Netflix, Reason for Delaying Submission of Appeal Statement [Cha Min-young's PostIT]

Netflix-SKB, Network Usage Fee Litigation
Court Rules in Favor of SKB in First Trial
Netflix Requests Extension for Appeal Submission
Concerns Ahead of National Assembly Audit Season
"Common Occurrence in Legal Circles" Counterarguments Exist

[Asia Economy Reporter Cha Min-young] # The lawsuit battle between Netflix and SK Broadband over 'network usage fees' has recently become a hot topic in the industry. This is because it was confirmed that Netflix, which filed an appeal after the Seoul Central District Court ruled in favor of SK Broadband in the first trial on June 1, suddenly requested the court to extend the deadline for submitting the statement of appeal. What will be the outcome of the second round of this 'trial of the century' that the whole world is watching?

Netflix Requests Extension for Submission of Statement of Appeal

According to the legal and telecommunications industries on the 19th, Netflix applied to the Seoul High Court on the 8th to extend the deadline for submitting the statement of appeal related to the 'confirmation of non-existence of debt lawsuit' ruling by the Seoul Central District Court. After filing the appeal on July 15, the court ordered Netflix to submit the statement of appeal by September 10, but Netflix judged that more time was needed.

Typically, the statement of appeal contains which parts of the first trial's ruling are factually incorrect or where incorrect legal principles were applied. It must include new claims to be made in the appeal trial, new evidence to be submitted, and the purpose to be proven through the evidence. The court reviews this in advance.

The specific reason for requesting an extension of the submission deadline has not been disclosed, but the industry cautiously speculates that it might be a strategic decision to avoid the October National Assembly audit. The second audit of the 21st National Assembly is scheduled to be conducted for three weeks from October 1 to 21 by agreement between the ruling and opposition parties. Multinational platform companies such as Google, Facebook, Apple, and Amazon are frequent witnesses summoned to the audit. On the other hand, there is also a counterargument that "extensions for submitting statements of appeal are common in the legal field."

SKB Wins First Trial... Netflix Immediately Appeals

The dispute between the two companies dates back to November 2019. SK Broadband filed a request for mediation with the Korea Communications Commission to mediate negotiations over network usage fees with Netflix, bringing the conflict to the surface. However, before the mediation results were announced, Netflix filed a lawsuit in April last year seeking confirmation of non-existence of debt, arguing that it had no obligation to pay network usage fees, escalating the dispute into a legal battle.

In the first trial, the court ruled in favor of SK Broadband. The 20th Civil Division of the Seoul Central District Court ruled against Netflix in the first trial of the confirmation of non-existence of debt lawsuit filed against SK Broadband. The court dismissed Netflix's claim that it had "no obligation to pay network usage fees" and rejected the claim that there was no obligation to negotiate.

'Dismissal' and 'rejection' are both legal terms meaning refusal of a lawsuit, but they carry subtly different meanings. Rejection means that the lawsuit meets the formal requirements but the court rejects the plaintiff's claims as unfounded. It can be interpreted as the plaintiff effectively 'losing' the case. Dismissal means the lawsuit is terminated without trial due to failure to meet all procedural requirements or due to impropriety.

Netflix, which lost the case, immediately issued a statement expressing regret over the court's decision. Right after the first trial result, Netflix stated in an official statement that "framing us as 'free riders' distorts the facts," and argued, "Rather, it is the ISP that is trying to unjustly gain by double charging consumers who have already paid ISPs for internet services to content providers (CP), not the CP."

Netflix cited two main reasons for appealing the first trial ruling. First, there is no legal basis for the obligation to pay fees for network usage. Obligations such as payment duties arise only when there is a legal basis such as laws or contracts, but the ruling omitted such grounds. Second, the first trial ruling was biased toward protecting the interests of domestic ISP companies, which would ultimately threaten the internet ecosystem and net neutrality as a whole.

Battle of Logic Between Top Domestic Law Firms

Another point of interest is how the two companies, each having hired the top domestic law firms, will persuade the court. Kim & Chang and Bae, Kim & Lee, who served as legal representatives for Netflix and SK Broadband respectively in the first trial, will face off again in the second trial. Given that these are industry-leading companies with massive capital, there is a possibility that this will escalate into a long-term battle. An industry insider said, "It seems that neither side will back down."

This trial is not just a matter between two companies. It is expected to be the world's first judicial ruling distinguishing the roles and responsibilities between CPs and ISPs. With the development of 5G technology and the anticipated astronomical increase in traffic costs amounting to hundreds of billions of won, disputes are expected to increase. The industry views this as an important precedent as various global CPs such as Amazon and Google YouTube engage in disputes with telecommunications operators in different countries during contract negotiations.

Typically, the date for the second trial is set within five months after the appeal is filed. Since the appeal was filed on July 15, it is expected to be scheduled after mid-December. Attention is focused on what arguments Netflix will present.

This content was produced with the assistance of AI translation services.