Supreme Court: "Webcasting Does Not Qualify as Commercially Sold Records"
"Status as Commercially Sold Records Determined by Fixation on Company Servers"
The Supreme Court has ruled that playing digital music tracks inside stores such as cafes constitutes an infringement of performance rights.
Even if a store plays music through a company that has signed a contract with the Korea Music Copyright Association (hereinafter KOMCA) to use music tracks via webcasting (providing music online in real-time for simultaneous reception by the public), it still constitutes a violation of performance rights.
The Supreme Court Civil Division 1 (Presiding Justice No Tae-ak) announced on the 9th that it overturned the lower court ruling, which had dismissed the Korea Music Copyright Association’s (KOMCA) lawsuit against Lotte GRS seeking restitution of unjust enrichment and damages, on January 23, and remanded the case to the Seoul High Court.
Previously, in 2008, KOMCA had signed contracts with Company A and others to permit the use of musical works via webcasting for in-store music.
Company A and others received digital music files identical to those sold commercially, stored them on their own servers, and converted them into different audio file formats. Lotte GRS contracted with Company A and played music via webcasting at franchise stores such as Lotteria from July 2013 to September 2016.
In response, KOMCA filed a lawsuit demanding payment of performance fees amounting to approximately 800 million KRW, arguing that music played via webcasting is not a performance of commercially sold records and thus violates copyright law.
The legal issue in this case concerns the scope and criteria for determining "commercially sold records" under the old Copyright Act (before its amendment on March 22, 2016, Law No. 14083, hereinafter the "Old Copyright Act").
Article 29, Paragraph 2 of the Old Copyright Act stipulates that when commercially sold records are performed publicly without charge, the performance rights of the copyright holder are not infringed. This means that if music that is not a commercially sold record is publicly played, the copyright holder must be paid a fair fee.
Company A argued that playing digital music in stores constitutes a "performance of commercially sold records," and both the first and second trials accepted this claim. The music files received by Company A were judged to be records produced for commercial sale and merely duplicated for in-store music service purposes. Therefore, these files were considered commercially sold records, limiting the copyright holder’s performance rights.
However, the Supreme Court ruled that background music for stores is produced for a different purpose than commercially sold music files and thus does not qualify as "commercially sold records." It held that companies using such music could be liable to KOMCA for damages or restitution due to infringement of performance rights.
The Supreme Court explained, "The music files in this case were digitized and duplicated not for commercial sale but for in-store music service purposes, so they do not qualify as commercially sold records," and added, "The lower court erred in its understanding of the legal principles regarding commercially sold records under the Old Copyright Act."
It further elaborated, "Whether a file qualifies as a commercially sold record should be determined based on when the music file was fixed on servers such as those of Company A. Since the files fixed by Company A for in-store music service do not qualify as commercially sold records, they are excluded."
Meanwhile, the Supreme Court’s Third Division (Presiding Justice Lee Heung-gu) also overturned and remanded a lower court ruling that had dismissed KOMCA’s lawsuit against LG Electronics and Tom N Toms, similarly siding with KOMCA.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
