisions of the Copyright Act concerning cinematographic works would apply to music compositions played in theatrically released films, the permission to reproduce music compositions in films should be considered to include the permission to perform them in films, unless otherwise provided in a separate agreement; (ii) KMCA’s unilateral change of the wording in the application/permission for use of music compositions could not be considered as a separate agreement on the use of music compositions for performance; (iii) KMCA granted the permission to reproduce the music compositions for the production of a film on the assumption that the music compositions would be played during film screenings; and (iv) the Royalty Collection Rules did not contain any provisions which allow KMCA to charge separate performance royalties. Based on the merits of the arguments above, the Court dismissed all of the claims made by KMCA.
The special provisions of the Copyright Act are intended to restrict certain rights of copyright holders for the purpose of promoting distributions of cinematographic compositions and development of the fine arts industry. In this regard, there have been conflicting views among the academia on whether the special provisions of the Copyright Act would be applicable to musical compositions played in movies. The CGV case is significant in that it is the first court decision rendered on this issue, confirming that the exercise of a copyright by its holder cannot be expanded indefinitely on the basis of the legislative intent behind the special provisions of the Copyright Act, while delivering a reasonable compromise between the conflicting interests of copyright holders and users of copyrighted works.
