Fair Trade Commission Corrects Unfair Terms Including Copyright Abuse by Webtoon Operators

Correction of Unfair Terms in Contracts by 7 Webtoon Service Providers and Creators

Twenty-six webtoon service providers, including Naver Webtoon, NCSoft, and NHN Entertainment, have corrected unfair terms that monopolize the secondary creation rights of webtoon content or restrict creators from transacting with third parties.

On the 21st, the Fair Trade Commission announced that it had rectified unfair terms in webtoon serialization contracts, stating, "The service providers voluntarily corrected these by deleting the relevant clauses or by making separate agreements with the creators."

Although the webtoon market has grown dramatically due to its popularization, there were concerns that unfair contracts between service providers and creators and opaque settlement structures had not been eradicated, highlighting the need to improve these outdated practices.

A representative example is the clause that requires webtoon service providers to include the right to create secondary works in the webtoon content serialization contracts.

According to Article 22 of the Copyright Act, secondary works are based on original works, so the right to create secondary works belongs to the author. Even if a service provider has the right to use the original work, a separate agreement is necessary to acquire the right to create secondary works.

The clause that includes the right to create secondary works in the contract with the service provider restricts the webtoon artist’s right to choose when, with whom, and in what form to produce secondary works. This constitutes an unfair clause that unjustly restricts customers from contracting with third parties (Article 11, Paragraph 3 of the Act on the Regulation of Terms and Conditions).

The Fair Trade Commission explained, "The service providers voluntarily corrected this by deleting the clause or by newly establishing that any business related to secondary works must be based on a separate explicit contract."

Clauses that restrict creators from transacting with third parties if priority negotiations for secondary works fail were also voluntarily deleted. Other unfair terms, such as excessive liability for damages, unfair contract termination clauses, and unfair jurisdiction clauses, were also corrected.

The Fair Trade Commission expressed expectations that "this will significantly reduce the risk of webtoon artists suffering from unfair contract conditions."

Additionally, the Fair Trade Commission added that it will participate in the Ministry of Culture, Sports and Tourism’s revision and establishment of the 'Standard Contract for the Comics Sector' to support the improvement of unfair practices and healthy growth in the content industry.