Sang-Eun Shin April 18 2022 Judgment concerning infringement of neighbouring rights holder's reproduction rights NAM & NAM | Intellectual Property - South Korea Sang-Eun Shin Intellectual Property FactsBackgroundDecisionCommentOn 3 June 2021, the Korean Supreme Court rendered a decision relating to infringement of the reproduction rights of a record producer with neighbouring (related) rights in copyright works.(1)FactsThe plaintiff (a phonogram producer) signed an exclusive contract with the defendant (a singer-songwriter) on 19 August 2014. Under the contract, the plaintiff had management authority and obligations regarding the defendant's entertainment activities. The main point of the contract was that the ownership of output developed and produced by the plaintiff during the exclusive contract period belonged to the plaintiff, while the defendant had copyright and neighbouring rights (especially performance rights) protected under copyright-related laws.On 1 November 2016, the plaintiff signed a master rights transfer contract with a company that was not party to the subject suit (the non-party company). The main point of this contract was to transfer all of the plaintiff's 1,688 musical works, including the songs composed by the defendant, to the non-party company.On 15 November 2016, the plaintiff prepared an agreement to terminate the contract with the defendant. Shortly after this agreement, on 24 November 2016, the defendant copied the musical recording (MR) files held by the plaintiff to the defendant's external hard drive ("MR files" are a kind of instrumental track used in performances).BackgroundArticle 2 of the Copyright Act provides that:The term 'phonogram' means the medium in which the sound (referring to voice or sound; the same hereinafter) is fixed (including a digitalized sound): Provided, That excluding the sound fixed along with images.Article 16 of the Act provides that: "The author shall have the right to reproduce his or her work."Article 78 of the Act provides that: "Phonogram producers shall have the right to reproduce their phonogram."Articles 16 and 78 of the Act both stipulate a right of reproduction. However, they are distinguishable in that article 16 concerns the rights of copyright holders, while article 78 concerns the rights of neighbouring copyright holders.In this case, the MR files copied by the defendant without permission corresponded to a "phonogram" prescribed under article 2 of the Act as the sound was fixed in a tangible medium. The neighbouring rights of the plaintiff (the phonogram producer) arose from the time the sound was first fixed to a record.Therefore, apart from the defendant's copyright as the author of the musical work included in the phonogram, the plaintiff, who was responsible for the overall production of the phonogram, had neighbouring rights to the phonogram, such as the right of reproduction.DecisionThis Supreme Court judgment was meaningful in two aspects.The first is that the plaintiff's rights to the MR files were clearly distinguished from their rights in the final recordings. The Court held that the rights to the MR files were not transferred to the non-party company just because the MR files were used in the final recordings.The second is that the Court determined that infringement of the plaintiff's right to reproduce occurred as soon as the MR files were duplicated and that damages corresponding to the legitimate price for copying the MR files were incurred, regardless of whether the MR files were used. This contrasts with the lower court's determination that, while the defendant had copied the MR files without the plaintiff's permission, the plaintiff had not suffered any damage due to the fact that the plaintiff still had the MR files and thus was not restricted from producing works in the future.CommentThis case highlights the wholly different rights that multiple parties can have in a work, and serves as a reminder that reproduction rights are limited where neighbouring rights are involved. Infringement is a distinct possibility, even between holders of rights in the same original work.For further information on this topic please contact Sang-Eun Shin at NAM & NAM by telephone (+82 2 753 5477) or email ([email protected]). The NAM & NAM website can be accessed at www.nampat.co.kr.Endnotes(1) Case 2020Da244672.