'OTT Music Copyright Fee Dispute'... Court to Examine Ministry of Culture's Discretion Basis

KT·LG Uplus - Ministry of Culture 1st Hearing
Plaintiff "Same 'Transmission' but Why Only OTT Is Different"
Defendant "Can Watch Twenty Times... No Procedural Defect"
Core Issue: Ministry of Culture's Discretionary Basis & OTT Specificity

The 14th Administrative Division of the Seoul Administrative Court (Presiding Judge Sanghoon Lee) held the first hearing on the 14th for the administrative lawsuit filed by KT and LG Uplus against the Ministry of Culture, Sports and Tourism.

[Asia Economy Reporter Cha Min-young] The first hearing of the administrative lawsuit filed by KT and LG Uplus, operators of online video streaming services (OTT), against the Ministry of Culture, Sports and Tourism regarding music copyright royalty rates was held. It has been about seven months since the lawsuit was filed in March, and the core issues are expected to focus on the grounds for the Ministry's discretionary authority and the unique characteristics of OTT operators.

The Seoul Administrative Court, Administrative Division 14 (Presiding Judge Lee Sang-hoon), held the first hearing of the administrative lawsuit filed by KT and LG Uplus against the Ministry of Culture, Sports and Tourism on the 14th.

The plaintiffs pointed out problems with the amendment to the music copyright collection regulations announced by the Ministry last year and claimed that the Ministry exceeded its discretionary authority, filing an administrative lawsuit. The amendment introduces a new clause for 'video transmission services' applicable to OTT, raising the royalty rate from 1.5% this year to 1.9995% by 2026. OTT companies must pay music copyright fees by multiplying 1.5% of their sales revenue by an annual coefficient and the music copyright management ratio. The annual coefficient increases sequentially from 1.000 in 2021 to 1.066 in 2022, continuing up to 2026.

The plaintiffs are represented by the law firm Bae, Kim & Lee LLC. The plaintiffs argue that ▲the usage rate part violates the principle of equality by imposing unreasonable discrimination against users of the same music copyright or violates the principle of proportionality by imposing excessive fees without reasonable grounds. They also claim that ▲Article 39 of the collection regulations violates Article 105 of the Copyright Act and ▲there are procedural defects due to insufficient consultation with interested parties.

In response, the defendant's legal representatives from the law firm Sejong are presenting opposing arguments. The defendant argues that ▲the party subject to the disposition is the Korea Music Copyright Association (KMCA), and the plaintiffs are merely third parties, not the parties subject to the disposition, so they cannot seek cancellation of the copyright disposition. They also claim ▲the procedure is lawful as it went through not only the Copyright Commission review but also the advisory process of the Music Industry Development Committee. Therefore, ▲the Ministry's discretionary authority was not exceeded.

On the day, the plaintiffs emphasized, "The KMCA enjoys a monopolistic status authorized by trust permission and requires approval procedures for use, which is a measure to prevent unconditionally unfair or excessive fees," adding, "Without the KMCA, operators would negotiate directly and be subject to various rates." They explained that since various trust system operation methods exist overseas, a thorough examination is necessary.

They continued, "It is true that OTT is newly emerging, but the content consumed within it is not new," and said, "While the copyright usage fees for OTT should differ, we have not confirmed the rationality of how much they should differ." They pointed out the lack of grounds for OTT operators to pay higher rates compared to comprehensive cable TV operators (SO) (0.5%) or IPTV (1.2%).

The defendant emphasized, "If OTT operators are to be protected, rights holders must also be protected," adding, "The KMCA needs to implement this quickly to distribute to rights holders, but objections are being raised, so rights holders are currently not protected at all."

They further argued, "OTT is not a simple rebroadcast but an interactive service where consumers can watch up to twenty times a week if they want," and "Therefore, referring to overseas cases, the service rate ranges from 2% to 6%. If the disposition authority has no significant error, it is respected. Considering the increasing sales and other aspects, the claims of OTT operators do not align with the actual situation or rights relationships."

On the day, the court questioned the defendant about the process of revising the amendment submitted by the KMCA and the defendant's position on the plaintiffs' request to submit review materials. The court also ordered the defendant to consider voluntarily submitting referenced materials cited in the review report, which are not internal confidential review documents.

Additionally, the court pointed out the issue of the plaintiffs' standing. The court requested, "Please clarify your positions on whether the approval of use stipulated in the collection regulations is naturally incorporated into the contract when a copyright usage contract is concluded between the trustee and the user, and what the effect of the contract would be if it is concluded without the defendant's approval disposition or with different fees than those stipulated in the collection regulations."

The court concluded the hearing by stating, "Ultimately, during the future trial process, both parties will need to argue about the materials underlying the exercise of discretion, the unique characteristics of OTT operators, and the previous and revised amendments," and scheduled the second hearing for December 9.

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